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| Hacking Charges Threaten Further Damage to Chinese-American Relations | Hacking Charges Threaten Further Damage to Chinese-American Relations |
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| WASHINGTON — President Obama was not involved in the decision to indict five members of the People’s Liberation Army, an administration official said on Wednesday. But bringing the charges, the official said, was consistent with Mr. Obama’s belief that the United States needed to adopt tougher measures after President Xi Jinping brushed off Mr. Obama’s repeated demands that the Chinese government curb the hacking of American companies. | WASHINGTON — President Obama was not involved in the decision to indict five members of the People’s Liberation Army, an administration official said on Wednesday. But bringing the charges, the official said, was consistent with Mr. Obama’s belief that the United States needed to adopt tougher measures after President Xi Jinping brushed off Mr. Obama’s repeated demands that the Chinese government curb the hacking of American companies. |
| “Our message wasn’t getting through,” the official said, speaking on condition of anonymity, as the United States tried to contain China’s expected retaliation to the charges. | “Our message wasn’t getting through,” the official said, speaking on condition of anonymity, as the United States tried to contain China’s expected retaliation to the charges. |
| The Justice Department had been assembling its case for several years, the officials said, and worked to persuade the American firms that were victims of the alleged theft to go public, which many companies were reluctant to do. But the timing of the indictments had injected an unpredictable new source of tension to Chinese-American relations at a moment when the White House was already rattled by China’s muscle-flexing in its coastal waters, which has brought it into conflict with Vietnam, Malaysia, and two treaty allies of the United States, Japan and the Philippines. | The Justice Department had been assembling its case for several years, the officials said, and worked to persuade the American firms that were victims of the alleged theft to go public, which many companies were reluctant to do. But the timing of the indictments had injected an unpredictable new source of tension to Chinese-American relations at a moment when the White House was already rattled by China’s muscle-flexing in its coastal waters, which has brought it into conflict with Vietnam, Malaysia, and two treaty allies of the United States, Japan and the Philippines. |
| Beijing and Washington might soon find themselves at odds over another sensitive issue: how to rein in the rogue government in North Korea. The administration is weighing whether to impose further sanctions on Pyongyang that could target Chinese enterprises active in the North, a move certain to inflame tensions with Beijing. Mr. Obama discussed the possibility with Prime Minister Shinzo Abe of Japan during a private dinner in Tokyo last month, according to an official familiar with the discussion. | Beijing and Washington might soon find themselves at odds over another sensitive issue: how to rein in the rogue government in North Korea. The administration is weighing whether to impose further sanctions on Pyongyang that could target Chinese enterprises active in the North, a move certain to inflame tensions with Beijing. Mr. Obama discussed the possibility with Prime Minister Shinzo Abe of Japan during a private dinner in Tokyo last month, according to an official familiar with the discussion. |
| While administration officials said the relationship with China has proved resilient to other blows — arms sales to Taiwan, for example, or Mr. Obama’s meetings with the Dalai Lama — they acknowledged that bringing indictments against members of the Liberation Army is different, particularly given the military’s influential role with Mr. Xi, a relatively new Chinese leader. | While administration officials said the relationship with China has proved resilient to other blows — arms sales to Taiwan, for example, or Mr. Obama’s meetings with the Dalai Lama — they acknowledged that bringing indictments against members of the Liberation Army is different, particularly given the military’s influential role with Mr. Xi, a relatively new Chinese leader. |
| On Thursday, the administration will be pressed to go even further. Senator Charles E. Schumer, Democrat of New York, has said he will call for the United States to file a case against China with the World Trade Organization for sanctioning cyberattacks against American corporate interests. Such a move, Mr. Schumer said, would put muscle behind the legal indictments. | On Thursday, the administration will be pressed to go even further. Senator Charles E. Schumer, Democrat of New York, has said he will call for the United States to file a case against China with the World Trade Organization for sanctioning cyberattacks against American corporate interests. Such a move, Mr. Schumer said, would put muscle behind the legal indictments. |
| “This is an important signal to China and other countries that cyberattacks against U.S. businesses are absolutely unacceptable,” Mr. Schumer wrote in a letter to be delivered Thursday to the United States trade representative, Michael B. Froman. “However, the United States and other countries who are victims of these attacks are powerless to enforce their own laws if the offending country refuses to extradite the accused.” | “This is an important signal to China and other countries that cyberattacks against U.S. businesses are absolutely unacceptable,” Mr. Schumer wrote in a letter to be delivered Thursday to the United States trade representative, Michael B. Froman. “However, the United States and other countries who are victims of these attacks are powerless to enforce their own laws if the offending country refuses to extradite the accused.” |
| Because cybercrime is a relatively new phenomenon, there is some question about whether the World Trade Organization could bring cases under its existing rules. But Mr. Schumer said organization members are required to protect trade secrets, which means that cyberespionage would differ little from walking out of a corporate office with the information. | Because cybercrime is a relatively new phenomenon, there is some question about whether the World Trade Organization could bring cases under its existing rules. But Mr. Schumer said organization members are required to protect trade secrets, which means that cyberespionage would differ little from walking out of a corporate office with the information. |
| So far, American officials say, the Chinese reaction to the indictments has been predictable, including suspension of dialogue on cybersecurity, demands that the indictments be withdrawn, threats of retaliation against American companies or officials and reminders of what the National Security Agency does. Analysts said they would not be surprised if the Chinese military retaliated by canceling some contacts with the American military. | So far, American officials say, the Chinese reaction to the indictments has been predictable, including suspension of dialogue on cybersecurity, demands that the indictments be withdrawn, threats of retaliation against American companies or officials and reminders of what the National Security Agency does. Analysts said they would not be surprised if the Chinese military retaliated by canceling some contacts with the American military. |
| For the White House, Mr. Xi poses a major uncertainty. Since ascending to Chinese leadership 18 months ago he has proved more willing than many expected to risk clashes with China’s neighbors over disputed territory in the South and East China Seas. That is driven, analysts said, partly by his need to secure the support of the military, a need that could play into China’s reaction to these indictments. | For the White House, Mr. Xi poses a major uncertainty. Since ascending to Chinese leadership 18 months ago he has proved more willing than many expected to risk clashes with China’s neighbors over disputed territory in the South and East China Seas. That is driven, analysts said, partly by his need to secure the support of the military, a need that could play into China’s reaction to these indictments. |
| “If you look around China’s periphery, China’s relations are bad with a lot of its neighbors,” said another senior official, also speaking on condition of anonymity. For the administration, the legal action is viewed as a path to forcing the Chinese government — and the P.L.A., which has often run its own foreign policy — into a diplomatic dialogue that it has resisted for three years. | “If you look around China’s periphery, China’s relations are bad with a lot of its neighbors,” said another senior official, also speaking on condition of anonymity. For the administration, the legal action is viewed as a path to forcing the Chinese government — and the P.L.A., which has often run its own foreign policy — into a diplomatic dialogue that it has resisted for three years. |
| The administration pressed its case with private and public messages that were all but ignored, officials said. Some officials believe the Chinese were calculating that after the revelations of N.S.A. surveillance operations in the past year, the White House would back away from its cyber theft initiatives. | The administration pressed its case with private and public messages that were all but ignored, officials said. Some officials believe the Chinese were calculating that after the revelations of N.S.A. surveillance operations in the past year, the White House would back away from its cyber theft initiatives. |
| At an informal summit meeting in California last year, Mr. Obama propelled cyber issues to the top of the agenda, warning Mr. Xi that if China did not take it seriously, it would damage the broader relationship. “We had a very blunt conversation about cybersecurity,” Mr. Obama told Charlie Rose of PBS after the meeting. | |
| The effort to engage the Chinese on cyber issues began in earnest in early 2011, as the attacks on American corporations, defense contractors, think tanks, universities and media outlets began to accelerate. The United States said it wanted to make the conversations part of the Strategic and Economic Dialogue, an annual meeting of Chinese and American officials. | The effort to engage the Chinese on cyber issues began in earnest in early 2011, as the attacks on American corporations, defense contractors, think tanks, universities and media outlets began to accelerate. The United States said it wanted to make the conversations part of the Strategic and Economic Dialogue, an annual meeting of Chinese and American officials. |
| James B. Steinberg, then the deputy secretary of state, led the effort and recalled on Wednesday that China “sent a good range of people from the P.L.A., and security and communications officials,” but that the discussion was not highly substantive. | |
| A more detailed conversation came the following year. In 2013, after the public revelations of the attack led by Unit 61398, the army’s cyberwarfare unit, Mr. Obama tried to move the conversation to what his national security adviser, Tom Donilon, called “the center of the relationship.” | |
| But the effort was undermined by the revelations from Edward J. Snowden, the former N.S.A. contractor. Mr. Steinberg, who has just written a book with Michael E. O’Hanlon about United States-China relations titled “Strategic Reassurance and Resolve,” said that the goal should be to “build on the process that we used when there was evidence of proliferation activity by the Chinese” in the nuclear arena. | But the effort was undermined by the revelations from Edward J. Snowden, the former N.S.A. contractor. Mr. Steinberg, who has just written a book with Michael E. O’Hanlon about United States-China relations titled “Strategic Reassurance and Resolve,” said that the goal should be to “build on the process that we used when there was evidence of proliferation activity by the Chinese” in the nuclear arena. |
| Mr. Steinberg said that if the Chinese were unresponsive, “that’s when you show some resolve” and press the issue with indictments, sanctions or other steps. “But there needs to be an endgame,” he said, “because this can’t be resolved by legal means or unilateral actions.” | Mr. Steinberg said that if the Chinese were unresponsive, “that’s when you show some resolve” and press the issue with indictments, sanctions or other steps. “But there needs to be an endgame,” he said, “because this can’t be resolved by legal means or unilateral actions.” |
| For now, however, the administration said the indictments would serve a purpose. “We have found that it’s important to set those limits and boundaries,” a senior official said. “Sometimes friction is useful.” | For now, however, the administration said the indictments would serve a purpose. “We have found that it’s important to set those limits and boundaries,” a senior official said. “Sometimes friction is useful.” |