Foreign firms working with China should prepare for cyber-attacks and embargoes, report warns

Foreign firms working with China should prepare for cyber-attacks, embargoes, report by threat analysts Recorded Future warns.

Foreign firms face the risk of cyber attack from China.

International companies doing business with China should prepare for cyber attacks, boycotts and law enforcement activity as the Chinese government and “patriotic hacktivists’’ work to advance Beijing’s geopolitical competitiveness, a report has found.

The American-headquartered threat assessment company Recorded Future identified specific actions China has taken against foreign companies and countries since 2009 as it seeks to guard and expand its geopolitical power.

Citing examples such as tariffs slapped on Australian exports after former prime minister Scott Morrison called for an inquiry into the origins of Covid-19, Recorded Future noted China had prioritised political concerns and nat­ional security over economic development, and international companies doing business with Beijing needed to be aware of the risks.

“The primary geopolitical drivers causing China to take action against international businesses are related to national security, human rights, technology competition, and territorial and sovereignty disputes,’’ the report, released on Wednesday, finds.

“In responding to these perceived threats, Beijing has taken – and is very likely to continue taking – eight types of actions that create special risks for inter­national businesses.’’

The report lists cyber attack, boycott, embargo, exit ban, law enforcement action, product ban, regulatory action and sanctions as actions developed by the Chinese government and “patriotic hacktivists’’ in response to perceived challenges to China.

Further international scrutiny of issues such as human rights abuses perpetrated against the oppressed Uighur minority population in Xinjiang was likely to see retaliatory actions increased, the report, by Recorded Future’s Insikt Group found.

Despite the signing of the China Australian Free Trade Agreement in 2015, Australian industries found themselves subject to tariffs and go-slows as the ­Canberra-Beijing relationship deteriorated. Beijing also discouraged Chinese students from studying in Australia.

Senior threat analyst at Recorded Future's Insikt Group Devin Thorne.

Senior threat intelligence analyst Devin Thorne said China had in recent years stepped up efforts to assert itself internationally.

“Part of those efforts include coercively wielding access to China’s economy and targeting businesses to achieve various outcomes, such as changing behaviours towards Taiwan,’’ he told The Australian.

“We are also in a period of increasing tension, competition and confrontation between China and other major powers, which are prompting new regulations and laws that impact businesses in new ways.

“Finally, China’s current leadership is reworking the balance between security and economic development so that … security is the priority.

“The result of all three trends is increasing risk to businesses, which need to assess how their activities may be viewed under the new rules of the road.’’

The report identifies punitive tariffs placed on Australian exports after Mr Morrison’s call in 2020 for an international inquiry into the origins of Covid-19.

“Almost certainly as a punitive measure, China subsequently imposed heavy tariffs and an embargo on products from Australia, negatively affecting the businesses and industries dealing in those goods,’’ Mr Thorne said.

“Those tariffs and restrictions have begun to lift but it was a painful period for many businesses.

Australian rock lobster faced a ban from China.

“Another instance of geopolitically motivated action impacting Australian businesses was China’s insistence in 2018 that all foreign airlines, including Qantas, change references to Taiwan as a country.

“Various Australian news outlets also saw their journalists prompted to leave China in 2020 over concerns for their personal safety as China-Australia relations worsened and authorities began questioning them about ­alleged national security matters.’’

Mr Thorne said Australia and New Zealand businesses had strong ties with China, and were at increased risk of “being impacted by China’s geopolitically moti­vated regulatory and punitive measures, which are shaped by Beijing’s threat perception.”

Issues identified in the report include US-China technology competition, which analysts found was “almost certainly driving retaliatory and possibly pre-emptive product bans targeting international businesses operating in China.’’

Territorial and sovereignty disputes were also flagged.