(Reuters) – The United States on Monday charged five Chinese military officers and accused them of hacking into American nuclear, metal and solar companies to steal trade secrets, ratcheting up tensions between the two world powers over cyber espionage.
China immediately denied the charges, saying in a strongly worded Foreign Ministry statement the U.S. grand jury indictment was “made up” and would damage trust between the two nations.
Officials in Washington have argued for years that cyber espionage is a top national security concern. The indictment was the first criminal hacking charge that the United States has filed against specific foreign officials, and follows a steady increase in public criticism and private confrontation, including at a summit last year between U.S. President Barack Obama and Chinese President Xi Jinping.
“When a foreign nation uses military or intelligence resources and tools against an American executive or corporation to obtain trade secrets or sensitive business information for the benefit of its state-owned companies, we must say, ‘Enough is enough,’” U.S. Attorney General Eric Holder said at a news conference.
Federal prosecutors said the suspects targeted companies including Alcoa Inc, Allegheny Technologies Inc, United States Steel Corp, Toshiba Corp unit Westinghouse Electric Co, the U.S. subsidiaries of SolarWorld AG , and a steel workers’ union.
Officials declined to estimate the size of the losses to the companies, but said they were “significant.” Some of the victims had filed unfair trade claims against their Chinese rivals, helping Washington draw a link between the alleged hacking activity and its impact on international business.
According to the indictment, Chinese state-owned companies “hired” Unit 61398 of the People’s Liberation Army “to provide information technology services” including assembling a database of corporate intelligence. The Chinese companies were not named.
The Shanghai-based Unit 61398 was identified last year by cybersecurity firm Mandiant as the source of a large number of espionage operations. All five defendants worked with 61398, according to the indictment.
“The administration is trying to make this clear it’s a trade issue, not a cold war with China,” said Jim Lewis of the Center for Strategic and International Studies, who has served as a U.S. representative in hacking negotiations with China.
The Chinese Foreign Ministry statement said it would suspend the activities of a Sino-U.S. working group on cyber issues, which American officials believe refers to a joint effort established in April 2013 involving State Department expert Chris Painter and China Foreign Ministry official Dai Bing.
That was set up as a spinoff from the U.S.-China Strategic and International Dialogue, but produced little tangible progress even before leaks by former National Security Administration contractor Edward Snowden leaks gave China grounds for accusing the NSA of infiltrating Chinese companies as well as government offices.
U.S. officials have maintained that they do not steal secrets to give an advantage to U.S. companies, but in China, Lewis said, the line between military and business prowess is unclear.
Unit 61398 has hundreds of active spies and is just one of dozens of such bodies in China, said Jen Weedon, an analyst at Mandiant, now owned by global network security company FireEye Inc. She said the group is not among the most sophisticated. The specific accusation is less important than the demonstration that the United States is committed to stepping up its fight in multiple ways, Weedon said.
