Cyber-warfare? The China hack FAQ

>>> we cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy.

>> within the last hour, attorney general eric holder outlined strategies to mitigate those real threats of cyber espionage. this new aggressive stance comes on the heels of an extensive multi-year report which traced several recent high-level cyber attacks tied to the chinese military . the report details attempts to hack power grids , water supply and the company with access to more than 60% of oil and gas pipelines in north america . joining us now is the author of " china airborne" and the national correspondent of the atlantic, james fallows . good afternoon, james .

>> thank you for coming on. the chinese came out today and strongly denied all of these allegations. should they be believed? is this just a case of threat inflation as we like to call it?

>> the chinese statement was in keeping with its government's usual response to accusations like this. they said that they never have endorsed hacking of anybody else, they resolutely enforce their laws. there's no violation of privacy laws in china . i think that's difficult to take seriously. i think the main point here is that for decades, for more than a decade now, there have been increasing both government and corporate concerns in the u.s. about hacking from a lot of places, including china , and the news in this latest report is tying it more specifically to the chinese military than had been done in the previous encounters.

>> now, they appear to have targeted companies like facebook, apple, twitter and google among others. isn't this an indication that they were seeking to steal intellectual property that the chinese might then reproduce and there by undermine american products?

>> yes. it seems to be a combination of motives here. one seems to be purely political, that is hacking "the new york times," "watshington post" computers. going into google. some is purely commercial. for example, coca-cola was in the middle of a gigantic takeover bid a couple of years ago in china that fell apart in the last minute probably because of some of the secrets were stolen. some of it is long-term commercial like going into the boeing and ge and technological accounts and so it's a multi-fronting and probably multi-source effort from china and other sources.

>> outgoing secretary of defense leon panetta said this recently. take a listen.

>> the collective result of these kinds of attacks could be a cyber pearl harbor . an attack that would cause physical destruction and the loss of life. an attack that would paralyze and shock the nation. and create a new profound sense of vulnerability.

>> james , how right is he? what are the wide-scale implications if a country like china can remotely seize and manipulate our critical infrastructure ?

>> i think it's worth remembering, number one, that without doubt the leading country in the world for this kind of capability is not china but the united states . the united states , after all, was a partner in the stuxnet virus in iran, et cetera , so american officials have been very careful not to talk in detail about our capabilities but they certainly match those that china has. the second is the kind of cyber pearl harbor i think is something most people would assume would happen only if there were complete hostilities for some other reason. it would not be in china 's interest or america's just to out of the blue attack the infrastructure. probably the ongoing issue that's more important is the theft of commercial information happening every day and the infiltration of things like publications.

>> james fallows , thank you so much. we remind you to pick up a copy of james ' new book, " china airborne" which is now available in