Wednesday, May 21, 2014

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.

6 comments:

  1. De Oppressor LiberMay 21, 2014 at 9:18 AM

    “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.”

    But we have tolerated (Time period: 2006-2014) these actions by the inaction of this and the last two years of the Bush administration’s Justice Department doing NOTHING. How long does it take to find out that there is a Wolf in the Hen House?

    I am the last person to want government controls. I would expect large multi-national corporations to police their own activities, look at what is in both in their companies interests and that of the United States, and perhaps walk away from lucrative deals with the likes of China. I know that is against the rules of business growth and expansion. But sometimes there are better ways – and this seems to be one of them.

    Bill Clinton really started this acceptance of technical information sharing and hardware selling via his close personal friends (large campaign donors) at Singer Corp. that GAVE Launch & Guidance Ballistic Missile knowledge to the North Koreans remember the salient point here is GAVE. But what did they get it return.

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  2. Politically, and for international relations, what the Obama's government did was possibly the both the smartest and dumbest thing they could have done.

    Obama's desperate to get his tattered reputation, and the Democrats approval rating up so pointing the finger at someone else is a great ploy; internationally, in the course of a month, he's antagonized two of the world's largest powers, and left other countries bewildered with the USA's incredible hypocrisy.

    If it was Briton, Germany, France, Japan, or S. Korea doing the spying little would have been said, and things would have quietly been done in the background.

    All in all, it’s a desperate move by Obama’s anxious government trying to gain domestic approval, while destroying any and all international credibility.

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  3. Obama is notorious for saying one thing and doing the opposite. In this case with the Chinese Obama has a 1.3 Trillion dollar IOU owned by China hanging over his head and in order to get these (most likely valid charges against the Chinese) China may well resort to any ploy!

    The Chinese could sell their IOU to anyone they wish – say Russia or Iran or the Palestine government. Or they could just proceed right to the “juggler vain” in Obama’s neck and suck life right out of him and his remaining 2 years in office.

    See Obama has over played his hand or overestimated his importance to the Chinese. Either way I think this was a plan by Beijing right from the start… an old “blackmailing scheme” – indebtedness and game over.

    The Chinese without question loaned the United States (Obama) willingly every time for all of Obama’s overspending knowing one day they would have the trump card and today is here.

    Somehow, for some reason do not be surprised if these charges against the 5 Chinese military people quietly go away.

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  4. Isn’t this just another wretched example of how inept the Obama Administration is at every nuance of Foreign Policy? We could go back to January 20, 2009 up to the present and at every turn this administration has bungled, twisted, falsified, lost control, been hammered down by much lesser nation … simply failed as badly as possible!

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  5. Today’s action by the Department of Justice is a reflection of the frustration that the Obama Administration has suffering. There is nothing working for them in International/Foreign Affairs. I think that if things had been going better for Washington, DC and if Secretary of defense Hagel had had a better trip last month to China you wouldn’t have seen this today.

    It’s not really a well-kept secret that the US has at times conducted ease dropping exercises against Huawei (Corporation) in China and Huawei has known ties to the People’s Liberation Army in China.

    This may be for diplomatic purposes only as far as the White House is concerned. This could be just a warning to China as to how much we know about their Intel gathering activities. Obama is desperately seeking a distraction. The smidgens are catching up to him.

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  6. The desire for the knowledge of what the other person, the other company, the other country knows or is working on is downright ancient. It was just easier and seemed less invasive or despicable when an envelope of money was passed on to someone in the other company and he passed on some Xerox copies … Xerox Wars.

    Company intelligence and property should be secure. But when a million ID’s and passwords of individual citizens can be copied in a key stroke, how can Cyber Espionage be prevented.

    Well prevention may be a simple matter – better Software Programs. If a group of ‘hackers” can sit down and somewhat quickly hack into a computer system – then why can’t a company generate its own, single use software. Expensive? – Certainly. Invaluable? - Most definitely.

    The US government has the finest encryption/decryption devices available.

    If man created the problem … then man can fix it - if man really wants to!

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