China says cyberspying charges may harm U.S. military ties

China on Tuesday warned the United States was jeopardizing military ties by charging five Chinese officers with cyberspying and tried to turn the tables on Washington by calling it "the biggest attacker of China's cyberspace."

China announced it was suspending co-operation with the United States in a joint cybersecurity task force over Monday's charges that officers stole trade secrets from major American companies. The Foreign Ministry demanded Washington withdraw the indictment.

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The testy exchange marked an escalation in tensions over U.S. complaints that China's military uses its cyber warfare skills to steal foreign trade secrets to help the country's vast state-owned industrial sector. A U.S. security firm, Mandiant, said last year it traced attacks on American and other companies to a military unit in Shanghai.

The charges are the biggest challenge to relations since a meeting last summer between U.S. 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 neighbours and fuelling tension.

Could chill relations

Beijing has denied conducting commercial spying and said it is a victim of computer hacking, but has given little indication it investigates foreign complaints.

The United States, by this action, betrays its commitment to building healthy, stable, reliable military-to-military relations and causes serious damage to mutual trust.- Hong Lei, Chinese foreign ministry spokesman

"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. "What the United States should do now is withdraw its indictment."

The Ministry of Defence warned that the U.S. accusations would chill gradually warming relations between the two militaries.

"The United States, by this action, betrays its commitment to building healthy, stable, reliable military-to-military relations and causes serious damage to mutual trust," it said.

Despite the pointed language, damage to U.S.-Chinese relations is likely to be limited, with little change in trade or military links, because Beijing realizes the indictment of the five officers is symbolic, said Shen Dingli, a director of the Center for American Studies at Shanghai's Fudan University. He has close ties to China's foreign policy establishment.

Beijing is unlikely to engage in tit-for-tat retaliation such as issuing its own indictments of American soldiers and probably will go ahead with plans to take part in U.S.-hosted naval exercises next month, Shen said. He said cybersecurity co-operation is likely to be suspended indefinitely, but that should have little impact because the joint group achieved little in its three meetings.

U.S. is 'biggest attacker of China's cyber space'

"Political, security and commercial espionage will always happen," Shen said. "The U.S. will keep spying on Chinese companies and leaders, so why can't China do the same?"

The Cabinet's Internet information agency said Chinese networks and websites have been the target of thousands of hacking attacks from computers in the United States.

"The U.S. is the biggest attacker of China's cyber space," Xinhua said, citing a statement by the agency. "The U.S. attacks, infiltrates and taps Chinese networks belonging to governments, institutions, enterprises, universities and major communication backbone networks."

Monday's indictment said the People's Liberation Army officers targeted U.S. makers of nuclear and solar technology, stealing confidential business information, sensitive trade secrets and internal communications. The targets were Alcoa World Alumina, Westinghouse Electric Co., Allegheny Technologies, U.S. Steel Corp., the United Steelworkers Union and SolarWorld.

The Justice Department said the charges should be a national "wake-up call" about cyber intrusions. American authorities have previously announced details of cyberattacks from China but Monday's indictment was the first accusation to name individuals. The Justice Department issued wanted posters with the officer's photos on them.

The new indictment attempts to distinguish spying for national security purposes which the U.S. admits doing from economic espionage intended to gain commercial advantage for private companies or industries.

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The United States denies spying for commercial advantage, though documents released by former National Security Agency contractor Edward Snowden said the NSA broke into the computers of Brazil's main state-owned oil company, Petrobras. Brazilian President Dilma Rousseff said if that was true, then the motive would be to gather economic information.

"China has already expounded its stance and is strongly opposed to stealing commercial secrets," said Xiong Zhiyong, a foreign relations specialist at Tsinghua University. "I think there is no difference between China and the United States in allowing cyberspying for national security, though there is no open announcement by the Chinese government."

The defendants are believed to be in China and it was unclear whether any might ever be turned over to the U.S. for prosecution.