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.
The indictment follows a vows to hold other nations accountable for theft of U.S. companies’ intellectual property.

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 was charged 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 began training 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, told Defense 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 Mandiant reported 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.

The United States and China agreed last year to begin holding regular, high-level talks on cybersecurity and commercial espionage. But whenever U.S. officials raise the issue of economic spying, the Chinese are not receptive, administration officials said. Though Washington takes pains to distinguish between foreign intelligence gathering and spying to help a country’s own industries gain an economic advantage, officials say that is a distinction without a difference to the Chinese.

The leaks from former National Security Agency contractor Edward Snowden beginning last June have only complicated the talks. Beijing has pointed to disclosures by Snowden of vast NSA surveillance activities — including spying on Chinese companies — to assert that the United States is the greater aggressor in the area.


The U.S. charges are likely to be seen in China as a major action, said Jin Canrong, vice director of international studies at Beijing’s Renmin University. “In the past, the U.S. talked about it but never took any real actions. If the U.S. freezes some Chinese military assets as a result of this, China will respond with counteractions accordingly.”

How negatively it affects U.S.-China relations depends on what further actions the White House takes beyond the criminal charges, Jin said. But in China, he noted, there is a feeling of hypocrisy whenever the United States brings up such charges, especially in light of the recent NSA leaks. “The U.S. has been doing the same thing,” he said.

“This case has been under preparation for a year,” said Bonnie S. Glaser, a senior Asia expert at the Washington-based Center for Strategic and International Studies who meets frequently with military-related and state-sponsored academics in China. The United States is now resorting to such charges because nothing else has worked diplomatically, she said. President Obama has raised the issue repeatedly with Chinese President Xi Jinping in meetings.

“The Chinese have ignored U.S. requests to stop stealing U.S. companies’ intellectual property. The U.S. believes it is necessary to impose consequences for China’s actions,” she said.

“Since Snowden’s revelations, the Chinese have ridiculed U.S. charges that it is stealing [intellectual property]. I expect they will call this U.S. action hypocritical and dismiss it out of hand,” she added.

“The difference between stealing intelligence and company secrets is lost on the Chinese,” she said. “Both are considered fair game and an essential means to accelerate China’s reemergence as a great power.”

At the same time, China has used recent disclosures on NSA surveillance for maximum diplomatic effect to push back against U.S. accusations of cyberattacks. Among the most damaging revelations was a report in March that the NSA infiltrated Chinese telecommunications giant Huawei Technologies to see whether it was spying for Beijing and to turn its equipment against other countries, such as Iran.


In recent years, U.S. officials have made the distinction between cyberspying for national security and cyber-intrusions into private companies for economic theft, which the United States says it does not do but which it accuses China of doing all the time. The Huawei case, while not a theft for economic advantage, showed the U.S. government infiltrating a private Chinese company.

In response, China seized the opportunity for role reversal, demanding an explanation from the United States

“China has lodged complaints to the United States about this many times. We urge the U.S. side to make a clear explanation and stop this kind of acts,” Chinese Foreign Ministry spokesman Hong Lei said in March.

Since last year’s NSA revelations, China has also shown increasing concerns about its own cybersecurity.

Demonstrating how seriously its leaders take the threat, Xi personally took charge of a new government body earlier this year overseeing China’s cybersecurity and vowed to turn China into a “cyber-power,” according to state-run media.

In the most recent example of such growing worries, a high-ranking Chinese Internet official said Sunday that China must intensify its security efforts, warning that “hostile forces abroad” are using cyberspace as a major channel to “infiltrate China.”

Douglas Paal, a former National Security Council official now at Carnegie Endowment for International Peace, said he expects that many Chinese will view the prosecution “as one of Washington’s ways to get back at China for recent pushes against Japan, the Philippines, and Vietnam.”

Paal added: “It will take some time to get people to accept that this is about commercial theft, and not something else. . . . The Chinese are still enjoying their luck at having the Snowden revelations to distract public attention from the U.S. argument against commercial espionage. That is not likely to change soon.”

 Frazzled wrote:
I don't get the point of this. Are these people in custody? If not whats the point?

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feeder wrote:
I thought it was common knowledge that everybody spies on everybody else, even amongst allies and even domestically? Why the denial?

 Tannhauser42 wrote:

feeder wrote:
I thought it was common knowledge that everybody spies on everybody else, even amongst allies and even domestically? Why the denial?

Exactly, we spy on them, they spy on us, etc. The trick is to not actually get caught doing it.

 Tannhauser42 wrote:

Exactly, we spy on them, they spy on us, etc. The trick is to not actually get caught doing it.

Bishop F Gantry wrote:
Americas accusing Another country for spying... Oh gosh jolly

 dogma wrote:

 Tannhauser42 wrote:

Exactly, we spy on them, they spy on us, etc. The trick is to not actually get caught doing it.

Poor Gary Powers.

Well that didn't take long. Having already responded angrily to the US charging 5 military officers with cyber espionage, China has published details of the US cyber attacks:

*CHINA CALLS U.S. THE BIGGEST ATTACKER OF CYBER SPACE: XINHUA

From 3/19 to 5/18, they claim to have found 135 host computers in the US carrying 563 phishing pages targeting Chinese sites that directly controlled 1.18 million computers. But Jay Carney said earlier that "the US does not engage in economic espionage."

As Xinhua reports,

A spokesperson for China's State Internet Information Office on Monday published the latest data of U.S. cyber attack, saying that China is a solid defender of cyber security.

The U.S. is the biggest attacker of China's cyber space, the spokesperson said, adding that the U.S. charges of hacking against five Chinese military officers on Monday are "groundless".

Latest data from the National Computer Network Emergency Response Technical Team Coordination Center of China (NCNERTTCC) showed that from March 19 to May 18, a total of 2,077 Trojan horse networks or botnet servers in the U.S. directly controlled 1.18 million host computers in China.

The NCNERTTCC found 135 host computers in the U.S. carrying 563 phishing pages targeting Chinese websites that led to 14,000 phishing operations. In the same period, the center found 2,016 IP addresses in the U.S. had implanted backdoors in 1,754 Chinese websites, involving 57,000 backdoor attacks.

The U.S. attacks, infiltrates and taps Chinese networks belonging to governments, institutions, enterprises, universities and major communication backbone networks. Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone. In the meantime, the U.S. repeatedly accuses China of spying and hacking.

China has repeatedly asked the U.S. to stop, but it never makes any statement on its wiretaps, nor does it desist, not to mention make apology to the Chinese people.

After the Prism program leaked by Edward Snowden, the United States was accused by the whole world. However, it has never made retrospection, instead, it accuses others.

The spokesperson said the Chinese government opposes any kinds of cyber crimes, and any groundless accusations against the country.

If the United States goes its own way, China will take countermeasures, the spokesperson said.

dereksatkinson wrote:

They also responded by throwing sanctions against Microsoft and has banned the use of windows 8 on government computers.

nkelsch wrote:
This isn't about spying for the sake of security or terrorism, this is focused on economic stuff and as a government, hacking businesses to gain an economic advantage int he marketplace. It would be like the US government Hacking a European car company, stealing designs for technology, then handing them over to Ford so US cars can have an edge. That is the accusation being made here.

nkelsch wrote:

This isn't about spying for the sake of security or terrorism, this is focused on economic stuff and as a government, hacking businesses to gain an economic advantage int he marketplace.

 Tannhauser42 wrote:

nkelsch wrote:

This isn't about spying for the sake of security or terrorism, this is focused on economic stuff and as a government, hacking businesses to gain an economic advantage int he marketplace.

Exactly what advantage would this give China in the marketplace? They already make just about everything we buy here in America.

The FBI has a problem. The agency needs to hire hackers to build out its cyber crime division, but it also will not hire anyone who's smoked weed in the past three years. And guess what? A lot of hackers like to smoke weed.

It's a real conundrum. However, it's a conundrum the FBI is working through. On Monday—the same day the agency made headlines by issuing wanted posters for Chinese Army hackers—FBI director James Comey told an audience at the White Collar Crime Institute about this little pot problem. "I have to hire a great work force to compete with those cyber criminals, and some of those kids want to smoke weed on the way to the interview," Comey said. Exactly how to do that is the hard part. Comey added that the agency is "grappling with the question right now."

So does this mean the FBI is looking to hire stoners? No, probably not. It does look like our friends in federal law enforcement are warming up to the idea of hiring people that like to take part in a fun activity that's legal in two states and practically legal in many more, though. In fact, Comey even told a member of the audience that his friend "should go ahead and apply," even if he's worried about the policy. And so can you. [WSJ]