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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.
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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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Comments page of 3
 Previous   Next 
by: tim from: Canberra
May 19, 2014 7:39 PM
In an interview with a Hong Kong paper, Edward Snowden asserts the U.S. has mounted hacking operations against hundreds of Chinese targets since 2009.
In Response

by: Hoang from: Canada
May 21, 2014 6:02 AM
U.S. is responding to Chinese hacking against U.S. government and companies. Australia should be grateful for U.S. support during world war 2. You will need U.S. support against China in the future. Australia is allowing too many Chinese into their country.

by: Jonathan huang from: Canada
May 19, 2014 7:06 PM
Like Obama said, every country spies, therefore America would never stop spying, so does China.
To make China safer, China will keep spying Americas every department including obamas iPhone, since it's made in China.

by: Kettle from: Canada
May 19, 2014 5:53 PM
Hey pot?
Yes, it's kettle. Just calling to say that you are black.

by: Tom from: USA
May 19, 2014 5:48 PM
I am shocked, shocked...China is accused of stealing other people's intellectual property....

by: alfredo ibarra barajas from: mexico
May 19, 2014 3:31 PM
The griddle told the pot. Doesn't Holder remember the accusations of Snowden against his own government of spying in all the world. How can The U.S. be so cynical, he and Obama, who now is called in my country The Chief Executive Deporter, for the thousands of deportations that have caused the separation, and anguish of families, who were not even criminals, and their only crime was to look for the betterment of their families. Aren't we all born with that desire embeded in our genetical code? Or just the privileged ones have the right to a better life. I don't know what to think when the Obamas tear their clothes, for what is happening to the girls in Nigeria, when they separate families in The U.S. It is all so sad. They should keep quiet.

by: David from: Ireland
May 19, 2014 3:30 PM
Ah the words Pot, Kettle and Black come to mind here

by: Chi Ly from: USA
May 19, 2014 3:08 PM
Catch the thieves and bring them to justice. Don't be easy with those Chinese thieves.

by: Chi Ly from: USA
May 19, 2014 3:01 PM
China, stop steeling and behave as a permanent member of the U.N.S.C.


by: Yuanyuan from: China
May 19, 2014 1:34 PM
Yes,tighten our Cyber security and meantime detect US spyings via the same way.l figure US spying also conspire same thing in global location.
In Response

by: nelson from: new york
May 23, 2014 10:23 AM
Steve, REALLY. I think your life has too few problems, a few more would keep you in check with reality.
In Response

by: colin
May 19, 2014 11:00 PM
You have to admit those Americans have a sense of humour...The NSA has hacked against various people and countrie
In Response

by: Steve from: Canada
May 19, 2014 9:31 PM
China is now a monster sent to our time by Satan. Stealing intelligent properties of power countries, intimidating small countries, violating democracy,... are all actions China put on their top priority list for their final goal: CONTROL THE WORLD

by: remie from: canada
May 19, 2014 12:37 PM
No surprise but china had internet in ancient time therefore they have right to hack and its only a little. So stop bad mouthing china! Next , china owns moon from ancient time . America wasn't first. LOL
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