News / USA

China’s Alleged Cybertheft Could Cost US Billions

FILE: U.S. officials announced charges against five Chinese military officers at a Washington, D.C., news conference May 19, 2014. Attorney General Eric Holder, second from left, is joined by, from left, David Hickton, John Carlin and Robert Anderson.FILE: U.S. officials announced charges against five Chinese military officers at a Washington, D.C., news conference May 19, 2014. Attorney General Eric Holder, second from left, is joined by, from left, David Hickton, John Carlin and Robert Anderson.
x
FILE: U.S. officials announced charges against five Chinese military officers at a Washington, D.C., news conference May 19, 2014. Attorney General Eric Holder, second from left, is joined by, from left, David Hickton, John Carlin and Robert Anderson.
FILE: U.S. officials announced charges against five Chinese military officers at a Washington, D.C., news conference May 19, 2014. Attorney General Eric Holder, second from left, is joined by, from left, David Hickton, John Carlin and Robert Anderson.
A U.S. manufacturer was in the midst of a trade dispute with Asian competitors it said was flooding the market with cut-rate solar panels when it learned of a glaring new vulnerability: Its online communications were being hacked.
 
SolarWorld executives “were notified by the FBI that there was a penetration, and it was ongoing,” company spokesman Ben Santarris said, describing the “exfiltrations” of thousands of sensitive emails and documents.
 
Santarris’ dispassionate language contrasts with the anger and frustration that U.S. officials expressed this week. In a landmark case, they charged five Chinese military officers with stealing information from a handful of prominent technology companies, including SolarWorld, U.S. Steel Corp. and Westinghouse Electric Co.
 
While the exact toll of the alleged espionage and theft would be almost impossible to calculate, experts say, the potential costs to America’s economy could be staggering in terms of lost sales, profits and jobs. 
 
The theft of a single company’s proprietary information about products or processes “could be worth millions, it could be billions,” said Halina Dziewit, who specializes in emerging technology as an intellectual property attorney for the Washington-based law firm Patton Boggs LLP.
 
“You’re losing your competitive advantage. You’re not getting the maximum return on your investment,” creating disincentives for more research and development, she said.
 
Overall, foreign theft of U.S. intellectual property costs “$300 billion a year and up, and that’s conservative,” said Slade Gorton, a former U.S. senator and member of the Commission on the Theft of American Intellectual Property.
 
Report warned about China
 
Last May, the commission issued a report that cited the impact of intellectual property theft by foreigners, singling out China as the most egregious offender. 
 
The indictment announced Monday was brought by a grand jury in the Western District of Pennsylvania.
 
FILE: A poster of five Chinese military officers accused of stealing U.S. companies’ trade secrets is displayed at the Justice Department in Washington, D.C., on May 19, 2014.FILE: A poster of five Chinese military officers accused of stealing U.S. companies’ trade secrets is displayed at the Justice Department in Washington, D.C., on May 19, 2014.
x
FILE: A poster of five Chinese military officers accused of stealing U.S. companies’ trade secrets is displayed at the Justice Department in Washington, D.C., on May 19, 2014.
FILE: A poster of five Chinese military officers accused of stealing U.S. companies’ trade secrets is displayed at the Justice Department in Washington, D.C., on May 19, 2014.
Five of the alleged six hacking victims are located in Pittsburgh: Westinghouse Electric Co., Alcoa World Alumina, Allegheny Technologies, U.S. Steel Corp. and the United Steelworkers Union. SolarWorld, a wholly owned subsidiary of SolarWorldAG in Germany, is based in Hillsboro, Ore. 
 
China denied the accusations, lodging a protest late Monday with U.S. Ambassador Max Baucus. China’s Defense Ministry warned the indictments could harm the two countries’ ongoing discussions concerning cybersecurity and the military.
 
A spokesman for China’s foreign ministry, Hong Lei, denied his country ever had engaged in cybertheft of trade secrets. And China's Defense Ministry accused the United States of having "ulterior motives" and of demonstrating "hypocrisy and double standards."
 
FBI Director James Comey, in an interview this week with ABC News, said the United States conducted surveillance for national security purposes but never shared information with businesses, which would give them an unfair competitive edge.
 
For years, the United States had accused China of stealing trade secrets but hadn’t adequately substantiated its claims, said David Hickton, U.S. attorney for the Western District of Pennsylvania.
 
“This indictment changes that,” Hickton told VOA in an interview.  “… We have given China the evidence.”
 
Indictment details problems
 
The indictment charges the Chinese with computer hacking, economic espionage and other offenses. It alleges that, from 2006 to 2012, they broke into computer systems, stealing trade secrets or other sensitive information that might benefit Chinese companies or “that would provide a competitor, or an adversary in litigation, with insight into the [organization’s] strategy and vulnerabilities,” according to a Department of Justice news release Monday.
 
For instance, the indictment contends the hackers stole key information about U.S. Steel’s cutting-edge stainless-steel pipes, installing malware on computers and snagging “hostnames and descriptions” of computers, “including those that controlled physical access to company facilities.” Westinghouse, while building four power plants in China, allegedly suffered the theft of “confidential and proprietary technical and design specifications” for pipes.  
 
“There is a direct loss to the company when cyber-espionage is done,” Hickton said, “… especially when it’s done by a state actor for a state company.”
 
He also emphasized the “downstream losses” to ordinary Americans, particularly those employed by the named companies. They “lose their jobs because the companies they work for can’t compete,” he told VOA.
 
Exact accounting ‘unknowable’
 
The hackers allegedly stole SolarWorld information about “cash flow, manufacturing metrics, product line information, costs and privileged attorney-client communications” about ongoing trade litigation, the indictment says.
 
SolarWorld’s spokesman, Santarris,  told VOA he couldn’t estimate the company’s related financial losses because of “too many unknowables.” Through cyber spying, he said, “unfair advantages could have been secured in a variety of directions: knowing about our cost structure, our financial position, our technological road map, our innovative ideas, our strategy for trying to curb anti-competitive trade.” 
 
Santarris said SolarWorld had been in litigation with China over what the company believed was the “dumping” of low-cost solar panels in the United States, creating unfair competition. The U.S. Commerce Department concurred in mid-2012 – right around the time the FBI notified SolarWorld executives of ongoing hacking.  “All of the personnel who were targeted for this infiltration had connections to the trade cases,” Santarris added.
 
SolarWorld cooperated with the FBI investigation, Santarris said.
 
Helping investigators collect evidence means a company can risk further exposure, said Melodi Mosley Gates, a privacy expert and an associate with Patton Boggs. She praised what she sees as increased collaboration between private companies and the government, “a critical part of improving cybersecurity.” 
 
Gorton, of the intellectual property theft commission, said he was encouraged by the government’s indictment, which aligns with the commission’s call for more aggressive investigation and prosecution of trade-secret theft, especially involving cybersecurity, by the Justice Department and FBI.
 
“This kind of cybertheft will only end when the cost of doing it exceeds the benefits the Chinese get from it,” Gorton said. “That means dealing with our own domestic market [to] much more quickly seize goods that benefit from intellectual property theft, and perhaps going beyond that.”
 
VOA’s Mandarin Service reporters Wei Hu and Yuwen Cheng contributed to this story.

You May Like

Yemen Brings US, Iran Closer to Naval Face-off

US sending two more ships to waters off coast of Yemen to take part in 'maritime security operations' More

Minorities Become Majority Across US

From 2000 to 2013, minorities became the majority in 78 counties in the United States. Here's where those demographic shifts are happening More

Japan's Maglev Train Breaks Own Speed Record

Seven-car 'magnetic levitation' train traveled at more than 600 kilometers per hour during test run Tuesday More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Brain Mapping Techniques Could Ease Chronic Paini
X
Shelley Schlender
April 20, 2015 7:03 PM
Pain has a purpose - it can stop you from touching a flame or from walking on a broken leg. As an injury heals, the pain goes away. Usually. But worldwide, one out of every five people suffers from pain that lasts for months and years, leading to lost jobs, depression, and rising despair when medical interventions fail or health experts hint that a pain sufferer is making it up. From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.
Video

Video Hope, Prayer Enter Fight Against S. Africa Xenophobia

South Africa has been swept by disturbing attacks on foreign nationals. Some blame the attacks on a legacy of colonialism, while others say the economy is to blame. Whatever the cause, ordinary South Africans - and South African residents from around the world - say they're praying for the siege of violence to end. Anita Powell reports from Johannesburg.
Video

Video Italy Rescues Migrants After Separate Deadly Capsize Incident

Italy continued its massive search and rescue operation in the Mediterranean Monday for the capsized boat off the coast of Libya that was carrying hundreds of migrants, while at the same time rescuing Syrian migrants from another vessel off the coast of Sicily. Thirteen children were among the 98 Syrian migrants whose boat originated from Turkey on the perilous journey to Europe.
Video

Video New Test Set to Be Game Changer in Eradicating Malaria

The World Health Organization estimates 3.4 billion people are at risk of malaria, with children under the age of five and pregnant women being the most vulnerable. As World Malaria Day approaches (April 25), mortality rates are falling, and a new test -- well into the last stage of trials -- is having positive results in Kenya. Lenny Ruvaga reports for VOA from Nairobi.
Video

Video Are Energy Needs Putting Thailand's Natural Beauty at Risk?

Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Overwhelmed by Migrants, Italy Mulls Military Action to Stabilize Libya

Thousands more migrants have arrived on the southern shores of Italy from North Africa in the past two days. Authorities say they expect the total number of arrivals this year to far exceed previous levels, and the government has said military action in Libya might be necessary to stem the flow. VOA's Henry Ridgwell reports.
Video

Video Putin Accuses Kyiv of ‘Cutting Off’ Eastern Ukraine

Russian President Vladimir Putin, in his annual televised call-in program, again denied there were any Russian troops fighting in Ukraine. He also said the West was trying to ‘contain’ Russia with sanctions. Henry Ridgwell reports on reactions to the president’s four-hour TV appearance.
Video

Video Eye Contact Secures Dog's Place in Human Heart

Dogs serve in the military, work with police and assist the disabled, and have been by our side for thousands of years serving as companions and loyal friends. We love them. They love us in return. VOA’s Rosanne Skirble reports on a new study that looks at the bio-chemical bond that cements that human-canine connection.
Video

Video Ukrainian Volunteers Search for Bodies of Missing Soldiers

As the cease-fire becomes more fragile in eastern Ukraine, a team of volunteer body collectors travels to the small village of Savur Mohyla in the what pro-Russian separatists call the Donetsk Peoples Republic - to retrieve bodies of fallen Ukrainian servicemen from rebel-held territories. Adam Bailes traveled with the team and has this report.
Video

Video Xenophobic Violence Sweeps South Africa

South Africa, long a haven for African immigrants, has been experiencing the worst xenophobic violence in years, with at least five people killed and hundreds displaced in recent weeks. From Johannesburg, VOA’s Anita Powell brings us this report.
Video

Video Apollo 13, NASA's 'Successful Failure,' Remembered

The Apollo 13 mission in 1970 was supposed to be NASA's third manned trip to the moon, but it became much more. On the flight's 45th anniversary, astronauts and flight directors gathered at Chicago's Adler Planetarium to talk about how the aborted mission changed manned spaceflight and continues to influence space exploration today. VOA’s Kane Farabaugh reports.
Video

Video Badly Burned Ukrainian Boy Bravely Fights Back

A 9-year-old Ukrainian boy has returned to his native country after intensive treatment in the United States for life-threatening burns. Volodia Bubela, burned in a house fire almost a year ago, battled back at a Boston hospital, impressing doctors with his bravery. Faith Lapidus narrates this report from VOA's Tetiana Kharchenko.
Video

Video US Maternity Leave Benefits Much Less Than Many Countries

It was almost 20 years ago that representatives of 189 countries met at a UN conference in Beijing and adopted a plan of action to achieve gender equality around the world. Now, two decades later, the University of California Los Angeles World Policy Analysis Center has issued a report examining what the Beijing Platform for Action has achieved. From Los Angeles, Elizabeth Lee has more.
Video

Video Endangered Hawaiian Birds Get Second Chance

Of the world's nearly 9,900 bird species, 13 percent are threatened with extinction, according to BirdLife International. Among them are two Hawaiian honeycreepers - tiny birds that live in the forest canopy, and, as the name implies, survive on nectar from tropical flowers. Scientists at the San Diego Zoo report they have managed to hatch half a dozen of their chicks in captivity, raising hopes that the birds will flutter back from the brink of extinction. VOA’s George Putic reports.
Video

Video Exhibit Brings Renaissance Master Out of the Shadows

The National Gallery of Art in Washington has raised the curtain on one of the most intriguing painters of the High Renaissance. Mostly ignored after his death in the early 1500s, Italian master Piero di Cosimo is now claiming his place alongside the best-known artists of the period. VOA’s Ardita Dunellari reports.

VOA Blogs