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| Firms That Challenge China on Trade Face Cybertheft | |
| (about 2 hours later) | |
| HONG KONG — Two large American steel makers, United States Steel and Allegheny Technologies, each lost confidential files in online attacks. The largest solar panel manufacturer in the United States, SolarWorld, lost technological secrets, production cost data, cash flow projections and details of its legal strategy. | HONG KONG — Two large American steel makers, United States Steel and Allegheny Technologies, each lost confidential files in online attacks. The largest solar panel manufacturer in the United States, SolarWorld, lost technological secrets, production cost data, cash flow projections and details of its legal strategy. |
| The United Steelworkers union lost computer records containing trade policy strategies and discussions about rare earth metals and auto parts. | The United Steelworkers union lost computer records containing trade policy strategies and discussions about rare earth metals and auto parts. |
| All four had something in common besides the data thefts: Each was publicly pushing back against China’s trade policies by seeking help from the World Trade Organization or the Commerce Department. | All four had something in common besides the data thefts: Each was publicly pushing back against China’s trade policies by seeking help from the World Trade Organization or the Commerce Department. |
| A Justice Department indictment released on Monday — which accuses five Chinese military personnel of the attacks — reads like a chronology of most of the major trade disputes between the United States and China in the last five years. | A Justice Department indictment released on Monday — which accuses five Chinese military personnel of the attacks — reads like a chronology of most of the major trade disputes between the United States and China in the last five years. |
| In most instances, the American company or union that defied Beijing ended up facing extensive break-ins by Chinese military hackers, according to the documents. It is a pattern that could discourage further trade policy challenges. | In most instances, the American company or union that defied Beijing ended up facing extensive break-ins by Chinese military hackers, according to the documents. It is a pattern that could discourage further trade policy challenges. |
| The Chinese government responded furiously on Tuesday, calling in the newly installed American ambassador, Max Baucus, to protest the release of the indictment, which was accompanied by F.B.I. “wanted” posters of Chinese soldiers in uniform. The Chinese foreign ministry and defense ministry vehemently denied any wrongdoing while accusing the United States of engaging in extensive intelligence gathering of its own. | The Chinese government responded furiously on Tuesday, calling in the newly installed American ambassador, Max Baucus, to protest the release of the indictment, which was accompanied by F.B.I. “wanted” posters of Chinese soldiers in uniform. The Chinese foreign ministry and defense ministry vehemently denied any wrongdoing while accusing the United States of engaging in extensive intelligence gathering of its own. |
| “China demands that the U.S. give it a clear explanation of its cybertheft, bugging and monitoring activities, and immediately stop such activity,” the defense ministry said in a news release. | “China demands that the U.S. give it a clear explanation of its cybertheft, bugging and monitoring activities, and immediately stop such activity,” the defense ministry said in a news release. |
| But behind the acrimony lay an uncomfortable risk for many American companies, as well as businesses from the European Union and elsewhere: Standing against Beijing, or even alerting foreign governments to trade issues, can carry serious repercussions. | But behind the acrimony lay an uncomfortable risk for many American companies, as well as businesses from the European Union and elsewhere: Standing against Beijing, or even alerting foreign governments to trade issues, can carry serious repercussions. |
| Western companies operating in China have long been aware that they might be susceptible to eavesdropping by the authorities. They have also faced legal cases alleging the sale of tainted food and other improprieties for which Chinese companies, particularly state-owned enterprises, are seldom investigated. | Western companies operating in China have long been aware that they might be susceptible to eavesdropping by the authorities. They have also faced legal cases alleging the sale of tainted food and other improprieties for which Chinese companies, particularly state-owned enterprises, are seldom investigated. |
| What stands out about those who suffered losses in the cases in the Justice Department indictment is that they involve executives and employees living and working in the United States. As such, they may have been slower to think about the possibility of Chinese retaliation if they contended that Chinese exports were being subsidized by the Chinese government or dumped below cost in the United States. | What stands out about those who suffered losses in the cases in the Justice Department indictment is that they involve executives and employees living and working in the United States. As such, they may have been slower to think about the possibility of Chinese retaliation if they contended that Chinese exports were being subsidized by the Chinese government or dumped below cost in the United States. |
| “Is China setting new rules, so that if you take them to the World Trade Organization, or if you go to the Commerce Department, then you’ll get punished?” asked David Zweig, the director of the Center on China’s Transnational Relations at the Hong Kong University of Science and Technology. If so, companies may back off from challenging China, he said. | “Is China setting new rules, so that if you take them to the World Trade Organization, or if you go to the Commerce Department, then you’ll get punished?” asked David Zweig, the director of the Center on China’s Transnational Relations at the Hong Kong University of Science and Technology. If so, companies may back off from challenging China, he said. |
| If China has begun retaliating against companies that seek the enforcement of free trade rules, as the indictment suggests, that could allow Beijing to begin creating an international trading system in which China has more latitude to pursue its own policies, Mr. Zweig added. | If China has begun retaliating against companies that seek the enforcement of free trade rules, as the indictment suggests, that could allow Beijing to begin creating an international trading system in which China has more latitude to pursue its own policies, Mr. Zweig added. |
| China’s surveillance of its own citizens is so pervasive that some Western executives doing business in China say that they accept it as almost routine and do not worry about it. | China’s surveillance of its own citizens is so pervasive that some Western executives doing business in China say that they accept it as almost routine and do not worry about it. |
| “People just assume everything they do is being watched — I always assume every email I send is read, every conversation I have is listened to,” said a Western executive, who spoke on the condition of anonymity. | “People just assume everything they do is being watched — I always assume every email I send is read, every conversation I have is listened to,” said a Western executive, who spoke on the condition of anonymity. |
| The executive said that the United States was far from blameless. He noted that Edward J. Snowden had released information documenting that the National Security Agency gathers intelligence around the world as well. | The executive said that the United States was far from blameless. He noted that Edward J. Snowden had released information documenting that the National Security Agency gathers intelligence around the world as well. |
| The United States government takes the position that it has been spying to gather military, political and economic intelligence. It argues that such activities are fundamentally different from and less of an intrusion on civil liberties than spying to gain a commercial advantage. | The United States government takes the position that it has been spying to gather military, political and economic intelligence. It argues that such activities are fundamentally different from and less of an intrusion on civil liberties than spying to gain a commercial advantage. |
| The usually cautious American Chamber of Commerce in Beijing, also called AmCham China, issued a statement on Tuesday afternoon, essentially endorsing this position. | The usually cautious American Chamber of Commerce in Beijing, also called AmCham China, issued a statement on Tuesday afternoon, essentially endorsing this position. |
| “The issue of cybersecurity is a major and growing concern for the business community,” the statement said. “While we cannot comment on the specifics of any particular case, AmCham China believes there is a fundamental difference between intelligence gathering for legitimate national security purposes and intelligence gathering for stealing trade secrets, and that the definition of national security ought not include economic interests. We urge both governments to reach agreement on the rules of the road regarding cybersecurity incorporating this distinction.” | “The issue of cybersecurity is a major and growing concern for the business community,” the statement said. “While we cannot comment on the specifics of any particular case, AmCham China believes there is a fundamental difference between intelligence gathering for legitimate national security purposes and intelligence gathering for stealing trade secrets, and that the definition of national security ought not include economic interests. We urge both governments to reach agreement on the rules of the road regarding cybersecurity incorporating this distinction.” |
| AmCham China is a coalition of American companies and individuals doing business in China and is independent of the United States and Chinese governments. | AmCham China is a coalition of American companies and individuals doing business in China and is independent of the United States and Chinese governments. |
| The Justice Department indictment included an unusually detailed description of SolarWorld’s troubles after it filed trade cases against China. | The Justice Department indictment included an unusually detailed description of SolarWorld’s troubles after it filed trade cases against China. |
| As waves of ever lower-priced solar panels showed up in the United States from China, the Oregon subsidiary of SolarWorld, a German company, hired trade lawyers in 2011 to ask the Commerce Department to investigate whether Chinese companies, with subsidies from their government, were selling solar panels below cost, or dumping them. | As waves of ever lower-priced solar panels showed up in the United States from China, the Oregon subsidiary of SolarWorld, a German company, hired trade lawyers in 2011 to ask the Commerce Department to investigate whether Chinese companies, with subsidies from their government, were selling solar panels below cost, or dumping them. |
| A Commerce Department investigation found evidence of dumping and subsidies, and the agency began imposing steep tariffs on Chinese imports in May 2012. But according to the Justice Department indictment, that legal victory began a new round of troubles for SolarWorld. | A Commerce Department investigation found evidence of dumping and subsidies, and the agency began imposing steep tariffs on Chinese imports in May 2012. But according to the Justice Department indictment, that legal victory began a new round of troubles for SolarWorld. |
| A Chinese soldier and at least one co-conspirator are accused of orchestrating a series of break-ins into SolarWorld’s computers from May to September 2012 and stealing a long list of crucial documents. | A Chinese soldier and at least one co-conspirator are accused of orchestrating a series of break-ins into SolarWorld’s computers from May to September 2012 and stealing a long list of crucial documents. |
| The files allegedly taken included the chief financial officer’s cash flow projections for how long SolarWorld could survive and detailed information on technological innovations and production lines, the costs for every production input and even SolarWorld’s discussions of legal strategy with its lawyers. | The files allegedly taken included the chief financial officer’s cash flow projections for how long SolarWorld could survive and detailed information on technological innovations and production lines, the costs for every production input and even SolarWorld’s discussions of legal strategy with its lawyers. |
| SolarWorld said in a news release that it was “deeply troubled” by the revelations in the indictment. “It’s yet another example of the Chinese government’s systematic campaign to seek unfair advantage in the U.S. and global solar industry,” the statement said. “Already, dozens of U.S. companies have closed operations, and thousands of U.S. employees have lost their jobs.” | SolarWorld said in a news release that it was “deeply troubled” by the revelations in the indictment. “It’s yet another example of the Chinese government’s systematic campaign to seek unfair advantage in the U.S. and global solar industry,” the statement said. “Already, dozens of U.S. companies have closed operations, and thousands of U.S. employees have lost their jobs.” |
| Only two of the companies identified by the Justice Department as victims of computer break-ins were not in the middle of trade disputes with China. | Only two of the companies identified by the Justice Department as victims of computer break-ins were not in the middle of trade disputes with China. |
| One, Westinghouse, is building four civilian nuclear reactors in eastern China for state-owned Chinese enterprises, while trying to limit the sharing or expropriation of its proprietary technology. The indictment said that Westinghouse’s confidential designs for pipes, pipe supports and pipe routings were stolen, along with its strategies for the Chinese market and its plans for preventing Chinese companies from reselling its technologies to others. | One, Westinghouse, is building four civilian nuclear reactors in eastern China for state-owned Chinese enterprises, while trying to limit the sharing or expropriation of its proprietary technology. The indictment said that Westinghouse’s confidential designs for pipes, pipe supports and pipe routings were stolen, along with its strategies for the Chinese market and its plans for preventing Chinese companies from reselling its technologies to others. |
| The other company, the aluminum producer Alcoa, was in talks to acquire a mining operation. “To our knowledge, no material information was compromised during this incident which occurred several years ago,” said a company spokeswoman. “Safeguarding our data is a top priority for Alcoa, and we continue to invest resources to protect our systems." | The other company, the aluminum producer Alcoa, was in talks to acquire a mining operation. “To our knowledge, no material information was compromised during this incident which occurred several years ago,” said a company spokeswoman. “Safeguarding our data is a top priority for Alcoa, and we continue to invest resources to protect our systems." |
| Some industries have already reached accommodations with Beijing that may insulate them from further pressure. | Some industries have already reached accommodations with Beijing that may insulate them from further pressure. |
| American, European and Japanese automakers have all won large shares of the Chinese car market through joint ventures with local partners that have been fairly slow to develop their own design expertise and have been content mostly to build cars according to foreign designs. | American, European and Japanese automakers have all won large shares of the Chinese car market through joint ventures with local partners that have been fairly slow to develop their own design expertise and have been content mostly to build cars according to foreign designs. |
| And with China now the world’s second-largest movie market, some Hollywood studios have begun making presentations to Chinese censors early in the production process for movies. They have also entered into joint ventures with Chinese state-controlled enterprises and have even invited Chinese officials to participate in creative decisions at some filming locations to ensure that movies will not be barred from the country’s theaters. | And with China now the world’s second-largest movie market, some Hollywood studios have begun making presentations to Chinese censors early in the production process for movies. They have also entered into joint ventures with Chinese state-controlled enterprises and have even invited Chinese officials to participate in creative decisions at some filming locations to ensure that movies will not be barred from the country’s theaters. |
| By contrast, there is little risk of being barred from American theaters for movies that question the United States government. Sony Pictures Entertainment announced last Wednesday that it had acquired the film rights to a book about Mr. Snowden. | By contrast, there is little risk of being barred from American theaters for movies that question the United States government. Sony Pictures Entertainment announced last Wednesday that it had acquired the film rights to a book about Mr. Snowden. |
| But so far, there has been no sign of a Hollywood movie on “Ugly Gorilla,” the Chinese military hacker who was described in a security industry report in February and was said by the Justice Department on Monday to be a soldier named Wang Dong. | But so far, there has been no sign of a Hollywood movie on “Ugly Gorilla,” the Chinese military hacker who was described in a security industry report in February and was said by the Justice Department on Monday to be a soldier named Wang Dong. |