Naming Names: Why the US Is Escalating Its Cyberespionage Fight with China

The US and China have for years been engaged in name-calling and taunting over cyber-espionage like a couple of playground bullies. Suddenly, the US ratcheted up the tension by going beyond the 2013 Mandiant report that named a Chinese People Liberation Army unit, actually indicting specific individuals, who, it says, it can prove stole documents online, some involving nuclear power plants.

So why now and why this? The Russians would appear to be a more obvious target given their actions in Ukraine and Syria, while none of the companies from whom secrets were apparently stolen are at the forefront of US technological design.

And that would appear to be precisely the point.

Russia is simply too hot right now. With 40,000 well-armed troops on the Ukrainian border and its leader finally making de-escalation noises, there would be little to gain by antagonizing the Bear.

China, however, appears to have crossed three red lines in its espionage activities: nuclear power, an industry in which the US retains some competitive advantages and the sabotage of which is every counter-terrorism expert's worst nightmare; technology, the current and probably future source of US economic well-being and, perhaps the most important, the President's personal pride. 

President Obama has been openly mocked for the weakness of his foreign policy in Syria, Ukraine and almost everywhere else. His once notably unconcerned demeanor has shown cracks, suggesting that those jibes have hit home. Even his supporters retain some pride in the notion of the US as the liberator of Europe in two world wars. So getting tough with a country who many of his constituents also believe is stealing US jobs and intellectual property is an easy win. Commentators who note the irony of the US charges in the wake of Edward Snowden's NSA revelations may be missing the point: the US is well aware of the perceived disparity and doesnt care. It is sending a message to the rest of the world that it has the capability to identify transgressors with the unspoken threat that it could do more - and it is reassuring domestic voters that it is not going to be pushed around. Pretty clever. If it works. JL

Lorenzo Franceschi-Bicchierai comments in Mashable:

The U.S. government has long accused the Chinese government of spying on American companies to steal intellectual property, but the indictment is a milestone in what has until now been a rhetorical fight.
The United States government is accusing members of the Chinese military of hacking and cyber-espionage against American businesses, the first time prosecutors have formally charged members of a foreign government with such crimes.
The Justice Department announced Monday the indictment of five members of China's People's Liberation Army for hacking U.S. firms and stealing trade secrets. It's unclear at this point whether they will ever face American justice, given the complicated nature of the case; all the defendants are in China and are members of the Chinese military. But U.S. officials stressed the importance of the indictment as a warning message to China.

"When a foreign nation uses military or intelligence resources and tools against an American executive or corporation to obtain trade secrets or business information for the benefit of its state-owned companies, we must say enough is enough," U.S. Attorney General Eric Holder said during a press conference on Monday. "This 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. This case should serve as a wake-up call to the seriousness of the ongoing cyber threat."
The indictment accuses Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, officers of Unit 61398 of the Third Department of the Chinese People’s Liberation Army, of 31 criminal counts for their hacking and cyberspying actions spanning eight years, from 2006 through 2014.
In particular,

prosecutors have identified six companies that have been victims of the hackers in the United States

prosecutors have identified six companies that have been victims of the hackers in the United States, including Westinghouse, SolarWorld and U.S. Steel. The Chinese hackers allegedly stole trade secrets, internal communications and strategy information from companies' computers with the goal of favoring their own enterprises. In the case of Westinghouse, for example, the hackers allegedly stole the designs for nuclear power plant components while Westinghouse was negotiating with a Chinese state-owned company over the construction of four power plants in the country.When asked during the press conference, U.S. officials declined to estimate the cost of these hacking and espionage operations, saying only the companies have suffered "significant losses," as FBI Executive Assistant Director Robert Anderson put it.
The Department of Justice even circulated some of the defendants' pictures before the press conference.
The U.S. government has long accused the Chinese government of spying on American companies to steal intellectual property, but the indictment is a milestone in what has until now been a rhetorical fight. 
China has always denied the accusations."In the past when we brought concerns such as these to Chinese government officials, they responded by publicly challenging us to provide hard evidence of their hacking that could stand up in court," said John Carlin, assistant attorney general for national security, during the press conference. "Well, today we are."
Security experts emphasized the importance of the indictment. George Kurtz, co-founder of CrowdStrike, called it a "watershed moment."
But others, like Dave Aitel of Immunity, and Richard Bejtlich of FireEye, also warned it could lead to an escalation in the online fight between the U.S. and China, including retaliation from the Chinese government — both online and in the courts.
Last year, a series of high-profile cases put Chinese hackers in headlines around the world. In January 2013, one of the first victims to go public was The New York Times. The computer security firm Mandiant released a report revealing a sophisticated and continuous attack on the Times' servers originating from China, and, more specifically, Unit 61398 of the People's Liberation Army.

Many observers noted the irony of the U.S. government accusing others of hacking

Many observers noted the irony of the U.S. government accusing others of hacking and spying on the Internet in the wake of the Edward Snowden revelations. In March, it was revealed that the NSA had been conducting a sophisticated years-long operation against China's tech giant Huawei.Holder, however, dismissed these concerns, saying that "all nations are engaged in intelligence gathering."
"What I think distinguishes this case is that we have a state-sponsored entity, state-sponsored individuals using intelligence tools to gain commercial advantage," he added.
UPDATE, May 19, 3:31 p.m. ET: In response to the indictment, China published a strong statement, denying the accusations and calling them "purely ungrounded and absurd."
"This U.S. move, which is based on fabricated facts, grossly violates the basic norms governing international relations and jeopardizes China-U.S. cooperation and mutual trust," said Foreign Ministry Spokesperson Qin Gang. "The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets."
Qin also struck back at the United States with an accusation of his own.
"It is a fact known to all that relevant U.S. 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," he said, clearly referring to the Snowden leaks. "China is a victim of severe U.S. cyber theft, wiretapping and surveillance activities."
In the statement, Qin also announced that China has suspended any activities related to the China-U.S. Cyber Working Group, a bilateral diplomatic effort created last year to address the allegations of hacking.