Hack­ing in­dict­ments raise ten­sions with China

The Washington Times Weekly - - Geopolitics - BY GUY TAY­LOR AND KELLY RID­DELL

The Jus­tice Depart­ment’s in­dict­ments of five Chi­nese army of­fi­cials ac­cused of hack­ing U.S. com­pa­nies es­ca­lated cy­ber­se­cu­rity ten­sions be­tween Wash­ing­ton and Bei­jing last week and opened what some an­a­lysts and U.S. law­mak­ers called a new phase in the con­fronta­tion be­tween the world’s two most pow­er­ful na­tions.

The first cy­ber-re­lated crim­i­nal in­dict­ment Wash­ing­ton has made against of­fi­cials from any for­eign govern­ment says an elite Chi­nese army group known as “unit 61398” has spent nearly a decade en­gag­ing in state-spon­sored theft of trade se­crets from sev­eral top-tier pri­vate en­ergy and steel com­pa­nies.

“We al­lege that mem­bers of unit 61398 con­spired to hack into com­put­ers of six U.S. vic­tims to steal in­for­ma­tion that would pro­vide an eco­nomic ad­van­tage to the vic­tims’ com­peti­tors, in­clud­ing Chi­nese state-owned en­ter­prises,” John Car­lin, as­sis­tant at­tor­ney gen­eral for na­tional se­cu­rity, told re­porters at the Jus­tice Depart­ment on Mon­day.

The charges trig­gered a re­buke from the Chi­nese For­eign Min­istry, which said Wash­ing­ton’s move was “un­grounded and ab­surd” and that China was re­spond­ing by halt­ing par­tic­i­pa­tion in cy­ber­se­cu­rity talks that of­fi­cials from both na­tions pur­sued over the past year.

Of­fi­cials at the State Depart­ment said they in­tend to con­tinue pur­su­ing the di­a­logue, but the Obama ad­min­is­tra­tion’s de­ci­sion to level the crim­i­nal charges sug­gests that over­all U.S. govern­ment frus­tra­tion with sus­pected Chi­nese hack­ing has reached a boil­ing point.

The Obama ad­min­is­tra­tion won quick praise from both sides of the aisle Mon­day. Some law­mak­ers re­vealed how China’s de­nial of state-spon­sored hack­ing dur­ing re­cent and high-level meet­ings with U.S. of­fi­cials ap­pears to have pro­voked the ad­min­is­tra­tion to tighten the screws on Bei­jing.

“The is­sue of state-spon­sored theft of in­tel­lec­tual property from pri­vate Amer­i­can com­pa­nies has been raised at the high­est lev­els with China, in­clud­ing by [Pres­i­dent Obama] him­self,” Rep. Patrick Mee­han, Penn­syl­va­nia Repub­li­can, who chairs a House Home­land Se­cu­rity sub­com­mit­tee on cy­ber­se­cu­rity, told The Wash­ing­ton Times in an in­ter­view.

“But China has not abated their ac­tiv­ity,” said the con­gress­man, who added that he other Repub­li­cans, in­clud­ing House Ma­jor­ity Leader Eric Can­tor of Vir­ginia, also raised the is­sue di­rectly with Chi­nese Pre­mier Li Ke­qiang dur­ing an of­fi­cial visit to Bei­jing last month.

“We were very de­lib­er­ate and spe­cific … and in all hon­esty, the re­sponse from the Chi­nese was dis­ci­plined and cir­cu­lar,” Mr. Mee­han said. “They made no ad­mis­sions.”

With those in­ter­ac­tions serv­ing as a back­drop to Mon­day’s de­vel­op­ment, Peter W. Singer, a scholar fo­cused on cy­ber­re­lated is­sues at the Brook­ings In­sti­tu­tion, said the lev­el­ing of crim­i­nal charges by the Obama ad­min­is­tra­tion should be seen as a se­ri­ous “next step” in “a dance that will play out for the com­ing years.”

“No one should ex­pect the in­dict­ment to end hack­ing,” Mr. Singer told The Times in an email. “While just five people were in­dicted, be­hind them is an im­mense hu­man net­work of hack­ers, both in­side Chi­nese mil­i­tary units and in broader cy­ber mili­tia that num­bers in the hun­dreds of thou­sands.”

The ac­tiv­i­ties of China’s Unit 61398 drew sig­nif­i­cant at­ten­tion in the Western me­dia last year af­ter a re­port by the Amer­i­can se­cu­rity firm Man­di­ant, which es­ti­mated that the unit is “staffed by hun­dreds, and per­haps thou­sands of people.”

The re­port said Man­di­ant in­ves­ti­ga­tors had gath­ered ev­i­dence on the unit’s hack­ing of some 141 com­pa­nies across 20 ma­jor in­dus­tries since 2006.

Mr. Car­lin said Mon­day that the FBI’s own probe into Unit 61398 un­cov­ered ev­i­dence iden­ti­fy­ing “spe­cific ac­tions on spe­cific days by spe­cific ac­tors to use their com­put­ers to steal in­for­ma­tion from across [the U.S.] econ­omy.”

The in­dict­ments against five of the unit’s mem­bers “de­scribes how they tar­geted in­for­ma­tion in in­dus­tries rang­ing from nu­clear to steel to re­new­able en­ergy,” Mr. Car­lin said. “While the men and women of our Amer­i­can businesses spent their busi­ness days in­no­vat­ing, cre­at­ing and de­vel­op­ing strate­gies to com­pete in the global mar­ket­place, these mem­bers of unit 61398 were spend­ing their busi­ness days in Shang­hai steal­ing the fruits of our la­bor.”

The FBI st­ing should serve as a “wake-up call” to the se­ri­ous­ness of the on­go­ing threat of cy­ber­crimes and how the U.S. plans on deal­ing with them, said U.S. At­tor­ney Gen­eral Eric H. Holder Jr., who an­nounced the charges with Mr. Car­lin.

Mr. Holder said the U.S. doesn’t col­lect in­tel­li­gence to help U.S. com­pa­nies, un­like what the Chi­nese were at­tempt­ing to do. He said he hopes China will co­op­er­ate with the in­dict­ment and al­low the five ac­cused to stand trial in the U.S., al­though the prospect of that would be slim re­gard­less of pol­i­tics be­cause the U.S. has no ex­tra­di­tion treaty with China.

“When a for­eign na­tion uses mil­i­tary or in­tel­li­gence re­sources and tools against an Amer­i­can ex­ec­u­tive or cor­po­ra­tion to ob­tain trade se­crets or sen­si­tive in­for­ma­tion for the ben­e­fit of its state-owned com­pa­nies we must say: Enough is enough,” Mr. Holder said. “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.”

In what per­haps is an ef­fort to shame the sus­pects, U.S. au­thor­i­ties re­leased pho­tos, in­clud­ing one man in mil­i­tary uni­form. The in­ves­ti­ga­tion dated back at least a year as the Obama ad­min­is­tra­tion searched for more puni­tive mea­sures against Chi­nese hack­ers. The most se­ri­ous charge of eco­nomic es­pi­onage in­cludes a max­i­mum 15-year prison sen­tence.

The ges­ture is largely sym­bolic and


Five mem­bers of an elite Chi­nese army group have been charged with con­spir­acy to com­mit com­puter fraud and abuse. At­tor­ney Gen­eral Eric H. Holder Jr. ac­cuses them of hack­ing U.S. cor­po­ra­tions and la­bor or­ga­ni­za­tions.

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