Why the U.S. Is Charging China With Cyberspying on American Companies

Cyberspying is estimated to cost the U.S. economy tens of billions a year. “Enough is enough,” Attorney General Eric Holder said Monday.

Attorney General Eric Holder speaks during a farewell ceremony in honor of outgoing Federal Bureau of Investigation (FBI) Director Robert Mueller at the Department of Justice on August 1, 2013.
National Journal
Dustin Volz
May 19, 2014, 6:53 a.m.

The United States is char­ging the Chinese mil­it­ary with hack­ing in­to the com­puters of Amer­ic­an com­pan­ies in or­der to gain valu­able trade secrets, mark­ing the first time the U.S. has brought a crim­in­al case against a for­eign gov­ern­ment for cy­ber­spy­ing.

At­tor­ney Gen­er­al Eric Hold­er an­nounced Monday an in­dict­ment of five of­ficers of China’s People’s Lib­er­a­tion Army for breaches against six Amer­ic­an com­pan­ies.The charges fol­low an in­vest­ig­a­tion by a fed­er­al grand jury in Pitt­s­burgh that con­cluded China’s mil­it­ary of­ficers con­spired to hack in­to the com­puters of West­ing­house Elec­tric, Al­coa, Al­legheny Tech­no­lo­gies, U.S. Steel, the United Steel­work­ers Uni­on, and Sol­ar­World.

“When a for­eign na­tion uses in­tel­li­gence re­sources and tools against an Amer­ic­an ex­ec­ut­ive or cor­por­a­tion to ob­tain trade secrets or sens­it­ive in­form­a­tion for the be­ne­fit of state-owned com­pan­ies, we must say ‘enough is enough,’ ” Hold­er said. “This ad­min­is­tra­tion will not tol­er­ate ac­tions by any na­tion that seeks to il­leg­ally sab­ot­aged Amer­ic­an com­pan­ies and un­der­mines their com­pet­i­tion in the op­er­a­tion of the free mar­ket.”

Hold­er ad­ded: “Our eco­nom­ic se­cur­ity and our abil­ity to com­pete fairly in the glob­al mar­ket­place are dir­ectly linked to our na­tion­al se­cur­ity.”¦ This case should serve as a wake-up call to the ser­i­ous­ness of the on­go­ing cy­ber­threat.”

The de­fend­ants named in the case are Wang Dong, Sun Kaili­ang, Wen Xinyu, Huang Zhenyu, and Gu Chun­hui. All are part of the same unit in the People’s Lib­er­a­tion Army. Each has been charged with 31 counts of com­puter and eco­nom­ic crimes.

Last year, the U.S. and China agreed to hold bi­lat­er­al dis­cus­sions on cy­ber­se­cur­ity and es­pi­on­age, after U.S. of­fi­cials is­sued a num­ber of warn­ings to China that its theft of ma­ter­i­al from Amer­ic­an com­pan­ies could dam­age re­la­tions.

China has typ­ic­ally denied such al­leg­a­tions.

The Na­tion­al Se­cur­ity Agency has re­ceived scru­tiny for try­ing to pres­sure China to re­strict its cyberes­pi­on­age op­er­a­tions while at­tempt­ing to set in­ter­na­tion­al stand­ards for cy­ber­con­flict. Leaks from Ed­ward Snowden, which have re­vealed U.S. spy­ing on Chinese com­pan­ies, have promp­ted in­ter­na­tion­al out­rage, as many na­tions say the U.S. gov­ern­ment is push­ing a double-stand­ard on cy­ber­spy­ing.

But the NSA has denied hack­ing in­to for­eign net­works in or­der to give do­mest­ic com­pan­ies any sort of com­pet­it­ive ad­vant­age.

“We do not use for­eign-in­tel­li­gence cap­ab­il­it­ies to steal the trade secrets of for­eign com­pan­ies on be­half of — or give in­tel­li­gence we col­lect to — U.S. com­pan­ies to en­hance their in­ter­na­tion­al com­pet­it­ive­ness or in­crease their bot­tom line,” NSA spokes­wo­man Vanee Vines told Na­tion­al Journ­al last month.

Com­mer­cial cy­ber­spy­ing is a grow­ing drain on the U.S. eco­nomy, es­tim­ated to cost $24 bil­lion to $120 bil­lion an­nu­ally.