China has developed first-strike cyberwarfare capabilities, according to an annual Pentagon report (pdf) on the status of the country's military:
The PLA has established information warfare units to develop viruses to attack enemy computer systems and networks, and tactics and measures to protect friendly computer systems and networks. In 2005, the PLA began to incorporate offensive CNO [computer network operations] into its exercises, primarily in first strikes against enemy networks.
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Experts say that the emphasis on first-strike capabilities represents a shift in Beijing's cyberwar thinking. As recently as two years ago, the PLA was focused on defensive technologies that would allow it to deter attack, thanks in part to the fact that the country was primarily running off-the-shelf, Western software. "Now there's no mention of that," says University of New Hampshire cyberwar expert Andrew MacPherson. "[M]uch more of the discussion is about first-strike capabilities."
Tensions with Taiwan might explain the change in Chinese strategy. Theories have been floating for years that taking down Taiwan's technological infrastructure would be a key element to any Chinese military campaign against the island and its American allies. And the Pentagon's report makes this point:
A limited military campaign could include computer network attacks against Taiwan’s political, military, and economic infrastructure to undermine the Taiwan population’s confidence in its leadership.
MacPherson goes even further, suggesting that, if backed into a corner, China may try to take down the Internet writ large: "Maybe [China] would be willing to unplug from the Internet if they saw the advantage to their side was great" by launching a virus assault on a global scale. It seems an unlikely scenario, but scary none the less.
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