Since Obama has no moral high ground when it comes to spying, this must be a distraction

US cyber charges risk retaliation from Beijing

By Geoff Dyer in Washington

©AP

After President Barack Obama hosted his Chinese counterpart Xi Jinping for eight hours of talks in California just under a year ago, a senior US official announced that American concerns about cyber theft were now “at the centre of the relationship” between the two countries.

Within hours, Edward Snowden had revealed himself from a Hong Kong hotel room to be the source of a series of leaks about the National Security Agency – and, in the process, dramatically undercut the Obama administration’s push to press China on hacking.

The administration tried to regain the initiative on Monday by announcing indictments against five members of the Chinese military for stealing trade secrets from US companies. “This is 21st century burglary,” said David Hickton, US attorney for the western district of Pennsylvania.

The indictments – complete with photos of the Chinese military officers on the FBI’s most wanted page – represent a dramatic escalation of the US campaign to deter the Chinese government from what it claims to be a systematic effort to steal commercially important information.

“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,” Eric Holder, the attorney-general, said on Monday.

In its efforts to name and shame Chinese hackers, one of the difficult questions for the Obama administration is whether the Snowden revelations about the activities of the NSA will provide the Chinese with ammunition to retaliate against the US.

“This seems to be a way of trying to apply more pressure on China to stop stealing from private companies,” said Richard Bejtlich, chief security strategist at FireEye. “But there is a risk of retribution from China.”

By issuing these indictments, the Obama administration is underlining an argument it has been trying to make for several years. All nations conduct espionage, US officials admit.

But they claim China is the most prominent country conducting what they call “cyber-enabled economic theft”, where intelligence or military officials hack trade secrets or commercially sensitive information and then pass it on to their state-owned companies.

“We do not collect intelligence to produce a competitive advantage to US companies,” said Mr Holder.

In depth

Cyber warfare

As online threats race up national security agendas and governments look at ways of protecting their national infrastructures a cyber arms race is causing concern to the developed world

The indictment focuses on a group of the Chinese military known as Unit 61398, which operates from an office building in central Shanghai and whose identity was first made public in a report published last year by the security company Mandiant, which has since been acquired by FireEye.

According to the indictment, one of the Chinese officials stole information about Westinghouse power plants in 2010 just as the US company was negotiating the terms of a plant construction contract with a Chinese state-owned company. In another case, the US alleges that Chinese military officials stole information from SolarWorld about cash flow, pricing and trade litigation at a time when the US government was accusing China of dumping low-cost solar products in the US market.

Wang Dong, one of the Chinese indicted on Monday, used the online alias “Ugly Gorilla”, according to the Mandiant report.

The Chinese government immediately denied the charges, describing them as “made up”.

“The Chinese government, military and associated personnel have never engaged in online theft of trade secrets,” the Chinese foreign ministry said.

While there appears little chance that any of the Chinese military officials would actually travel to the US to face the charges, the administration hopes the evidence it is presenting will act as some form of deterrence to China. US officials vowed on Monday to issue further indictments.

However, one of the dangers for the US is that the documents leaked by Mr Snowden, who currently has asylum in Russia, will give the Chinese the chance to take action against the US for activities that Beijing could allege are similar in nature.

According to one document released by Mr Snowden, which was first revealed by the New York Times and Der Spiegel, the NSA has created “back doors” into networks and components manufactured by Huawei, the Chinese telecoms equipment company, which allowed it to obtain communications between executives.

Other documents have suggested the US places similar bugs into routers and other equipment made by US companies.

While the indictment accuses China of using hacking to gain an advantage in trade litigation, documents leaked by Mr Snowden indicate the US has used espionage to give it a stronger hand in trade talks.

“I hope that the US is prepared for the prospect that some other country, or even some local prosecutor, will now try to indict General Alexander [the former head of the NSA],” said Jason Healey, an expert on cyber policy at the Atlantic Council.