By: Toh Han Shih

Within days of each other, the US, UK and other allies have launched accusations and warnings alleging threats posed by China to multinationals in Hong Kong and elsewhere, raising the temperature in what is rapidly becoming a cold war between the west and China.

The Biden administration, which took power in Washington, DC on Jan. 20, has chosen to continue many of the aggressive measures, including trade restrictions, put in place by the previous US President Donald Trump. Washington has been joined by other western powers in pushing back against China’s rising economic and military clout.

According to Christopher Skaluba, director of the Scowcroft Center’s Transatlantic Security Initiative at the Washington-based Atlantic Council thinktank, “it is an unusual and unmistakable rebuke of China and one that undercuts Beijing’s careful cultivation of European clients through aggressive infrastructure investments (e.g. in Greece and Italy) and regional diplomatic arrangements like the 17+1. On top of recent sanctions related to human-rights abuses in Xinjiang Province, this signals that European scrutiny of China is on the rise.”

The UK “is joining like-minded partners to confirm that Chinese state-backed actors were responsible for gaining access to computer networks around the world via Microsoft Exchange servers, according to a July 19 statement by UK Foreign Secretary Dominic Raab (above), the UK Foreign, Commonwealth and Development Office, and the UK National Cyber Security Center.

The attacks, he said, “took place in early 2021, affecting over a quarter of a million servers worldwide. The cyberattack on Microsoft Exchange Server by Chinese state-backed groups was a reckless but familiar pattern of behavior. The Chinese government must end this systematic cyber sabotage and can expect to be held accountable if it does not.”

The British government blamed China’s Ministry of State Security, which manages China’s intelligence services and secret police, for the cyber attacks.

Also on July 19, US State Secretary Antony Blinken alleged, “The United States and countries around the world are holding the People’s Republic of China accountable for its pattern of irresponsible, disruptive, and destabilizing behavior in cyberspace, which poses a major threat to our economic and national security.” 

“The PRC’s Ministry of State Security has fostered an ecosystem of criminal contract hackers who carry out both state-sponsored activities and cybercrime for their own financial gain. In addition, the United States government, alongside our allies and partners, has formally confirmed that cyber actors affiliated with the MSS exploited vulnerabilities in Microsoft Exchange Server in a massive cyber-espionage operation that indiscriminately compromised thousands of computers and networks, mostly belonging to private sector victims,” Blinken added.

Canada, Australia, New Zealand, EU and NATO have also blamed China for the attacks.

On the same day, the US Department of Justice (DOJ) published on its website an indictment charging Chinese nationals with a campaign to hack into the computer systems of dozens of companies, universities and government entities in the US and other countries between 2011 and 2018. Three of the defendants – Ding Xiaoyang, Cheng Qingmin and Zhu Yunmin - were officers of the Hainan State Security Department, the branch of the Ministry of State Security in the Chinese province of Hainan Island, said a DOJ press release on July 19.

Liu Pengyu, a spokesman of the Chinese embassy in Washington DC, denied the allegations of hacking, saying the Chinese government and its officials “never engage in cyber attacks or cyber theft.”

The accusations of Chinese hacking by the US and its allies on July 19 come three days after the US State, Treasury, Commerce and Homeland Security departments jointly issued a business advisory warning US firms of the risks of operating in Hong Kong under China’s growing influence in the semi-autonomous city.

The business advisory cited the National Security Law as one of the risks facing US firms. The Chinese government imposed this law on Hong Kong in the middle of last year to quell the protests which rocked the city in 2019 and 2020. Since the security law took effect, more than 100 people have been arrested and over 50 people have been prosecuted under this law.

This US warning “is definitely to put pressure on China,” a US businessman who has lived many years in Hong Kong told Asia Sentinel.

The Chinese government has explicitly accused the US of a conspiracy with its business advisory. On July 17, Chinese Foreign Ministry spokesman Zhao Lijian said, “This once again exposed the sinister intention of the US to undermine Hong Kong's stability and prosperity, meddle in China's domestic affairs, and thwart China's development. The despicable conspiracy of the US will get nowhere.”

The Hong Kong Liaison Office, China’s representative in the city, fingered the US in its statement on July 17, “For a long time, some US politicians have played an inglorious role in Hong Kong, they have colluded with elements who oppose China and want to wreak havoc in Hong Kong to vainly create a color revolution in Hong Kong. This ‘business advisory’ concocted by the US is an attempt to stymie Hong Kong’s economic growth after failing on the political side.”

The US government sanctioned seven deputy directors of the Liaison Office on July 17. The next day, the People’s Daily, a Chinese state newspaper, published a commentary calling the sanctions a “paper tiger”.

“The advisory issued to American businesses operating in Hong Kong is also a malicious attempt of Washington to smear China and contain China's development through creating disturbance and chaos in the city. By deliberately throwing mud at China, the United States … aims at undermining the special administrative region's status as a global financial hub… and eventually turn it into a bridgehead to split China,” the state mouthpiece alleged.

The US businessman, who declined to be named, was skeptical about the Chinese government’s accusations of a US conspiracy. The US has little to gain from destabilizing Hong Kong, as that would hurt the economic interests of the US and the world, he explained.

But in the near term, there will be no easing of pressure on China by the US and its allies. A British naval force, including the aircraft carrier HMS Queen Elizabeth, is due to reach the South China Sea in several weeks.

Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consulting company

This article is among the stories we choose to make widely available. If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us.