US introduces cyber-espionage clause to funding law to lock out Chinese vendors

28 Mar 2013

US lawmakers have introduced a new cyber-espionage review process for technology purchases, amidst mounting concern over the security of equipment purchased from Chinese vendors. Reuters writes that under the new rules, which formed part of a new funding law, NASA and the Justice and Commerce departments are now required to make a formal assessment of ‘cyber-espionage or sabotage’ risk in consultation with law enforcement authorities before purchasing ICT equipment. The assessment must also look into any ‘risk associated with such system being produced, manufactured or assembled by one or more entities that are owned, directed or subsidized’ by China.

US concerns over the vulnerability of its systems to cyber-attacks have escalated in recent years, with a report from the House Intelligence Committee highlighting in October 2012 the ‘risks associated with Huawei and ZTE’s provision of equipment to US critical infrastructure’ and urging US companies to source equipment elsewhere. The following month, the committee described Huawei as the ‘800-pound gorilla in the room’ claiming that ‘the Chinese are aggressively hacking into our nation’s networks, threatening our critical infrastructure and stealing secrets worth millions of dollars.’ China continues to deny the allegations, with President Xi Jinping warning his US counterpart against making ‘groundless accusations.’ Indeed China has responded in kind, with Chinese media describing the nation as ‘naked’ whilst the US was ‘armed-to-the-teeth’, citing research from China National Computer Network Emergency Response Team (CNCERT) as saying that 99.4% of botnet servers involved in attacks on Chinese computers in 2011 were US-based. Chinese telco Unicom followed up the clash of rhetoric by removing Cisco-provided core cluster routers from its China169 backbone network. More recently, CommsUpdate reported in February 2013 that Hibernia Networks had suspended work on its Hibernian Express trans-Atlantic cable after key US carriers warned that they would not use the proposed Huawei-built system for fear of losing lucrative government contracts.

China, United States, Cisco Systems, Huawei Technologies, ZTE