UK's Private Concerns About Chinese Cyber Spies

US And China Spy Row: Diplomatic Fallout 'Huge'

Updated: 7:32pm UK, Monday 19 May 2014

By Mark Stone, China Correspondent

America's decision to file charges against five Chinese individuals and to publish 'wanted' posters for them is as serious as it is unprecedented.

These are allegations levelled not just against China but against the Chinese State.

The United States government is, for the first time ever, accusing another nation of state-sponsored economic espionage or as they called it "21st century burglary".

The diplomatic fallout will be huge.

The officials from the Department of Justice not only singled out individuals from Chinese People's Liberation Army (PLA), but they named the unit within the PLA which they say has been doing the hacking: Unit 61398.

It is not the first time the unit 61398 has been in the frame.

Last February, an American internet security firm called Mandiant published the results of several years research and intelligence analysis.

Working on behalf of their clients - multinational companies in both the US and in the UK - they analysed instances of hacking and commercial espionage.

Using sophisticated technology and cyber forensics, Mandiant collated evidence and 'digital crumbs' from hundreds of investigations.

They mapped the IP addresses from many different cyber attacks. Remarkably, they all popped up in one small neighbourhood in the Chinese city of Shanghai, and the location of the headquarters of Unit 61398.

Mandiant was not able physically to prove that the hackers were inside the building but analysts were convinced that they could not be anywhere else.

"Either they are coming from inside Unit 61398 or the people who run the most-controlled, most-monitored internet networks in the world are clueless about thousands of people generating attacks from this one neighbourhood," the Mandiant's founder Kevin Mandia said at the time the report was released.

At the time, the US government said that it was aware of Mandiant's report.

They said they were talking to the Chinese at the highest level about their concerns over cyber espionage of intellectual property. But it was also made clear that the diplomatic sensitivities were huge.

The Chinese have been unusually swift with their angry response to the American move.

A Foreign Ministry statement, published at nearly midnight in Beijing, said the allegations were "made up".

The Chinese cries of 'hypocrisy' will be deafening. After all, as Edward Snowden revealed, America has hacked China - the NSA allegedly hacked into the HQ of Huawei, the Chinese tech giant.

But the US says its agencies only 'cyber spy' when it concerns national security - and they say Huawei is a national security concern.

America insists it doesn't steal intellectual property for commercial gain. In China, the distinction is a little more blurred.  

America's allegations are bound to be of concern to companies, big and small, who do business in China and those wanting to break into China.

It's the world's second largest economy and a market to win. But it's hard to trust who you're working with in China.

Hugo Swire, a British Foreign Office minister, is on a trade trip to China this week trying to help UK companies break into the country.

But he and his staff leave their smartphones at home - UK government advice states that the chances they may get hacked into are too high to risk taking them.

Some of the companies who the Americans say had intellectual property stolen are in the business of nuclear power and solar panels.

It just happens that China's nuclear power and solar panel industries are becoming increasingly successful. Is that through their own innovation or is it "21st century burglary"?

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