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| China vents outrage over U.S. cyberspying indictment | China vents outrage over U.S. cyberspying indictment |
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| BEIJING — Outraged by U.S. cyberspying charges against members of a secretive Chinese military unit, China summoned the U.S. ambassador in Beijing for a dressing down, state media said Tuesday, and the Defense Ministry blasted the U.S. accusations as hypocritical. | |
| China’s Internet controllers, meanwhile, published new statistics that they said show massive cyberattacks on China originating from the United States. “Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone,” the state-run Xinhua News Agency reported. “In the meantime, the U.S. repeatedly accuses China of spying and hacking.” | China’s Internet controllers, meanwhile, published new statistics that they said show massive cyberattacks on China originating from the United States. “Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone,” the state-run Xinhua News Agency reported. “In the meantime, the U.S. repeatedly accuses China of spying and hacking.” |
| A day after the U.S. Justice Department unveiled explosive criminal cyber-espionage charges against five Chinese military officers in the first such case implicating a foreign government, Beijing was still sputtering with indignation, and diplomats and cyber-experts on both sides were trying to figure out how to pick up the pieces. In a salvo of invective late Monday, the Chinese Foreign Ministry called the charges in a U.S. federal grand jury indictment “purely fictitious, extremely absurd.” China also announced it was suspending participation in the Sino-U.S. Cyber Working Group, formed to bridge differences over cyberspying. | A day after the U.S. Justice Department unveiled explosive criminal cyber-espionage charges against five Chinese military officers in the first such case implicating a foreign government, Beijing was still sputtering with indignation, and diplomats and cyber-experts on both sides were trying to figure out how to pick up the pieces. In a salvo of invective late Monday, the Chinese Foreign Ministry called the charges in a U.S. federal grand jury indictment “purely fictitious, extremely absurd.” China also announced it was suspending participation in the Sino-U.S. Cyber Working Group, formed to bridge differences over cyberspying. |
| According to an online notice posted Tuesday by Xinhua, Assistant Foreign Minister Zheng Zeguang summoned Ambassador Max Baucus to complain that U.S. authorities published the indictment, ignoring the strong protests of Chinese authorities. | According to an online notice posted Tuesday by Xinhua, Assistant Foreign Minister Zheng Zeguang summoned Ambassador Max Baucus to complain that U.S. authorities published the indictment, ignoring the strong protests of Chinese authorities. |
| In a lengthy statement Tuesday, the Defense Ministry invoked WikiLeaks reports and recent disclosures by fugitive National Security Agency contractor Edward Snowden to level charges of hypocrisy against U.S. authorities. | In a lengthy statement Tuesday, the Defense Ministry invoked WikiLeaks reports and recent disclosures by fugitive National Security Agency contractor Edward Snowden to level charges of hypocrisy against U.S. authorities. |
| The indictment accused five members of a People’s Liberation Army unit in Shanghai of hacking into U.S. computers and stealing valuable trade secrets from leading steel, nuclear plant and solar power firms. | The indictment accused five members of a People’s Liberation Army unit in Shanghai of hacking into U.S. computers and stealing valuable trade secrets from leading steel, nuclear plant and solar power firms. |
| The landmark case paves the way for more indictments and demonstrates that the United States is serious about holding foreign governments accountable for crimes committed in cyberspace, U.S. officials said at a news conference Monday. | The landmark case paves the way for more indictments and demonstrates that the United States is serious about holding foreign governments accountable for crimes committed in cyberspace, U.S. officials said at a news conference Monday. |
| The Obama administration “will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market,” Attorney General Eric H. Holder Jr. said. | The Obama administration “will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market,” Attorney General Eric H. Holder Jr. said. |
| The decision to confront China grew out of a White House strategy formulated two years ago to impose increasing costs on Beijing if it did not respond to requests to stop its widespread hacking for commercial advantage. The indictment is intended to address what President Obama and senior intelligence officials have called one of the top threats to national and economic security, with an estimated annual cost to the U.S. economy that ranges from the tens of billions of dollars to more than $100 billion. | The decision to confront China grew out of a White House strategy formulated two years ago to impose increasing costs on Beijing if it did not respond to requests to stop its widespread hacking for commercial advantage. The indictment is intended to address what President Obama and senior intelligence officials have called one of the top threats to national and economic security, with an estimated annual cost to the U.S. economy that ranges from the tens of billions of dollars to more than $100 billion. |
| According to legal experts, China has a rich menu of options for retaliation, including the prospect of leveling charges of its own against the U.S. government. | According to legal experts, China has a rich menu of options for retaliation, including the prospect of leveling charges of its own against the U.S. government. |
| “Traditionally we don’t prosecute each other on these kinds of things — espionage, theft, cyber-intrusions across borders,” said Mark Rasch, a former Justice Department official in the criminal division’s fraud section. “By doing this, the U.S. has set a precedent.” | “Traditionally we don’t prosecute each other on these kinds of things — espionage, theft, cyber-intrusions across borders,” said Mark Rasch, a former Justice Department official in the criminal division’s fraud section. “By doing this, the U.S. has set a precedent.” |
| China could bring charges against individual U.S. officials, charge an entire agency such as the NSA, or even U.S. cyber-corporations such as Mandiant, the security firm whose investigation into Chinese hacking helped lead to Monday’s unveiling of criminal charges, if the Chinese secure evidence that the company’s investigation broke Chinese laws. | China could bring charges against individual U.S. officials, charge an entire agency such as the NSA, or even U.S. cyber-corporations such as Mandiant, the security firm whose investigation into Chinese hacking helped lead to Monday’s unveiling of criminal charges, if the Chinese secure evidence that the company’s investigation broke Chinese laws. |
| “It can quickly devolve into an unending tit-for-tat,” Rasch said. | “It can quickly devolve into an unending tit-for-tat,” Rasch said. |
| But bringing cyber-charges against the United States might be tough for China, some Chinese experts said. | But bringing cyber-charges against the United States might be tough for China, some Chinese experts said. |
| “There’s no evidence Chinese authorities have the ability to gather similarly solid evidence to support a charge,” said a Chinese engineer at a private IT firm, who asked for anonymity to talk about Chinese cyber-capabilities. The original files in the Snowden scandal, which might hold some details of U.S. intrusions into Chinese computers, are held by foreign media. | “There’s no evidence Chinese authorities have the ability to gather similarly solid evidence to support a charge,” said a Chinese engineer at a private IT firm, who asked for anonymity to talk about Chinese cyber-capabilities. The original files in the Snowden scandal, which might hold some details of U.S. intrusions into Chinese computers, are held by foreign media. |
| Another route would be economic punishment. “People’s pocketbooks are a riper and more satisfying target,” said Douglas Paal, a former top National Security Council official on Asia. | Another route would be economic punishment. “People’s pocketbooks are a riper and more satisfying target,” said Douglas Paal, a former top National Security Council official on Asia. |
| China has shown in the past it is not afraid to wield its colossal economy as a cudgel. An ongoing spat with Japan, for example, led it in 2010 to temporarily shut down rare earth exports, crucial to Japanese electronic companies. | China has shown in the past it is not afraid to wield its colossal economy as a cudgel. An ongoing spat with Japan, for example, led it in 2010 to temporarily shut down rare earth exports, crucial to Japanese electronic companies. |
| Fears of retaliation at times have made U.S. companies hesitant to join Washington’s efforts to confront China on cybertheft. China’s economy, however, is not what it used to be and is now facing a slowdown. As they grapple with a need for economic reforms in coming years, Chinese leaders may not feel such retaliation is worth it. | Fears of retaliation at times have made U.S. companies hesitant to join Washington’s efforts to confront China on cybertheft. China’s economy, however, is not what it used to be and is now facing a slowdown. As they grapple with a need for economic reforms in coming years, Chinese leaders may not feel such retaliation is worth it. |
| China could also show its displeasure in the realm of diplomacy, cutting off military ties like it has in recent years to protest U.S. arms sales to Taiwan or halting other cooperation, experts said. | China could also show its displeasure in the realm of diplomacy, cutting off military ties like it has in recent years to protest U.S. arms sales to Taiwan or halting other cooperation, experts said. |
| In presenting the charges Monday, U.S. officials tried to draw a clear distinction between cyberspying for national security reasons and cyberspying to steal corporate secrets for economic gain, which the United States says it does not do but that China does all the time. | In presenting the charges Monday, U.S. officials tried to draw a clear distinction between cyberspying for national security reasons and cyberspying to steal corporate secrets for economic gain, which the United States says it does not do but that China does all the time. |
| “The U.S. would certainly like to push this beyond the U.S.-China relationship and create a norm against cyber-economic espionage,” said Adam Segal, a cybersecurity expert at the Council on Foreign Relations. | “The U.S. would certainly like to push this beyond the U.S.-China relationship and create a norm against cyber-economic espionage,” said Adam Segal, a cybersecurity expert at the Council on Foreign Relations. |
| Another reason that U.S. officials sought the indictment is simply because nothing else was working, experts said, even though President Obama has brought up the issue repeatedly with the Chinese. | Another reason that U.S. officials sought the indictment is simply because nothing else was working, experts said, even though President Obama has brought up the issue repeatedly with the Chinese. |
| “The Chinese have ignored U.S. requests to stop stealing U.S. companies’ intellectual property,” said Bonnie Glaser, senior Asia adviser at the Center for Strategic and International Studies. “The difference between stealing intelligence and company secrets is lost on the Chinese. Both are considered fair game and an essential means to accelerate China’s reemergence as a great power.” | “The Chinese have ignored U.S. requests to stop stealing U.S. companies’ intellectual property,” said Bonnie Glaser, senior Asia adviser at the Center for Strategic and International Studies. “The difference between stealing intelligence and company secrets is lost on the Chinese. Both are considered fair game and an essential means to accelerate China’s reemergence as a great power.” |
| Beijing has pointed to disclosures by Snowden of vast NSA surveillance activities — including spying on Chinese companies — to assert that the United States is the greater aggressor in the area. | Beijing has pointed to disclosures by Snowden of vast NSA surveillance activities — including spying on Chinese companies — to assert that the United States is the greater aggressor in the area. |
| The indictment, which was returned May 1, charges five officials in the People’s Liberation Army (PLA) — hackers with handles such as UglyGorilla and KandyGoo — with computer fraud, conspiracy to commit computer fraud, damaging a computer, aggravated identity theft and economic espionage. | The indictment, which was returned May 1, charges five officials in the People’s Liberation Army (PLA) — hackers with handles such as UglyGorilla and KandyGoo — with computer fraud, conspiracy to commit computer fraud, damaging a computer, aggravated identity theft and economic espionage. |
| China has no extradition treaty with the United States and none of the suspects is likely to see a U.S. courtroom. Nonetheless, Holder said he hopes Beijing will “respect our criminal justice system and let justice take its course.” | China has no extradition treaty with the United States and none of the suspects is likely to see a U.S. courtroom. Nonetheless, Holder said he hopes Beijing will “respect our criminal justice system and let justice take its course.” |
| The indictment is the result of years of work, officials said, in which investigators followed a complex trail of computer bits to one building in one Chinese city. | The indictment is the result of years of work, officials said, in which investigators followed a complex trail of computer bits to one building in one Chinese city. |
| That nondescript 12-story building under military guard in the Pudong New Area of Shanghai is home to Unit 61398 — part of the PLA and identified by researchers as one of the most prolific hacking crews targeting Western companies’ trade secrets and intellectual property. | That nondescript 12-story building under military guard in the Pudong New Area of Shanghai is home to Unit 61398 — part of the PLA and identified by researchers as one of the most prolific hacking crews targeting Western companies’ trade secrets and intellectual property. |
| The 56-page indictment describes the hacking of five companies and a trade union. All but one are located in the Western District of Pennsylvania, where the charges were brought. | The 56-page indictment describes the hacking of five companies and a trade union. All but one are located in the Western District of Pennsylvania, where the charges were brought. |
| The companies — which include U.S. Steel, the country’s largest steelmaker, and Alcoa, the largest aluminum manufacturer — agreed to come forward, bucking what for years had been a reluctance by many firms to acknowledge that they had been hacked for fear of shareholder lawsuits and damage to reputation. | The companies — which include U.S. Steel, the country’s largest steelmaker, and Alcoa, the largest aluminum manufacturer — agreed to come forward, bucking what for years had been a reluctance by many firms to acknowledge that they had been hacked for fear of shareholder lawsuits and damage to reputation. |
| “There has come a point at which enough is enough,” said David Hickton, U.S. attorney for the Western District of Pennsylvania. “The companies are tired of being raided.” | “There has come a point at which enough is enough,” said David Hickton, U.S. attorney for the Western District of Pennsylvania. “The companies are tired of being raided.” |
| The other companies are Westinghouse Electric, which builds nuclear power plants; Allegheny Technologies, a metals manufacturer; and SolarWorld, which makes solar products in Hillsboro, Ore. Also hit was the United Steelworkers union, which opposes Chinese trade practices. | The other companies are Westinghouse Electric, which builds nuclear power plants; Allegheny Technologies, a metals manufacturer; and SolarWorld, which makes solar products in Hillsboro, Ore. Also hit was the United Steelworkers union, which opposes Chinese trade practices. |
| The indictment alleges that the hackers stole trade secrets that would have been particularly beneficial to Chinese companies.PLA member Wen Xinyu — also known as “WinXYHappy” — hacked SolarWorld’s computers and stole thousands of files containing cost and pricing information, prosecutors allege. Hackers took detailed production information that could help a competitor shorten its research and development timeline. | The indictment alleges that the hackers stole trade secrets that would have been particularly beneficial to Chinese companies.PLA member Wen Xinyu — also known as “WinXYHappy” — hacked SolarWorld’s computers and stole thousands of files containing cost and pricing information, prosecutors allege. Hackers took detailed production information that could help a competitor shorten its research and development timeline. |
| The American company rapidly lost market share to Chinese competitors that were accused of systematically pricing exports well below production costs. | The American company rapidly lost market share to Chinese competitors that were accused of systematically pricing exports well below production costs. |
| After a complaint from SolarWorld, the Commerce Department and the U.S. International Trade Commission found that China had “dumped” solar products in the U.S. market. | After a complaint from SolarWorld, the Commerce Department and the U.S. International Trade Commission found that China had “dumped” solar products in the U.S. market. |
| In another case, defendant Wang Dong — or UglyGorilla — gained access to a U.S. Steel computer, which allowed him to steal descriptions for more than 1,700 other company computers and worm his way into vulnerable machines, according to the indictment. He gained access after fellow PLA hacker Sun Kailiang, also known as Jack Sun, sent spear-phishing e-mails to employees, including one purporting to be from the firm’s chief executive. The e-mails contained malware that, when clicked on, surreptitiously loaded onto employees’ computers and allowed back-door access. | In another case, defendant Wang Dong — or UglyGorilla — gained access to a U.S. Steel computer, which allowed him to steal descriptions for more than 1,700 other company computers and worm his way into vulnerable machines, according to the indictment. He gained access after fellow PLA hacker Sun Kailiang, also known as Jack Sun, sent spear-phishing e-mails to employees, including one purporting to be from the firm’s chief executive. The e-mails contained malware that, when clicked on, surreptitiously loaded onto employees’ computers and allowed back-door access. |
| John Carlin, the assistant attorney general for national security, said the Chinese have long challenged U.S. officials to provide hard evidence of their data theft that could stand up in court. “Well today, we are,” he said. “For the first time, we are exposing the faces and names behind the keyboards in Shanghai used to steal from American businesses.” | John Carlin, the assistant attorney general for national security, said the Chinese have long challenged U.S. officials to provide hard evidence of their data theft that could stand up in court. “Well today, we are,” he said. “For the first time, we are exposing the faces and names behind the keyboards in Shanghai used to steal from American businesses.” |
| Although the indictment does not name the state-owned enterprises that may have benefited from the espionage, according to open-source literature, they are State Nuclear Power Technology, the Baosteel Group and the Aluminum Corporation of China, which is commonly known as Chinalco. | Although the indictment does not name the state-owned enterprises that may have benefited from the espionage, according to open-source literature, they are State Nuclear Power Technology, the Baosteel Group and the Aluminum Corporation of China, which is commonly known as Chinalco. |
| Nakashima reported from Washington. | Nakashima reported from Washington. |