Fortnightly Review

Fortnightly Review

Fortnightly Review

Growing Concerns in Taiwan about Potential Chinese Hacking of Elections

The United States is not the only democracy facing the threat of foreign interference in its elections. Russia’s intervention into the United States’ 2016 presidential election, as assessed by three agencies within the US intelligence community, has thrown into sharp relief efforts undertaken by the Kremlin to exploit and undermine the credibility of the US democratic political process through cyber operations and other means. Yet, other authoritarian governments are also employing similar strategies, which are not only directed at the United States but other democracies as part of a broader influence campaign ostensibly aimed at undermining the liberal democratic order.

Taiwan is the primary target of the People’s Republic of China’s (PRC) influence operations, which include overt and covert measures that involve cyber operations to shape political outcomes favorable to its strategic interests. Against the backdrop of the political fallout from Russia’s intervention in the 2016 election that continues to roil US domestic politics, there are growing concerns in Taiwan that China may utilize similar cyber operations, such as those used by Russia’s intelligence services, to conduct espionage against political organizations, intrusions into electoral boards, and disseminate overt propaganda,  to affect Taiwan’s 2018 local elections and perhaps also the 2020 presidential election. According to a recent news report in the Financial Times, a spokesperson for the ruling-Democratic Progressive Party (DPP) acknowledged: “We are worried the Chinese government will try to target Taiwan and influence our elections.” According to Bryce Boland, FireEye’s chief technology officer for Asia-Pacific, quoted in the same report: “China-based threat groups have all the technical know-how to pull off a Russian-style hack and leak operation.”

Taiwanese concerns over hacking by Chinese actors for political reasons are not without precedent. Indeed, China has a long history of conducting cyber-attack and espionage against political targets in Taiwan. Most notably, there are consistent spikes in the number of cyber intrusions either in the lead-up to or in the aftermath of significant political events in Taiwan, especially elections. For instance, the first major publicly documented cyber attack took place in August 1999 after then-President Lee Teng-hui (1988-2000) described relations between Taiwan and China as “special state-to-state relations,” and Chinese hackers responded by sabotaging government, university, and commercial sites. The targets of Chinese cyber operations have also evolved over time, in tandem with its growing sophistication.

In December 2015, right before Taiwan’s presidential and Legislative Yuan elections, the e-mail accounts of senior DPP and former senior US officials working on Taiwan were hacked. In April 2016, a few months after Tsai Ing-wen and the DPP won the presidential and Legislative Yuan elections, US-based cybersecurity firm FireEye issued a statement revealing that Chinese hackers had spoofed the website of the ruling party, and was redirecting traffic to a watering hole that was stealing visitor’s information. According to the release: “FireEye believes this operation likely reflects continued efforts by China-based cyber espionage operators to collect intelligence related to the DPP as it moves Taiwan away from pro-mainland China policies.” Intelligence—the scope of which is ultimately defined by Chinese political leaders[1]—may include sensitive data regarding party personnel, internal communications, strategic policy documents, and proprietary polls that are conducted internally to assess public opinion, among other sources.

The 2018 local elections, which are scheduled to take place a year from now, next November are significant, as they will be seen as the litmus test of the DPP-led government and of Xi Jinping’s approach towards Taiwan after the 19th Party Congress. More importantly, they will serve as a bellwether for the 2020 presidential election.

The Tsai government appears intently focused on the cyber threat facing the island. Her administration’s efforts so far include stewarding the passage of new legislation or amendments to existing legislation aimed at enhancing accountability and readiness in cybersecurity, and, in particular, standing up a cyber security command. The new command, which is comprised of 6,000 personnel, was formally launched in June 2017 as the Information, Communications and Electronic Force Command, under the Ministry of National Defense, and headed by Major General Ma Ying-han (馬英漢).

Public awareness concerning the cyber threat facing Taiwan is also increasing, both in the public as well as private sectors. According to a study done by the US Department of Commerce in July 2017, the size of Taiwan’s information security market is growing. Indeed, the market has expanded at an annual rate of 12.2 percent since 2013, increasing in scale from US$926.6 million to US$1.44 billion in 2017. The output of Taiwan information security firms is projected to rise from US$1.12 billion in 2015 to US$1.56 billion in 2019, reflecting an annual growth rate of 8.7 percent.

A robust domestic information security industry is an important bulwark against the looming cyber challenge. Public-private partnerships are an essential component to a comprehensive approach as the government has limited capacity, and a large portion of the infrastructure and expertise resides in the private sector. Yet, according to the DoC study,

[Taiwan’s] domestic information security companies tend to be small in scale with relatively few employees, and there are fewer than 200 domestic firms involved in information security across Taiwan. The government views the relatively small size of Taiwan’s information security industry as a vulnerability, and is planning to boost information security education and training programs.

The Russian interference in the 2016 elections offers a playbook that other authoritarian governments may utilize when seeking to undermine democratic institutions worldwide. To be sure, democracies share similar vulnerabilities to exploitation of their open political processes and democratic institutions, but this apparent weakness can also serve as an asset in countering influence operations through the promotion of greater transparency. A strong public-private partnership can also assist democratic governments in efforts to detect, monitor, and repeal cyber exploits and attacks. The public release of the declassified intelligence study on Russian interference provides a useful case study for democratic countries to use in developing countermeasures.

The main point: There are growing concerns in Taiwan that China may utilize similar cyber operations to those used by Russia’s intelligence services, which include espionage against political organizations, intrusions into electoral boards, and overt propaganda dissemination.

Taiwan’s CI Dilemma: The Thin Line between Soldiers & Spies?

Like social security in the United States, salvaging Taiwan’s nearly bankrupt pension system has been considered one of the most politically toxic domestic reform agenda items in any administration. This is, perhaps, why so many administrations have dared not touch it even though there is a general consensus among the two major political parties that the pension system has long needed to be reformed. The fact of the matter is that there is never a good time to cut people’s retirement funds, especially for people who have committed their careers to government service. The Tsai administration, which made domestic policies her priority, has taken on pension reform head-on—in large part due to necessity. On November 13, the Ministry of National Defense released a notice of proposed reform to military pensions—which are expected to go bankrupt in 2020—including setting a minimum monthly pension payment for retired military personnel of US$1,065 (NT$32,160).

Retired military personnel currently collect monthly pensions of US$1,635 (NT$49,379) on average and civil servants US$1,867 (NT$56,383). The reported average monthly earnings for regular workers in Taiwan for September was US$1,328 (NT$ 40,116).

In the past two decades, government debt has surged tenfold to US$187 billion (NT$5.67 trillion) while the working population has decreased. A combination of lower economic growth and a rapidly aging population have placed huge strains on the pension system, which is nearly bankrupt. According to a retired lieutenant general from Taiwan quoted by the South China Morning Post: “The biggest problem we are facing with the [pension] reform is fear. It is making everyone anxious and uneasy … [w]hen soldiers cannot focus on their duty, it weakens the effectiveness of Taiwan’s military forces.” He added, “It would then be easy for China to take Taiwan without even getting blood on their knives.”

While the debate over pension reforms has reasonably focused on its economic and political impacts on certain groups, little attention has been paid to its national security implications. Specifically, whether it creates softer targets for Chinese intelligence operations. It is no secret that many of the known targets of Chinese intelligence operatives have been retired soldiers. According to a testimony given by a former counter-intelligence official in the Federal Bureau of Investigation (FBI) before the U.S.-China Economic and Security Review Commission:

Between 2002 and 2016, 56 individuals have been charged in Taiwan as clandestine agents of the MSS or PLA. There have been 23 espionage plots of which all but 6 involve more than one individual. Five (5) of the individuals arrested are flag officers. An additional 17 are officers in the Army, Navy, Air Force or Marine Corp, and 15 are members of one of three ROC intelligence services.

The recent release of convicted spy, retired Major General Hsu Nai-chuan (許乃權), has shown a spotlight on Taiwan’s counter-intelligence dilemma and how it may relate to pension reforms. Hsu was convicted in 2015 of working with PLA officer Zheng Xiaojiang (鎮小江), in what was characterized by the Taiwanese-media as one of the PLA’s biggest spy ring cases. However, the convicted spies and their associates were handed relatively lenient sentences (a four-year term and a two-year-and-10-month prison term, respectively). The reason, according to lawmakers, for the light sentences was because even though Taiwan’s current laws stipulate a prison sentence of three to 10 years for people disclosing national secrets to a foreign state, “China” does not fall into the category of a foreign state due to the complex nature of cross-Strait relations. Yet, adding insult to Taiwan’s legal quagmire injury, Hsu is still entitled to monthly pensions of up US$2,483.

Earlier this month, military veterans in Taiwan again took to the streets to protest the government’s plan to cut military pensions. Protesters argued that the minimum pension for retired soldiers should be higher than that for civil servants. While the government’s motivation to enact pension reform is driven by the need to keep the system solvent for future generations, national security professionals must be mindful of the potential impact that the pension cuts may have, and must take effective countermeasures to minimize the potential effects of making retired soldiers softer targets for Chinese intelligence operations and united front activities. It stands to reason that, if previous pension rates could not provide sufficient incentives for some to withstand Chinese enticement, then a reduction in pension rates could potentially worsen the problem. Indeed, “these are people whose economic livelihoods and careers depend upon China, making the threat implicit when intelligence officers approach them.”

The main point: The Tsai government’s motivation for pension reform is driven by the need to save the pension system for future generations, but national security-minded professionals should be wary of the potential impact that the pension cuts could have in making retired soldiers softer targets for Chinese intelligence operations.

[1] For a good study on how the Chinese understands intelligence, see, e.g., https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol.-56-no.-3/pdfs/Mattis-Understanding%20Chinese%20Intel.pdf