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US Chinese military charges a smokescreen for its own spying

In a surprising move, a US District Court has charged five members of the Chinese military with hacking six US companies to obtain commercial secrets over the last eight years. The move has been denounced…

The US Justice Department says members of the People’s Liberation Army hacked into US businesses to steal trade secrets. Jim Lo Scalzo/AAP

In a surprising move, a US District Court has charged five members of the Chinese military with hacking six US companies to obtain commercial secrets over the last eight years. The move has been denounced by the Chinese government and the US Ambassador has been called to Beijing as a result.

A trial that will never happen

Given there is no extradition treaty in place between the US and China, and in any case the Chinese would never give up members of their military to the US, the trial is extremely unlikely to ever go ahead. The indictment does not provide much detail on how these Chinese military hackers were identified, nor how the hacks were traced back to their unit, codenamed 61398.

In fact, much of the information about the role of Unit 61398, their methods and indeed some of the code names of the individuals involved were released in a report by private cyber-security firm Mandiant in February of 2013.

The hacker methods detailed in the charges are not particularly sophisticated and one piece of evidence points to Chinese involvement because the times that the compromised machines were communicating with the hackers coincided with a 9 to 5 work day in Shanghai, with an hour for lunch. Building a case on the idea that the Chinese military would work on a strict seven-hour day seems implausible.

The public relations of spying

Given the political and economic ramifications of revealing the identities of the Chinese hackers, it’s clear the US government was behind this move, at a time when US-Chinese relations continue to test new depths. Equally clear is that through this move, the White House is orchestrating a public relations campaign aimed directly at the US public, especially the US business community to highlight the clear economic necessity of having an ever growing spying machine.

Looked at in this light, the timing is not surprising. The Snowden revelations over the past year about the pervasiveness of the US spying effort have been a PR disaster for the US government. What was worse was the impact these revelations were having on US companies that had been embroiled in the scandal, mostly against their wishes. It was becoming increasingly difficult to convince a sceptical world public that the spying was simply about national security and terrorist threats when allied leaders were having their phones tapped by the NSA.

Sales of tech companies products and services have been impacted by the revelations the NSA had been subverting products before they reached customers. This recently led the CEO of Cisco to call for the US government to effectively back off from its use of the companies' products as a carrier of surveillance software and equipment.

The grand jury indictment will serve to draw a clear line between the necessity of US cyber-warfare capabilities and the continued economic protection of American companies, especially those doing direct business in China. It is in the US government’s interests to show how leaving the Chinese spying unchecked will have economic consequences for the US and more direct impacts on businesses trading in the Chinese market or competing against Chinese firms.

Will company leaders believe the PR?

It is not clear if this approach will work for the US government. Other than the posturing by US Attorney-General Eric Holder about the outrageous behaviour of the Chinese, there is little in fact that it can do. The vagaries and risks of doing business in China have been known and accepted, albeit begrudgingly, for some time. The US is dependent on the Chinese market for both manufacturing and exports.

What the NSA could do however, is to concentrate on improving the ability of companies and citizens to protect themselves against cyber attacks and threats. This in itself would be an ever-moving target, but at least the more obvious forms of attack by the Chinese could be shut down.

The global problem of corporate hacking by governments

For the rest of the world watching events unfold, including Australia, it should be clear that anyone dealing with countries like China, and in fact even the US, is likely to face attempts to obtain their trade secrets through hacking.

Australia saw such spying after revelations in 2009 of Chinese spies targeting Rio Tinto during its dealings with Chinese aluminium company Chinalco.

It’s likely that ASIO has continued to work actively with Australian companies to investigate hacking incidents from foreign governments and, attempting to protect them against this pervasive threat.

Join the conversation

24 Comments sorted by

  1. Jay Wulf

    Digerati at nomeonastiq.com

    There is an excellent report released early by Mandiate (an IT security firm) last year on Chinese industrial espionage 1). It makes for an interesting reading.

    But given the Industrial scale, ubiquitous global surveillance committed by the USA totalling 1.7 billion messaged intercepted daily equal to 138 MILLION books every 24 hours, raping the privacy of the global community this is very much like Al Capone taking one of his drivers to court over a stolen wine bottle.

    No one in the Information…

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  2. Stephen Ralph

    carer at n/a

    I have to laugh at the US accusing China of snooping and spying via on-line technology.

    Three words: pot, kettle, black.

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  3. Michael Ekin Smyth

    Investor

    David: The idea that these charges are a 'smokescreen' is nonsensical. First of all, they come many, many months after the NSA allegations, so they could not possibly hide or obscure them.
    Secondly, the activities involved are of a completely different nature. Chinese spying has been focused on commercial gain. They are, quite literally, stealing commercial and technical knowledge.
    American surveillance has been almost completely political and security in nature. I have not heard of any credible claims that it has been in any way commercial.
    The third point to take into account is that the American actions emanated from two completely different parts of the government system. The American government is famously diverse and many parts operate independently. This is no smokescreen.

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    1. Sean Douglas

      logged in via email @hotmail.com

      In reply to Michael Ekin Smyth

      "I have not heard of any credible claims that it has been in any way commercial."

      Would one expect them to advertise the fact?

      The absence of evidence is not evidence of absence. A little common sense tells us a bear usually shits in the woods, and not inside a McDonald's.

      RE "This is no smokescreen." ... so where's your evidence for this claim again?

      While you are at it, please tell whatever happened with the BIG MEDIA hype over the Iranians planning to blow up the Saudi ambassador to the US by some half Iranian newbie drug dealer loser ... with "tracks all the way to the higher Govt officials" ????? remember him? remember the BIG Justiuce Dept announcement .. um, common sense?

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    2. Joseph Bernard

      Director

      In reply to Michael Ekin Smyth

      RE: Commercial gains or poor internet security?

      question is how are plans to a nuclear power plant all available online via the internet? Is this how Iran is able to build their own facility?

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    3. Simon Moffitt

      logged in via email @hotmail.com

      In reply to Michael Ekin Smyth

      So Michael you didn't hear about Petrobras Brazil from the wiki-leaks cables?

      Btw what about Merkel? That comes under justifiable political spying?

      Oh and this is after we have recently been told the best leaks are yet to come. So why not a smokescreen now?

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    4. Michael Ekin Smyth

      Investor

      In reply to Simon Moffitt

      Simon: you are confusing the leaks. Petrobras appeared in Wikileaks due to US diplomatic discussions - which can be, quite legitimately about economic issues.
      I said that US spying was political, not economic or commercial. The tapping of Merkel's phone definitely falls under the political rubric.
      The expression 'smokescreen' in this sense comes from military parlance. It is impossible to put up a smokescreen for something that has already happened. Well, you could put one up but it would be pointless…

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    5. Simon Moffitt

      logged in via email @hotmail.com

      In reply to Michael Ekin Smyth

      My bad it was actually Snowden and NSA documents. http://www.theguardian.com/world/2013/sep/09/nsa-spying-brazil-oil-petrobras

      & yes it's more of a decoy/red herring than a smokescreen.

      Nothing has changed from the days of Smedley Butler it isn't just that war is a racket national security is as well.

      BTW on historical note the US was quite happy to steal economic secrets as it developed but like many developed nations they pull up the ladder.

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    6. Michael Ekin Smyth

      Investor

      In reply to Simon Moffitt

      Simon: yeah, I traced it down. One segment on a Brazilian current affairs program - with an 'expert' saying it was possible and that the US was spying on Petrobras. No evidence, just an accusation.
      The Guardian article was just an echo of that story.
      Petrobras is a company in an extremely difficult situation. The Brazilian government has forced it, communist style, to supply all sorts of social goods - including education.
      Why petroleum engineers should or could provide basic education is a…

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    1. Michael Ekin Smyth

      Investor

      In reply to Peter Dawson

      Peter: I've been watching the series 'The Americans", scripted by a former CIA agent handler. Many of the story lines are based on real life incidents. Fascinating to see how people will put their lives on the line for relatively minor snippets of information.

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    2. Peter Dawson

      Gap Decade

      In reply to Michael Ekin Smyth

      I watched some of that series. I'd forgotten about it. Ironic that sometimes we've got as much chance of finding out snippets about our political history in a Hollywood drama as we do by being given access to information via official channels. (I'm reminded of "The Falcon and the Snowman"). Slim chance in both cases, unfortunately.

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    3. Michael Ekin Smyth

      Investor

      In reply to Peter Dawson

      Peter: Actually the spying case used as a basis for this series was extremely well reported, and in great detail. You can check it out on various sites - whether 'official' or not. Are news organizations 'official'?
      It all happened in 2010 and involved a cast including Khrushchev's granddaughter - who is now an American academic. One of the spies was a student in her class.
      In fact one of the Russian spies who went under the name Anna Chapman (Anna Vasil’yevna Kushchyenko) went on to become a minor television celebrity and even appeared in Playboy. So much for dedication to the Motherland.
      We don't hear about these things because of the general 'noise' in the culture. They are reported but there is so much going on that it is impossible to track everything.
      That is why some of the current marketing and academic focus on the 'attention' culture actually has some basis.
      Hollywood, well HBO actually, serves a useful purpose in turning our attention to these events.

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    4. Peter Dawson

      Gap Decade

      In reply to Yoron Hamber

      It’s not surprising that they were making denials to each other back in Israel. What’s surprising is the lack of discussion in the USA. With the special relationship between Israel and the USA, such an impugning of Israel’s character would normally provoke a storm of controversy. Which makes it look like a case of “the dog that didn’t bark.”

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    5. Peter Dawson

      Gap Decade

      In reply to Michael Ekin Smyth

      I was mostly thinking of the often unsuccessful FOI request, and the embargoed government documents which, after however many decades, are still often delivered to the public heavily censored. Take the war criminal, Henry Kissinger, for example. He’s managed to delay the public release of all the documents of his office until after his death, and you can bet there will be plenty of blacked out text at crucial points when the sod does finally die.

      It’s like George Bush Sr. said, we’d string them up from the lamp posts if we ever found out what they got up to.

      Bring on the leaks, I say.

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  4. Ting Zhao

    logged in via Facebook

    In an interview with a Hong Kong paper, Edward Snowden asserts the U.S. has mounted hacking operations against hundreds of Chinese targets since 2009。 The pot calling the kettle black

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  5. Adrian Gibbs

    Retired

    Why are we being asked to believe that anyone still stores 'secret information' in a computer connected to the internet, when it can be 'protected' instantly and completely by pulling the plug?

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    1. Michael Ekin Smyth

      Investor

      In reply to Adrian Gibbs

      Adrian: well, people have to communicate. Think of all the Wikileaks cables. 'Secrets' are never restricted to just one person - they are normally known to certain groups, hence the various security clearance levels.
      Pulling the plug would certainly work but then there would be no opportunity to communicate the secret to those you wish to make aware.

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  6. R. Ambrose Raven

    none

    "It’s likely that ASIO has continued to work actively with Australian companies to investigate hacking incidents from foreign governments and, attempting to protect them against this pervasive threat."

    It is far more likely that ASIO has continued to work actively with the American government to investigate hacking incidents from foreign governments and to assist them to hack into Australian companies. ASIO is here ultimately to serve American Imperial interests, also with those of the other UKUSA members.

    Have we also so quickly forgotten the revelations "we" bugged East Timor's government offices as it negotiated the treaty? That commercial/political espionage is now being used by East Timor to force an arbitration in the Hague to have the treaty declared void.

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  7. Yoron Hamber

    Thinking

    Think it's a result of independent actions actually, although possibly as a result of 'bad publicity' received too, so you may have a point there. There are some institutions worthy of admiration in USA, those that try to bringing bad guys in, no matter what protection they have, although I will not include NSA for this, not after Snowden.

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    1. Yoron Hamber

      Thinking

      In reply to Yoron Hamber

      Ahh, you mean that they may use it to prove the need of 'whole sale gathering'?

      Now, that would be blatantly apparent & stupid to most of us, wouldn't it? Maybe it is, and still will work though? All advertising is good, even the bad someone wrote once. Depends on how easily fooled people are, then again, nothing surprises me any more :)

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