Justice Department levies charges against 2 Chinese hackers

By Ellen Nakashima and David J. Lynch / The Washington Post

WASHINGTON — The Justice Department on Thursday unveiled indictments of two Chinese hackers who allegedly pilfered vast amounts of valuable confidential data from U.S. government agencies and corporate computers in 12 countries.

The indictments were followed by a joint statement from Secretary of State Mike Pompeo and Homeland Security Secretary Kirstjen Nielsen assailing China for violating a landmark 2015 pledge by President Xi Jinping to refrain from hacking U.S. trade secrets and intellectual property to benefit Chinese companies.

“Stability in cyberspace cannot be achieved if countries engage in irresponsible behavior that undermines the national security and economic prosperity of other countries,” they said. “These actions by Chinese actors to target intellectual property and sensitive business information present a very real threat to the economic competitiveness of companies in the United States and around the globe.”

U.S. allies echoed the Justice Department action, in an unprecedented mass effort to call out China for its alleged malign acts. It represents a growing consensus that Beijing is flouting international norms in its bid to become the world’s predominant economic and technological power.

In London, Canberra and other capitals, ministers knocked China for violating a 2015 pledge, first offered at the Rose Garden and repeated at international gatherings, to refrain from economic hacking.

“This campaign is one of the most significant and widespread cyber intrusions against the U.K. and allies uncovered to date, targeting trade secrets and economies around the world,” British Foreign Secretary Jeremy Hunt said in a statement.

Federal prosecutors in Manhattan accused Zhu Hua and Zhang Shilong of conspiracy to commit computer intrusions, wire fraud and aggravated identity theft. The charges resulted from a more than decade-long campaign to gain access to corporate and government secrets to aid China’s rise to global prominence.

The two men acted “in association with” the Chinese Ministry of State Security (MSS), as part of a hacking squad known as “APT1o” or “Stone Panda,” the indictment said.

“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 Christopher A. Wray.

Companies in the finance, telecommunications, consumer electronics and medical industries were among those targeted, along with U.S. government laboratories operated by the National Aeronautics and Space Administration and the military.

The Chinese hackers also made off with personal information, including Social Security numbers belonging to more than 100,000 U.S. Navy personnel, prosecutors said.

“The list of victim companies reads like a who’s who of the global economy,” said Wray.

The hackers employed a technique known as “spearphishing,” tricking computer users at the business and government offices into opening malware-infected emails giving them access to login and password details.

Geoffrey Berman, the U.S. attorney for the Southern District of New York, called the Chinese cyber campaign “shocking and outrageous.”

Presidents and prime ministers around the globe led their cabinets to coordinate the decision to confront China, said one Western official. The united front against Chinese hacking and economic espionage stands in contrast to the “America First” president’s preference for taking a unilateral course to many of his trade goals.

“This demonstrates there’s a strong well of international support the United States can tap … Countries are fed up,” said Ely Ratner, executive vice president of the Center for a New American Security.

“Multilateral efforts have better prospects for producing results than unilateral moves,” said Bonnie Glaser, senior adviser for Asia at the Center for Strategic and International Studies.

Along with the United States and United Kingdom, countries targeted by China include Canada, France, Germany, Japan, Sweden and Switzerland. In the long-running espionage campaign, Chinese hackers penetrated companies called managed services providers (MSPs) that provide cybersecurity and information technology services to government agencies and major firms. Their goal: to worm their way into the networks of the service providers’ clients to gain access to their intellectual property and sensitive data.

Mounting intelligence shows a sustained Chinese hacking effort devoted to acquiring sophisticated American technologies of all stripes.

Lisa Monaco, who was President Barack Obama’s assistant for homeland security and counterterrorism and a former assistant attorney general for national security, said the Justice Department’s action “is an important continuation of a framework that seeks to impose costs on malicious nation state cyber actors.”

Chinese commercial hacking “is one of the most persistent and significant economic and national security threats we face,” she said.

Thursday’s push to confront China over its alleged aggression in the economic and military spheres comes at a fraught time, as Canada has arrested a Chinese telecommunications executive at the United States’ request on a charge related to violating sanctions against Iran.

The allied condemnation adds toXi’s worries at a time when many economists say that China’s economy is slowing more sharply than official statistics acknowledge. Policymakers in Beijing are trying to wean the economy from a dependence upon rising levels of debt, while coping with the consequences of President Donald Trump’s tariffs on more than $250 billion in Chinese products.

Still, some administration allies were skeptical that Thursday’s announcement would alter China’s behavior.

“Just as when the Obama administration did it, indicting a handful of Chinese agents out of the tens of thousands involved in economic espionage is necessary but not important,” Derek Scissors, a China analyst at the American Enterprise Institute, said. “International denouncements may irritate Xi, but they place no real pressure on him.”

Scissors said it would be more effective for the United States to hit high-profile Chinese companies with financial sanctions, including potential bans on their ability to do business with American companies. “The rest is sound and fury, signifying little,” he added.

The condemnations also pose a complicating factor as Trump and Xi seek to negotiate a trade deal. Over dinner in Buenos Aires earlier this month, the two leaders agreed to a truce in their months-long tariff war.

Talks between U.S. and Chinese diplomats are expected to begin early next month. The Trump administration is seeking a deal that would involve structural changes to China’s state-led economic model, greater Chinese purchases of American farm and industrial products and a halt to what the United States says are coercive joint-venture licensing terms.