July 31, 2006: China is using it's labor advantage to build the world's largest arsenal of Information War weapons. It works like this. Information War weapons consist of freshly discovered, and exploitable, defects in software that runs on the Internet. You want to be the first person to find one of these defects, because these flaws enable a hacker to get into other peoples networks. Called "Zero Day Exploits" (ZDEs), in the right hands, these flaws can enable criminals to pull off a large online heist, or Cyber Warriors can do enormous damage to enemy networks.
China is obtaining these ZDEs the same way they have, for exampled, become the place where software manufacturers go to get their software (especially game software) tested cheaply, and thoroughly. In China, you can fill up a large hall hundreds of bright, but otherwise unemployed, Chinese guys, equip them with PCs, and instructions on what to do to test software. Offer bonuses for those who find flaws, and off you go. Finding ZDEs is basically the same drill, except it takes a week or so of on-the-job training to familiarize your searchers with the testing and searching tools (some of them available at hacking sites) used to dig around in software for flaws.
Every time a publisher patches software (Windows XP, WORD, various browsers, and so on), they create new flaws. As soon as the publisher finds an exploitable flaw, they patch them. So there's never a lack of work for the ZDE crews. Some of these exploit research operations work for criminal gangs, that quickly use the ZDE for some scam, or auction the ZDE off to someone who can, or thinks they can, make a buck with it.
It's unclear what the relationship is between the government supported (Cyber War) ZDE search operations, and those run by criminal gangs. Because ZDEs are perishable, maintaining an arsenal of them is expensive. But apparently the military sells of some of those that appear to have more criminal than military value. At the same time, the Chinese Cyber War organization may be buying those with more military than criminal value.
Even before ZDEs became a valuable commodity, there were individuals, and small groups, that sought them out. But apparently the Chinese approach is much more productive. The Chinese criminal gangs are becoming much more active in Internet related crime as a result. There has also been an upsurge in known attacks on American government sites, that appear to emanate from China.