U.S. Indicts Chinese Officials for Cyber-Spying

U.S. Indicts Chinese Officials for Cyber-Spying

In an unprecedented move that’s likely to heighten economic and political tensions between the United States and China, the Department of Justice is filing criminal charges against five Chinese military officials for stealing trade secrets and other private information from five large American companies and a labor union, according to U.S. officials and a federal indictment. It’s the first criminal indictment against state actors for cyber-spying against the United States.

The alleged activities involve a years-long campaign by the Chinese military and its proxies to hack into the computer systems of American companies, trade associations, unions, and law firms and steal confidential information, including business plans, product designs, and private communications. In the current case, the Chinese hackers gave such information from the victim companies to Chinese state-owned companies, giving them an unfair advantage over their American competitors, Justice Department officials said in a press conference on Monday, May 19.

Cyber-spying has been the subject of a long-simmering dispute between Beijing and Washington. But the criminal indictment — the first of its kind against Chinese military or government officials — would take the matter to a new level and signals that Barack Obama’s administration has decided its strategy of publicly shaming China into halting its cyber-espionage isn’t working.

The Chinese hackers are accused of hacking into the computers of Westinghouse Electric, Alcoa, Allegheny Technologies, U.S. Steel, the United Steelworkers union, and SolarWorld, Attorney General Eric Holder announced. The companies are among the biggest manufacturing companies in the United States, and United Steelworkers is the largest steel labor union. The Chinese hackers stole pricing information and equipment designs in order to benefit Chinese state-owned industries, the Justice Department alleges.

The hackers are connected to a unit allegedly run by the People’s Liberation Army that was identified in a public report last year by the computer security firm Mandiant. Known as Unit 61398, it’s believed to be responsible for a broad campaign of spying against American organizations, not just the six mentioned in the indictment. The U.S. government was aware of the report before it was published and contributed some information to it, according to individuals who are familiar with the report.

The Chinese hackers also stole attorney-client communications and cost and productions analysis that gave the Chinese hackers an insight into the companies at a "critical time," including when they were conducting negotiations to do business in China, said David Hickton, the U.S. attorney for the Western District of Pennsylvania, where the charges were filed. "This 21st-century burglary has to stop," Hickton said, adding that the cyber-spying had "led directly to the loss of jobs" in the United States.

President Obama has privately broached the subject of China’s cyber-spying in private meetings with Chinese President Xi Jinping. And last year, Obama’s then national security advisor, Tom Donilon, rebuked China in a speech for cyber-spying, which he called "a growing challenge to our economic relationship with China" and a "key point of concern and discussion with China at all levels of our governments." That was the highest-level public criticism of the Chinese actions to date.

China’s cyber-espionage is also of deep concern to the Pentagon, which fears Beijing is focused both on stealing plans for advanced armaments to build its own versions and on using that know-how to develop ways of countering high-tech American aircraft, drones, and other battlefield armaments. The Defense Department’s annual assessment of Chinese military strength, which is expected to show an ongoing spike in China’s cyber-capabilities, is set to be released.

Officials promised more indictments against foreign cyberspies. "This is the new normal. This is what you’re going to see on a recurring basis," said Robert Anderson, a top FBI cybersecurity official.

"We hope that the conduct will stop by bringing criminal actions," said John Carlin, the assistant attorney general in charge of the Justice Department’s National Security Division. But it was unclear whether the Chinese hackers would ever see the inside of a U.S. courtroom.

Chinese officials have consistently denied in public that their government engages in economic cyber-espionage against the United States. Officials strongly criticized the Mandiant report on Unit 61398 and called it inaccurate.

This story has been updated.