China has denied US cyberspying charges against five of its army officers, accusing Washington of hypocrisy. But analyst James Lewis says the US draws a critical line between espionage for political and commercial aims.
On Monday, May 19, the United States charged Chinese military officials with hacking into US companies to steal vital trade secrets. The criminal indictment alleges that the five officers of the People's Liberation Army [Unit 61398 in Shaghai] "maintained unauthorized access to victim computers to steal information from these entities that would be useful to their competitors in China, including state-owned enterprises," US Attorney General Eric Holder said. The alleged targets were Alcoa World Alumina, Westinghouse Electric Co., Allegheny Technologies, U.S. Steel Corp., the United Steelworkers Union and SolarWorld.
The indictment, which includes charges of trade-secret theft and economic espionage, was issued in Pittsburgh, where most of the companies are based. China denied it all, saying the charges were "purely ungrounded and absurd."
In a DW interview, James Lewis, director of the Strategic Technologies Program at the Washington-based Center for Strategic and International Studies (CSIS) and US President Barack Obama's former cyber security advisor, says the US wants to send a message to China to stop stealing economic secrets and abide by international laws forbidding the theft of intellectual property.
DW: Technically speaking, how is China spying on US companies?
James Lewis: The current technique is called "phishing." This involves sending emails that look legitimate, but when they are opened, they secretly infect the user's computer network with malware which, in turn, enables cyber-spies to exfiltrate information. They also use a social engineering trickery, such as sending an email with the words "click here to see next year's bonuses" written in the subject line. If you send it to 100 people a few will end up being tricked.
What sort of secrets did the five accused Chinese officers reportedly steal?
They are accused of stealing business confidential information such as a company's negotiating strategy or bottom line, and intellectual property that they then passed on to Chinese companies so they could build a competing product without having to invest in research and development.
What are the chances these five Chinese military officials will ever see the inside of a US courtroom?
Zero. The intent is to send a message to China's leaders. No one expects them to be extradited to stand trial.
Why is this latest case of cyber-espionage so significant?
The US has been talking to China about cyber-espionage for four years at the highest levels, including the presidential level. The Chinese haven't done anything about it. This is a way of reminding them that this is an important bilateral issue that won't simply go away.
China's defense ministry denied the charges and accused the US of "double standards," pointing to the leaks by former National Security Administration contractor Edward Snowden. What is your view on this?
The Chinese always say this. Twenty years ago for instance, when the US and other countries asked Beijing to stop selling missiles, the Foreign Ministry also said it was hypocrisy and a double standard. When the US asked them not to sell weapons to regimes which violate human rights, they said the same. The Chinese do more economic espionage against the US and other nations than all other countries combined. For instance, they are also going after German automobile technology now. If there is hypocrisy, it is in Beijing. China needs to become a country that follows the rule of law.
How big of a problem has China's economic cyber-espionage become for the US?
China's cyber-espionage probably costs about 40 billion dollars a year and has affected between 100,000 and 200,000 jobs. And this doesn't include the theft of military technology. It's being going on for a decade and has gotten worse in recent years. This is something that can no longer be ignored.
In your view, to which extent are European companies affected?
One of the firms in the indictment was a US subsidiary of a German company. Germany suffers as much as the US, but is in my view afraid to confront China because of the importance of the Chinese market. A former German intelligence official told me "the Chinese hollowed out our clean energy companies. Now they're going after out car companies."
However, this is not a parallel with the spying done by the US National Security Agency (NSA). There is no international law that forbids espionage for political-military purposes, mainly because all countries do it and don't want an international law regulating it. But there is law that forbids the theft of intellectual property of which the People's Republic of China is a signatory. Beijing needs to live up to its trade commitments.
The Chinese argue that the distinction between commercial and political-military espionage is a US creation and argue that looking for business secrets is part of the fabric of national security. What is your view on this?
No one forced China to join the World Trade Organization (WTO), where it agreed to protect intellectual property and treat foreign and Chinese companies on an equal basis. China ignores these commitments and argues that it shouldn't have to observe the rules because it is still a poor country. If China wants to say that it has the right to engage in commercial espionage, it should withdraw from the WTO.
If America went too far in political-military espionage, China has gone far too far in commercial espionage. There are many known incidents where the People's Liberation Army has hacked companies in Germany, the UK, France, Russia, Sweden, Norway, Belgium, India, Australia, South Korea, Japan, and Canada in addition to the US. China has returned to the world stage, something we all welcome, but it must adjust its behavior to fit its new stature.
What can be done for governments and companies to better protect themselves from cyber-espionage?
There are defensive measures that companies can put in place, but at the end of the day this is a political problem. We need agreements among states on responsible behavior and the rule of law, this is true for the US spying, but it's even more for China and Russia.
China recently warned the United States was jeopardizing military ties with China. What impact is the indictment likely to have on US-China relations?
A serious military dialogue with China would be invaluable, but this would require transparency and regular dialogue, something the Chinese have been unwilling to do. Relations get ever-more tense every year and the best way to reverse this would be start an honest dialogue between China's People's Liberation Army and the US Department of Defense.
James Lewis is director of the Strategic Technologies Program at the Washington-based Center for Strategic and International Studies (CSIS) and US President Barack Obama's former cyber security advisor.