This wanted poster is displayed at the Justice Department in Washington. Attorney General Eric Holder announced that a U.S. grand jury had charged the five Chinese men with economic espionage and trade secret theft.

Associated Press,

U.S. accuses China of conducting cyberespionage against American companies

  • Article by: Ellen Nakashima, William Wan and William Branigin
  • Washington Post
  • May 19, 2014 - 11:05 PM

– The Justice Department on Monday accused five members of the Chinese military of conducting economic cyber espionage against American companies, marking the first time that the United States has leveled such criminal charges against a foreign country.

Industries targeted by the alleged cyber espionage ranged from nuclear to steel to solar energy. The hacking by a military unit in Shanghai, they said, was conducted for no other reason than to give a competitive advantage to Chinese companies, including state-owned enterprises.

In a statement read at a news conference, Attorney General Eric Holder said: “The range of trade secrets and other sensitive business information ­stolen in this case is significant and demands an aggressive response. … Success in the international 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.”

Holder said the Obama 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.”

In response, China’s Foreign Ministry charged Monday that the U.S. government “fabricated facts” in the indictment, which it said “seriously violates basic norms of international relations and damages Sino-U.S. cooperation and mutual trust.” It said China lodged a “protest” with the United States, urging it to “correct the error immediately and withdraw its so-called prosecution.”

In a statement, Foreign Ministry spokesman Qin Gang denied that Chinese government, military and “associated personnel” have ever engaged in “the theft of trade secrets through cyber means.” Qin called the U.S. accusations “purely fictitious, extremely absurd.” On the contrary, he said, “China is the victim of U.S. theft and cyber surveillance.”

In retaliation, the statement said, “China has decided to suspend the activities of the Sino-U.S. Cyber Working Group.” It left open the prospect of “further reaction” in the case.

The indictment against members of the People’s Liberation Army follows vows by senior administration officials to hold other nations to account for computer theft of intellectual property from American industry. China is widely seen as the nation that has been most aggressive in waging cyber espionage against the United States.

Holder said a federal grand jury in Pittsburgh returned an indictment against five members of a Chinese military unit in a Shanghai building, accusing them of conspiring together and with others to hack into the computers of six U.S. entities. Named in the case as defendants were Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, all officers of Unit 61398 of the 3rd Department of the People’s Liberation Army. Wang is also known as UglyGorilla, his hacker handle. Gu used the alias KandyGoo and Sun was also known as Jack Sun, ­prosecutors said.

Victimized by the cyber spying were Westinghouse Electric Co., Alcoa, Allegheny Technologies Inc., United States Steel, the United Steel Workers Union and SolarWorld.

The indictment alleges that in some cases the hackers stole trade secrets that would have been particularly beneficial to Chinese companies. For example, it alleges that an Oregon producer of solar panel technology, SolarWorld, was rapidly losing market share to Chinese competitors who were systematically pricing exports well below production costs. At the same time, defendant Wen stole thousands of files containing cost and pricing information from the company, the indictment says.

It also alleges that while Westinghouse Electric, a Pennsylvania nuclear power plant manufacturer, was negotiating with a Chinese company over the construction of four power plants in China, defendant Sun stole confidential design specifications for pipes, pipe supports and pipe routing for those plants — information that would enable any competitor looking to build a similar plant to save on research and development costs.

Each defendant is charged with 31 counts for alleged offenses between 2006 and 2014. If convicted, they would face decades in prison. However, they are in China, and there is virtually no chance that the Chinese government would turn them over to U.S. authorities.

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