Going After China’s Cyber-Spies

by Jonah Shepp

The Justice Department has indicted five Chinese military officers on charges of cyber-espionage, accusing them of stealing American companies’ trade secrets:

The five members of the People’s Liberation Army — Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui — belong to Unit 61398 of the 3rd Department of the People’s Liberation Army, based out of a building in Shanghai. All of them have been accused of conspiring to hack into the computers of six American entities. The companies identified as victims of the hacking are Westinghouse Electric; U.S. subsidiaries of SolarWorld; U.S. Steel; Allegheny Technologies; the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union; and Alcoa.

There’s no chance that they’ll ever appear in court, but the diplomatic consequences are obvious. Jacob Siegel and Josh Rogin note that the move comes at an awkward time in US-China relations:

The decision to expose Unit 61398 comes less than a week after a top Chinese general toured the U.S. on what many believed was a diplomatic trip intended to give U.S. officials the chance to deescalate tensions in China’s territorial disputes with its neighbors. But the visit failed to produce the hoped-for deescalation. Instead, Defense Secretary Chuck Hagel sparred publicly with Chinese Defense Minister Gen. Chang Wanquan over Chinese actions in the East China Sea, including China’s recent declaration of an air defense zone that spans disputed territories. Hagel was reportedly rebuffed in his plea to the Chinese military for greater transparency during a visit there last month.

Brian Merchant situates Unit 61398 within China’s massive cyber-spying operation:

Unit 61398 has in the past been tied to a hacking group the Comment Crew, most decisively by a 2013 Mandiant cyber security report. The New York Times explained that, according to the research, the Comment Crew “has drained terabytes of data from companies like Coca-Cola” but that “increasingly its focus is on companies involved in the critical infrastructure of the United States — its electrical power grid, gas lines and waterworks. According to the security researchers, one target was a company with remote access to more than 60 percent of oil and gas pipelines in North America.”

P.W. Singer explains what China’s cyber-spies are after:

[T]he targets of it range from across the spectrum: everything from jet fighter designs to oil company equipment designs to the designs of chairs made by small furniture makers. Or the theft of negotiating strategies: what everything from oil companies to soft drink companies were going to bid in competition with Chinese companies. Its been going after academic and scientific research; going even after personal cell phones. They’ve gone after journalists, [as in] the famous New York Times affair where a Chinese military-linked unit entered into the Times. It wasn’t after the secret recipe for New York Times newspaper ink, it wasn’t after readers’ credit card numbers, it was after who inside China was speaking to New York Times editors about corruption in China.

Adam Taylor notes that the Chinese are citing Snowden to dismiss the charges as hypocritical:

Monday’s statement [from the Chinese Foreign Ministry] appeared to make direct reference to Snowden’s revelation again. “It is a fact known to all that relevant US institutions have long been involved in large-scale and organized cyber theft as well as wiretapping and surveillance activities against foreign political leaders, companies and individuals,” the statement read. “China is a victim of severe US cyber theft, wiretapping and surveillance activities. Large amounts of publicly disclosed information show that relevant US institutions have been conducting cyber intrusion, wiretapping and surveillance activities against Chinese government departments, institutions, companies, universities and individuals.”

But Ambers distinguishes our espionage operations from what China has been doing:

The U.S. does not steal proprietary secrets to help U.S. corporations compete in the world. It does steal secrets to help the U.S., broadly, compete in the world. …

The U.S. does invade the internet servers and computers of foreign countries, looking to collect intelligence that will add value to American policy-makers’ decisions about trade deals, sanctions, counter-narcotics, counter-trafficking, and counter-terrorism. It does so with the help of American countries. It does not, at least explicitly, steal secrets from, say, Chinese companies in order to directly benefit American companies working with the same technology. But it does create backdoors into state-owned or operated companies in order to spy. Maybe it is a distinction without a difference, at least in terms of how the world perceives U.S. spying.

The editors at Bloomberg applaud the indictment:

Cybercrime targeting trade secrets and intellectual property is a booming business, one that costs U.S. companies billions each year. It’s been called the greatest transfer of wealth in human history. And China’s legions of cyberspies are, by general consensus, the world’s worst offenders. The U.S. has now signaled that it will protect companies against such intrusions after years of private warnings to the Chinese. And, more important, the indictment will hopefully remind China that curtailing this kind of abuse is in its own economic interest. On the first score, the indictment amounts to a defense of a long-established principle of espionage: While governments can spy to protect national security, as the U.S. does, they shouldn’t steal corporate secrets to benefit their own businesses. The Chinese government has been ostentatiously flouting this norm for years.

Color me unpersuaded on this point. Would we somehow be more OK with Chinese agents hacking the DoD because they could claim they were protecting their national security interests? I doubt it. Face it, guys: we’re a lot cooler with us spying on them than with them spying on us. That’s just national loyalty talking—don’t try and chalk it up to general principle. Gwynn Guilford also isn’t so sure this “long-established principle of espionage” argument will fly in other countries, especially since, y’know, we violate it too:

[T]he push to define the relative degrees of cyberspying nefariousness might not be all that persuasive abroad, says Adam Segal, a senior fellow at Council on Foreign Relations. “[US Attorney General Eric] Holder tried in his introductory statements to say ‘we’re going after economic espionage,’ and the US continually says we don’t engage in that,” Segal tells Quartz. “But Huawei and Petrobras [foreign companies the US government’s been caught spying on] are clearly economic targets. So I don’t see [this latest effort] gaining traction internationally.”

It certainly hasn’t convinced many in China:

On the Chinese web, users largely dismissed the U.S. accusations as a case of “a thief crying ‘stop the thief!’” and wondered whether China shouldn’t pursue charges of its own against U.S. officials for government-sponsored cyber spying.” So this means China can just charge U.S. military officers in the same way,” wrote one user on the Weibo microblogging platform. Another called the accusations “ridiculous; the United States has the whole world in its fist, but it’s not okay for others to want to listen in on what you’re doing.” Many also wondered aloud whether Beijing shouldn’t charge the U.S. National Security Agency for spying on Chinese telecommunications giant Huawei.

Meanwhile, Daniel Ikenson is unsympathetic to the affected companies: