How dangerous could a cyber-war with China be for the US?

>>> a u.s. security firm has now exposed the role of china 's military in cyber attacks on criminal u.s. companies, including companies involved with the electrical power grid , with water works , and pipelines. is the threat highlighted by the president in his state of the union address only last week.

>> we know hackers steal people's identities and infiltrate private emails. we know foreign countries and companies swipe our corporate secrets. now our enemies are also seeking the ability to sabotage our power grid , our financial institutions , our air traffic control systems. 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.

>> vice president at the firm that released this new report on chinese cyber attacks, and chris johnson is a former intelligence official who spent a lot of time in china over the years and is now at the center for strategic and international studies . welcome both. well, first to you, brady. this report is pretty scary stuff. we've always known that there was chinese hacking as long as i've been covering foreign policy . we've talked about chinese hacking, but this really pinpoints the chinese military . you've zeroed in on a particular area in shanghai. tell me what the significance of that is.

>> that's right, andrea. what makes it report different is rather than speculating these attacks might come from china , we've shown quite a bit of evidence that directs this to a pla unit 61398. we can say with definitive accuracy that the attacks were coming out of a single subnet or several subnet that is go back to that one neighborhood in shanghai.

>> among the targets are companies involved in critical infrastructure entities, which we're talking about pipelines and water works and, you know, the electrical grid , nuclear power plants .

>> almost no sector was spared. we saw everything from high-tech manufacturing to transportation, defense, but, you're right. a lot of the sectors that were targeted were part of the nation's critical infrastructure , and that gives us concern.

>> as a former intelligence official, what is the national security implication of this?

>> i think this just underscores how pervasive china 's effort is on cyber hacking and on cyber security , the need for cyber security from the u.s. standpoint. when these companies are engaging in business in china , they really are going up against the full group of resources of the chinese government .

>> when we talk about this at the same time what the chinese might say to us is wait a minute. you guys do it too. look at stucks -- look at what is happening against the iranian nuclear facilities . i'm not asking you to confirm anything the u.s. may or may not be doing. from my sources i can tell people that this is an american engagement with israel and others.

>> right. i would say it's kind of an apples and oranges comparison, though. in one instance we're talking about state versus state. if the u.s. were to, say, target a uranium enrichment plant in iran, that's a state taking action against another country. this is much more asymmetrical. this is the full weight and force against the chinsz military going after private companies , western companies that are defenseless against that kind of might. it's very different than one country going after another country in a cyber battlefield.

>> isn't that a dis ukz between a difference, though? the chinese military versus american infrastructure compared to the u.s. government against an iranian facility?

>> it's cross aing line. now we're talking about entities that aren't defended by american oil and gas companies or high-tech manufacturing companies that aren't be defended by the u.s. government . for us it's crossing a line into a classic victim that's not prepared to with stand that type of attack.

>> i've been told by former intelligence chiefs here that this has long been a major cause of concern going forward. what is the u.s. now prepared to do to defend against it?

>> i think that's the case. the question is how are we going to go about improving -- what we need is a comprehensive dialogue with beijing.

>> that's been the key difficulty that we've had. there obviously have been talks that involve the chinese military , but clearly now we need to have a much broader dialogue.

>> we have new chinese leadership coming into play here, and the u.s. has to consider when either john kerry or president obama at a summit meeting meets with chinese leadership, we have to decide well, wait a second, china holds our debt. we need china to pressure north korea . we need china not to veto our sanctions at the u.n. on iran. what leverage do we have with china to go in and stop doing this?

>> it does provide --

>> you also in your report there's information about private companies , including coca-cola, coca-cola having been penetrated not by the chinese military , per se , but by other chinese entities or other hackers, and it could or could not have influenced the fact that coca-cola lost a contract they were bidding on because they're negotiating strategy may have been exposed. what do you say to private companies to all the rest of us who depend so heavily on, you know, internet access , about protecting our own security.

>> we have to do a lot more. that's clear. i would say organizations should start by taking the report that we published. there's 3,000 technical indicators that organizations can use to detect these guys on their networks and work to eject them. that's where it starts. there's a lot more we have to do. we really have to increase the security in the nation's commercial industry if we're going to actually do anything to thwart this attack.

>> you've been in government. there are 16 intelligence agencies who now have all privately confirmed in classified intelligence estimate that this, in fact, is taking place, and the chinese military is involved. what is it -- what's in china 's interest here? i mean, there's some obvious economic benefits.

>> they've had tremendous economic benefit, and it's important for underscore that this policy goes back to the reform era. it was encouraged chinese entities to do this as part of the reform in opening up process. cyber is in many ways another it rags of what they've been doing for many years. only it's a much more comprehensive tool.

>> , and finally, are they far ahead of us in their ability to penetrate?

>> i don't think they're ahead of us, but they're demonstrating through these attacks that they're in the game. what's striking, as was pointed out, is the fact that they seem to use these same signatures over and over again, and they see if this excellent report does change.

>> it's a new kind of arms race.

>> it is. i don't think it's going away any time soon. this is a new normal.

>> the new normal. scary stuff. change your pass words. thank you both very much.

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