© Rick Wilking/ReutersFun and Games: The Air Force Space Command Network Operations and Security Centre in Colorado.
US and Chinese officials take part in war games in bid to prevent military escalation from cyber attacks

The US and China have been discreetly engaging in "war games" amid rising anger in Washington over the scale and audacity of Beijing-co-ordinated cyber attacks on western governments and big business, the Guardian has learned.

State department and Pentagon officials, along with their Chinese counterparts, were involved in two war games last year that were designed to help prevent a sudden military escalation between the sides if either felt they were being targeted. Another session is planned for May.

Though the exercises have given the US a chance to vent its frustration at what appears to be state-sponsored espionage and theft on an industrial scale, China has been belligerent.

"China has come to the conclusion that the power relationship has changed, and it has changed in a way that favours them," said Jim Lewis, a senior fellow and director at the Centre for Strategic and International Studies (CSIS) thinktank in Washington.

"The PLA [People's Liberation Army] is very hostile. They see the US as a target. They feel they have justification for their actions. They think the US is in decline."

Comment: Total projection: the US sees China as a target, as evidenced by its actions in Asia since 9/11, where it has encircled China and Russia with military bases and missile installations.

The war games have been organised through the CSIS and a Beijing thinktank, the China Institute of Contemporary International Relations. This has allowed government officials, and those from the US intelligence agencies, to have contact in a less formal environment.

Known as "Track 1.5" diplomacy, it is the closest governments can get in conflict management without full-blown talks.

"We co-ordinate the war games with the state department and department of defence," said Lewis, who brokered the meetings, which took place in Beijing last June, and in Washington in December.

"The officials start out as observers and become participants ... it is very much the same on the Chinese side. Because it is organised between two thinktanks they can speak more freely."

During the first exercise, both sides had to describe what they would do if they were attacked by a sophisticated computer virus, such as Stuxnet, which disabled centrifuges in Iran's nuclear programme. In the second, they had to describe their reaction if the attack was known to have been launched from the other side.

"The two war games have been quite amazing," said Lewis. "The first one went well, the second one not so well.

"The Chinese are very astute. They send knowledgeable people. We want to find ways to change their behaviour ... [but] they can justify what they are doing. Their attitude is, they have experienced imperialism and they had a century of humiliation."

Lewis said the Chinese have a "sense that they have been treated unfairly".

"The Chinese have a deep distrust of the US. They are concerned about US military capabilities. They tend to think we have a grand strategy to preserve US hegemony and they see a direct challenge.

Comment: All sane people on Earth know the US has this grand imperial strategy.

"The [Chinese officials] who favour co-operation are not as strong as the people who favour conflict."

Comment: In other words, the Chinese officials who are amenable to US interests have no hope of persuading the power brokers in the Chinese government that the US is not belligerent.

The need for the meetings has been underlined in recent months as the US and the UK have tried to increase pressure on China, which they regard as chiefly responsible for the theft of billions of dollars of plans and intellectual property from defence manufacturers, government departments, and private companies at the heart of America's national infrastructure.

Analysts say this amounts to "preparation of the battlefield", and both the UK and the US have warned Beijing to expect retaliation if it continues.

In recent months, the US has made clear it is turning its military focus away from Europe towards the Pacific to protect American interests in the region.

"Of the countries actively involved in cyber espionage, China is the only one likely to be a military competitor to the US," Lewis said.

"US and Chinese forces are in close proximity and there are hostile incidents ... The odds of miscalculation are high, so we are trying to get a clear understanding of each side's position."

Lewis believes the US is preparing to become more aggressive towards China, saying President Barack Obama has already tasked internal working groups in the White House to consider tougher sanctions.

Without naming China, a senior executive in the FBI told the Guardian the threats posed from cyber attacks were alarming.

"We know that the capabilities of foreign states are substantial and we know the type of information that they are targeting," said Shawn Henry, executive assistant director of the FBI's cyber unit.

"We have seen adversaries that have been in networks for many months or even years in some cases, undetected. They have essentially had free rein over those networks ... They have complete ability to disrupt that network entirely."

Frank Cilluffo, who was George Bush's special assistant on homeland security, said the time had come to confront China.
"We need to talk about offensive capabilities to deter bad actors. You cannot expect companies to defend against foreign intelligence services. There are certain things we should do if someone is doing the cyber equivalent of intelligence preparation of the battlefield of our energy infrastructure.

"To me that's off grounds. That demands a response. What other incentive could there be to map our infrastructure in the event of a crisis?

"We have a stronger hand in conventional military and diplomatic means. We need to show them our cards. All instruments on the table. I think we do have to start talking active defence."
He said the US had to be proactive or, in time, people would start losing confidence in the integrity of the internet and computer systems.
"If I don't invest because I am afraid, if I don't use the web because I am afraid, if you lose trust and confidence in those systems, the bad guys have won. Checkmate."
The state department refused to speak about the war games, or say which officials took part.

A spokesman said: "The United States is committed to engaging countries to build a global environment in which all states recognise and adhere to norms of acceptable behaviour in cyberspace. We are engaging broadly with the Chinese government on cyber issues so that we can find common ground on these issues which have increasing importance in our bilateral relationship."

The Pentagon declined to comment or say which of its officials took part in the war games.

China has consistently denied being responsible for cyber attacks on the US and other western countries. It says it is also the victim of this kind of espionage.

The Chinese defence minister, Liang Guanglie, has said Beijing "stands firmly against all kinds of cyber crimes".

"It is hard to attribute the real source of attacks and we need to work together to make sure that this security problem won't be a problem," he said.

"Actually in China we also suffered quite a wide range [of], and frequent, cyber attacks. The Chinese government attaches importance also on cyber security and stands firmly against all kinds of cyber crimes. It is important for everyone to obey or follow laws and regulations in terms of cyber security."

The People's Daily, the Chinese newspaper that most reflects the views of China's ruling Communist party, said last year that linking China to internet hacking attacks was irresponsible.

"As the number of hacking attacks on prominent international businesses and organisations has grown this year, some western media have repeatedly depicted China as the villain behind the scenes."