China has denied responsibility for cyber attacks against Australia amid warnings from security experts that the threats could increase in strength and sophistication.

On Friday, Prime Minister Scott Morrison said Australia was currently under a massive cyber attack from a “state-based actor”.

Mr Morrison did not name China but experts and intelligence sources are pointing to the Asian country.

However the ABC reports China’s foreign ministry has rejected as “baseless” suggestions it was behind the attacks on government departments, service providers and companies.

Ministry of Foreign Affairs spokesman Zhao Lijian accused Australian think thank, the Australian Strategic Policy Institute (ASPI), of wrongly outing China.

“We’ve pointed out many times, this institute has long been receiving funding from US arms companies, and the attacks coming from the institute are completely baseless”, said Mr Zhao.

“It has been hyping up, or creating, all kinds of anti-China topics.

“The attacks and the blame coming from this institute against China is totally baseless and nonsense.”

Mr Zhao said China was a “staunch upholder of cyber security” and “the biggest victim of cyber attacks”.

In response, ASPI executive director Peter Jennings said China was attempting to distract attention from the think tank’s research into the Chinese Government, adding that he believed China was “highly likely” to be the source, the ABC reports.

A cyber wake-up call

Security experts have warned cyber attacks against Australia will increase in strength and sophistication if we don’t urgently heed the government’s warning to update our systems.

Cynch Security chief technology officer Adam Selwood said if Australians needed a wake-up to the seriousness of the threat, the prime minister’s ‘unprecedented’ briefing on Friday was it.

“It’s never happened before – this would be the first time the PM has come out on national television and flagged there is a cyber-attack underway,” Mr Selwood said.

Although the government has not found any large-scale privacy breaches yet, Mr Selwood said if Australians did not protect themselves quickly, they could expect similar attacks.

“If we were to not respond to this type of attack, our vulnerabilities will continue to be leveraged by cyber criminals and other people trying to take advantage of us.

Mr Morrison and Senator Reynolds at Friday’s briefing. Photo: AAP

“It’s without question: where there’s an opportunity they’ll take it.

“Australia is pretty well known as being a hot target for a lot of attackers globally, the reason being we’re a fairly affluent country, there’s a lot of opportunities.”

The attack comes after cyber intrusions at prominent companies like Toll, BlueScope Steel, Lion, and Fisher & Paykel in New Zealand.

Why is China targeting Australia?

Some of the same computer code and tactics used in the latest cyber attack were used in a February 2019 hack into Parliament House, also blamed on China, experts say.

Intelligence sources have told the ABC the earlier attack was likely conducted by China’s premier intelligence agency in retaliation for Australia banning telco Huawei from the 5G network in 2018.

The recent intrusions were likely designed to achieve two broad outcomes, the former official said.

“[This is] a concerted campaign against the Australian economy and political systems … for the purposes of gathering strategic information and causing economic damage.”

Some of the activity may also be connected to attempts to steal information linked to Australia’s COVID-19 response, the official said.

So how serious is it?

UNSW Canberra Centre of Internet Safety director Nigel Phair said Australians urgently needed to take cyber security seriously.

“In recent times the volume and the stealth have increased,” he said.

“Cyber crime is now a modern part of statecraft and warfare.

“You can have big battleships and guns or you can conduct a lot of cyber attacks and show your muscle and how you can disrupt an economy.”

Just because we haven’t reached a stage where a large scale attack had shut down electricity grids, or stolen bank details doesn’t mean we’re not at risk.

The most vulnerable to an attack are small businesses, he said.

The suspected Chinese hackers targeted Australia on Friday.

“Everywhere is vulnerable. Take out banking, they invest heavily in cyber security and most of the federal government is also good.

“Big and medium businesses are bad, so is small business – remember small business make up over 90 per cent of businesses in this country, yet they are a forgotten part of the supply chain.

“Company directors are asleep at the wheel. They need to change the way they look at their online assets.

“They have got to understand they need to invest and they’re just not doing it.”

But how does it even work?

Cyber crime should be the stuff of nightmares, experts say.

It can result in identify theft, bribery, and blackouts if things like the electricity grid are targeted.

“There are different types of cyber attacks,” Australian Information Security Association chair Damien Manuel said.

“They range from somebody tricking you to click on something which installs software which acts in a malicious way to encrypting all your data, or they could blackmail you into paying a ransom.”

Stealing data and installing nasty software is just the tip of the iceberg.

From there you have distributed denial of service (DDoS) attacks – which is what was happening on Friday morning.

“A DDoS – that’s not about stealing information, it’s about taking services offline.”

Your smart fridge could be part of the attack. Photo: Getty

This isn’t Australia’s first DDoS rodeo. On Census night in 2016, the online form suffered a series of attacks, sabotaging the website.

To launch this type of attack, nation-state actors have to get millions of smart devices – which can range from your home computer, your phone to even your smart fridge, to all login to a website at the same time.

“Without you knowing your machine might go to a particular site and request it to be loaded. If I control one million of these devices and tell them to go to this website and go to it every few seconds, it becomes overwhelmed with requests.”

While that doesn’t sound too bad if your supermarket order is hacked, it can be dire if it’s information not wanted in the public domain, he said.

“If someone went to Sexyland and stole the customer database that could potentially quite embarrassing. Cyber criminals or foreign governments could use it to coerce people.

“There was an instance of that with Ashley Madison, which was the infidelity website. That led to people committing suicide, family violence, breakups, some of this stuff has real tangible impacts.”