Below are several Treadstone 71 evidence-based observations presented to generate critical thought on the topic brought forth by Nicolas Chaillan in resent days. The issues he suffered are not new. In fact, they sound quite familiar from the days as a CISO facing the same laissez-faire attitude towards cyber security in several different industries. The standard recipe in most organizations is for cyber security to report to the CIO, the security budget is carved out as a percentage of a percentage, and risk is used to permanently defer needed fixes. This model generates scores of negative underlying factors with the motto: Speak loudly and bluff the big stick.
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· China buys targeted supply chain companies to corner the market based upon political leadership and 5-year plan direction for the purposes of embedding malicious code in critical components, understanding US defensive and offensive capabilities, market capture, performing low-risk cyber-attacks based on proven models, and for future domination.
· China buys targeted artificial intelligence, rare earth metals, cyber security supply chain companies (non-inclusively) to corner the market for financial gain and global dominance.
· Chinese academia rapidly setting up centers for artificial intelligence, machine learning, quantum computing, and cyber security (non-inclusively) to attract the world’s brightest as directed by political leadership – a stated desire to build their own ‘Ivy League.’ For years, Chinese students have flocked to US universities targeting the best for entry. US universities and colleges gladly accept these students who pay a full price much higher than US-based, out-of-state students. Many stay through masters and PhD. programs and participate in DARPA and IARPA research programs driven by grants. Others gain employment in US companies targeted by the 5-year plans. Their academic legacy in the United States paves the way for sharing information with incoming Chinese students.
· Western companies creating point-in-time components in ‘gold rush’ times to quickly sell to the highest bidder and profit as dictated by stockholder requirements and venture capital ownership.
o A PwC study analyzed CEO successions at the world’s largest 2,500 public companies over the past 19 years reports that while the median tenure of a CEO has been five years, 19 percent of all CEOs remain in position for 10 or more years, consistently, over the time period analyzed. 2018 PwC Study.
· Western companies run to sell in China adhering to Chinese requirements for access to code, root capabilities, and Chinese government oversight in exchange for relatively short-term profits. Chinese intelligence groups reverse-engineer cyber-security software and hardware while the US continues to build technologies based on failed models as exhibited by the massive number of data breaches, successful hacks, and penetrations of Western critical infrastructures and corporate environments.
· Chinese intelligence fully understands the United States system. Corporate life cycles driven by quarterly and annual profits are advantageous to Chinese exploitation. The United States plays a great geopolitical and economic game of chess winning periodic battles while the Chinese ‘give up and gain ground’ as they play the long game of GO.
· Our understanding of the long game is 5 to 10 years. The Chinese play in terms of multi-generational strategic gains with highly focused tactical execution.
- Chinese economic gains are not based on population.
- The Chinese population is an enabler of fast growth.
- Over the past 40+ years, they have stolen US intellectual property across our Critical Infrastructure.
- This acted as a catalyst for their rapid growth across all verticals.
- Eventually, the need to steal from the United States will wane.
- One indicator is the targeted acquisition and venture funding of U.S. leading to ownership of critical supply chain technologies across all verticals.
There is a migration from outright theft to buying, acquiring through partnerships, and building their own as their capability matures. The Chinese political system allows for rapid changes with a tremendous focus based on party direction driven by their 5-year plans. The 5-year plans are iterative approaches to their long-term goals and objectives. Their ability to acquire US intellectual property and transform this IP into offensive cyber capabilities is driven through government direction, academic prowess, and an all-hands-on-deck approach to building capabilities beyond US expectations.