View Video: The Washington Post’s Ellen Nakashima breaks down the significance of the Justice Department’s decision to charge the Chinese military with cyber-espionage against American companies. (/)
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The Justice Department on Monday accused five members of the Chinese military of conducting economic cyber-espionage against American companies, marking the first time that the United States has leveled such criminal charges against a foreign country.
Industries targeted by the alleged cyberspying ranged from nuclear to steel to solar energy, officials said. The hacking by a military unit in Shanghai, they said, was conducted for no other reason than to give a competitive advantage to Chinese companies, including state-owned enterprises.
In a statement he read at a news conference, Attorney General Eric H. Holder Jr. said: “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. . . . Success in the international marketplace should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.”
Holder 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.”
In response, China’s Foreign Ministry charged Monday that the U.S. government “fabricated facts” in the indictment, which it said “seriously violates basic norms of international relations and damages Sino-U.S. cooperation and mutual trust.” It said China lodged a “protest” with the United States, urging it to “correct the error immediately and withdraw its so-called prosecution.”
Foreign Ministry Spokesman Qin Gang denied in a statement that Chinese government, military and “associated personnel” have ever engaged in “the theft of trade secrets through cyber means.” Qin called the U.S. accusations “purely fictitious, extremely absurd.”
Contrary to U.S. claims, “China is the victim of U.S. theft and cyber-surveillance,” Qin said.
In retaliation, the statement said, “China has decided to suspend the activities of Sino-U.S. Cyber Working Group.” It left open the prospect of “further reaction” in the case.
The indictment against members of the People’s Liberation Army follows vows by senior administration officials to hold other nations to account for computer theft of intellectual property from American industry.
China is widely seen as the nation that has been most aggressive in waging cyber-espionage against the United States.
Holder said a federal grand jury in Pittsburgh returned an indictment against five members of a Chinese military unit in a Shanghai building, accusing them of conspiring together and with others to hack into the computers of six US. entities. Named in the case as defendants were Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, all officers of Unit 61398 of the 3rd Department of the People’s Liberation Army. Wang is also known as UglyGorilla, his hacker handle. Gu used the alias KandyGoo and Sun was also known as Jack Sun, prosecutors said.
Victimized by the cyberspying were Westinghouse Electric Co., Alcoa, Allegheny Technologies Inc., United States Steel, the United Steel Workers Union and SolarWorld, officials said. Alcoa is the largest aluminum company in the United States, and U.S. Steel is the nation’s largest steel company.
The indictment alleges that in some cases the hackers stole trade secrets that would have been particularly beneficial to Chinese companies. For example, it alleges that an Oregon producer of solar panel technology, SolarWorld, was rapidly losing market share to Chinese competitors who were systematically pricing exports well below production costs. At the same time, defendant Wen stole thousands of files containing cost and pricing information from the company, the indictment says.
It also alleges that while Westinghouse Electric, a Pennsylvania nuclear power plant manufacturer, was negotiating with a Chinese company over the construction of four power plants in China, defendant Sun stole confidential design specifications for pipes, pipe supports and pipe routing for those plants — information that would enable any competitor looking to build a similar plant to save on research and development costs.
Each of the defendants wascharged with 31 counts for alleged offenses between 2006 and 2014. If convicted, they would face decades in prison. However, they are at large in China, U.S. officials acknowledged, and there is virtually no chance that the Chinese government would turn them over to U.S. authorities.
The five were indicted on May 1, and the indictment was unsealed Sunday and docketed Monday morning, officials said.
In addition to Holder, officials participating in a news conference to announce the charges included John Carlin, assistant attorney general for national security; David Hickton, the U.S. attorney for the Western District of Pennsylvania, based in Pittsburgh; and Robert Anderson, executive associate director of the FBI.
The charges are being brought in western Pennsylvania, where several companies that were allegedly victimized are located.
“This case should serve as a wakeup call” on the seriousness of the ongoing cyber threat, Holder said.
Carlin said that in the past, Chinese government officials have challenged the United States to produce charges that could stand up in a court of law.
“Well, today we are,” he said.
“To be clear, this conduct is criminal,” Carlin said.
“This 21st century burglary has to stop,” Hickton said. “Hacking, spying and cyberthreats for commercial advantage can and will be prosecuted criminally even when the defendants are state actors.”
In response to a question, Hickton said, “This cyber hacking leads directly to the loss of jobs here in the United States.”
In 2012, the Justice Department’s National Security Division begantraining hundreds of prosecutors to combat and prosecute cyber-espionage that poses a threat to national security. Later that year, Carlin, then principal deputy assistant attorney general, toldDefense News that “you’ll see a case brought.”
Even if a prosecution never materializes, the indictment will send a powerful message that such acts will not be tolerated, officials said.
Estimates of the economic costs to the United States of commercial cyber-espionage range from $24 billion to $120 billion annually. China is by far the country that engages in the most such activity against the United States, according to a U.S. national intelligence estimate.
Senior U.S. officials have repeatedly warned China that its continued pilfering of intellectual property to benefit its industries will harm the two countries’ bilateral relationship.
In February 2013, the U.S. security firm Mandiantreported that it had linked a specific unit of the People’s Liberation Army to cyber-intrusions of more than 140 U.S. and foreign companies and entities.
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