COMMENT:

The coalition Government is endeavouring to box clever and preserve New Zealand's relationship with China at diplomatic and senior Cabinet

levels.

Yesterday, New Zealand took the unprecedented step and joined its Five Eyes partners in calling out China for State-sponsored cyber attacks as the technological Cold War ratcheted up another gear.

Advertisement

According to senior sources there was some trepidation at Cabinet level before the decision to name China directly was agreed.

But unlike our nearest neighbour Australia, where the Morrison Government ministers resoundingly and directly rebuked China for stealing commercial secrets from Australian businesses, New Zealand's response was muted.

Cabinet left it to the Government Communications Security Bureau (GCSB) through its director-general Andrew Hampton to publicly front the issue.

There was no formal statement from either Foreign Affairs Minister Winston Peters or the Minister Responsible for the GCSB Andrew Little (at the time this column was filed).

Hampton said the GCSB had established links between the Chinese Ministry of State Security (MSS) and a global campaign of cyber-enabled commercial intellectual property theft.

"This long-running campaign targeted the intellectual property and commercial data of a number of global managed service providers, some operating in New Zealand," Hampton said.

"This activity is counter to the commitment all APEC economies, including China, made in November 2016. APEC economies agreed they should not conduct or support ICT-enabled theft of intellectual property or other confidential business information, for commercial advantage."

In subsequent interviews, Hampton did not draw a direct line between hacks into unidentified "managed service providers" — phone and email — operating in New Zealand and the outright theft of their customers' commercial secrets.

Advertisement

Nor did he confirm any breaches of the Government's own servers.

But it seems risible to believe that New Zealand's cyber security settings are of such a superlative standard that the hacking ring could not have breached some of them and at least tried to steal commercial secrets if they had wanted to.

Particularly, given New Zealand's acknowledged superiority in key agricultural sectors.

Spark CEO Simon Moutter has confirmed that keeping on top of the rapidly changing cyber security space is a tough challenge. But it is also a fact that NZ corporates are also reluctant to confirm cyber breaches.

Cabinet ministers were well aware that the co-ordinated push back by the Five Eyes nations — United States, UK, Canada, Australia and New Zealand — would go public yesterday.

At the heart of the synchronised accusations are indictments which the US Justice Department revealed had been laid against two Chinese hackers, who it said acted "in association with" the MSS.

The indictment outlined that Zhu Hua and Zhang Shilong — members of a hacking squad known as "Advanced Persistent Threat 10" or "Stone Panda" — were accused of conspiracy to commit computer intrusions, wire fraud and aggravated identity theft while pilfering "hundreds of gigabytes" of confidential business data.

The US and other of the Five Eyes partners have blamed China for a 12-year campaign of cyber attacks which are said to have "vacuumed up technology and trade secrets from corporate computers in 12 countries, affecting almost every major global industry" with FBI director Christopher Wray saying: "China's goal, simply put, is to replace the US as the world's leading superpower, and they're using illegal methods to get there."

The coalition Government has sound reasons to want to preserve the relationship at diplomatic and senior minister levels.

Ministers will be hopeful that the synchronised actions will reinforce to Chinese President Xi Jinping that they expect China to hold to a 2016 pledge to refrain from hacking for commercial gain.

The heightened sensitivity between the United States and China means that there is no tolerance any more to turning a blind eye to cyber infringements.

Particularly, given corporate suspicions in the US that Beijing is flouting the rule as China seeks to displace the US as the world's predominant economic and technological power.

In Washington DC recently, business lobbies I spoke with were concerned that companies trading through global supply chains may ultimately find themselves encouraged to develop and use parallel supply chains.

Yesterday's co-ordinated push takes global trade one step closer to that new reality.