20-05-2014, 09:52 #1
[EN] China Bans Use of Windows 8 on Government Computers
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The Central Government Procurement Center issued the ban on installing Windows 8 on government computers as part of a notice on the use of energy-saving products, posted on its website last week.
The official Xinhua news agency said the ban was to ensure computer security after Microsoft ended support for its Windows XP operating system, which was widely used in China.
Neither the government nor Xinhua elaborated on how the ban supported the use of energy-saving products, or how it ensured security.
China has long been a troublesome market for Microsoft. Former CEO Steve Ballmer reportedly told employees in 2011 that, because of piracy, Microsoft earned less revenue in China than in the Netherlands even though computer sales matched those of the U.S.
Microsoft declined to comment.
Last month, Microsoft ended support for the 13-year-old XP to encourage the adoption of newer, more secure versions of Windows. This has potentially left XP users vulnerable to viruses and hacking.
“China’s decision to ban Windows 8 from public procurement hampers Microsoft’s push of the OS to replace XP, which makes up 50 percent of China’s desktop market,” said data firm Canalys.
20-05-2014, 11:32 #2
Firms in United States see risk in challenges to BeijingBy KEITH BRADSHERMAY 20, 2014
HONG KONG — Two large American steel makers, U.S. Steel and Allegheny Technologies, each lost confidential files giving access to their computer networks.
The largest solar panel manufacturer in the United States, SolarWorld, allegedly lost technological secrets, production cost data, cash flow projections and the details of its legal strategy.
The United Steelworkers union lost computer records containing trade policy strategies and discussions about rare earth metals and auto parts.
All four had something in common besides data theft: Each was in the middle of pushing back against China’s trade policies by seeking help from the World Trade Organization or the Commerce Department.
A Justice Department indictment, released Monday, names five Chinese military personnel as being behind the intrusions and reads like a chronology of most of the major trade disputes between the United States and China during the past five years. In most cases, the documents say, the American company or union that defied Beijing ended up facing extensive break-ins by Chinese military hackers, in a pattern that could discourage further trade policy challenges.
5 in China Army Face U.S. Charges of Cyberattacks
The Justice Department sought to shame officials with the People’s Liberation Army by displaying wanted posters on Monday. Credit Charles Dharapak/Associated Press
The Chinese government responded furiously on Tuesday, calling in the newly installed American ambassador, Max Baucus, to protest the release of the indictment, which was accompanied by F.B.I. “wanted” posters of Chinese soldiers in uniform. The Chinese foreign ministry and defense ministry vehemently denied any wrongdoing while accusing the United States of engaging in extensive intelligence gathering of its own.
“China demands that the U.S. give it a clear explanation of its cybertheft, bugging and monitoring activities, and immediately stop such activity,” the defense ministry said in a news release.
But behind the acrimony between governments lay an uncomfortable risk for many American companies, as well as businesses from the European Union and elsewhere: Standing against Beijing, or even alerting foreign governments to trade issues, can carry serious repercussions.
Western companies operating in China have long been aware that they might be susceptible to eavesdropping by the authorities. They have also faced legal cases alleging corruption, the sale of tainted food and other improprieties for which Chinese companies, particularly state-owned enterprises, are seldom investigated.
What stands out about the cases in the Justice Department indictment is that they involve executives and employees living and working in the United States, who may have been slower to think about the possibility of Chinese retaliation if they contended that Chinese exports were being subsidized by the Chinese government or dumped below cost in the United States.
“Is China setting new rules, so that if you take them to the World Trade Organization or if you go to the Commerce Department, then you’ll get punished?” asked David Zweig, the director of the Center on China’s Transnational Relations at the Hong Kong University of Science and Technology. If so, companies may back off from challenging China, he said.
If China has begun retaliating against companies that seek the enforcement of free trade rules, as the indictment suggests, that could allow Beijing to begin creating an international trading system in which China has more latitude to pursue its own policies, Mr. Zweig added.
China’s surveillance of its own citizens is so pervasive that some Western executives doing business in China say that they accept it as almost routine and do not worry about it.
“People just assume everything they do is being watched — I always assume every email I send is read, every conversation I have is listened to,” said a Western executive, who insisted on anonymity because of the legal sensitivities of the issue.
The executive said that the United States was far from blameless. He noted that Edward J. Snowden had released information documenting that the National Security Agency gathers intelligence around the world as well.
The United States government takes the position that it has been spying to gather military, political and economic intelligence and that this is fundamentally different from and less of an intrusion on civil liberties than spying to gain a commercial advantage.
The usually cautious American Chamber of Commerce in Beijing, also called AmCham China, issued a statement on Tuesday afternoon, essentially endorsing this position.
“The issue of cybersecurity is a major and growing concern for the business community,” the statement said. “While we cannot comment on the specifics of any particular case, AmCham China believes there is a fundamental difference between intelligence gathering for legitimate national security purposes and intelligence gathering for stealing trade secrets, and that the definition of national security ought not include economic interests. We urge both governments to reach agreement on the rules of the road regarding cybersecurity incorporating this distinction.”
Amcham China is a coalition of American companies and individuals doing business in China, and is independent of the United States and Chinese governments.
The Justice Department indictment included an unusually detailed description of SolarWorld’s troubles after it filed trade cases against China.
As waves of ever lower-priced solar panels showed up in the United States from China, the Oregon subsidiary of SolarWorld, a German company, hired trade lawyers in 2011 to ask the Commerce Department to investigate whether Chinese companies were selling solar panels below cost, or dumping, and with subsidies from the Chinese government.
A Commerce Department investigation found evidence of dumping and subsidies, and the agency began imposing steep tariffs on Chinese imports in May 2012. But according to the Justice Department indictment, that legal victory began a new round of troubles for SolarWorld.
A Chinese soldier and at least one co-conspirator are accused of beginning a series of break-ins into SolarWorld’s computers from May to September 2012 and stealing a long list of crucial documents. The files allegedly taken included the chief financial officer’s cash flow projections for how long SolarWorld could survive and detailed information on technological innovations and production lines, the costs for every production input and even SolarWorld’s discussions of legal strategy with its lawyers.
SolarWorld said in a news release that it was “deeply troubled” by the revelations in the indictment. “It’s yet another example of the Chinese government’s systematic campaign to seek unfair advantage in the U.S. and global solar industry,” the statement said. “Already, dozens of U.S. companies have closed operations, and thousands of U.S. employees have lost their jobs.”
Only two of the alleged victims of computer break-ins cited by the Justice Department were not in the middle of trade disputes with China. One of them, Westinghouse, is building four civilian nuclear reactors in eastern China for state-owned Chinese enterprises, while trying to limit the sharing or expropriation of its proprietary technology; the other, the aluminum producer Alcoa, was in talks to acquire a mining company. The indictment said that Westinghouse’s confidential designs for pipes, pipe supports and pipe routings were stolen, along with Westinghouse’s strategies in the Chinese market and its plans for preventing Chinese companies from reselling its technologies to others.
Some American industries have already reached accommodations with Beijing that may insulate them from further pressure. With China now the world’s second-largest movie market, some Hollywood studios have begun making presentations to Chinese censors early in the production process for movies. They have also entered into joint ventures with Chinese state-controlled enterprises and even invited Chinese officials to participate in creative decisions at some filming locations to ensure that movies will not be barred from Chinese theaters.
Sony Pictures Entertainment announced last Wednesday that it had acquired the film rights to a book about Mr. Snowden. But so far, there has been little sign of a Hollywood movie on “Ugly Gorilla,” the Chinese military hacker who was described in a security industry report in February and was alleged by the Justice Department on Monday to be a soldier named Wang Dong.
20-05-2014, 16:21 #3A Microsoft spokesman said the government's procurement department had posted a notification online barring Windows 8 from bidding for public sector deals.
Beijing issued the restriction as part of a decree about the use of energy-saving products.
The spokesman said: "We were surprised to learn about the reference to Windows 8 in this notice.
"Microsoft has been working proactively with the Central Government Procurement Centre and other government agencies through the evaluation process to ensure that our products and services meet all government procurement requirements.
"We have been and will continue to provide Windows 7 to government customers. At the same time we are working on the Window 8 evaluation with relevant government agencies."
27-05-2014, 11:31 #4
Spy Dispute: China Said to Push Banks to Remove IBM
Government agencies, including the People’s Bank of China and the Ministry of Finance, are asking banks to remove the IBM servers and replace them with a local brand as part of a trial program, said the four people, who asked not to be identified because the review hasn’t been made public.
The review fits a broader pattern of retaliation after American prosecutors indicted five Chinese military officers for allegedly hacking into the computers of U.S. companies and stealing secrets. Last week, China’s government said it will vet technology companies operating in the country, while the Financial Times reported May 25 that China ordered state-owned companies to cut ties with U.S. consulting firms.
Harriet Ip, a Singapore-based spokeswoman for IBM, referred questions to IBM in the U.S. Jeffrey Cross, a Somers, New York-based spokesman, didn’t immediately respond to an e-mail seeking comment outside U.S. business hours.
“Security trumps everything,” said Duncan Clark, chairman of BDA China Ltd., a Beijing-based consultant to technology companies. “China doesn’t need the U.S. companies in the way it did for the last few decades.”
The results of the government review will be submitted to a working group on Internet security led by President Xi Jinping, two of the people said.
Spokesmen for Bank of China Ltd., China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd. declined to comment. Three phone calls to Agricultural Bank of China Ltd.’s Beijing press office weren’t returned.
U.S. technology sales in China have come under increasing threat following Edward Snowden’s revelations last June of a National Security Agency spying program. Forrester Research Inc. estimates purchases of information-technology products in China will rise 11 percent this year to $125 billion, meaning other U.S. technology companies, including Microsoft Corp, face threats to their business.
“China’s government is in a strong position given Snowden’s disclosures,” Clark said. “If you give them an excuse, they will aggressively promote domestic brands.”
The directive would be a further blow to IBM’s business in China, where spending on server technology may grow 8.4 percent a year through 2017, compared with 2.2 percent globally, according to data compiled by IDC.
The company said its China sales fell 20 percent in the first quarter and, in an April conference call, Chief Financial Officer Martin Schroeter said the challenges were cyclical.
“We still see good opportunity over the long term” in China, he said.
IBM announced in January it would sell its low-end server computer business to Beijing-based Lenovo Group Ltd. for $2.3 billion. That transaction faces regulatory scrutiny including a U.S. national security review. Angela Lee, a Hong Kong-based spokeswoman for Lenovo, said she couldn’t immediately comment.
China Postal Savings Bank Co. is using servers made by Jinan-based Inspur Group Ltd. as part of a trial program that began in March 2013, the people said. The government plans to expand that trial to other banks, they said.
The group’s Inspur International Ltd. (596) unit gained 9.4 percent, the most in almost a year, to close at HK$1.52 in Hong Kong trading. In Shenzhen, Inspur Electronic Information Industry Co. rose 4.7 percent.
Other agencies involved in the review include the National Development and Reform Commission, the China Banking Regulatory Commission, and the Ministry of Industry and Information Technology, the people said. The NDRC, the Finance Ministry, the central bank and the CBRC didn’t immediately respond to faxed requests for comment.
The U.S. indictment, announced May 19, led China to suspend its involvement in a cybersecurity working group and drew formal protests from the ministries of defense and foreign affairs. The State Internet Information Office likened the U.S. actions to “a thief yelling ‘Catch the thief.’”
27-05-2014, 11:39 #5
China Pulls Cisco Into Dispute on CyberspyingTAIPEI, Taiwan — Amid heightening tension between Washington and Beijing over online espionage, a Chinese state media outlet has sharply criticized the American network equipment maker Cisco Systems, saying it is complicit with United States cyberspying. Cisco denied the accusations.
Cisco “carries on intimately with the U.S. government and military, exploiting its market advantage in the Chinese information networks, playing a disgraceful role and becoming an important weapon in the U.S. exploiting its power over the Internet,” said the article, which was published on the website of China Youth Daily, a state-run newspaper. The article was widely reposted on Chinese news sites Tuesday.
Cisco, based in San Jose, Calif., said it did not provide any sort of electronic back doors in its products.
“Cisco does not work with any government to weaken our products for exploitation,” John Earnhardt, a Cisco spokesman, said in a statement. “Additionally, Cisco does not monitor communications of private citizens or government organizations in China or anywhere in the world.”
Last week, the United States announced the indictments of five members of the Chinese military, saying that they had hacked the computer networks of several major American companies and a trade union. That move touched off recriminations from China and concern that rising tensions between the two countries would have repercussions for foreign technology companies pursuing business in China.
Beijing denounced the indictments and accused Washington of hypocrisy in light of the revelations from the former National Security Agency contractor Edward J. Snowden about widespread surveillance by the United States. Fresh accusations came in a new report on Monday from the China’s Internet Media Research Center. Although the report relied heavily on foreign news accounts of Mr. Snowden’s revelations, it said that Beijing’s official inquiries had borne out his assertions that Chinese leaders and companies had been targeted.
The People’s Daily, the mouthpiece of China’s ruling Communist Party, said in an opinion piece posted on its website Monday that the United States raised the issue of cyberspying because it wanted to thwart China’s development, cover up its own actions and blunt the pressure of domestic public opinion.
China’s State Internet Information Office said last week that the government would begin requiring security examinations of equipment from foreign suppliers before it could be sold in the domestic market, a move analysts described as retaliation for the indictments.
That pattern of escalation will probably continue, said Mark Natkin, managing director of Marbridge Consulting, a Beijing-based information technology consulting firm.
“I think it is certainly difficult for policy makers and other authorities here to simply sit back and be subject to these sorts of allegations and say nothing,” he said. “I do think we’ll see some more escalation, and hopefully, it will not be permanent. Hopefully, it will not last too long. Right now it’s hard to imagine it all clearing away.”
Just before the indictments were announced, China said it was banning Microsoft’s Windows 8 operating system on government computers. The state media said the move was prompted by security concerns after the retirement of the 12-year-old Windows XP system in April.
About 15 percent of Cisco’s revenue of $34.8 billion for the nine-month period ended in April came from Asia, including China, the company said this month. In that time, overall sales in Asia dropped 9 percent, and sales in China dropped 7 percent. The company noted that it was experiencing pressure from “price-focused competitors from Asia, especially from China” — most likely a reference to Huawei and ZTE, the leading Chinese telecommunications equipment makers.
United States officials have warned that Huawei posed a threat to national security and sought to restrict its ability to develop networks in the United States and for American allies. In 2012 a congressional panel cited documents from former Huawei employees that said the company had provided services to China’s military.
Legislation signed by President Obama last year prevents the federal government from purchasing equipment made by Huawei or other Chinese telecommunications equipment makers without a security review. Huawei has denied that it has close ties to China’s military or that its products present security vulnerabilities.
The Chinese state media have voiced concerns about Cisco’s role in the nation’s digital infrastructure before. Last year, the state-run China Daily newspaper cited an unidentified analyst who said, “There is a terrible security threat in China from U.S.-based technology companies including Cisco, Apple and Microsoft.”
04-06-2014, 18:02 #6
China escalates rhetoric in campaign to ban Windows 8
China's state-run television took to the air Monday to blast Windows 8 as a security threat because it had been created by a foreign technology company. (Image: China Central Television.)
China's state-run television today took new shots at Microsoft's Windows 8, using a two-and-a-half-minute segment on a national show to blast the operating system as a data thief.
The piece on China Central Television (CCT) was a follow-up to an announcement in May by the Central Government Procurement Center, which mandated that all "desktops, laptops and tablet PCs purchased by central state organizations must be installed with OS other than Windows 8."
According to the Wall Street Journal the segment quoted experts who argued that operating systems' makers can steal data from computers, including phone numbers and financial information.
"Whoever controls the operating system can control all the data on the computers using it," the CCT broadcast said, according to the newspaper's translation.
"It has little to do about security or privacy," countered Patrick Moorhead, principal analyst with Moor Insights & Strategy. "Windows 8 is astronomically more secure than Windows XP. and while it's true that Windows 8, like any operating system, saves data like contacts in an address book and favorites in the browser, it's on a purely optional basis."
Nor is there any evidence that Microsoft, or any OS maker, mines that data.
Much of the CCT segment was devoted to discussion of Windows 8's high price, said Jay Chou, an analyst with IDC who speaks Mandarin. Chou summarized the broadcast for Computerworld, which is owned by IDG, the same privately-held company that operates the IDC research arm.
"Before the formal May 16 announcement came out, many in government IT purchasing were already notified to stop buying and using Windows 8," Chou said, paraphrasing the segment. "The reason given by some in these public sector agencies is the relative higher cost of buying a Windows 8 PC. The report also says there is continued hope and encouragement to use a Chinese-produced OS."
"This kind of thing goes back and forth, stews for a while, and hits an apogee where people do some chest-beating," Moorhead said. "But then people get on with business."
The Chinese government and Microsoft have crossed swords before. In 2000, Red Flag Linux, which was funded in part by the government's Ministry of Information, was mandated as the replacement for Windows 2000 on all government PCs. Tensions between China's government and Microsoft over piracy and pricing were at the root of that order.
Moorhead believes it's much the same today.
"It's all about negotiation, negotiation up from 'free' for many people in China," Moorhead said, referring to China's reputation as a den of software pirates and echoing Chou. The government there is simply trying to pressure Microsoft into cutting it big discounts for Windows licenses, he argued.
Any effort by the Chinese government to divorce itself from Microsoft's software is probably destined for failure, Moorhead maintained, but not because there are no alternatives to Windows.
It's Office that has the stranglehold on the world. Only Office can provide the file fidelity necessary for business, Moorhead argued. "Chinese companies and organizations need to communicate with other companies and organizations around the world," he said. And Office is the lingua franca of the planet's commerce.
But he thought, assuming China continues to press the case, that it might move Microsoft to cut deals. "Microsoft is in it to win it on Office," said Moorhead. "But really, any money that Microsoft can get above zero is a win for them."
Also today, The People's Daily, the Communist Party's official organ, blasted some of the biggest Western technology companies, including Microsoft, Apple, Facebook, Google and Yahoo as pawns of the U.S. government's National Security Agency (NSA). "Foreign technology services providers such as Google and Apple can become cybersecurity threats to Chinese users," the publication said today.
Not coincidentally, Microsoft's general counsel, Brad Smith, took to a company blog to demand changes in U.S. surveillance policies to, as he put it, "Reduce the technology trust deficit it has created." Microsoft, Google and others have repeatedly urged Washington to push reforms because their global business has been affected by foreign governments' fury over surveillance practices.
"The video did not mention security concerns and/or political tensions between the U.S. and China that may have led to this," Chou said. "The government would of course be hard-pressed to delve into that on a national news channel."
Nor did it quote anyone outside government, said Ian Lamont, a former Computerworld editor and Mandarin speaker who also pitched in with a partial translation. "They were asking how local government offices in Beijing and Jiangsu are dealing with the ban, but didn't ask companies or people, maybe because no one wanted to come out and criticize a central government directive."
According to the May missive from the Central Government Procurement Center, the Windows 8 ban does not apply to individuals or businesses, which remain free to choose the OS.
04-06-2014, 18:04 #7
China Slams Microsoft's Windows 8By Paul Mozur
BEIJING--China's powerful state-run television broadcaster criticized Microsoft Corp.'s Windows 8 operating system in a national news show on Wednesday, adding to the software maker's challenges in a traditionally tough market.
In its widely watched noon news broadcast, China Central Television aired a segment that questioned the operating system's security. It quoted people it identified as experts who said that an operating system's maker can obtain user data including phone numbers and bank-account information.
"Whoever controls the operating system can control all the data on the computers using it," it said.
It also quoted Chinese experts who argued that Microsoft cooperated with the U.S. government to carry out cyberspying. That has been a sensitive topic in China since the disclosures last year by former U.S. National Security Agency contractor Edward Snowden about U.S. cyber-monitoring efforts.
The report followed a May announcement from China's Central Government Procurement Center that the government couldn't purchase computers loaded with Windows 8.
A Microsoft spokesman declined to comment on the broadcast. He referred to a previous statement from the company's general counsel, Brad Smith, which laid out the steps Microsoft has taken to prevent government snooping and protect customer data.
The decision to ban procurement of Windows 8 came more than a month after Microsoft officially pulled the plug on providing support for its aging but widely installed Windows XP software. Still, it patched a security hole for Microsoft's Internet Explorer browser for XP users in the weeks after the announcement.
Companies like Microsoft could face further backlash in China. The U.S. and China have clashed in recent weeks after the U.S. indicted five officers in the People's Liberation Army on allegations of cyberespionage. In response, China said it would more closely scrutinize imported Internet technology for vulnerabilities it might pose to the nation's security.
China has long had the stated goal of weaning itself off foreign-produced technology. Experts say friction following Mr. Snowden's leaks has already hurt sales for companies like Cisco Systems Inc. and International Business Machines Corp.
Still, China lacks know-how in specialized areas such as software, high-end servers and certain types of mission- critical equipment, experts say. For example, if China were to switch to a homegrown operating system, it would have a hard time replacing Microsoft's Office suite of software, which is used by businesses and local governments across China.
The difficulties for Microsoft come as the company is trying to push more users in China to switch to a licensing system for Windows that operates from servers. The hope is that will help Microsoft cut down on the rampant piracy of its operating system in China.
Widespread piracy of Windows and Office software means that Microsoft earns far less in China than it does in smaller countries, even though it has a massive presence in what is the world's largest personal-computer market. In 2011, then-Chjef Executive Steve Ballmer told employees in a meeting that Microsoft's revenue in China was only 5% of what it got in the U.S. even though the PC markets were comparable in size at the time.
While its broadcasts aren't necessarily representative of the views of top leaders, CCTV wields considerable power in China. Some companies have shifted policies or recalled products following critical CCTV reports.
04-06-2014, 23:24 #8
Transcript: What Was Said in Chinese State TV’s Anti-Microsoft Segment
Here’s a transcript of what was said in one segment of the report:
Expert: It’s very easy for providers of operating systems to obtain various types of sensitive user information. They can find out your identity, your account information,your contact list, your mobile phone number. With all that data together, using big data analysis, a party can understand the conditions and activities of our national economy and society. The statistics collected will be more precise and up-to-date than that collected by our National Bureau of Statistics.”
Narrator: “According to Ni Guangnan, this is not a small concern.Documents leaked by the man behind PRISM, Edward Snowden, reveals Microsoft has in the past worked with the US government to help the NSA obtain encrypted files and data on the internet.”
Expert: “We’ve also seen that for example, the US has relevant acts like the Patriot Act which obligates companies that hold information resources to transfer them to the US government. In reality, this is how the monitoring takes place. It’s easily done. This is by no means a theoretical analysis. This is the way it is.
Narrator: “According to Ni Guannan, because operating systems are tied to national information security Russia and Germany are already requiring the use of domestically developed operating system software on government computers.”