Charles Dharapak/AP

U.S. accuses Chinese officials of cyberspying, tensions escalate

Attorney General Holder announces unprecedented charges against Chinese officials accused of spying on US companies

The U.S. on Monday made cyberespionage charges against five Chinese military officials accusing them of hacking into U.S. companies to gain trade secrets.

Attorney General Eric Holder says the companies affected were Alcoa World Alumina, Westinghouse Electric, Allegheny Technologies, U.S. Steel and SolarWorld as well as the United Steelworkers union.

According to the indictment, the hackers are accused of stealing trade secrets and economic espionage.

China denounced the first-of-their-kind charges on Monday and state-run Xinhua News Agency said Tuesday that Chinese Assistant Foreign Minister Zheng Zeguang had called U.S. Ambassador Max Baucus to a meeting Monday night.

Zheng lodged a "solemn representation with the U.S. side," Xinhua said, using standard diplomatic language for a complaint. A U.S. Embassy spokesman said he had no immediate comment.

The diplomatic move marks a serious escalation the diplomatic move, which marks an escalation in a dispute that has deeply angered Beijing. 

The charges Holder made on Monday have been described as unprecedented and dramatize a longtime Obama administration goal to prosecute state-sponsored cyberthreats. It is the first time the U.S. Justice Department has publicly accused China of cyberspying.

Holder said the U.S. will not tolerate foreign government efforts to sabotage American companies.

“It is our hope that the Chinese government will respect our criminal justice system,” Holder said.

The indictment has put a greater strain on the U.S.-China relationship.

Chinese Foreign Ministry spokesman Qin Gang denied the allegations and said that Beijing would suspend binational activities to bolster international cybersecurity, citing the U.S.’s “lack of sincerity” to resolve issues through dialogue.

“The U.S. accusation against Chinese personnel is purely ungrounded and absurd,” he said.

In a separate statement, China's defense ministry said the government and the military have never engaged in cyberspying on businesses. It called on the United States to immediately stop spying on China, saying that the charges have seriously damaged trust between the two militaries.

China announced it was suspending cooperation with the United States in a joint cybersecurity task force over Monday's charges that officers stole trade secrets from major American companies. The Foreign Ministry demanded Washington withdraw the indictment.

In recent months, Washington has been increasingly critical of what it describes as provocative Chinese actions in pursuit of territorial claims in disputed seas in East Asia. For its part, Beijing complains that the Obama administration’s attempts to redirect its foreign policy toward Asia after a decade of war in the Middle East is emboldening China’s neighbors and causing tension.

U.S. officials previously accused China’s army and China-based hackers of launching attacks on American industrial and military targets, often to steal secrets or intellectual property. China has said that it faces a major threat from hackers, and the country’s military is believed to be among the biggest targets of the NSA and U.S. Cyber Command.

Qin echoed these allegations in his response to Washington Monday. “It is a fact known to all that relevant U.S. institutions have long been involved in large-scale and organized cybertheft as well as wiretapping and surveillance activities against foreign political leaders, companies and individuals,” he said.

“China is a victim of severe U.S. cybertheft, wiretapping and surveillance activities. Large amounts of publicly disclosed information show that relevant U.S. institutions have been conducting cyberintrusion, wiretapping and surveillance activities against Chinese government departments, institutions, companies, universities and individuals.”

Despite the pointed language, damage to U.S.-Chinese relations is likely to be limited, with little change in trade or military links, because Beijing realizes the indictment of the five officers is symbolic, said Shen Dingli, a director of the Center for American Studies at Shanghai's Fudan University. He has close ties to China's foreign policy establishment.

Beijing is unlikely to engage in tit-for-tat retaliation such as issuing its own indictments of American soldiers and probably will go ahead with plans to take part in U.S.-hosted naval exercises next month, Shen said. He said cybersecurity cooperation is likely to be suspended indefinitely, but that should have little impact because the joint group achieved little in its three meetings.

"Political, security and commercial espionage will always happen," Shen said. "The U.S. will keep spying on Chinese companies and leaders, so why can't China do the same?"

The Cabinet's Internet information agency said Chinese networks and websites have been the target of thousands of hacking attacks from computers in the United States.

In March, Beijing expressed “extreme concern” over reports by The New York Times that the NSA had secretly accessed the email archive of telecom giant Huawei, a major competitor of U.S.-based Cisco Systems.

U.S. officials maintained, in at least one anonymous comment to the press, that the intelligence operation was not economic espionage.

Last September, President Barack Obama discussed cybersecurity issues on the sidelines of a summit in St. Petersburg, Russia, with Chinese President Xi Jinping.

White House spokesman Ben Rhodes said at the time that Obama had addressed concerns about cyberthreats emanating from China. He said Obama told Xi the U.S. sees it not through the prism of security but out of concern over theft of trade secrets.

John Carlin, recently installed as the head of the Justice Department’s National Security Division, earlier this year cited prosecution of state-sponsored cyberthreats as a key goal for the Obama administration.

An FBI official last week told Reuters to expect multiple cybersecurity-related cases, including indictments and arrests, in the coming weeks.

In late March, Defense Secretary Chuck Hagel revealed that the Pentagon planned to more than triple its cybersecurity staff in the next few years to defend against Internet attacks that threaten national security.

Hagel’s comments at the National Security Agency headquarters in Fort Meade, Maryland, came as he prepared to visit China.

“Our nation’s reliance on cyberspace outpaces our cybersecurity,” Hagel said at the time. “Our nation confronts the proliferation of destructive malware and a new reality of steady, ongoing and aggressive efforts to probe, access or disrupt public and private networks and the industrial control systems that manage our water and our energy and our food supplies.”

The attempt to crack down on China cyberespionage comes a year after details of the scope of the Obama administration’s own state-sanctioned spying program was revealed as a part of the broader leaks by former National Security Agency contractor Edward Snowden.

Among the revelations from those leaks was a U.S. effort to spy on the leaders of some of its allies, including Germany and Brazil, which led to public outrage in both countries. 

Al Jazeera and wire services

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