UPDATE 1-Canada ups cyber security spending as China worry rises
* To spend C$155 mln more to combat hackers, cyber espionage
* U.S. warnings, recent hacking attempts play into decision
OTTAWA, Oct 17 (Reuters) - Canada said on Wednesday it will beef up spending on defenses against Internet hackers as it grapples with reports of Chinese hacking of Canadian companies and a U.S. warning of the risks of Chinese cyber espionage.
The Conservative government will spend an additional C$155 million ($158 million) over five years on strengthening its response center for dealing with cyber threats in the private sector as well as boosting the security of the government's own communications, Public Safety Minister Vic Toews said.
The announcement came less than a month after Toews' department acknowledged a pair of cyber attacks on a Canadian energy company and on a manufacturer of software used by energy firms. The government declined to comment on reports that suggested a Chinese connection.
A U.S. congressional report last week warned of the risks of doing business with Chinese telecom equipment makers Huawei Technologies Co Ltd and ZTE Corp because of possible Chinese cyber espionage.
"Keeping our cyber networks and infrastructure secure and resilient is one of the most challenging issues facing our government, our citizens and our allies," Toews told a news conference at a technical college in Ottawa.
"I can assure you that our government is fully engaged in meeting and overcoming this challenge."
Declining to name China or any company, Toews said his announcement was partly in response to concerns that have been raised, but also part of a broader strategy laid out two years ago to try to make Canada's cyber infrastructure safe.
The focus on China has come at an awkward time for Chinese state-owned CNOOC Ltd, whose $15.1 billion bid to buy Canadian oil producer Nexen Inc needs Canadian government approval.
Toews said strengthening the provisions of Investment Canada Act, which governs foreign takeovers of Canada companies, may be a possibility.
"This is a constant struggle because of the nature of technology and how quickly technology is evolving, so we are certainly looking at all possibilities when we look to further buttress our secure mechanisms," he said.
He said all industrialized nations must face the dangers posed by hackers.
U.S. Defense Secretary Leon Panetta warned last week of the potential of a "cyber Pearl Harbor," in which cyber attacks would be launched on critical or military infrastructure, possibly in combination with a physical attack.
"I don't know if he has overstated it," Toews said of Panetta's comments, "but certainly there is a risk to cyber security. Cyber security is something that every developed nation has to be worried about given the nature of technology and the rapid change of technology."
Toews refused to confirm that Huawei will be excluded from taking part in building a new secure network for government communications, saying that at this time there was nothing to announce in that respect.
A spokesman for Prime Minister Stephen Harper said last week that the government had invoked a national security exception that allows it to prevent risky companies from participating in the building of the secure government network, and he said he would leave it to reporters to judge if Huawei should be allowed to take part.
The new government funding announced on Wednesday is on top of a previous allocation of C$90 million over five years.