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US Indicts Chinese Officials for Cyber Theft

US Charges Chinese Military Officers With Cyber Espionagei
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May 20, 2014 3:10 AM
A grand jury in the United States on Monday indicted five members of the Chinese military on charges of cyber espionage against six American businesses. Analysts say the move sends a powerful signal to China that Washington has reached its limit. Natalie Liu has more from Washington.
Watch related video from Natalie Liu.
Luis Ramirez
The United States has filed charges against five Chinese military officials it accuses of stealing business secrets from American companies.

Obama administration officials say the criminal indictments - the first of their kind against foreign government officials - are meant to send a message that the U.S. wants China to stop stealing cyber secrets.

“We have consistently and candidly raised these concerns with the Chinese government, and today's announcement reflects our growing concerns that this behavior has continued,” said White House Spokesman Jay Carney.

The U.S. accuses officials of a unit of China's People's Liberation Army [Department 61398 in Shaghai] of stealing secrets from U.S. metals, nuclear and solar energy companies to give Chinese firms - including state-owned ones - a business advantage.

Announcing the indictments Monday, the top U.S. prosecutor, Attorney General Eric Holder, said the thefts have provided significant information to Chinese companies.

China responded quickly, saying it will suspend participation in a China-U.S. Internet working group. It called the cyber spying allegations absurd.

Carney said the U.S. will continue to engage with China, but he said Washington needed to send a message.

“We believe there are ample and important areas where we can and should be able to cooperate with China on issues related to cyber security. But it is also very important that the rules of the road are established,” he said.

A U.S. State Department spokeswoman Jen Psaki said the United States regrets the action taken.

"We regret China’s decision on the suspension of activities of the working group. We continue to believe that dialogue is an essential part of resolving these and other cyber security concerns," she said.

Carney said there is no comparison between China's stealing of business secrets for commercial gain and American intelligence gathering - which he said is done in the interest of U.S. national security, not money.

Industrial espionage

Six American companies, including United States Steel , Alcoa, Allegheny Technologies, Westinghouse Electric, SolarWorld, United Steel Workers Union were victims of Chinese hacking attacks, U.S. officials said. Also targeted were Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial and Service Workers International Union.
 
Press materials are displayed on a table of the Justice Department in Washington, May 19, 2014, before Attorney General Eric Holder was to speak at a news conference.Press materials are displayed on a table of the Justice Department in Washington, May 19, 2014, before Attorney General Eric Holder was to speak at a news conference.
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Press materials are displayed on a table of the Justice Department in Washington, May 19, 2014, before Attorney General Eric Holder was to speak at a news conference.
Press materials are displayed on a table of the Justice Department in Washington, May 19, 2014, before Attorney General Eric Holder was to speak at a news conference.
Underscoring that this was "a real threat to our economy and security," Holder said the Chinese hackers stole information that provides China's competitors with insight into the "strategy and vulnerabilities" of American companies in key industries.

"The alleged hacking appears to have been conducted for no reason other than to advantage state-owned companies and other interests in China, at the expense of businesses here in the United States," said Holder.

"Our economic security and our ability to compete fairly in the global marketplace are directly linked to our national security," he added. "When a foreign nation uses military or intelligence resources and tools against an American executive or corporation to obtain trade secrets or sensitive business information for the benefit of state-owned companies, we must say, enough is enough."

An American computer security company says the Shanghai unit at the heart of U.S. economic espionage allegations against Chinese military officers has been spying for years on companies around the world.

In a report earlier this year, Washington-based Mandiant said it found that hundreds, perhaps thousands, of workers at the People's Liberation Army unit have hacked into the computers at 141 companies in 20 major industries since 2006, mostly in English-speaking countries. Mandiant says the Chinese military stole secretive information about their business operations and passed it on to Chinese companies, including state-run enterprises.
 

Early fallout

China's foreign ministry denounced the charges as "fabricated" and said they would undermine trust between the two governments. In protest, Beijing said it is suspending the activities of a Sino-U.S. Internet working group.

Whether the five Chinese military officers ever stand trial in the U.S. is an open question.

Holder said the U.S. is hopeful that Beijing "will respect our criminal justice system" and allow the accused military officers to be brought to trial. "It is our hope to have these people stand before an American jury and face justice," he said.

The U.S. identified the five military officers as Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, all of whom face 31 charges, each of which each carries a 15-year prison term.

Wen Yunchao, a China Internet expert based in New York, told VOA's Mandarin service that he thinks the indictments are part of a bigger picture.
 
“I think the criminal charges against Chinese officials can be considered as part of U.S. pivot to Asia policy. And of course, it could have something to do with the upcoming U.S. congressional midterm elections as well. It’s not an isolated case.”

The charges pit the world's two biggest economies against each other.

The United States has an overall economic output that is twice the size of China's, about $16 trillion to $8 trillion annually. Some analysts say that by other measures, however, China could surpass the United States within the year as the world's biggest economy.
 
  • Sun Kailiang, from China's Third Department of the General Staff Department of the People's LIberation Army (3PLA), Second Bureau, Third Office, Military Unit Cover Designator (MUCD) 61398. (FBI photo).
  • Wen Xinyu, from China's Third Department of the General Staff Department of the People's LIberation Army (3PLA), Second Bureau, Third Office, Military Unit Cover Designator (MUCD) 61398. (FBI photo)
  • Huang Zhenyu, from China's Third Department of the General Staff Department of the People's LIberation Army (3PLA), Second Bureau, Third Office, Military Unit Cover Designator (MUCD) 61398. (FBI photo)
  • Wang Dong, from China's Third Department of the General Staff Department of the People's LIberation Army (3PLA), Second Bureau, Third Office, Military Unit Cover Designator (MUCD) 61398. (FBI photo)
  • Gu Chunhui, from China's Third Department of the General Staff Department of the People's LIberation Army (3PLA), Second Bureau, Third Office, Military Unit Cover Designator (MUCD) 61398. (FBI photo)

Unfair advantage

Stolen trade secrets could be a short-cut to developing products that unfairly compete with U.S. products. That is because it is far cheaper to steal plans than to do the research and take the time needed to develop an original product. That cost savings can give the thief a major advantage in pricing products.  

The hackers also are accused of spying on companies involved in trade disputes and business negotiations with China, to give Chinese state-owned firms an unfair advantage against their American rivals.

Much of this activity targeted offices in the Pittsburgh, Pennsylvania, area. The chief prosecutor in western Pennsylvania, David Hickton, said hacking has forced some plants to close, throwing people out of work.

"The important message is that cyber theft impacts real people, in real and painful ways. The lifeblood of any organization is the people who work, strive, and sweat for it," said Hickton. "When these cyber intrusions occur, production slows, plants close, workers get laid off and lose their homes."

American officials have long been concerned about hacking from abroad, especially China. An FBI official told Reuters last week to expect multiple cyber security-related cases, including indictments and arrests, in the coming weeks.

Long-standing concern

While such charges may be largely symbolic, the move would prevent the individuals indicted from traveling to the United States or other countries that have an extradition agreement with the U.S.

Several cyber security experts say Monday's action show the U.S. is serious about dealing with hacking.

“It sends a strong message to the Chinese,” a senior fellow at the Center for Strategic and International studies James Lewis told Reuters.

Others some remained skeptical the move would deter online invasions.

“It won't slow China down,” said Eric Johnson, an information technology expert at Vanderbilt University and dean of its School of Management.

On Sunday, a top Chinese Internet official called for Beijing to tighten its own cyber security, citing “overseas hostile forces.”

VOA's Jim RandIe in Washington contributed information for this report, along with Reuters.

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by: Sharonto
May 22, 2014 5:08 AM
Actually, I don't care about the mutual cyberspying game between two countries. I just care about how I can spy my son's computer? How about Micro Keylogger which is said to be the best spying tool for family.


by: Robert E from: USA
May 20, 2014 9:55 AM
Remembering NSA,it is only an example of POTus calling the Kettle black.

In Response

by: uC from: uc
May 22, 2014 3:43 AM
USA is the world largest terrorist in the world, and all terrorist attacks are backed by the US, and the US must pay a high price to it.

In Response

by: Hoang from: Canada
May 21, 2014 5:55 AM
I don't understand why so many Americans criticize their own country. Every country spy on each other but the U.S. does not spy like China to steal technology for economical and military gain so they can challenge the U.S. in the future. Americans should be loyal to their country like the Vietnamese people and boycott all made in China products instead of always criticizing your country. If Americans are not happy about U.S. then move to China.


by: Aaron from: Virginia
May 20, 2014 9:37 AM
I am amazed that so few people, particularly like people from Canada & Australia who do not understand this situation and drawing absurd comparisons to national security spying (which all nations do) and commercial espionage by the Chinese government on US corporations (which almost no western nation, including the United States does) to give corporate copyrighted and owned information to their own corporations (which are state owned). I am truly amazed so many people do not know the difference, but the fact that western nations do not do this is widely known among western nations.

However, I would say that if some of you think this is different, then I guess the US government, which has, like with most things technological, far superior cyber warfare capabilities due to technology and its superior wealth, should just start stealing information from foreign corporations and give that information to US corporations...which the US government could do for a price to said corporations. I would say that, if people actually thought this is done by most western nations (and it seems people do) because Asian corporations don't have technological advancements that western nations don't already have. I truly am amazed that people do not know the difference and how with China not just breaking the law, but breaking many of the set rules that they agreed to in order to join the World Trade Organization. However...I guess you people think nobody follows those WTO rules?

What this would do if western governments actually did practice commercial espionage on behalf of its own corporations would damage many national trade agreements and create a harsh and serious distrust among corporations from other nations. I wonder if energy companies owned by the UK or France would have no problem with it if the US government was stealing information from those corporations to give to US corporations? Seriously. Wow.

However, this is fine. The EU nations and economies are still struggling economically and we saw how the US banking crisis affected the EU, which they are not recovering from as quickly as the US. Let's see how some of the actual governments from the other western nations react to this (considering they too actually know this thing is not done by all nations and that they are equally in danger of this), and whether they want to cause any tension with the US over trade...which the EU benefits far greater from than the US. Just sayin.

In Response

by: Nelson from: NYC
May 23, 2014 10:14 AM
What absolute nonsense. So the US was scared its allies would suddenly flip on them hence the reason for spy on not just the agencies but the actual presidents of the allies. Imagine Japan spying on Obama's and Hilary's phone in the name of "security". Lets face it, the USA does the very same thing, and will always do regardless of the revelations. It just hurts a bit when the very country funding your economy is your biggest supplier, they basically give you money to buy their products. That's actual power.

In Response

by: Fan Di from: Cambridge, MA
May 21, 2014 11:17 AM
How do you know so many things - like what Chinese government did, what US government did? Or are you lying? And please do not draw comparison from the US government to other western countries. I do not believe there is any other country in the world like the US government, who cyber spies almost every country and every firm in the world, even its allies.

In Response

by: Jonathan huang from: Canada
May 20, 2014 8:01 PM
Tell me the hacking of Merkel's phone isn't about commercial secrets, but only about national security, why America would suspect its close ally? Does Germany pose any threat to America?
You just slapped your own face loudly! Brainwashed fool!


by: hegesias from: noneofyourbusiness
May 20, 2014 9:21 AM
Hello, Pot, meet Kettle.


by: Great Idea from: midwest
May 20, 2014 9:03 AM
Let's just boycott China! Shouldn't be problem... I'll buy... hmmmmm


by: Noname from: Nolocation
May 20, 2014 7:59 AM
We already use offshore development resources. So they have access to our source code and designs... What's new?


by: Johan
May 20, 2014 6:33 AM
The Kettle calling the Pot black..... :D

In Response

by: Aaron from: Virginia
May 20, 2014 9:01 AM
If you don't know the difference between commercial espionage (that few nations practice) and national security spying (which all nations practice), then you don't understand the issue.


by: Mod from: China
May 19, 2014 9:36 PM
Cyber spying is always on both sides.don't you forget Snowden ?

In Response

by: misa07
May 21, 2014 1:43 PM
will see , later on Snowden will disappear trust me

In Response

by: Hoang from: Canada
May 21, 2014 5:58 AM
Snowden is a coward and traitor to U.S. He will eventually go back to U.S. and be prosecuted for his crime.


by: Lincon from: east
May 19, 2014 9:15 PM
shame on the u.s government. according its statement, Obama should stand on trial and go to jail. I wonder how president Obama could give a speech with sense of shame. If i was Obama, i would resign and find a place to hide myself.


by: Tyler from: Australia
May 19, 2014 8:46 PM
Every country is tempted to collect intelligence for their own benefit. Remember Rio Tinto espionage case where China suffered great loss too? Who believes the US never committed cyber crimes, particularly against Chinese enterprises? Why US secret agencies attacking Chinese IT giant Huawei is legitimate while Chinese against theirs is not? Don't always set double standard against other countries. Examine yourself before criticising others.

In Response

by: Jonathan huang from: Canada
May 20, 2014 7:52 PM
@aaron, you must be a ret@r!) rio tinto espionage isn't about national security, it's pure commercial.
Anyway, since national security is much more serious than commercial security, (May be you aggressors don't agree), I can say America stealing national security secrets is more despicable than China's stealing only commercial secrets.
And remember you are not god, it's not you who decide which is moral which is not! You are a brainwashed fool!

In Response

by: Aaron from: Virginia
May 20, 2014 9:08 AM
You don't know what you are talking about at all. This is far different from a government that uses spying and cyber tactics for national security (which every nation practices) and a government conducting cyber espionage on commercial entities to steal commercial copyrighted and corporate owned information to give to their own nation's corporations (which few and almost no western nations practice). You really have no clue what you are talking about because the Chinese do not have any technological secrets that the US government needs or could benefit from. So, you should examine the situation more carefully before commenting.

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