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Chinese hackers infiltrated U.S. companies, attorney general says

From Ashley Fantz, CNN
updated 6:31 PM EDT, Mon May 19, 2014
STORY HIGHLIGHTS
  • NEW: State Department says Washington, Beijing need to talk more about the issue
  • Indictment alleges five People's Liberation Army officers hacked computers
  • United Steel Workers Union, Westinghouse, Alcoa among victims, Eric Holder says
  • China Foreign Ministry spokesman calls charges "extremely absurd"

(CNN) -- Attorney General Eric Holder announced Monday that members of the Chinese military have engaged in the hacking of American businesses and entities, including U.S. Steel Corp., Westinghouse, Alcoa, Allegheny Technologies, the United Steel Workers Union and SolarWorld.

The victims operate in Pennsylvania, and a grand jury there returned a 31-count indictment against members of the Chinese military, accusing them of violating federal law by hacking to spy and steal secrets, Holder said.

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The indictment alleges that five People's Liberation Army officers "maintained unauthorized access to victim computers to steal information from these entities that would be useful" to the victims' competitors in China, the attorney general said.

Their names are Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui, according to the indictment.

The Chinese government did not immediately confirm or deny the veracity of the names.

In some instances, the hackers stole trade secrets that would have been "particularly beneficial to Chinese companies at the time that they were stolen," Holder said.

In other cases, they are accused of swiping sensitive internal communications that could provide a competitor or a litigation adversary with insight into the strategy and the vulnerabilities of the victimized companies and entities, he said.

The attorney general said that he hopes the Chinese government will work with American officials to bring the offenders to justice and that the United States intends to prosecute.

The Chinese Embassy in Washington referred questions to a statement on China's Foreign Ministry site in which spokesman Qin Gang called the charges "extremely absurd."

He said that the United States "has fabricated facts" and that China is a "staunch defender of cyber security."

The statement said the Chinese government, its military and "associated personnel never engage in any theft of trade secrets."

The indictment "severely violates basic norms of international relations, and harms cooperation and mutual trust between China and the United States," the statement said.

China protested the U.S. action, the Foreign Ministry statement said, and wants it to "correct its mistake" and withdraw the charge.

China is a "victim of U.S. cyber surveillance and theft," the spokesman asserted, saying that "certain U.S. agencies have been consistently tapping into China's government agencies, corporates, universities, and private networks for surveillance purposes."

Sensitive subject

A spokeswoman for the State Department told reporters that Washington wants to have more dialogue with Beijing about the issue.

"We remain deeply concerned about Chinese government-sponsored, cyber-enabled theft of trade secrets and other sensitive business information for commercial gain," Jen Psaki said. "And, again, this was specific to the actions of ... of just a few individuals. And we hope that the Chinese government can understand that."

This was a law enforcement case, she added, not a diplomatic one.

"We continue to believe -- and this is relevant to us, our role here at the State Department -- that we can have a constructive and productive relationship with China," she said. "We're ready to work with China to prevent these types of activities from continuing."

Joining Holder, David Hickton, U.S. Attorney for the Western District of Pennsylvania, said the alleged hacking has caused the victimized U.S. companies to lose capital investments in research and technology.

He added that the "important message" is that cyberespionage "impacts real people in real and painful ways," he said.

"The lifeblood of any organization is the people who work, strive and sweat for it. When these cyberintrusions occur, production slows, plants close, workers get laid off and lose their homes," Hickton said.

"Hacking, spying and cybertheft for commercial advantage can and will be prosecuted criminally even when the defendants are state actors," he said.

These are the first charges against Chinese state officials for what the U.S. says is a widespread problem, U.S. officials told CNN before Holder's remarks.

At a regular news briefing at the White House on Monday, press secretary Jay Carney was asked about the case.

"This is an issue that has been brought up by President Obama with (Chinese) President Xi (Jinping) in their meetings as recently as in March as a general problem that we have seen and reflects the president's overall concern about cybersecurity," Carney said. "We have consistently and candidly raised these concerns with the Chinese government, and today's announcement reflects our growing concern that this Chinese behavior has continued."

He was adamant that the U.S. "intelligence programs serve a specific national security mission, and that does not include providing a competitive advantage to U.S. companies or U.S. economic interests," Carney said. "In other words, we do not do what those Chinese nationals were indicted for earlier today. Period."

More than 100 people nabbed in global hacker crackdown

CNN's Pamela Brown, Evan Perez and Kevin Wang contributed to this report.

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