The Justice Department’s indictments of five Chinese army officials accused of hacking U.S. companies escalated cybersecurity tensions between Washington and Beijing on Monday and opened what some analysts and U.S. lawmakers called a new phase in the confrontation between the world’s two most powerful nations.
The first cyber-related criminal indictment Washington has made against officials from any foreign government says an elite Chinese army group known as “unit 61398” has spent nearly a decade engaging in state-sponsored theft of trade secrets from several top-tier private energy and steel companies.
“We allege that members of unit 61398 conspired to hack into computers of six U.S. victims to steal information that would provide an economic advantage to the victims’ competitors, including Chinese state-owned enterprises,” John Carlin, assistant attorney general for national security, told reporters at the Justice Department on Monday.
The charges triggered a rebuke from the Chinese Foreign Ministry, which said Washington’s move was “ungrounded and absurd” and that China was responding by halting participation in cybersecurity talks that officials from both nations pursued over the past year.
Officials at the State Department said they intend to continue pursuing the dialogue, but the Obama administration’s decision to level the criminal charges suggests that overall U.S. government frustration with suspected Chinese hacking has reached a boiling point.
The Obama administration won quick praise from both sides of the aisle Monday. Some lawmakers revealed how China’s denial of state-sponsored hacking during recent and high-level meetings with U.S. officials appears to have provoked the administration to tighten the screws on Beijing.
“The issue of state-sponsored theft of intellectual property from private American companies has been raised at the highest levels with China, including by [President Obama] himself,” Rep. Patrick Meehan, Pennsylvania Republican, who chairs a House Homeland Security subcommittee on cybersecurity, told The Washington Times in an interview.
“But China has not abated their activity,” said the congressman, who added that he other Republicans, including House Majority Leader Eric Cantor of Virginia, also raised the issue directly with Chinese Premier Li Keqiang during an official visit to Beijing last month.
“We were very deliberate and specific and in all honesty, the response from the Chinese was disciplined and circular,” Mr. Meehan said. “They made no admissions.”
With those interactions serving as a backdrop to Monday’s development, Peter W. Singer, a scholar focused on cyber-related issues at the Brookings Institution, said the leveling of criminal charges by the Obama administration should be seen as a serious “next step” in “a dance that will play out for the coming years.”
“No one should expect the indictment to end hacking,” Mr. Singer told The Times in an email. “While just five people were indicted, behind them is an immense human network of hackers, both inside Chinese military units and in broader cyber militia that numbers in the hundreds of thousands.”
The activities of China’s Unit 61398 drew significant attention in the Western media last year after a report by the American security firm Mandiant, which estimated that the unit is “staffed by hundreds, and perhaps thousands of people.”
The report said Mandiant investigators had gathered evidence on the unit’s hacking of some 141 companies across 20 major industries since 2006.
Mr. Carlin said Monday that the FBI’s own probe into Unit 61398 uncovered evidence identifying “specific actions on specific days by specific actors to use their computers to steal information from across [the U.S.] economy.”
The indictments against five of the unit’s members “describes how they targeted information in industries ranging from nuclear to steel to renewable energy,” Mr. Carlin said. “While the men and women of our American businesses spent their business days innovating, creating and developing strategies to compete in the global marketplace, these members of unit 61398 were spending their business days in Shanghai stealing the fruits of our labor.”