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U.S. Treads Fine Line in Fighting Chinese Espionage With Spy Charges, U.S. Draws a Line That Few Others Recognize
(about 5 hours later)
WASHINGTON — By indicting members of the People’s Liberation Army’s most famous cyberwarfare operation, called Unit 61398 but known among hackers by the moniker “Comment Crew,” the Obama administration is now using the legal system to make a case it has previously confined to classified briefings: that the Chinese military leadership is behind an enormous organized campaign to steal American intellectual property and designs for its own profit. WASHINGTON — By indicting members of the People’s Liberation Army’s most famous cyberwarfare operation — called Unit 61398 but known among hackers as the “Comment Crew” — the Obama administration has turned to the criminal justice system to reinforce its argument that there is a major difference between spying for national security purposes, something the United States does daily, and the commercial, for-profit espionage carried out by China’s military.
For two years now, President Obama and his aides have declared that when the United States spies on China, its goals are sharply different from those of the Chinese who engage in espionage. In public speeches and private conversations with Xi Jinping, the Chinese president, Mr. Obama has argued that it is far more pernicious to use the intelligence instruments of the state for commercial competitive advantage. The United States may do all it can to learn about China’s nuclear arsenal, or about Beijing’s intentions in its territorial disputes with Japan, but it does not, the administration says, steal from China Telecom to help AT&T. The Chinese argue that the distinction is an American artifact, designed for commercial advantage. They believe that looking for business secrets is part of the fabric of national security, especially for a rising economic powerhouse. And while American officials are loathe to admit it, Washington’s view has relatively few advocates around the world. The French, for example, were notorious for conducting state-backed corporate espionage long before the Chinese mastered the form. And if they choose, Chinese leaders has ample opportunity to retaliate by making life even harder for American companies.
Attorney General Eric H. Holder Jr. repeated that argument Monday morning as he unsealed an indictment that included allegations that Unit 61398 had stolen trade secrets for nuclear power plants that would save months or years of design work, as well as information from inside an American solar energy company that was pursuing a trade complaint against its Chinese competitors. Attorney General Eric H. Holder Jr. repeated the we-don’t-spy-for-corporate-America argument Monday morning as he unsealed an indictment that included allegations that Unit 61398 had stolen trade secrets for nuclear power plants that would save Chinese firms years of design work, as well as information from inside an American solar energy company that was pursuing a trade complaint against its Chinese competitors.
That was only the tip of the iceberg: A Federal report last year, classified but widely circulated, indicated that more than 3,000 American companies had been notified by the F.B.I. that they had been hacked, mostly by Chinese competitors. Statistics like those have been at the heart of the argument that the Chinese activity is increasingly intolerable. “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,” Mr. Holder said. “This is a tactic that the U.S. government categorically denounces. As President Obama has said on numerous occasions, we do not collect intelligence to provide a competitive advantage to U.S. companies, or U.S. commercial sectors.”
But the Chinese have already rejected both the facts and the argument, and they used the revelations last year by the former National Security Agency contractor Edward J. Snowden to press their response that the distinction between spying for commerce and spying for national security is a tiny one, and distinctly American. There is little doubt, based on the evidence published last year, that the Comment Crew’s targets include companies that compete directly with state-owned Chinese enterprises that fund the People’s Liberation Army and often line the pockets of its leaders. But they are hardly the only targets of Chinese espionage: The office of the secretary of defense, the firms building the new Joint Strike Fighter, the Council on Foreign Relations, the Aspen Institute and The New York Times have all been targets of Chinese hacking units, for different reasons.
“The Chinese response was that building China’s economy and strengthening its technological base were national security issues,” James A. Lewis, a cybersecurity expert at the Center for Strategic and International Studies in Washington, wrote shortly after the indictment was announced. “One People’s Liberation Army officer put it this way: ‘In the U.S., military espionage is heroic and economic espionage is a crime, but in China, the line is not as clear.' ” But the United States is limited in the complaints it can make because it has targeted similar institutions in China — for equally murky reasons. So when Mr. Obama raised the issue with Xi Jinping, the Chinese president, he focused only on commercial espionage, arguing it is far more pernicious to use the intelligence instruments of the state for a business advantage. The United States may do all it can to learn about China’s nuclear arsenal, or Beijing’s intentions in its territorial disputes with Japan, but it does not, he says, steal from China Telecom to help AT&T.
In fact, even in the United States the line has occasionally blurred. Prosecutors focused on the most clear-cut commercial cases, perhaps because the United States believes the cases will bolster the president’s central argument, that there is something sacred about intellectual property.
The United States spies regularly for economic advantage when the goal is to support trade negotiations; when the United States was trying in the 1990s to reach an accord with Japan, it tapped the Japanese negotiator’s car. It is also widely believed to be using intelligence in support of major trade negotiations now underway with European and Asian trading partners. But in the view of a succession of Democratic and Republican administrations, that is considered fair game. “This is not something they pulled out of their back pocket,” said Kevin Mandia, whose company, the Mandiant division of FireEye, compiled the first public report about Unit 61398 last year. “This was a logical escalation of the pressure.”
Companies can also be targets. Documents released by Mr. Snowden have revealed that the American government pried deep into the servers of Huawei, one of China’s most successful Internet and communications companies. The documents made clear that the N.S.A. was seeking to learn whether the company was a front for the People’s Liberation Army and whether it was interested in spying on American firms. But there was a second purpose: to get inside Huawei’s systems, and to use them as a conduit to spy on countries that buy its equipment around the world. But it was also an effort to regain the high ground the United States lost last year after the revelations made by Edward J. Snowden, the former National Security Agency contractor. The documents he revealed suggested that the clear line Mr. Obama talks about when discussing Chinese cyber practices is often blurry.
Huawei officials said they failed to understand how that differed in any meaningful way from what the United States has accused the Chinese of doing. Even before Mr. Snowden walked out of the Hawaii facilities of the N.S.A. with a trove of documents, it was clear that the United States was not above economic espionage, as long as it was not for the direct benefit of specific companies.
But such reasoning is rejected by former American officials. “I welcome this indictment because it has our government falsely rejecting the false equivalence between us and the Chinese,” said Michael V. Hayden, a former director of both the N.S.A. and the Central Intelligence Agency. “It’s a risky course of action,” he added, “but prior to this we were in stasis.” For example, the United States spies regularly for economic advantage when the goal is to support trade talks; when the Clinton administration was locked in a high-stakes negotiation in the 1990s to reach an accord with Japan, it bugged the Japanese negotiator’s limousine. At the time, the chief beneficiaries would have been the Big Three auto companies and a smattering of parts suppliers. It is also widely believed to be using intelligence in support of trade negotiations underway with European and Asian trading partners. But in the view of a succession of Democratic and Republican administrations, that is fair game.
It is risky because the Chinese have already reacted by declaring that they are shutting down, at least for now, the modest conversations underway between the two countries on norms of behavior on the Internet. Companies can also be targets. Documents released by Mr. Snowden showed that the American government pried deep into the servers of Huawei, one of China’s most successful Internet and communications companies. The documents made clear that the N.S.A. was seeking to learn whether the company was a front for the People’s Liberation Army and whether it was interested in spying on American firms. But there was a second purpose: to get inside Huawei’s systems and use them to spy on countries that buy the company’s equipment.
But those conversations were already fraught. Last month, Defense Secretary Chuck Hagel went to Beijing to argue for a new channel of communication between the United States and China on cyberstrategy. American officials had already given the Chinese an overview of American cybersecurity, emphasizing that the N.S.A. did not take what it collects and hand it to Apple or Microsoft or Google. Huawei officials said they failed to understand how that differed meaningfully from what the United States has accused the Chinese of doing.
The hope was that it would prompt the Chinese to give Washington a similar briefing about the People’s Liberation Army units that are believed to be behind the escalating attacks on American corporations and government networks. So far, the Chinese have not reciprocated. But such reasoning is rejected by the intelligence community. “I welcome this indictment because it has our government rejecting the false equivalence between us and the Chinese,” said Michael V. Hayden, a former director of both the N.S.A. and the Central Intelligence Agency. “It’s a risky course of action,” he added, “but prior to this we were in stasis.”
Instead, they have denied that the P.L.A. conducts cyberoperations. When The New York Times published an article early last year about Unit 61398, in which it detailed some of the group’s operations, there were furious denials from Beijing. For a few weeks, the unit went quiet. It is risky because the Chinese have already declared that they are shutting down, at least for now, the modest talks between the two countries on norms of behavior on the Internet.
Then it came back — operating from different servers, but often against the same American industrial targets. Those conversations were already fraught. Last month, Defense Secretary Chuck Hagel went to Beijing to argue for a new channel of communication between the United States and China on cyberstrategy. American officials had already given the Chinese an overview of American cybersecurity, emphasizing that the N.S.A. did not take what it collects and hand it to Apple or Microsoft or Google.
The hope was that it would prompt the Chinese to give Washington a similar briefing about the People’s Liberation Army units that are believed to be behind the attacks on American corporations and government networks. So far, the Chinese have not reciprocated.
Instead, they have denied that the P.L.A. conducts cyberoperations. When The Times published a n article early last year about Unit 61398, in which it detailed some of the group’s operations, there were furious denials from Beijing. For a few weeks, the unit went quiet.
Then it came back — operating from different servers, but often against the same American industrial targets.