China summons US envoy, warns that cyberspying charges could harm ties

Beijing warns the US to withdraw indictment against 5 Chinese military officers


China has warned the U.S. that it is jeopardizing its military ties with Beijing and demanded that Washington withdraw an indictment brought by the Justice Department against five Chinese military officials accused of hacking into U.S. companies to steal trade secrets. 

The state-run Xinhua News Agency said Tuesday that Chinese Assistant Foreign Minister Zheng Zeguang summoned Ambassador Max Baucus on Monday night to make a formal complaint about the charges. 

A statement issued by the Foreign Ministry Monday night said the charges were based on "fabricated facts" and would jeopardize China-U.S. "cooperation and mutual trust."

"China is steadfast in upholding cybersecurity," said the statement, which was read again Tuesday on state television's midday news broadcast. "The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber-theft of trade secrets. The U.S. accusation against Chinese personnel is purely ungrounded and absurd."

"The Chinese government and Chinese military as well as relevant personnel have never engaged and never participated in so-called cyber theft of trade secrets," said a foreign ministry spokesman, Hong Lei, at a news briefing Tuesday. "What the United States should do now is withdraw its indictment."

In its statement, the Defense Ministry repeated the charges, but added that the U.S. accusations would send a chill through gradually warming relations between their two militaries.

"Up to now, relations between the China-U.S. militaries had been development well overall," the ministry said. "The U.S., by this action, betrays its commitment to building healthy, stable, reliable military-to-military relations and causes serious damage to mutual trust between the sides."

The charges are the biggest challenge to relations since a meeting last summer between President Barack Obama and his Chinese counterpart, Xi Jinping, in Sunnylands, California.

Ties already were under strain due to conflicts over what Washington says are provocative Chinese moves to assert claims over disputed areas of the East and South China Seas. Beijing complains the Obama administration's effort to shift foreign policy emphasis toward Asia and expand its military presence in the region is emboldening Japan and other neighbors and fueling tension.

China's response marks an escalation in a dispute over U.S. claims that the Chinese military is illegally helping the country's massive state industries.

China has already strongly denounced the charges and says it is suspending cooperation with the U.S. in a joint cybersecurity working group. The group was formed last year in the wake of allegations of Chinese military involvement in online commercial espionage. China has denied those allegations as well. 

The case against the defendants, who have never set foot in the United States, was announced by Attorney General Eric Holder Monday in Washington. When asked whether there was any hope the Chinese government would hand over the officials, Holder said only the "intention" is for the defendants to face the charges in a U.S. court, and he hopes to have Chinese government cooperation.

But the Chinese government immediately signaled it would not cooperate, claiming the accusations were made up and warning the case would damage U.S.-China relations.

According to Reuters, Foreign Ministry spokesman Qin Gang urged "immediate rectification."

The highly touted indictment appears to serve more to shed light on the growing problem of cyber-espionage than to guarantee any of the defendants will have their day in a Pittsburgh, Pa., federal court, where the case is being brought.

U.S. prosecutors described the alleged crimes as "21st century burglary."

The indictment accused the Chinese officials of targeting the U.S. nuclear power, metals and solar products industries. The alleged victims include major U.S. firms like Alcoa World Alumina, Westinghouse Electric and U.S. Steel Corp.

Holder said the hackers were targeting a total of six American companies, stealing information deemed useful to companies in China, including state-owned firms. He stressed that the alleged hacking is far different than the type of intelligence gathering conducted by governments around the world, in that this involved cyber-espionage for the sheer purpose of gaining the commercial upper hand against U.S. businesses.

"This is a tactic that the United States government categorically denounces," Holder said. "This case should serve as a wake-up call to the seriousness of the ongoing cyberthreat."

The charges were described as the first such case brought against state actors. The specific charges relate to cyber-espionage and theft of trade secrets.

John Carlin, recently installed as head of the Justice's National Security Division, had identified the prosecution of state-sponsored cyberthreats as a goal for the Obama administration.

"For the first time, we are exposing the faces and names behind the keyboards in Shanghai used to steal from American businesses," he said Monday, accusing the Chinese officials of "stealing the fruits of our labor."

The other victims listed include Allegheny Technologies, United Steelworkers Union, and SolarWorld.

U.S. officials have accused China's army and China-based hackers of launching attacks on American industrial and military targets, often to steal secrets or intellectual property. China has said that it faces a major threat from hackers, and the country's military is believed to be among the biggest targets of the NSA and U.S. Cyber Command.

Last September, President Obama discussed cybersecurity issues on the sidelines of a summit in St. Petersburg, Russia, with Chinese President Xi Jinping.

White House spokesman Ben Rhodes said at the time that Obama had addressed concerns about cyber threats emanating from China. He said Obama told Xi the U.S. sees it not through the prism of security, but out of concern over theft of trade secrets.

In late March, Defense Secretary Chuck Hagel revealed that the Pentagon planned to more than triple its cybersecurity staff in the next few years to defend against Internet attacks that threaten national security.

Hagel's comments at the National Security Agency headquarters in suburban Washington came as he prepared to visit China.

"Our nation's reliance on cyberspace outpaces our cybersecurity," Hagel said at the time. "Our nation confronts the proliferation of destructive malware and a new reality of steady, ongoing and aggressive efforts to probe, access or disrupt public and private networks, and the industrial control systems that manage our water, and our energy and our food supplies."

The Associated Press contributed to this report.