The Justice Department on Monday charged members of the Chinese military with conducting economic cyber-espionage against American companies, marking the first time that the United States has leveled such criminal charges against a foreign country.
Industries targeted by the alleged cyberspying ranged from nuclear to steel to solar energy, officials said. In some cases, they said, the hacking by a military unit in Shanghai was conducted for no other reason than to give a competitive advantage to Chinese companies, including state-owned enterprises.
In a news conference, Attorney General Eric H. Holder Jr. said: “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. Success in the global marketplace should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.”Holder said the Obama administration “will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.”
China’s Foreign Ministry did not immediately respond to requests for comment.
The indictment against members of the People’s Liberation Army follows vows by senior administration officials to hold other nations to account for computer theft of intellectual property from American industry.
China is widely seen as the nation that has been most aggressive in waging cyber-espionage against the United States.
Holder said a federal grand jury in Pittsburgh returned an indictment against five members of a Chinese military unit in a Shanghai building, accusing them of conspiring together and with others to hack into the computers of six US. entities. Named in the case as defendants were Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, all officers of Unit 61398 of the 3rd Department of the People’s Liberation Army. Wang is also known as UglyGorilla, his hacker handle. Gu used the alias KandyGoo and Sun was also known as Jack Sun, prosecutors said.
Victimized by the cyberspying were Westinghouse Electric, Alcoa, Allegheny Technologies Inc., United States Steel, the United Steel Workers Union and Solar World, officials said. Alcoa is the largest aluminum company in the United States, and U.S. Steel is the nation’s largest steel company.
In addition to Holder, officials participating in a news conference to announce the charges include John Carlin, assistant attorney general for national security; David Hickton, the U.S. attorney for the Western District of Pennsylvania, based in Pittsburgh; and Robert Anderson, executive associate director of the FBI.
The charges are being brought in western Pennsylvania, where several companies that were allegedly victimized are located.
“This case should serve as a wakeup call” on the seriousness of the ongoing cyber threat, Holder said.
Carlin said that in the past, Chinese government officials have challenged the United States to produce charges that could stand up in a court of law.
“Well, today we are,” he said.
“This 21st century burglary has to stop,” Hickton said. “Hacking, spying and cyberthreats for commercial advantage can and will be prosecuted criminally even when the defendants are state actors.”
In response to a question, Hickton said, “This cyber hacking leads directly to the loss of jobs here in the United States.”
In 2012, the Justice Department’s National Security Division began training hundreds of prosecutors to combat and prosecute cyber-espionage that poses a threat to national security. Later that year, Carlin, then principal deputy assistant attorney general, toldDefense News that “you’ll see a case brought.”
Even if a prosecution never materializes, the indictment will send a powerful message that such acts will not be tolerated, officials said.
Estimates of the economic costs to the United States of commercial cyber-espionage range from $24 billion to $120 billion annually. China is by far the country that engages in the most such activity against the United States, according to a U.S. national intelligence estimate.
Senior U.S. officials have repeatedly warned China that its continued pilfering of intellectual property to benefit its industries will harm the two countries’ bilateral relationship.
In February 2013, the U.S. security firm Mandiant reported that it had linked a specific unit of the People’s Liberation Army to cyber-intrusions of more than 140 U.S. and foreign companies and entities.
The United States and China agreed last year to begin holding regular, high-level talks on cybersecurity and commercial espionage. But whenever U.S. officials raise the issue of economic spying, the Chinese are not receptive, administration officials said. Though Washington takes pains to distinguish between foreign intelligence gathering and spying to help a country’s own industries gain an economic advantage, officials say that is a distinction without a difference to the Chinese.
The leaks from former National Security Agency contractor Edward Snowden beginning last June have only complicated the talks. Beijing has pointed to disclosures by Snowden of vast NSA surveillance activities — including spying on Chinese companies — to assert that the United States is the greater aggressor in the area.
The U.S. charges are likely to be seen in China as a major action, said Jin Canrong, vice director of international studies at Beijing’s Renmin University. “In the past, the U.S. talked about it but never took any real actions. If the U.S. freezes some Chinese military assets as a result of this, China will respond with counteractions accordingly.”
How negatively it affects U.S.-China relations depends on what further actions the White House takes beyond the criminal charges, Jin said. But in China, he noted, there is a feeling of hypocrisy whenever the United States brings up such charges, especially in light of the recent NSA leaks. “The U.S. has been doing the same thing,” he said.
“This case has been under preparation for a year,” said Bonnie S. Glaser, a senior Asia expert at the Washington-based Center for Strategic and International Studies who meets frequently with military-related and state-sponsored academics in China. The United States is now resorting to such charges because nothing else has worked diplomatically, she said. President Obama has raised the issue repeatedly with Chinese President Xi Jinping in meetings.
“The Chinese have ignored U.S. requests to stop stealing U.S. companies’ intellectual property. The U.S. believes it is necessary to impose consequences for China’s actions,” she said.
“Since Snowden’s revelations, the Chinese have ridiculed U.S. charges that it is stealing [intellectual property]. I expect they will call this U.S. action hypocritical and dismiss it out of hand,” she added.
“The difference between stealing intelligence and company secrets is lost on the Chinese,” she said. “Both are considered fair game and an essential means to accelerate China’s reemergence as a great power.”
At the same time, China has used recent disclosures on NSA surveillance for maximum diplomatic effect to push back against U.S. accusations of cyberattacks. Among the most damaging revelations was a report in March that the NSA infiltrated Chinese telecommunications giant Huawei Technologies to see whether it was spying for Beijing and to turn its equipment against other countries, such as Iran.
In recent years, U.S. officials have made the distinction between cyberspying for national security and cyber-intrusions into private companies for economic theft, which the United States says it does not do but which it accuses China of doing all the time. The Huawei case, while not a theft for economic advantage, showed the U.S. government infiltrating a private Chinese company.
In response, China seized the opportunity for role reversal, demanding an explanation from the United States
“China has lodged complaints to the United States about this many times. We urge the U.S. side to make a clear explanation and stop this kind of acts,” Chinese Foreign Ministry spokesman Hong Lei said in March.
Since last year’s NSA revelations, China has also shown increasing concerns about its own cybersecurity.
Demonstrating how seriously its leaders take the threat, Xi personally took charge of a new government body earlier this year overseeing China’s cybersecurity and vowed to turn China into a “cyber-power,” according to state-run media.
In the most recent example of such growing worries, a high-ranking Chinese Internet official said Sunday that China must intensify its security efforts, warning that “hostile forces abroad” are using cyberspace as a major channel to “infiltrate China.”
Douglas Paal, a former National Security Council official now at Carnegie Endowment for International Peace, said he expects that many Chinese will view the prosecution “as one of Washington’s ways to get back at China for recent pushes against Japan, the Philippines, and Vietnam.”
Paal added: “It will take some time to get people to accept that this is about commercial theft, and not something else. . . . The Chinese are still enjoying their luck at having the Snowden revelations to distract public attention from the U.S. argument against commercial espionage. That is not likely to change soon.”
Source: The Washington Post
