FBI Director Christopher Wray issued a stark warning about Chinese government-linked hackers infiltrating critical US infrastructure, awaiting a strategic moment for devastating action. Speaking at Vanderbilt University, Wray outlined the ongoing Volt Typhoon hacking campaign, which has breached American companies in vital sectors like telecommunications, energy, and water, with 23 pipeline operators among the targets.
FBI Director Christopher Wray issued a warning that Chinese hackers are preparing to attack critical US infrastructure:
“China is positioning its enormous hacking enterprise…The PRC has made it clear that it considers every sector that makes our society run fair game in its… pic.twitter.com/Fwsoj4jWXF
At the 2024 Vanderbilt Summit on Modern Conflict and Emerging Threats, Wray emphasised China’s evolving capability to inflict physical damage on crucial infrastructure at its discretion. The campaign’s intent remains elusive, though it aligns with China’s broader strategy to dissuade US intervention in Taiwan, a democratic territory claimed by Beijing.
China, which has never disavowed the use of force to assert control over Taiwan, denies any government involvement in Volt Typhoon, dismissing it as the work of criminal ransomware groups. The Chinese Embassy in Washington echoed this stance, accusing the US of politicising cybersecurity by attributing attacks to China and portraying itself as the victim.
Wray disclosed that Chinese hackers employ a network of compromised devices globally to obfuscate their activities, a tactic previously identified by private cybersecurity firms like Microsoft and Google. As tensions persist between the US and China over Taiwan and cybersecurity, the spectre of cyberwarfare looms large, underscoring the imperative for robust defences against digital incursions.
Apple has removed the Meta-owned apps WhatsApp and Threads from its app store in China, complying with orders from the country’s internet regulator, the Cyberspace Administration, citing national security concerns. According to Apple, the move was made in accordance with local laws, despite any disagreement. The Chinese government allegedly found content on WhatsApp and Threads regarding China’s president, Xi Jinping, that violated cybersecurity laws, though specifics were unclear.
This action intensifies the technology dispute between the US and China, with Apple and Meta caught in the middle. In the US, lawmakers are considering a bill that would compel ByteDance to divest its popular video app TikTok, citing national security risks due to its ties to China. Meanwhile, the White House is tightening restrictions on Beijing’s access to advanced technologies and American financing.
Apple, reliant on China for a significant portion of its revenue, has complied with Beijing’s demands in the past, including blocking various apps and establishing a data centre to store Chinese users’ iCloud data. As tensions persist, Apple has started diversifying its supply chain, reducing its dependence on Chinese manufacturing.
While Meta’s fallout from China may be less direct, the company faces challenges elsewhere, particularly in its strained relationship with Apple over privacy and data tracking issues. In the US, efforts to address concerns over TikTok’s ownership and data handling are gaining momentum, with legislation being packaged alongside other bills related to foreign aid.
Intel is set to launch two specialised AI chips, HL-328 and HL-388, tailored specifically for the Chinese market in June and September, respectively. These chips are developed in compliance with US export controls and sanctions. The announcement, detailed in a white paper on Intel’s website dated 12 April, comes in response to tightened regulations limiting the capabilities of AI chips exported to China. Nvidia, a competitor in the AI chip market, also has plans for China-specific chips following similar export control restrictions.
Intel’s upcoming China-specific AI chips are part of the Gaudi 3 product line, which was unveiled on 9 April. Despite featuring advanced hardware components like on-chip memory and high-bandwidth memory, these chips will undergo performance reductions to meet export control requirements. The aim is to adhere to US regulations while continuing to engage in the Chinese market.
Nvidia, like Intel, is navigating export control challenges by developing specific AI chips for China. One of Nvidia’s chips, the H20, is anticipated to enter the market in limited quantities in the first quarter of 2024, with larger volumes expected in the subsequent quarter. These developments highlight efforts by major semiconductor companies to adapt to evolving export regulations without completely withdrawing from the Chinese market, aiming to balance compliance with strategic business interests.
Why does it matter?
Both Intel and Nvidia’s initiatives reflect the broader impact of geopolitical tensions on the semiconductor industry. As governments implement stricter export controls, companies are innovating to meet regulatory requirements while continuing to serve global markets. The launch of China-specific AI chips represents a strategic response to these challenges, enabling technology firms to navigate complex trade dynamics while sustaining business operations.
President Biden’s administration has escalated tensions with China by adding more Chinese entities to an export blacklist than any previous US government. This latest move by the Commerce Department brings the total number of entities targeted under Biden to 319, surpassing the count during Trump’s tenure. The decision underscores the increasing use of economic tools to achieve foreign policy objectives, particularly as Biden seeks to limit China’s access to advanced technology, citing national security concerns.
The heightened scrutiny on China comes amidst growing apprehensions in Washington over President Xi Jinping’s assertiveness towards Taiwan, fueling fears of Beijing leveraging American technology to bolster its military capabilities. Both Democrats and Republicans have rallied behind the tough stance on China, reflecting bipartisan consensus on the issue, especially with the upcoming elections looming. Biden has maintained Trump’s tariffs while expanding restrictions on Beijing’s access to cutting-edge innovations, notably in critical sectors like AI.
The entity list serves as a primary mechanism for sanctioning entities on national security grounds and has increasingly become a focal point in US-China relations. Beijing has denounced Washington’s actions as economic coercion and unilateral bullying, vowing to defend the rights and interests of Chinese companies. In a retaliatory move, China imposed sanctions on two US companies, signalling a tit-for-tat escalation in tensions. However, such measures are largely symbolic, with minimal impact on the targeted firms.
Despite the Biden administration’s firm stance, there have been occasional concessions, such as withdrawing a Chinese government laboratory from the entity list to address the fentanyl crisis. Nonetheless, the recent additions to the list signal a continuation of the US strategy to maintain its technological edge, particularly in dual-use technologies. As Washington tightens controls on exports to Chinese firms involved in military modernisation efforts, the stage is set for further friction in the already strained US-China relationship.
China plans to operationalise a nationwide computing power network by next year, aiming to balance regional digital disparities and enhance capacity. The initiative, led by the National Data Administration (NDA), is a strategic response to President Xi Jinping’s call for digital advancement and innovation amid global competition.
Liu Liehong, the head of the NDA, at a recent conference assured efforts to enhance data infrastructure and hasten the development of the computing power network. The initiative will enhance data sharing and utilisation, maintaining equilibrium between public and commercial interests while fostering data-driven innovation. The need for rigorous regulation, including standardization of formats, security protocols, and clear data governance policies was further emphasised.
In addition, the launch of pilot projects for data labelling, essential for AI utilisation, was announced, setting the stage for AI advancements across sectors.
This initiative can be located at the backdrop of China’s ongoing technological race with the US, as China intends to boost its computing capacity, currently second only to the US, by 50% by 2025.
China has unveiled a national plan to develop its own metaverse by 2025, with the goal of creating three to five globally influential metaverse companies. This plan was published by five Chinese ministries led by the Ministry of Industry and Information Technology in a policy document.
The policy blueprint covering the time period of 2023 to 2025 highlights the application of metaverse technology in various industries, such as home appliances, automotive, and aerospace.
The development of artificial intelligence, blockchain, and virtual reality technologies will be key to achieving the metaverse vision and the Chinese government aims to establish three to five industrial clusters around these emerging technologies. The document also suggests that manufacturing industries, including steel and textiles, can adopt related technologies to optimize scheduling, material calculation, and other parts of the production process.
Previously, some local authorities in China like Henan and Shanghai province have also issued their own policies to promote metaverse development, emphasizing on how it can support the economy and traditional industries.
Foxconn, Apple’s main supplier is set to invest close to $500 million in building two component factories in India. This is in addition to the $700 million investment in a Bengaluru plant that is expected to assemble iPhones and create around 100,000 jobs.
Apple has been re-examining its China-reliant supply chain ever since Covid-19-related disruptions caused output at Foxconn’s Zhengzhou plant (currently the world’s biggest source of Apple’s iPhone) to plunge ahead of the 2022 holidays. Foxconn’s recent investments in India is a reflection of India becoming a popular destination for manufacturers seeking an alternative to China.
With China’s unstable regulations, a sluggish economy, and trading restrictions imposed by the US, western investors and corporations are becoming increasingly disillusioned and seeking to diversify their supply chains. This shift in the global supply chain has been expedited in parts due to the Covid-19 pandemic, the escalation of tension between the US and China, and the conflict in Ukraine.
China’s cyberspace regulator has recently closed over 100,000 online accounts that were spreading false news and rumours about news anchors and media agencies to ‘clean up the internet’. The Cyberspace Administration of China (CAC) has started a campaign to sieve out social media accounts that pretend to be state-controlled media and spread ‘fake news’.
The regulator asserted that it would provide guidance to online platforms in order to protect the legitimate rights and interests of the majority of internet users to get accurate news. The regulator also encourages users to report fake news and news anchors by providing leads.
The government implements strict measures to remove internet content and language that it considers unsuitable, offensive, or harmful to the public and businesses. Such a crackdown can be contextualised as a larger part of a global effort to combat the spread of fake news, with many countries implementing laws to punish those who spread it.
