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Cyber espionage and the new Cold War of US-China relations

The members of China’s military charged over cyber espionage by the US will never see American justice, but the case does break new ground in a fractious US-China relationship increasingly characterised…

The stoush between China and the US over spying is becoming toxic. Shutterstock

The members of China’s military charged over cyber espionage by the US will never see American justice, but the case does break new ground in a fractious US-China relationship increasingly characterised by mutual accusations of foul play. What does this mean for relations between the US and China? Might other countries follow this precedent with their own legal actions?

The US and China have been wrangling over this issue for years. Congressional committees complain about theft of US intellectual property by Chinese firms like Huawei and portray them as proxies of the Chinese government.

Post-Snowden, China has retaliated by drawing attention to leaked documents suggesting the US National Security Agency regularly hacks Chinese networks.

The White House indicates that “cyber issues” are central to Sino-American relations, although this is a relationship so soured that two recent authors describe the effects of “cyber” on bilateral relations as “toxic” and “poisonous”.

In February 2013, cyber security company Mandiant traced many alleged Chinese activities to a Shanghai industrial estate and specifically to People’s Liberation Army (PLA) Unit 61398 located there.

Mandiant claimed the unit was responsible for commercial cyber espionage against US interests, an accusation Beijing firmly rejected. The Obama administration hoped this “naming and shaming” tactic might force new Chinese President Xi to rein in the PLA or at least get them to be less brazen in their operations.

This message did not reach the PLA. After a brief lull, Unit 61398 was back in operation and five of its officials feature in the new indictments, charged with stealing proprietary information from American companies engaged with state-owned Chinese businesses. The stark accusation is: these individuals are part of a state-led conspiracy to steal intellectual property from American companies with whom China has legitimate business. This material includes internal email exchanges and “trade secrets related to technical specifications for nuclear plant designs”.

The real reason for America’s anger

What infuriates the US is not the use of computer networks for secret espionage ― after the Edward Snowden spying revelations it can no longer deny the extensive nature of its own national intelligence activities ― but what it sees as the subversion of the rules of free enterprise. This spat is about commercial espionage and specifically US enterprise not ceding strategic advantage to Chinese competitors. The US wants a level commercial “playing field” and it perceives Chinese actions as inimical to that.

China has denied the charges as “made-up” and reasserted it does not engage in such activities. The US says it will issue further indictments against individuals suspected of conducting commercial cyber espionage. Given US prosecutors know the chance of prosecuting PLA officials in person is effectively nil, what function do these indictments serve and what happens next to US-China relations?

Sending a message

The indictments may be symbolic because they will not result in prosecutions, but this does not mean they are meaningless. They put pressure on Beijing to be seen doing something constructive, rather than making generic denials of illegal activity. They also signal that China must do so or risk as-yet unspecified consequences. This is perhaps not such an empty threat given the details of the indictments also communicate strongly to the Chinese that US intelligence has good operational knowledge of the PLA’s networks and even individual officials.

Will this spark similar legal moves by others? US allies like the UK and Australia have their own complaints about Chinese cyber espionage but they might prefer the US takes the diplomatic flak rather than commence their own rather less muscular legal challenges. Alternatively, the US might pressure them to do just that, to communicate to China that the international community is just as concerned about Chinese actions as they are.

How China responds is critical, not because it is necessarily at fault, but because in the diplomatic game Beijing must react to an escalatory gambit like this. Will it respond in kind, or might it switch to the sort of diplomatic tit-for-tat that characterised the Cold War?

If China decides, for example, to indict Keith Alexander, the former NSA director implicated in cyber operations against China, it will look petty and bereft of ideas. If history is any guide, however, we can expect China to claim the moral high ground while continuing much as before, which will enrage the Americans.

Each side accuses the other of avoiding constructive dialogue but neither has found a way of saving face so that such engagement might take place. This latest move makes it even less likely that the two sides can sit down together and China has already suspended a US-China internet working group, indicating a further chill in bilateral relations. The US and China need this mutual relationship to work but this latest development shows again how hard they both find it to manage. Your move, Mr President.

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33 Comments sorted by

  1. Zeo maz

    Untrained Monkey.

    Huff and puff all you like America but you are just as bad, if not worse, than China! You sound like a petulant child because your not getting your own way and have the audacity to force other countries to help you!! I suppose you will pull out the so called "Free Trade Agreement" to force these other countries to help you as well.

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    1. Barry White

      Retired

      In reply to Zeo maz

      There is no law in the US or elsewhere apparently that outlaws military espionage. However there is international law that protects patents, and commercial data.
      That is the difference

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    2. Tim Stevens

      Fellow at King's College London

      In reply to Barry White

      @Barry - Yes, that is the difference. I fear many people are too ready to conflate the two, which doesn't help matters.

      Everybody spies on everyone else for national security purposes, it's just a matter of degree. As you say, there are no formal treaties, etc, preventing this. Not everybody conducts state-led/sanctioned commercial espionage programs for national gain in contravention of international law and norms.

      The latest US charges may be shaky and the indicted individuals may not even be PLA officials (http://jeffreycarr.blogspot.co.uk/2014/05/analysis-of-victim-companies-in-pla.html) but this doesn't alter the fact that China has a case to answer and the US is right in pressing its claims, even if it is somewhat uncomfortable for some people to admit that.

      As for the Internet of Things, yes, it has a lot of people very worried. Or, rubbing their hands with glee ...

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    3. Michael Shand

      Software Tester

      In reply to Tim Stevens

      So you think China should take the US to international Court for violating their soveriegnty and stealing confidential information

      There are formal treaties protecting individuals from being spied upon, you might want to familiarise yourself with the US constitution

      merely stating "National Security' isn't a free pass on the law and if you want to hold china accountable, bring on the case against australia and the case against the US and against the UK all of which are guilty of the same actions as china if not worse

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    4. Tim Stevens

      Fellow at King's College London

      In reply to Michael Shand

      And you, sir, might need to distinguish between the messenger and the message. There is a possibility that this affair may result in exactly the sort of legal free-for-all you're talking about. I somehow doubt it, given that it's mainly posturing but you never know.

      I repeat: there are no formal treaties banning 'espionage' and China knows that just as well as the US. China is refusing to distinguish between secret and commercial espionage. They are not analytically equivalent, no matter how much one dislikes the whole shebang.

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    5. Michael Shand

      Software Tester

      In reply to Tim Stevens

      I am not advocating a legal free for all, I am merely pointing out how easily you state china should be taken to court .....and that's it, no mention of any other nation

      And there are laws protecting confidential information of companies and governments - individuals cannot legally obtain and share confidential government information

      being a state or a corporation does not change that - Ohh I didn't steal your car, Allianz did so it's okay - no, if I can't steal ASIO information, why would it be legal for say the UK government to steal ASIO information

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    6. Tim Stevens

      Fellow at King's College London

      In reply to Michael Shand

      I've never said China should be taken to court, nor would I. Even the US isn't seriously going to take China to court. This should all be dealt with diplomatically. The fact is, neither side - read this: *neither side* - is doing all it can to resolve this.

      With respect, you're confusing an awful lot of different issues, although they are, of course, deeply intertwined.

      Point of order: this is an 800-word op-ed on US and China. Not much space to discuss other countries, methinks. But, you're right, there's an awful lot more that could be said.

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    7. Michael Shand

      Software Tester

      In reply to Tim Stevens

      My apologies Tim, I did not know that you were the author.

      In light of this, my apologies for being rude, thanks for the article on such an important topic, hope to read more in the future

      and do check out the Australia / Timor Leste case if you can

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    8. Tim Stevens

      Fellow at King's College London

      In reply to Michael Shand

      No problem. You raise important issues beyond the scope of this short piece. I think the crucial thing to keep in mind is that paying attention to the alleged wrong-doings of another party in no way absolves you of your own less salubrious practices. This is something the US and China would do well to remember.

      And I will check out Australia/TL - as you suggest, it's probably something that has slipped from view over the years.

      All the best.

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    9. Michael Shand

      Software Tester

      In reply to Tim Stevens

      Well, it was this year that the International Court of Justice has imposed restrictions on the spy agencies of one of the so-called ''five eyes'' intelligence community as result of part of the incident

      so it probably shouldn't have dropped off the radar but given the state of the media and even contributors to The Conversation I understand why people might not be aware of it

      Standard Conversation Article about spying is "the (Government) climate has always (Spied) changed, so it's not a big deal"

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    10. Wei Ling Chua

      Freelance Journalist and Author at www.facebook.com/mediadisinformation

      In reply to Michael Shand

      Michael, the US constitution has got nothing to do with this. US is simply a gangster nation. They breached Huawei’s servers to keep an eye on those using their products ( http://www.androidheadlines.com/2014/03/nsa-apparently-breached-huaweis-servers-keep-eye-using-products.html ) while falsely alleged Huawei of spying: http://english.cntv.cn/program/newsupdate/20130917/103903.shtml . Also see this: http://www.slate.com/blogs/the_world_/2014/03/24/nsa_hacked_huawei_why_beijing_is_loving_the_latest_ironic_snowden_revelation.html?wpisrc=burger_bar .

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    11. Barry White

      Retired

      In reply to Wei Ling Chua

      You would have to be dopey to allow a Chinese government company to supply equipment in critical areas. Anyone commenting on here on this subject will have enough knowledge to see the implications. Never having been a hacker, but have done enough programming to know how easy it is to hide your footprints.

      As I said earlier, anyone who puts important information on internet connected computers should be given the sack !

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    12. Wei Ling Chua

      Freelance Journalist and Author at www.facebook.com/mediadisinformation

      In reply to Barry White

      Hi Barry, are you suggesting that it is alright for Western companies to supply equipment in critical areas in Australia but not Chinese companies? Please bear in mine that the Congress hearing fail to produced any evidence of Huawei spying. Beside Huawei has open it source for the US to examine. Google, Apply .... etc etc all found guilty of spying for the US government by Snowden revelation. read this: Privacy Pretense- How Silicon Valley Helped the NSA : http://www.foreignaffairs.com/articles/140246/abraham-newman/privacy-pretense?sp_mid=44308605&sp_rid=d2VpY2h1YTJAYmlncG9uZC5jb20S1
      Western corporations are actually the real threat to the world. The bias again non-western corporations are baseless.

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    13. Barry White

      Retired

      In reply to Wei Ling Chua

      Yes, I am suggesting that.
      I would prefer the Western companies to supply rather than a country with a proven "walk all over them" attitude as demonstrated in Tibet and in the South China Sea and a country from whom we have borrowed so much.
      If we default, what might they want in lieu ?

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    14. Wei Ling Chua

      Freelance Journalist and Author at www.facebook.com/mediadisinformation

      In reply to Barry White

      Barry, you know nothing about Tibet and the South China Sea. Anyway, Australia will be marginalized if politicians with such mentality run the country. The tide has changed, and people who are blinded by their personal bias will eventually lead this country into poverty in the 21st century. What I can say about Tibet is common sense, China did not slaughter it indigenous population up to 80%, with life-expectancy 20 years below national average. China do not have issue with stolen generation, which…

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    15. Barry White

      Retired

      In reply to Wei Ling Chua

      Wei, well ar least we have tried to improve the state of the aboriginies. It does take two to tango anyway.
      You, as a China supporter have a nerve criticising us on human rights !
      I suggest you ask the Vietnamese.

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    16. Wei Ling Chua

      Freelance Journalist and Author at www.facebook.com/mediadisinformation

      In reply to Barry White

      Barry,ignorance of the world around you is your worst enemy. Is there an "improvement on the state of the aborigines"? Read this so-called closing the gap policies since 2008:
      2014: No way to close the gap on Abbott's Indigenous lie: http://www.independentaustralia.net/politics/politics-display/abbotts-false-and-misleading-indigenous-commitment,6170
      2013: reports make for fairly bleak reading: most indicators show no change: https://theconversation.com/unfinished-business-reducing-indigenous-incarceration-17227

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    17. Michael Shand

      Software Tester

      In reply to Wei Ling Chua

      The US are Gangsters are they? Gangsters or Gang Bangers? maybe they are thugs?

      Neither china nor the US are innocent, I'm sick of comments that follow the thread of this article which is to describe all the bad actions of one side....whilst conviently leaving out anything the other side has done

      Also, the US Constitution gives rights to american citizens, spying on those citizens is in direct contradiction with the constitution, hence why it matters

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    18. Wei Ling Chua

      Freelance Journalist and Author at www.facebook.com/mediadisinformation

      In reply to Michael Shand

      Michael, I can understand your frustration. I am frustrated too. I began my post with a relevance information to show that the allegation against China by the US has been proven baseless as the Congressional hearing failed to produced any evidence that Huawei spy on US. However, somehow, there will always be people who receive their information purely from the agenda based media with all kind of self indulgence righteous and total ignorant about their own human rights issues and simply comment on…

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    19. Michael Shand

      Software Tester

      In reply to Wei Ling Chua

      Fair enough, I guess it's hard to know who you are talking to and where they are at in the conversation

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  2. Jay Wulf

    Digerati at nomeonastiq.com

    " The US wants a level commercial “playing field” "

    That has to be the most amusing line in an already good article.

    The only reason the US wants a 'level playing field' is so that it can run its multinational 800-pound driven gorilla steamroller to destroy any remnants of opposition. If you look at the 'Free' trade agreement, it grossly favours the US multinationals.

    Honestly I think the US is just pissed off that APT1 is using the same 666-day attacks that its own operations like FOXACID are using. With PLA growing to be a bigger threat, they now will have to patch sooner, least the Chinese get in through the same back doors our American friends have been using.

    This is the big argument that is absent from all the global spying disclosures. The fundamental basis of IT security has been systematically broken on and industry scale. With other players braking it, at least we will go back to the good old days a little.

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  3. Brian Glennie

    artist in training

    Why would China have to spy on companies in the U.S., when all U.S. companies have offices in China and production done their.
    Appears to be a smoke-screen to cover " dastardly deeds " done at by U.S. military and "security " operations.

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  4. Barry White

    Retired

    I just cannot understand why companies that have critical information load it onto computers that are connected to the internet !
    It seems totally stupid to me. They can have a network of computers on their premises that have no internet connection.
    Likewise this whole "internet of things" looks like a hackers paradise to me.

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    1. Tim Stevens

      Fellow at King's College London

      In reply to Barry White

      @Barry - Yes, that is the difference. I fear many people are too ready to conflate the two, which doesn't help matters.

      Everybody spies on everyone else for national security purposes, it's just a matter of degree. As you say, there are no formal treaties, etc, preventing this. Not everybody conducts state-led/sanctioned commercial espionage programs for national gain in contravention of international law and norms.

      The latest US charges may be shaky and the indicted individuals may not even be PLA officials (http://jeffreycarr.blogspot.co.uk/2014/05/analysis-of-victim-companies-in-pla.html) but this doesn't alter the fact that China has a case to answer and the US is right in pressing its claims, even if it is somewhat uncomfortable for some people to admit that.

      As for the Internet of Things, yes, it has a lot of people very worried. Or, rubbing their hands with glee ...

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    2. Michael Shand

      Software Tester

      In reply to Tim Stevens

      "Not everybody conducts state-led/sanctioned commercial espionage programs for national gain in contravention of international law and norms."

      Australia does

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    3. Michael Shand

      Software Tester

      In reply to Tim Stevens

      Look up "Timor Leste"

      The fact that you are not aware of this suggests you might want to and you did specifically state that the US should take china to court for doing these actions

      you did lay blame whether you meant to or not

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    4. Tim Stevens

      Fellow at King's College London

      In reply to Michael Shand

      No, I did not. I said that China has a case to answer. The US has many cases of its own that it refuses to address, I might add. This does not mean that China is blameless.

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    5. Barry White

      Retired

      In reply to Michael Shand

      Michael, was it an internet intrusion or a good old fashioned microphone in a conference room stunt ?
      I thought that was what I read.

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    6. Michael Shand

      Software Tester

      In reply to Barry White

      It was the good ole fashion put microphones in their conference rooms so that when they talk about the negotiations we can take advantage of them

      I feel society has lost it's way a little bit with privacy, we all used to understand why it is illegal to open another persons mail

      Now a days it seems people think that the only reason we didn't do it because it was too hard, as if having the internet around, we would of never made that rule about privacy

      The latest incident was George Brandis raiding their lawyers office and stealing the evidence that was going to be used against them, which the International Court of Justice said was unlawful

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  5. geo nic

    Hang Gliding Instructor

    I believe that this is merely a test: the US knows it has no credibility on this matter. Now it wants to see if China has any.
    Guess what? China denies any wrong doing whatsoever, which is hardly credible.
    Test failed. Now what? Escalate the issue and make it worse, or simply let it fade from the headlines. My guess is that the information will be used as an indicator of the PRC's intentions and credibility on issues in the South and East China Seas where they are currently, surreptitiously usurping islands against International laws and local doctrines (UNCLOS and DOC, respectively), which they signed. If they can't be trusted on a simple matter of admitting to cyber-espionage (which is patently ludicrous), then maybe they also cannot be trusted on what they are saying about what hey are doing in their disputes with Japan, Vietnam, and the Philippines.

    I think the other shoe will drop when China tries to intimidate the Philippines again in the latter's EEZ ...

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