Back in January of this year Alex Allan, Chairman of the British Joint Intelligence Committee, briefed a ministerial committee on the rapidly growing threat of cyber attacks and espionage from China. In that briefing, Allan expressed his growing concern because government departments, the intelligence services and the military were all exposed to the threat from computer and network hardware that came from foreign suppliers -- he specifically mentioned China.
British Telecom's new communications network has been installed by Chinese telecom giant Huawei, which is allegedly funded by Beijing and has links to the People's Liberation Army. The ministerial committee on national security was told that Huawei components that form key parts of BT's new 10 billion pound network might be constructed with compromised hardware that contains malicious elements waiting to be activated by China. The Times Online quoted intelligence officials, as saying, "In case of a war like situation, China could use BT to halt critical services such as communications, power, and water supplies." Security experts supported the intelligence chiefs' concerns and warning. They said if an adversary were able to gain control of the communications equipment, the network's mode of operation could be altered. This would give them the ability to basically turn the network off!
Another real possibility is that traffic could be rerouted to network nodes that are controlled by the attacker. While British Telecom has taken preventive security measures to reduce this risk, the government is said to believe that the enhanced security measures would not be effective against deliberate attack by China. It is widely believed that China is already equipped to make "covert network modifications" or to "compromise equipment in ways that are very hard to detect" and that might later "remotely disrupt or even permanently disable the network." It is unknown if British security experts have hard evidence of network hardware espionage or they are just being cautions.
These words of warning came on the heels of multiple reports of the discovery of a vast cyber espionage network (GhostNet) that is controlled from China which has infiltrated government and private 1,295 computers in 103 countries.
INTEL: The British intelligence services and their military all use the new British Telecom network.
INTEL: A Huawei's head executive is Ren Zhengfei, the former director of an arm of the three million-strong People's Liberation Army who was responsible for telecommunications research.