Why the U.S. Is Charging China With Cyberspying on American Companies

The United States is charging the Chinese military with hacking into American companies in order to gain valuable trade secrets, marking the first time the U.S. has brought a criminal case against a foreign government for cyberspying.

Attorney General Eric Holder announced Monday an indictment of five officers of China's People's Liberation Army for breaches against six American companies.The charges follow an investigation by a federal grand jury in Pittsburgh that concluded China's military officers conspired to hack into the computers of Westinghouse Electric, Alcoa, Allegheny Technologies, U.S. Steel, the United Steelworkers Union, and SolarWorld.

"When a foreign nation uses intelligence resources and tools against an American executive or corporation to obtain trade secrets or sensitive information for the benefit of state-owned companies, we must say 'enough is enough,' " Holder said. "This administration will not tolerate actions by any nation that seeks to illegally sabotaged American companies and undermines their competition in the operation of the free market."

Holder added: "Our economic security and our ability to compete fairly in the global marketplace are directly linked to our national security.… This case should serve as a wake-up call to the seriousness of the ongoing cyberthreat."

The defendants named in the case are Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui. All are part of the same unit in the People's Liberation Army. Each has been charged with 31 counts of computer and economic crimes.

Last year, the U.S. and China agreed to hold bilateral discussions on cybersecurity and espionage, after U.S. officials issued a number of warnings to China that its theft of material from American companies could damage relations.

China has typically denied such allegations.

The National Security Agency has received scrutiny for trying to pressure China to restrict its cyberespionage operations while attempting to set international standards for cyberconflict. Leaks from Edward Snowden, which have revealed U.S. spying on Chinese companies, have prompted international outrage, as many nations say the U.S. government is pushing a double-standard on cyberspying.

But the NSA has denied hacking into foreign networks in order to give domestic companies any sort of competitive advantage.

"We do not use foreign-intelligence capabilities to steal the trade secrets of foreign companies on behalf of—or give intelligence we collect to—U.S. companies to enhance their international competitiveness or increase their bottom line," NSA spokeswoman Vanee Vines told National Journal last month.

Commercial cyberspying is a growing drain on the U.S. economy, estimated to cost $24 billion to $120 billion annually.