UK spy chief raises concerns about China’s digital yuan

China’s digital yuan, which is being heavily promoted ahead of the Beijing Winter Olympics, risks becoming a tool for surveying users and controlling global currency transactions, monitoring British intelligence agency GCHQ warned.

In an interview with the Financial Times, Sir Jeremy Fleming said that while digital currencies offer a “great opportunity” to democratize the payment system, the development of this new technology also poses a threat.

“If done wrong, it gives a hostile state the ability to survey transactions,” he said. “It gives them the ability. . . to be able to control what is conducted on those digital currencies. ”

The director of espionage spoke to the FT earlier this week from the London headquarters of the National Cyber ​​Security Center, the defense arm of GCHQ, ahead of the announcement of the new cyber strategy.

The document, expected later this month, will serve as a blueprint for combating digital threats at a time when war is increasingly spreading into cyberspace. Fleming said the GCHQ is a “poach and a predator” in the field, responsible for defending the country against attacks and organizing offensive operations against the enemy.

The agency, which has listening stations across the UK and abroad, works in conjunction with its more famous sister services MI5 and MI6, which specializes in domestic and foreign intelligence, respectively. However, GCHQ’s digital expertise is in high demand due to what Fleming calls the technology’s growing “prominence” in society.

China's official app for mobile digital yuan

China’s official app for mobile digital yuan © Florence Lo / Reuters

In fact, threats have changed dramatically since the agency’s historic role in World War II, when GCHQ codebreakers decrypted Nazi communications from huts Splendid tents at Bletchley Park.

He said China is now the “biggest strategic problem” facing the UK and is expanding its espionage activities and seeking control of digital infrastructure. “China stole a march. . .[it’s]It’s invested a lot, openly and secretly, and that’s because it’s starting to make a real impact on how road rules operate in the tech and digital landscape,” explains Fleming. . “We have to figure out our response to all of that.”

The spy chief wanted to stress the importance of the UK remaining open to trade with Beijing and cooperating in areas such as climate change.

But he worries that if other countries collect large volumes of data about British citizens – how they work, shop, socialize and travel – it will prove to be “deeply intrusive” and could lead to “sovereign erosion”. In the first day of this month Richard Moore, the head of MI6, suggested that China was exporting technology that would allow it to use a “network of authoritarian control” around the world and accused Beijing of trapping other countries into a “data trap”.

Digital currencies can be one such trap, with 140 million individuals and businesses registered to use the digital yuan, according to the People’s Bank of China. “In the context of The upcoming Olympic Games. . .China is taking every opportunity to develop their own digital currency, and their hope is that foreign visitors will use it in the same way as domestic visitors,” Fleming said.

He hopes Beijing will work with international partners in unifying a regulatory system for online currencies. Several countries and organizations, Fleming said, have shown a “real desire” for a better dialogue on the issue, but noted that he “has not yet seen that traction from China.”

Such an expression is typical of the 54-year-old director of GCHQ, who is the most cautious and reserved with the media of the three UK spy chiefs. His 28-year intelligence career began almost by accident when, after a brief stint as an accountant in the city, he applied for a job at the Department of Defense.

This turned out to be a post at MI5, where he was later involved in responding to the 7/7 terrorist attacks in London, and led security preparations for the 2012 Olympics. He was widely assumed to be the general manager of MI5 until the top job at GCHQ was vacated and he switched companies to take up the role.

One of Fleming’s main responsibilities was to develop British cyber warfare capabilities. Sparring between countries in cyberspace is a secret business and the details of the UK’s own “cyber-hacking” capabilities remain highly confidential.

Last year, ministers announced the creation of a National Cyber ​​Force , led jointly by GCHQ and MoD, aims to target opponents online by intercepting terrorists’ phone signals, disrupting servers, and hacking enemy weapon systems. Based in a village in Lancashire, according to Fleming, the force will be “a really important part of our cyber power. . . that’s how the states compete.”

GCHQ headquarters in Cheltenham
GCHQ headquarters in Cheltenham © PA

Although Britain has publicly called on countries like Russia and China to carry out hacking activities, Fleming declined to comment on how Britain fights in the cyber space. “We had to put some space between the activities and the conversation,” the sheriff said. “These capabilities are scrutinized and they are appropriately monitored.”

The only known example of a UK offensive cyber campaign waged against the Islamic State, at the culmination of the group’s efforts to form an NGO across Syria. and Iraq. The campaign included suppressing the group’s propaganda by destroying physical IT infrastructure and limiting the group’s power on the battlefield by disabling drones.

As network technology advances, not all threats come directly from traditional competitors. Last month United States punished NSO Group, an Israeli spyware maker, following allegations that its software has been used by authoritarian governments to spy on the phones of human rights activists and journalists around the world , including the editor of this newspaper.

Fleming described such deployment of NSO attack capabilities as “totally far from bland”, adding: “My personal view is that countries or companies issue it. [technology] Such an unrestricted manner is damaging and should not be tolerated. ”

GCHQ Listening at Bude in Cornwall
GCHQ Listening at Bude in Cornwall © Kieran Doherty / Reuters

The UK has not pursued the US by sanctioning the NSO but Fleming said he was “certain” that it was an issue the government would “want to look closely at”.

In the short term, GCHQ is focused on addressing some of the consequences of the Covid-19 pandemic, from espionage aimed at stealing vaccine research to an increase in ransomware attacks due to increased vulnerabilities. from working remotely. Almost 40% of businesses in the UK have suffered a cyber attack or breach so far this year.

These growing threats have given his agency a much broader foothold. “The role of GCHQ is changing very rapidly, admitting that the evolutionary rate is among the fastest,” says Fleming. . . in our history”. “Ultimately, you’ve got thousands of technologists in GCHQ who have expertise that can be brought in to tackle a much broader problem. [than espionage]”, he explained.

Part of this development has been the recognition that intelligence agencies cannot do all of their work with domestically developed technology. As the FT reported earlier this year, GCHQ has pioneered the new contactwith AWS, Amazon’s cloud computing arm, to store classified data for British spy agencies. While Fleming wouldn’t comment on that deal, he appears open to future collaborations and partnerships with tech companies.

“It’s not a sustainable model for UK intelligence to distance itself from some of the best, most innovative technology in the world, with security built in,” Fleming stressed. . “The tech world is a global one and we have to play in that space.”

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