U.S. publicly calls on China to stop commercial cyber-espionage, theft of trade secrets

Kin Cheung/AP - Foreign Minister Yang Jiechi has rejected allegations that China's military is behind hacking attacks on U.S. targets.

In an unusually direct appeal, the Obama administration on Monday called on China to halt its persistent theft of trade secrets from corporate computers and engage in a dialogue to establish norms of behavior in cyberspace.

The demands mark the administration’s first public effort to hold China to account for what officials have described as an extensive, years-long campaign of commercial cyber-espionage.

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“Increasingly, U.S. businesses are speaking out about their serious concerns about sophisticated, targeted theft of confidential business information and proprietary technologies through cyber-intrusions on an unprecedented scale,” President Obama’s national security adviser, Thomas E. Donilon, said in a speech to the Asia Society in New York.

Donilon said China must recognize the risk such activities pose to the reputation of Chinese industry, to bilateral relations and to international trade. Beijing, he said, must also “take serious steps to investigate” allegations of commercial hacking.

The remarks were noteworthy because administration officials have been reluctant to call out China — or any other country — as a bad actor in cyberspace, to avoid antagonizing a major trade partner and world power.

But since 2010, when Google disclosed that China had hacked its systems and stolen its source code, government officials and independent cybersecurity experts have begun to build evidence showing that China is systematically engaged in the theft of secrets through cyberspace. A recent report by the security firm Mandiant detailed how one unit of the People’s Liberation Army is responsible for hacking into a wide range of U.S. industries.

China has routinely denied that it hacks into other countries’ computer systems and asserts that it is the victim of computer espionage. But over the past year, numerous U.S. officials have raised concerns privately with their Chinese counterparts.

“From the president on down, this has become a key point of concern and discussion with China,” Donilon said. “And it will continue to be.”

Experts differed on how China will respond.

“It’s going to be hard for the Chinese to ignore this coming from Donilon,” said James A. Lewis, a cybersecurity expert with the Center for Strategic and International Studies. The key is trade and investment, he said. “Before, people were afraid that speaking out would harm their ability to do business in China. Now they’re saying the costs are such that we need to do something. That’s where the Chinese need to wake up and smell the coffee.”

He said a growing number of major U.S. companies are rethinking their investments in China.

But William Reinsch, president of the National Foreign Trade Council, said he doubted that China will change its ways anytime soon. “The first thing they will do is deny everything,” he said. “The second is maybe do a better job of covering their tracks. The whole thing is a giant cat-and-mouse game.”

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