The U.S. accused China of cybertheft. Now what?

BEIJING – After Monday’s explosive cybercrime charges by U.S officials against the Chinese military – the first ever against another country – diplomats and cyber-experts on both sides are figuring out how to pick up the pieces. Not an easy prospect.

In Beijing, the government was still sputtering with outrage Tuesday at the Justice Department’s charges against five members of the People’s Liberation Army. First there was Monday’s late-night invective from China’s Foreign Ministry calling the charges “purely fictitious, extremely absurd.”

On Tuesday state media reported that China had summoned the U.S. ambassador in Beijing for a dressing down, and the Defense Ministry issued a long statement on the hypocrisy of U.S. accusations invoking America’s own cyber-related embarrassments, such as Wikileaks and recent disclosures by former National Security Agency contractor Edward Snowden.

Meanwhile, China’s Internet controllers published new statistics they said shows massive cyberattacks on China originating from the United States. “Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone. In the meantime, the U.S. repeatedly accuses China of spying and hacking,” said the pointed report by state-run Xinhua News Agency.

Outrage aside, what can China do and how confrontational could this get?

China has an unfortunately rich menu of options for retaliation. An extreme reaction would be to slap the U.S. government right back with criminal charges of its own.

“Traditionally we don't prosecute each other on these kinds of things – espionage, theft, cyber-intrusions across borders. By doing this, the U.S. has set precedent,” said Mark Rasch, a former Justice official who worked computer crimes. China could bring charges against individual U.S. officials, charge an entire agency like the NSA, or even U.S. corporations such as Mandiant, the Internet security firm whose investigation shed public light on an organization that the FBI was investigating, if the Chinese secure evidence their investigation broke Chinese laws.

“It can quickly devolve into an unending tit-for-tat,” Rasch said.

But bringing cyber charges against the United States might be tough for China, say some Chinese experts.

“There’s no evidence Chinese authorities have the ability to gather similarly solid evidence to support a charge,” said a Chinese engineer at a private IT firm, who asked for anonymity to talk about Chinese cyber-capabilities. The original files in the Snowden scandal, which might hold some details of U.S. intrusions of Chinese, are held by foreign media.

Another route would be economic punishment. “People's pocketbooks are a riper and more satisfying target,” said Douglas Paal, a former top National Security Council official on Asia.

China has shown in the past it’s not afraid to wield its colossal economy as a cudgel. An ongoing spat with Japan, for example, led it to temporary shut down rare earth exports in 2010, crucial to Japanese electronic companies.

Fears of retaliation at times have made U.S. companies hesitant to join in Washington's efforts to confront China on cybertheft.  China’s economy, however, isn’t what it used to be and is now facing a slowdown and much needed reforms in coming years. It may not seem worth it to Chinese leaders.

China could also show its displeasure in the diplomacy realm, cutting off military ties like it has in recent years to protest of U.S. arms sales to Taiwan or cutting off other avenues of cooperation. On Monday, the Foreign Ministry said it was pulling out of a U.S.-China cyber-working group that had barely gotten off the ground.

Given the potential fallout, why did the U.S. file charges?

The criminal charges give the Obama administration a potential way to reset their cyber-argument both with China and the rest of the world. Before the whole Snowden fiasco, Obama’s administration was just beginning to gather momentum for a public case against China’s hacking. Ever since, it’s hard for any country, least of all China, to take U.S. officials seriously when they talk about stopping unfair cyber-intrusions.

In presenting Monday’s charges, U.S. officials tried hard to draw a clear distinction between cyberspying for national security reasons and cyberspying to steal corporate secrets for economic gain (which U.S. leaders say they don’t do but China does all the time).

“The U.S. would certainly like to push this beyond the U.S.-China relationship and create a norm against cyber economic espionage,” said Adam Segal, a cybersecurity expert at Council on Foreign Relations.

Another reason U.S. officials went for the indictment is simply because nothing else was working, experts say. Obama has brought up the issue repeatedly with Chinese.

“The Chinese have ignored U.S. requests to stop stealing U.S. companies' intellectual property,” said Bonnie Glaser, senior Asia adviser at CSIS. “The difference between stealing intelligence and company secrets is lost on the Chinese. Both are considered fair game and an essential means to accelerate China's reemergence as a great power.”

So what happens now?

Probably nothing legally.

Since the United States and China do not have an extradition treaty, the Chinese military personnel are unlikely to ever stand trial in a U.S. courtroom.

But if China wanted to play it cute, it could require that United States send, along with its extradition request, details of the U.S. investigation and how prosecutors arrived at the charges. It would be a way to fish for details about U.S. cyber-operations and possible targets to counter charge with espionage or cybercrimes during their pursuit of that evidence, said Rasch, the former federal prosecutor.

On the larger scale, it’s hard to say what the legal effect the case may have.

“It could means U.S. government actors are subject to other countries’ cyber-laws as well. The precedent crosses into other arenas too. A drone operator in Arizona may be subject to the law in the country where the drone has its effect,” Rasch said. “We’re in a whole new realm of cross-border crimes and interventions, where the rules on cyberwar and new types of conflict are still being defined.”

William Wan is The Post’s China correspondent based in Beijing. He served previously as a religion reporter and diplomatic correspondent.
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