The US Justice Department indicted five Chinese military officers with stealing data from six US companies and unions on Monday, inaugurating a major escalation of tensions with China over economic spycraft.
Attorney general Eric Holder announced that the US for the first time would seek to bring officials of a foreign government to the US to face charges of infiltrating American computer networks to steal data beneficial to US trade competitors. The Justice Department even went as far as printing “wanted” posters.
The charges come as revelations about the scale of National Security Agency surveillance from whistleblower Edward Snowden indicate that at least some US surveillance carries an economic benefit.
“The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response,” Holder said on Monday.
While suspicions about government sponsorship of corporate data theft have swirled around China for years, never before has the US formally accused officials from China, or any other government, of involvement.
Not only has attribution of online espionage long vexed investigators, the prospect of diplomatic or economic retaliation has also been an impediment to taking action. The Justice Department national security chief, John Carlin, and colleagues from the Federal Bureau of Investigation credited a years-long effort, and the willingness of companies to admit to a data breach, with “exposing the faces and the names behind the keyboards in Shanghai.”
Accused are Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, whom a federal grand jury in Pennsylvania indicted on 31 counts of espionage. Carlin described the five men as members of a People’s Liberation Army entity known as Unit 61398.
Last year, a report by the information security firm Mandiant concluded that Unit 61398 was most likely behind data theft comprising hundreds of terabytes, a scale it found to be unlikely to have occurred without government sponsorship.
Mandiant found that the unit’s network infiltrations “periodically revisit the victim’s network over several months or years and steal broad categories of intellectual property, including technology blueprints, proprietary manufacturing processes, test results, business plans, pricing documents, partnership agreements, and emails and contact lists from victim organizations’ leadership.”
The alleged data theft affected aluminum giant Alcoa, US Steel, the US Steelworkers Union, electricity and nuclear energy firm Westinghouse, Allegheny Technologies Inc, and SolarWorld. A senior FBI official, Robert Anderson, said he hoped other companies who experienced theft of proprietary information would “come forward and talk to us”.
China's foreign ministry called the allegations “extremely ridiculous". Ministry spokesman Qin Gang demanded that the US “immediately rectify its mistake" and repeal the lawsuit, according to a statement on its website.
“This grave violation of the basic norms of international relations has harmed Chinese-US cooperation and mutual trust,” he said, adding that China has already lodged a formal complaint with US authorities.
The Chinese government frequently counters hacking allegations by claiming that the country is a safeguard of internet security and that cyber-attacks are a universal problem. Qin said that China “never engages in the activity of stealing commercial secrets through the internet.” He called the allegations “baseless”.
“For a long time, American authorities have conducted large-scale, organized cyber-theft and cyber-espionage activities against foreign dignitaries, companies and individuals,” he said. “This is already common knowledge.”
The US military has for years suspected its Chinese counterpart of stealing proprietary defense information, including about the design of the F-35 family of stealth jets, even as it seeks to forge closer ties with the People’s Liberation Army.
General Martin Dempsey, the chairman of the Joint Chiefs of Staff, welcomed his PLA counterpart to the Pentagon last week, but both officers avoided talk about cyber espionage in a Thursday press conference.
Some observers said China was all but certain to retaliate, economically or diplomatically. “Clearly, China will need to respond in some fashion,” said a trade lobbyist who requested anonymity. “Hopefully, advancements will be made that won't impact economic development for either country.”
James Lewis, a cybersecurity expert at the Center for Strategic and International Studies, said the effect would be "intangible" but the formal accusation "sends a strong message" to Beijing.
But Holder said that he wanted China to turn the five officers over to the US to stand charges, an unlikely step for the Chinese to take. “Our intention is for the defendants to have due process in an American court of law,” Holder said.
The US posture is complicated by recent revelations of widespread NSA surveillance that impacts the blurry area between economic and security matters. Since the Edward Snowden disclosures began, the US has drawn a distinction between spying for security purposes, which it considers legitimate, and surveillance intended to reap economic advantages, which it does not.
But the NSA penetrated the servers of the Chinese telecom corporation Huawei, which US officials consider little more than a stalking horse for Chinese surveillance, and put the company’s executives under surveillance, the New York Times and Der Spiegel reported in March.
While the US insists its concerns about Huawei are predicated on security threats from Huawei products sending customer data back to China – and the opportunities of inserting backdoors into Huawei products used by surveillance targets – Huawei has felt those concerns amounted to a pretext. Last year it announced it would abandon the US market, although executives later walked the announcement back somewhat.
Documents leaked by Edward Snowden showed the NSA targeted the Brazilian oil firm Petrobras, even as the NSA insisted that its Defense Department parent “does not engage in economic espionage in any domain, including cyber,” in a statement to the Washington Post.
Holder attempted to distinguish between economic and security surveillance in a Monday press conference. “All nations are engaged in intelligence gathering,” Holder said, but the current indictment involves “a state sponsored entity, state sponsored individuals, using intelligence tools to gain commercial advantages, and that is what makes this case different.”
