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International relations

China hits back at US allegations of mass cyberthefts

US indicts two Chinese men for 'unacceptable' thefts across at least 12 countries

The indicted Chinese duo are suspected of using malware to gain access to computer networks and make off with data over extended periods.   © Getty Images

WASHINGTON/BEIJING -- The Chinese government on Friday denied American allegations that Beijing has long carried out cyberattacks on at least a dozen countries including the U.S. to grab troves of commercial and government secrets -- a response that further ratchets up tensions between the world's two biggest economies.

"The Chinese government had never participated in or supported stealing of industrial secrets," China's foreign ministry said in a statement. Beijing urged Washington to withdraw its accusations.

The U.S. has indicted two Chinese nationals for carrying out the cyberattacks. The Department of Justice said Thursday that the men stole intellectual property and confidential business information from more than 45 technology companies and government entities in the U.S., including the Navy and the NASA space agency.

Suspected hackers Zhu Hua and Zhang Shilong operated in association with the Chinese Ministry of State Security, an intelligence service, according to the department. They are believed to be in China but can be arrested if they travel, the FBI said.

The indictments deal a blow to Chinese President Xi Jinping as he works to ease trade frictions with the U.S. over a 90-day negotiating period. They may further exacerbate tensions after the arrest of Meng Wanzhou, chief financial officer of Chinese telecommunications giant Huawei Technologies, in Canada at Washington's behest.

Stolen data included Social Security numbers and birthdates for 100,000-plus naval personnel, according to the Justice Department. It said the cyberthefts extended to at least 12 countries: Brazil, Canada, France, Finland, Germany, India, Japan, Sweden, Switzerland, the United Arab Emirates, the U.K. and the U.S.

U.S. Deputy Attorney General Rod Rosenstein speaks at a news conference in Washington on Dec. 20.   © AP

"We want China to cease its illegal cyberactivities," Deputy Attorney General Rod Rosenstein told a news conference.

He said the duo worked for a group known to cybersecurity experts as APT 10, named for the "advanced persistent threats" that gain access to computer networks and make off with data over extended periods.

The U.S. and China had agreed at a leaders' summit in September 2015 to avoid "cyber-enabled theft" of intellectual property. "The activity alleged in this indictment violates the commitment" that China made to members of the international community, Rosenstein said, after calling it "unacceptable."

"America and its many allies know what China is doing," he said. "We know why they are doing it."

"China's goal, simply put, is to replace the U.S. as the world's leading superpower, and they're using illegal methods to get there," said FBI Director Chris Wray, who announced the indictments along with Rosenstein.

The Chinese targeted a "who's who" of the global economy, Wray said.

The Justice Department named sectors including banking and finance, telecommunications and consumer electronics, medical equipment, packaging, manufacturing, consulting, health care, biotechnology, automotive, oil and gas exploration, and mining.

Aircraft carrier USS Ronald Reagan sails with cruiser USS Antietam during a fueling-at-sea exercise in the Philippine Sea. American prosecutors on Dec. 20 unsealed an indictment charging two Chinese nationals with computer hacking attacks on U.S. targets including the Navy. (U.S. Navy photo)

"Today's announcements were meant as a major show of force, with an unprecedented degree of coordination across U.S. agencies and with allied governments," said Paul Triolo, who covers global technology issues at Eurasia Group.

"This is the launch of a new campaign by the U.S. that will almost certainly include further law enforcement actions against Chinese organizations involved in cyberactions," he said.

But noting that the U.S. had stopped short of imposing sanctions on Chinese companies allegedly benefiting from the cyberthefts, Triolo said he does not think that these announcements will lead Beijing to cancel or delay the schedule for upcoming trade negotiations, set to begin in early January.

The British government also accused APT 10 of cyberattacks in Europe, the U.S. and Asia. The National Cyber Security Centre called the group "almost certainly responsible" for attacks against global managed-service providers, which remotely manage information technology for client organizations, since at least 2016 in an attempt to steal corporate secrets. It is "highly likely that APT 10 has an enduring relationship with the Chinese Ministry of State Security, and operates to meet Chinese state requirements," the center said.

These activities "go against the commitments made to the U.K. in 2015, and, as part of the G-20, not to conduct or support cyber-enabled theft of intellectual property or trade secrets," British Foreign Secretary Jeremy Hunt said in a news release. "Our message to governments prepared to enable these activities is clear: Together with our allies, we will expose your actions and take other necessary steps to ensure the rule of law is upheld."

The U.K. plans to work with the U.S. and other allies for a coordinated response.

Nikkei Staff Writer Yusuke Nakajima in London, Nikkei Asian Review Chief Desk Editor Ken Moriyasu in New York and Nikkei staff writer Akihide Anzai in Tokyo contributed to this report.

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