The Growing Cyber War between China and the United States

The media has been full of stories about the US indictment of Chinese military officers for criminal cybersecurity offenses. Here are excerpts from the US government's posted explanation of the charges. ~~~~~ "A grand jury in the Western District of Pennsylvania (WDPA) indicted five Chinese military hackers for computer hacking, economic espionage and other offenses directed at six American victims in the U.S. nuclear power, metals and solar products industries The indictment alleges that the defendants conspired to hack into American entities, to maintain unauthorized access to their computers and to steal information from those entities that would be useful to their competitors in China, including [Chinese] state-owned enterprises (SOEs). In some cases, it alleges, the conspirators stole trade secrets that would have been particularly beneficial to Chinese companies at the time they were stolen.  In other cases, it alleges, the conspirators also stole sensitive, internal communications that would provide a competitor, or an adversary in litigation, with insight into the strategy and vulnerabilities of the American entity. 'This is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking,' U.S. Attorney General Eric Holder 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 global market place 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. This 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.' 'For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,' said FBI Director James B. Comey.  'The indictment announced today is an important step. But there are many more victims, and there is much more to be done. With our unique criminal and national security authorities, we will continue to use all legal tools at our disposal to counter cyber espionage from all sources.' 'State actors engaged in cyber espionage for economic advantage are not immune from the law just because they hack under the shadow of their country’s flag,' said John Carlin, Assistant Attorney General for National Security. 'Cyber theft is real theft and we will hold state sponsored cyber thieves accountable as we would any other transnational criminal organization that steals our goods and breaks our laws.' 'This 21st century burglary has to stop," said David Hickton, U.S. Attorney for the Western District of Pennsylvania. 'This prosecution vindicates hard working men and women in Western Pennsylvania and around the world who play by the rules and deserve a fair shot and a level playing field.' Summary of the Indictment Defendants :  Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, who were officers in Unit 61398 of the Third Department of the Chinese People’s Liberation Army (PLA).  The indictment alleges that Wang, Sun, and Wen, among others known and unknown to the grand jury, hacked or attempted to hack into U.S. entities named in the indictment, while Huang and Gu supported their conspiracy by, among other things, managing infrastructure (e.g., domain accounts) used for hacking Victims : Westinghouse Electric Co. (Westinghouse), U.S. subsidiaries of SolarWorld AG (SolarWorld), United States Steel Corp. (U.S. Steel), Allegheny Technologies Inc. (ATI), the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) and Alcoa Inc. Time period : 2006-2014 Crimes : Thirty-one counts." ~~~~~ US officials listed only one US technology firm among the victims in the indictments of five Chinese military officers for allegedly hacking US companies. But, according to the Wall Street Journal, if the past is a guide, it will be hi-tech companies that figure prominently in China's response. The unexpected US move on Monday adds to the growing battle between Washington and Beijing over cybersecurity issues that are already hampering US companies in the $324 billion Chinese information technology market. Experts say the issue has already hurt sales for companies like Cisco Systems Inc. and International Business Machines. The worry, according to experts, is that the Obama administration's latest move against China over alleged hacking could further sour a large and growing technology market for foreign players. "This is just another straw on the camel's back, which is already overloaded by previous events," David Wolf, managing director, global China practice for consulting firm Allison+Partners, told the WSJ. A number of major tech companies doing business in China have not yet commented on the indictments. China's Foreign Ministry said Tuesday that it had summoned the US's newly arrived ambassador, former Montana Senator Max Baucus, to express displeasure over the indictments, and both the Chinese Foreign Ministry and Defense Ministry are warning of repercussions. Foreign Ministry spokesman Hong Lei said at a daily briefing: "We will take further action," adding that Beijing has already suspended participation in a working group with the US on cybersecurity formed a year ago, and he demanded that Washington scrap the charges. "What the US should do now is to withdraw the indictments," Mr. Hong said. Defense Ministry spokesman Geng Yansheng, in a separate statement, said the US move runs counter to generally improving relations between the countries militaries and "severely damages trust between the two sides." Both spokesmen said China had been hit by US cyberattacks - Mr. Hong said targets included government agencies, universities and individuals - and both accused the US of hypocrisy. "We urge the US to give us a clear explanation of what it's done and stop all relevant actions," Mr. Hong said. The unprecedented criminal indictment of five Chinese military officers adds strains to a US-China relationship already being tested by Beijing's aggressive efforts to enforce its maritime claims against US allies Japan and the Philippines. The indictments will also undoubtedly impact a busy agenda that diplomats see as giving Beijing ample opportunity to retaliate -- both sides are preparing for an annual meeting of cabinet ministers scheduled for July that is convened to address a broad array of security and economic issues / an annual human rights dialogue has yet to be scheduled / negotiators are hoping to finish work on a treaty to clarify rules for investment and remove barriers to it. ~~~~~ Dear readers, US Steel, Westinghouse and ALCOA are among the oldest and most respected corporations in America and the world. They are mature, conservative companies whose conduct of business is marked by the avoidance of flamboyant public displays or campaigns. So, that these corporations are the named victims in the US indictments can be seen as a serious statement about their loss of business trade secrets and patented or in-development technology. The potential for damage to US technology companies is obvious, and it is a continuation of the negative effects created by the revelations made by Edward Snowden about NSA cyberspying around the world. And attempts by the US government to differentiate between public security and private commercial cyberspying will not convince the Chinese, whose pride and sense of place in the world have been badly damaged. For the US to do this officially and publicly must mean that the charges are supportable and grave. While President Obama's foreign policy record would make us skeptical about the need for such a public slap at China, the decision of US Steel, Westinghouse and ALCOA to pursue this legal action must be seen as serious, lending great weight to the US Justice Department's claims. Stay tuned because this cyber war has just started.