Cyber-attacks on China

  By Phil Muncaster

China is claiming attacks on public and private organisations from outside of its borders have rocketed in the past year - from five million computers affected in 2010 to 8.9m in 2011.

Attacks on Chinese websites are on the rise, according to a government report >>

State-run newspaper China Daily reported the figures from (deep breath) the government’s National Computer Network Emergency Response Technical Team and Coordination Center.

They revealed that machines behind 11,851 IP addresses from overseas took control of 10,593 Chinese websites during 2011. Other attacks involved the destruction of servers and stealing of personal data from web users in the People’s Republic.

Some 1,116 sites were defaced by overseas attackers, and just under half of those government sites, Wang Minghua, deputy director at the centre, told a news conference on Monday.

“This shows that Chinese websites still face a serious problem from being maliciously attacked by foreign hackers or IP addresses," he is quoted as saying.

Surprisingly, Japan is alleged to be the source of most attacks on China, supposedly landing 22.8 per cent, followed by the US with 20.4 per cent and then the Republic of Korea with 7.1 per cent.

The attacks were both financially motivated and targeted at stealing sensitive information from government departments, according to the report, although tellingly there is no breakdown for each.

China has swung from being a country frequently accused of launching cyber-attacks on Western nations to one finding itself on the business end of hackers' keyboards. Although it has been frustratingly difficult for investigators and politicians to prove, everyone from Hillary Clinton to William Hague and Google’s Eric Schmidt has pointed accusing fingers at the Asian nation as a source of malicious net traffic.

Most recently, a detailed report from US defence contractor Northrop Grumman revealed that the People’s Liberation Army is tooling up with advanced information warfare capabilities, and warned that academia and commercial technology firms are helping to provide it with significant R&D resources.

However, despite the threat that Western governments believe Chinese hackers pose, it’s also likely that as China increasingly becomes an affluent web-connected nation, international cyber-criminals will look to target its web users. There are after all more than 500m users online in the People’s Republic, and almost one billion mobile subscribers, while a growing middle class is spending increasing amounts of cash online - China’s internet GDP will grow at a CAGR of over 17 per cent through to 2016, according to new research.

It would be naïve to think that the US, UK and other nations are snoozing while China-sponsored attackers target their data. The UK’s Cyber Security Strategy announced in November explained that a Cyber Defence Operations Group will be installed at the Ministry of Defence next month, for example.

Overseen by Air Marshal Sir Stuart Peach, the group will have a mission to develop "new tactics, techniques and plans to develop military cyber capabilities”.

The latest stats from the Chinese government may be slightly exaggerated but shouldn’t be dismissed out of hand. ®

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Malaysia Websites hacked but not whacked after ...

India, Asia #1 world's top weapons importer!

 A study has found India to be the biggest weapons importer.

STOCKHOLM AFP— Asia leads the world when it comes to weapon imports, according to a study released Monday by the Stockholm International Peace Research Institute (SIPRI).

 World arms trade (AFP Graphic)

Globally the volume of international transfers of major conventional weapons was 24 percent higher in the period 2007-11 compared to the 2002-06 period, the report said.

Over the past five years, Asia and Oceania accounted for 44 percent in volume of conventional arms imports, the institute said.

That compared with 19 percent for Europe, 17 percent for the Middle East, 11 percent for North and South America, and 9 percent for Africa, said the report.

India was the biggest arms importer in the period covered, 2007-11, accounting for 10 percent in weapons volume.

 India is the world's largest arms importer (AFP/File, Raveendran)

File photo shows Indian soldiers firing a Bofors gun 

It was followed by South Korea (6 percent), China and Pakistan (both 5 percent), and Singapore (4 percent), according to the independent institute which specialises in arms control and disarmament matters.

These five countries accounted for almost a third, 30 percent, of the volume of international arms imports, said SIPRI.

"India's imports of major weapons increased by 38 percent between 2002-06 and 2007-11," SIPRI said.

"Notable deliveries of combat aircraft during 2007-11 included 120 Su-30MKs and 16 MiG-29Ks from Russia and 20 Jaguar Ss from the United Kingdom," it said.

While India was the world's largest importer, its neighbour and sometime foe Pakistan was the third largest.

Pakistan took delivery of "a significant quantity of combat aircraft during this period: 50 JF-17s from China and 30 F-16s," the report added.

Both countries "have taken and will continue to take delivery of large quantities of tanks," it also noted.

"Major Asian importing states are seeking to develop their own arms industries and decrease their reliance on external sources of supply," said Pieter Wezeman, senior researcher with the SIPRI Arms Transfers Programme.

China, which in 2006 and 2007 was the world's top arms importer, has now dropped to fourth place.

"The decline in the volume of Chinese imports coincides with the improvements in China's arms industry and rising arms exports," according to the report.

 File photo shows Chinese People's Liberation Army (PLA) …

But "while the volume of China's arms exports is increasing, this is largely a result of Pakistan importing more arms from China," it added.

"China has not yet achieved a major breakthrough in any other significant market."

China is however the sixth largest world exporter of weapons behind the United States, Russia, Germany, France and Britain.

In Europe, Greece was the largest importer between 2007 and 2011, the institute said.

Between 2002 and 2011, Syria increased its imports of weapons by 580 percent -- the bulk supplied by Russia -- while Venezuela boosted its imports over the same period by 555 percent, it reported.

Throughout the Middle East as a whole, weapons imports decreased by eight percent over the period of the survey.

However SIPRI warned "this trend will soon be reversed."

Tunisia, where mass protests ousted strongman Zine El Abidine Ben Ali early last year, launched the so-called Arab Spring and inspired similar movements in Egypt, Libya and elsewhere.

"During 2011, the governments of Bahrain, Egypt, Libya, Tunisia and Syria used imported weapons in the suppression of peaceful demonstrations among other alleged violations of human rights and international humanitarian law.

"The transfer of arms to states affected by the Arab Spring has provoked public and parliamentary debate in a number of supplier states," the report said.

The volume of deliveries of "major conventional weapons" to African nations increased by a massive 110 percent in 2007-2011 over the previous five-year period, with deliveries to North Africa up by 273 percent.

Morocco saw its own imports increase by 443 percent, the report added.

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Malaysia's household debt rise a concern

PETALING JAYA: While not an imminent danger, the level of household debt is of concern and warrants close monitoring, RAM Ratings head of financial institution ratings Wong Yin Ching said,

The nation’s household debt as a percentage of gross domestic product (GDP) had risen to 77% as at end-2011 compared with 69% at end-2006, and its household debt-to-GDP ratio was considered high when compared with other countries in the region, especially in relation to GDP per capita.

Wong was speaking to StarBiz after the release of the rating agency’s Banking Bulletin 2012. Home loans remained the largest component, contributing about 45% of the total household debt, she added.

However, unsecured financing in the form of personal loans and credit-cards had been growing rapidly, accounting for about 15% and 5% of total household debt, respectively.

Development financial institutions, cooperatives and building societies that offer personal financing facilities to civil servants under salary-deduction schemes contributed to the bulk of the growth, she noted.

“We view positively Bank Negara’s various pre-emptive measures implemented since late 2010 to rein in growth in household debt and safeguard the soundness of the financial system.

“On top of the tighter measures on residential property financing, stricter guidelines have also been implemented on credit cards, such as increasing the income eligibility criteria.

“We do not discount additional prudential regulations to be imposed in future,” Wong said.

Effective Jan 1, banks are required to use net income calculation method instead of gross income when computing debt-service ratio.

Wong added that unemployment rate was still relatively low at 3% and the credit quality of household sector was also healthy, with a low gross impaired-loan ratio of 1.8% as at end-January 2012 (end-2010:2.3%).

Nevertheless, she said the debt-servicing ability of households in the lower-income segment might be more vulnerable to economic down-cycles, greater variability in income and inflationary pressures.

On loan growth, RAM Ratings expects the overall banking system’s loan growth to taper to about 8% to 9% this year, after clocking in a strong 14% expansion in 2011. This is supported by a projected 4.6% real GDP growth this year, which is slightly lower than the 5% in 2011.

Private investments, she said were expected to remain strong, although a weakening in global demand would have some bearing on export performance.

Wong anticipates the central bank to remain accommodative in its monetary policy by maintaining the overnight policy rate at 3% with a downside bias in 2012, as preserving growth momentum would take precedence over curbing inflationary pressures.

While a more moderate household loan growth was anticipated due to the prudential regulations introduced, she added this would be balanced by stronger financing demand from the commercial and corporate sector from the rollout of projects under the Economic Transformation Programme and 10th Malaysia Plan.

For non-performing loans this year, she said the industry’s gross impaired-loan ratio was expected to be kept healthy this year, with a slight uptick to about 3% from the current all time low level of 2.7%.

“In terms of capitalisation, all the domestic, all the domestic banks were well poised to meet the new capital requirements under Basel III, of which the implementation would be phased in from 2013,” she added.

Although these new capital measures would elevate banks’ funding costs, which may in turn be passed on to consumers, it would ensure the banking sector was safeguarded against unexpected shocks, Wong said.

As at end-January, the banking system’s capitalisation was strong with a tier-1 risk-weighted capital adequacy ratio of 12.9%.

Banks’ profitability, she said had been on a steady rise over the last couple of years on the back of strong loan growth, benign loan impairment charges and growing fee income. However, net interest margins (NIMs) had been under pressure due to stiff price competition, particularly in certain loan segments such as residential mortgages.

NIM is a measure of the difference between interest income generated by banks and interest paid out to depositors.

Source: By DALJIT DHESI  daljit@thestar.com.my

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