The feds on Monday slapped five Chinese army officers with espionage charges for hacking into major US companies – the first time operatives for a foreign government have been charged with cyber spying.
The Chinese hackers penetrated US nuclear power, steel and solar industries to steal trade secrets and give government-controlled companies an unfair advantage over US competitors, authorities said.
“This is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking,” US Attorney General Eric Holder said in Washington.
“The alleged hacking appears to have been conducted for no other reason than to advantage state-owned companies and other interests in China at the expense of businesses here in the United States,” he said. “This is a tactic that the United States government categorically denounces. Enough is enough.”
The hacked companies include Alcoa World Alumina, Westinghouse Electric Co., Allegheny Technologies, US Steel Corp., United Steelworkers Union and SolarWorld.
“For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,” said FBI Director James B. Comey, who predicted there would be more prosecutions.
“This is the new normal. This is what you’re going to see on a recurring basis,” added Bob Anderson Jr., a top FBI cyber crime expert.
Those indicted were Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, all officers in the Chinese People’s Liberation Army, the feds said.
They hacked into the American companies from 2006 until this year, generally while the companies were working with state-owned enterprises on projects and deals in China.
The defendants in many cases sent “spear phishing” emails to employees of the companies that contained malware, allowing the accused spies to pilfer confidential data.
The hackers also swiped internal communications that would help Chinese competitors in litigation with American companies by providing “insight into the strategy and vulnerabilities of the American entity,” the feds said in a statement.
In one 2012 case, the hackers were able to penetrate SolarWorld’s computers and grab thousands of files detailing the companies pricing, cash flow and other financial data.
The breach allowed Chinese competitors to flood American markets with solar products priced below their fair value, hammering SolarWorld’s sales.
The five were charged with espionage, identity theft and stealing trade secrets, among other offenses.
US authorities for years have accused the Chinese military and other China-based hackers of sneaking into American business and military computer systems to steal secrets. China has lodged the same charge at the US.
Secret State Department cables obtained by WikiLeaks traced major systems breaches to China, Reuters reported in 2011.
And one 2009 cable pinpointed attacks to a specific unit of China’s People’s Liberation Army.
Holder said he hoped China would take the indictments seriously and hand over the five suspects.
“It is our hope that the Chinese government will respect our criminal justice system,” he said.
In response, China’s Foreign Ministry said the charges were based on “fabricated facts” and jeopardized China-US relations.
“China is steadfast in upholding cybersecurity,” the minitry said in a statement. “The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets. The US accusation against Chinese personnel is purely ungrounded and absurd.”
The charges were widely seen as symbolic, and would only prevent the accused spies from traveling to the States or countries that have an extradition agreement with the US.
Cyber security experts differed on the value of the 31-count indictments, which were handed down by a federal grand jury in western Pennsylvania, where US Steel, Alcoa, Westinghouse and Allegheny Technologies are located.
“It sends a strong message to the Chinese,” James Lewis, a senior fellow at the Center for Strategic and International studies, told Reuters.
The move “indicates that DOJ has ‘smoking keyboards’ and [is] willing to bring the evidence to a court of law and be more transparent,” said Frank Cilluffo, head of the Homeland Security Policy Institute at George Washington University.
Others remained skeptical the move would deter online warfare.
“It won’t slow China down,” said Eric Johnson, an information technology expert at Vanderbilt University.
But David Hickton, US Attorney for the Western District of Pennsylvania, said the spying has to stop.
“This prosecution vindicates hard working men and women in Western Pennsylvania and around the world who play by the rules and deserve a fair shot and a level playing field,” Hickton said.
The Obama administration has criticized the Asian giant for muscling its neighbors during territorial disputes in the seas off of East Asia.
At the same time, Beijing complains that the administration’s attempt to refocus its foreign policy toward Asia over the Middle East emboldened neighbors like Japan, South Korea and Vietnam, inflaming tensions.
Last September, President Obama discussed cybersecurity issues on the sidelines of a summit in St. Petersburg, Russia, with Chinese President Xi Jinping.
In late March, Defense Secretary Chuck Hagel revealed that the Pentagon planned to more than triple its cybersecurity staff to defend against Internet attacks that threaten national security.