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US Charges Chinese Army Officers with Cyberespionage

Fed up with failed diplomacy, American officials today (May 19) unveiled a bold new tactic to combat Chinese state-sponsored online espionage, indicting five officers in China's People's Liberation Army (PLA) with stealing trade secrets from American metals and energy companies.

Named as victims of Chinese hacking were U.S. Steel and Alcoa, as well as Allegheny Technologies, Inc., the United Steel Workers union, nuclear-power-plant builder Westinghouse Electric Co. and the U.S. subsidiary of SolarWorld, a German maker of solar panels.

MORE: 7 Scariest Security Threats Headed Your Way

Familiar names in cyberespionage

The five defendants all allegedly work or worked for Unit 61398 of the Third Department of the PLA, also known as the "Comment Crew," "Shanghai Group," "APT 1" or "Byzantine Candor." The group is best known for breaking into the computer networks of The New York Times in early 2013, but is suspected in dozens of other attacks on governments and companies around the world.

"In the past, when we brought concerns such as these to Chinese government officials, they responded by publicly challenging us to provide hard evidence of their hacking that could stand up in court," said Assistant Attorney General for National Security John Carlin at a press conference in Washington, D.C. announcing the indictments. "Well today, we are."

"Diplomacy and public disclosure haven't worked," said Executive Assistant Director of the FBI Robert Anderson. "So now we name indictments."

U.S. Attorney General Eric Holder noted that while all nations spy on each other for political and military matters, the spying in this case was done for purely economic reasons. The U.S. companies whose networks were allegedly broken into were competing with Chinese companies owned or controlled by the PLA.

"State actors who engage in economic espionage, even over the Internet from faraway offices in Shanghai, will be exposed for their criminal conduct and sought for apprehension and prosecution in an American court of law," Holder said. "Success in the global marketplace should be based solely on a company's ability to innovate and compete, not on a sponsor government's ability to spy and steal business secrets."

A new strategy against cyberespionage

The five defendants were each charged by a federal grand jury in Pittsburgh with 31 counts, including conspiring to commit computer fraud and abuse, aggravated identity theft, economic espionage, trade-secret theft and multiple counts of accessing a protected computer without authorization and of using malware.

The indictment alleges that Wang Dong, Sun Kailiang and Wen Xinyu actively hacked into or tried to hack into the U.S. companies named, and that Huang Zhenyu and Gu Chunhui provided technical support to the other three by maintaining domain accounts (presumably command-and-control servers) used in the network penetrations.

Each defendant faces a possible maximum of 227 years in prison, although their apprehension depends on the cooperation of Chinese authorities.

When asked by a reporter at the Department of Justice press conference why none of the defendants had been apprehended, Carlin pointed out that the five worked for the PLA in Shanghai, and Holder noted that none had ever visited the United States.

Carlin and Anderson said the indictments reflected a new strategy on the part of the U.S. government against state-sponsored industrial espionage.

"Cybertheft is real theft, and we will hold state-sponsored cyberthieves accountable as we would any other transnational criminal organization that steals our goods and breaks our laws," Carlin said.

"This is the new normal," Anderson said. "This is what you're going to see on a recurring basis. If you attack America, we are going to hold you accountable."

How industrial espionage hits home

Holder, Carlin and U.S. Attorney for the Western District of Pennsylvania David Hickton detailed how the theft of trade secrets and other confidential data affected American companies.

"These PLA officers maintained unauthorized access to victim computers to steal information from those entities that would be useful to their competitors in China, including state-owned enterprises," Holder said.

"Right about the time SolarWorld was rapidly losing its market share to Chinese competitors that were pricing exports well below costs, these hackers were stealing cost, pricing and strategy information from SolarWorld's computers," Carlin said. "While Westinghouse was negotiating with a Chinese state-owned enterprise over the construction of nuclear power plants, the hackers stole trade-secret designs for components of those plants."

The theft of secrets deeply affected the metals industry in and around Pittsburgh, where U.S. Steel, Alcoa and Allegheny Technologies are all based, Hickton said.

"Our competitive advantage has been to engineer superior steel," Hickton said. "These computer intrusions ... blunt our ability to compete."

"Cybertheft impacts real people," he added. "Production slows, plants close, workers get laid off and lose their homes."

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  • Mike Friesen
    227 possible years for hacking??? Ridiculous. Man I'm glad I live in Canada. (So long as I don't anger the states)
    Reply
  • gggplaya
    Obviously, the chinese government wanted the information so i think this is just an feel good act on the united states part. I mean seriously, there's probably like millions of "Wang Dong"s in the country with 6 billion. He can easily dissapear and create a new identity.
    Reply
  • techguy911
    I think this is a HUGE waste of taxpayers money no wonder the US is going bankrupt with wasted money on this trial.
    The chances of anything happening is 0% US law is not Chinese law US courts have NO jurisdiction in China.
    Reply
  • somebodyspecial
    227 years is nothing. You'll serve 10 tops...LOL. Our criminal system is like dog years but worse. You only serve 1yr for about every 10-20 they give you. We may even just let you go like the 36000 illegals that have 85000+ crimes (rape, murder etc) that are about to be let go by Obama.

    "If you attack America, we are going to hold you accountable."

    LOL...Really...
    "although their apprehension depends on the cooperation of Chinese authorities. "

    So everyone gets nothing then...The only way to make this work is to tell China, if you don't hand these 5 people over in the next week, all trade (every freaking dollar stops), and ZERO goods from your country will flow to ours and you'll receive ZERO of our goods...Also all chinese assets will be stolen if in USA banks etc immediately on day 8 and we've ALREADY frozen EVERY account you have in USA and every single chinese owned business is now USA property until the 5 are handed over".

    See, that is how you do it. NO WIGGLE ROOM. Comply or we steal all your stuff in USA. Those solar places you set up here? They're OURS. Thanks for building them for us...What's that you say you have them in custody now and they're on a flight to USA? Ok, you can have your crap back. Anything less than this is unacceptable and just as weak as tweets about Putin, Ukraine, 278 girls etc...Shut up if you're not planning on doing anything REAL.

    This is nothing more than a tweet of #stopstealingfromusa
    ROFLMAO@obama's idea of USA foreign policy.

    How does a REAL president stop Putin? No need to go to war. I tell you I'm cutting off all trade with you and cranking up natural gas and oil in USA for the next 15yrs to bankrupt your country (and help our jobs/economy!). We will undercut everything you do until you're bankrupt even if you change your mind in 5yrs. Stop taking land today & remove your troops or get used to 15yrs of people standing in bread lines etc with no money. It takes 5yrs for us to get this done, so you have to know we're not just going to ramp up and give you 5yrs to take land then quit ramping the second you back down in 5yrs. You have to know we're going to pass something that says we'll do this until your BROKE and destroyed and NOBODY can change that rule until you are BANKRUPT. With $800B in their economy coming from natural gas/oil you will be broke in 10yrs if not sooner. But that punishment really doesn't work for 5yrs until we can get enough out the door to fully cover EUROPE etc. So you have to let them know if you don't stop NOW (not in 5yrs when you realize we're not kidding) we go all out for 15yrs or until your completely devastated and reduced to eating bugs for dinner. There will be ZERO mercy. That is how you walk softly but carry a big economic stick with ZERO american deaths or soldiers on a battlefield. We can EASILY CRUSH russia.
    Reply
  • anthony8989
    This is why Communist-owned enterprises should not be allowed to compete in the free market. State-owned non-acquirable corporations are given an unfair advantage. Not only are they able to purchase publicly traded - or even government owned companies (in Canada's case) - but they are completely immune to being bought out themselves. Couple that with a Federal permission slip to break international laws for economic gain and we've got ourselves one big fiasco.

    It's the communist regimes that allow boarder-line or full on slave/child labour, war crimes, civil rights violations, and a slew of other reprehensible acts. And how can we forget mass exportation of jobs and GDP from North America and Europe. Now we can add proven corporate espionage to the list.

    The American and European corporate fat-cats should have thought about the repercussions before they sold our economy and our lively-hoods to the Chinese.
    Reply
  • Someone Somewhere
    The US, of course, does the same thing.
    Reply
  • fixxxer113
    The only way to make this work is to tell China, if you don't hand these 5 people over in the next week, all trade (every freaking dollar stops), and ZERO goods from your country will flow to ours and you'll receive ZERO of our goods

    With a current debt of 17,5 trillion dollars and with almost every single piece of technology being manufactured in China, I don't think the US is in a postition to blackmail them, or Russia for that matter. The US is no longer the superpower it once was. The people of course are still being taught that, which is sad because you have no actual perception of what's going on outside your country. Also bear in mind that that outsourcing your industry and energy production, did not start with Obama...

    This is why Communist-owned bla bla bla...The American and European corporate fat-cats should have thought about the repercussions before they sold our economy and our lively-hoods to the Chinese.

    You have absolutely no idea what communism is, what states are supposed to do and what you are talking about in general... China's regime is anything but communist. It's actually a capitalist's wet dream, having people work for peanuts while you make ridiculous amounts of profit. Go read some books and educate yourself.

    As I told @Somebodyspecial, don't blame "communists" for the condition of the US. What's happening in your country now, is Capitalism doing what it does best. If you think this system is in place for you to get rich i am very sad for you...
    Reply
  • pjmelect
    The Chinese are only doing what the US is doing to the rest of the world (as told by Snowden) The Chinese are right in saying that the US is being hypocritical.
    Maybe there should be an international treaty regarding countries hacking each other.
    Reply
  • godnodog
    227 years is nothing. You'll serve 10 tops...LOL. Our criminal system is like dog years but worse. You only serve 1yr for about every 10-20 they give you. We may even just let you go like the 36000 illegals that have 85000+ crimes (rape, murder etc) that are about to be let go by Obama.

    "If you attack America, we are going to hold you accountable."

    LOL...Really...
    "although their apprehension depends on the cooperation of Chinese authorities. "

    So everyone gets nothing then...The only way to make this work is to tell China, if you don't hand these 5 people over in the next week, all trade (every freaking dollar stops), and ZERO goods from your country will flow to ours and you'll receive ZERO of our goods...Also all chinese assets will be stolen if in USA banks etc immediately on day 8 and we've ALREADY frozen EVERY account you have in USA and every single chinese owned business is now USA property until the 5 are handed over".

    See, that is how you do it. NO WIGGLE ROOM. Comply or we steal all your stuff in USA. Those solar places you set up here? They're OURS. Thanks for building them for us...What's that you say you have them in custody now and they're on a flight to USA? Ok, you can have your crap back. Anything less than this is unacceptable and just as weak as tweets about Putin, Ukraine, 278 girls etc...Shut up if you're not planning on doing anything REAL.

    This is nothing more than a tweet of #stopstealingfromusa
    ROFLMAO@obama's idea of USA foreign policy.

    How does a REAL president stop Putin? No need to go to war. I tell you I'm cutting off all trade with you and cranking up natural gas and oil in USA for the next 15yrs to bankrupt your country (and help our jobs/economy!). We will undercut everything you do until you're bankrupt even if you change your mind in 5yrs. Stop taking land today & remove your troops or get used to 15yrs of people standing in bread lines etc with no money. It takes 5yrs for us to get this done, so you have to know we're not just going to ramp up and give you 5yrs to take land then quit ramping the second you back down in 5yrs. You have to know we're going to pass something that says we'll do this until your BROKE and destroyed and NOBODY can change that rule until you are BANKRUPT. With $800B in their economy coming from natural gas/oil you will be broke in 10yrs if not sooner. But that punishment really doesn't work for 5yrs until we can get enough out the door to fully cover EUROPE etc. So you have to let them know if you don't stop NOW (not in 5yrs when you realize we're not kidding) we go all out for 15yrs or until your completely devastated and reduced to eating bugs for dinner. There will be ZERO mercy. That is how you walk softly but carry a big economic stick with ZERO american deaths or soldiers on a battlefield. We can EASILY CRUSH russia.

    You do realize that China can dump their dollars reserves in the market making the dollar value close to collapse. Being that the dollar is a fiat currency, this would mean serious trouble to the US, far more than any to China. Not to forget the US debt certificates (or US bonds, not sure the name) they also own.

    The article itself is funny, where is our historical memory when we need it? Oh it´s written by the victors. So are the us officials also being charged when Echelon program was used to divert a busyness deal between Saudi Arabia and Airbus to Saudi Arabia and Boing? OH THE IRONY!!!
    Reply
  • axefire0
    Why did it take US this long to charge these state-sponsored cyber criminals? Everybody knew China has been conducting an organized industrial espionage for a long long time.
    Reply