Cyber charges against China could raise the stakes for US commands

The United States may have just upped the ante for the U.S. Cyber Command, with the Justice Department’s announcement that it has charged five Chinese military officials with cyber espionage.

The indictments — the first time that the US has filed formal accusations over cyber espionage against a foreign country — are seen as likely to escalate tensions between the two countries and bring a sharper focus to the cyber domain, where the Cyber Command and its component commands in the military services conduct offensive and defensive operations.

The United States is charging the Chinese officials with conspiring to gain unauthorized access to the computer systems of six companies to steal information useful to Chinese state-owned enterprises and competitors. Trade secrets and sensitive internal communications were stolen from the companies.

The companies allegedly hacked by the Chinese military include nuclear power, metals, and solar product companies — Alcoa World Alumina, Westinghouse Electric Co., Allegheny Technologies, US Steel Corp., United Steelworkers Union, and SolarWorld.

“This is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking,” Attorney General Eric Holder said in announcing the indictments. “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response.  Success in the global market place should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.”

The defendants include five officers in Unit 61398 of the Third Department of the Chinese People’s Liberation Army, which is the signals intelligence arm of China’s military –it is often described as the Chinese equivalent of the National Security Agency.  Organizations above the platoon level under the PLA use a Military Unit Cover Designator when describing units, rarely using the true unit designators within the public realm and in press releases.

In February 2013, Mandiant, a cybersecurity firm, released a report that linked significant cyber-attacks spanning almost a decade to the PLA’s Unit 61398 – the first time that a connection was overtly made between an advanced persistent threat and the government of China. The group, purportedly based in the Pudong New Area in Shanghai, is thought to have stolen hundreds of terabytes of data from at least 141 organizations.

The charges include trade secret theft, economic espionage, aggravated identity theft, accessing a computer without authorization for the purpose of commercial advantage and private financial gain, conspiring to commit computer fraud and abuse, and transmitting a program, code, or command with the intent to cause damage to protected computers. The maximum penalties for each of the charges range from two to fifteen years.

Cyberattacks on private industry are as much of a focus of national security as those on government institutions. Many security experts have contended for years that intellectual property, rather than some kind of “Cyber Pearl Harbor,” was the real goal of foreign, state-sponsored hackers. In July 2012, Army Keith Alexander, then director of the NSA, called cybercrime the source of "the greatest transfer of wealth in history." 

China has been suspected of cyber espionage for years, being unofficially blamed for everything from the Google hack to the theft of security tokens from RSA Security, some of which were used in a subsequent attack on defense contractor Lockheed Martin.

But last May, a Pentagon report for the first time explicitly accused China’s military of hacking into U.S. government agencies and contractors. At the time, Bloomberg reported that the networks of almost every major U.S. defense contractor had been breached.

One of those companies was QinetiQ, which supplies military satellites, drones, robotic systems and software. The company was regularly hacked over a three-year period, losing research that "compromised information vital to national security, such as the deployment and capabilities of the combat helicopter fleet," Bloomberg reported.

A report early last year from Akamai showed a sharp increase in hacks from China, accounting for a third of attacks identified on the company’s global content delivery network.

China, for its part, has maintained that it does not engage in cyber espionage and that its own networks are a frequent target of the NSA and U.S. Cyber Command.

Holder, at a news conference, said, "It is our hope that the Chinese government will respect our criminal justice system," and turn the five officials over for prosecution. That would seem highly unlikely, but DOJ officials said it was important to file the charges.

“State actors engaged in cyber espionage for economic advantage are not immune from the law just because they hack under the shadow of their country’s flag,” said John Carlin, Assistant Attorney General for National Security. “Cyber theft is real theft and we will hold state sponsored cyber thieves accountable as we would any other transnational criminal organization that steals our goods and breaks our laws.”