US, China in throes of cyber spying

The tough line enjoys rare bipartisan support in divided Washington, culminating in congressional pressure on US companies to shun business with Chinese telecommunications firms. The accusations have infuriated China, which counters that the US is overstating Beijingâ„¢s role and unfairly punishing Chinese companies.

Å“If you think about what China is doing in cyber espionage, it will curl everyoneâ„¢s toes,” House Intelligence Committee Chairman Mike Rogers (R-Mich.) said at a defense symposium in Alabama this summer. Å“It is the greatest national security threat we face that we are not prepared for.”

The former FBI agent has taken the lead on cybersecurity and introduced legislation with his panelâ„¢s top Democrat, Rep. Dutch Ruppersberger (Md.), which would allow the federal government to share classified information to help private US companies protect themselves. They maintain that revelations of massive US spying by former National Security Agency contractor Edward Snowden arenâ„¢t comparable to Chinese theft of private-sector trade secrets.

Chinese sources say economic espionage will only increase as economic exchanges between the US and China grow, but that Beijing isnâ„¢t to blame.

Å“You donâ„¢t have the evidence that it is instigated and organized by the Chinese government,” said a senior researcher at the Shanghai Institutes for International Studies, a think-tank that advises the Chinese government. Å“We should not equate incidents with the Chinese governmentâ„¢s intentional organizational.”

The source accused US business groups of fear-mongering. He said the Chinese are the Å“victims” of cyber-espionage rather than its instigators.

Å“Cybersecurity is security with a high content of size and technology. Americans are much, much ahead of China,” he said. Å“This institute is always being attacked by American espionage.”

The White House has stepped up its criticism despite its reluctance to confront China, which has the worldâ„¢s second-largest economy. President Obama made cybersecurity a priority when he met in June with Chinese leader Xi Jinping for an unprecedented two-day meeting in Sunnylands, California.

Å“The issue of cybersecurity and the need for rules and common approaches to cybersecurity are going to be increasingly important as part of bilateral relationships and multilateral relationships,” Obama said at the time. Å“Itâ„¢s critical, as two of the largest economies and military powers in the world, that China and the United States arrive at a firm understanding of how we work together on these issues.”

The rhetoric from Congress has been more hawkish.

Rogers and Ruppersberger unveiled a report last year accusing Chinese telecommunications giant Huawei of being a potential threat to US national security and private information such as medical and financial records. The report urged the federal government to block acquisitions and mergers involving Huawei and called on US network providers not to do business with the company.

The report said Huawei has helped the Chinese military modernize its telecommunications and raised concerns with company founder and president Ren Zhengfei, a retired major of the Peopleâ„¢s Liberation Army. It also accused the 26-year-old privately held company of being opaque about its corporate structure.

The congressional speculation, Huaweiâ„¢s top spokesman retorts, amounts to little more than Å“sinophobia.”

Å“The main reason we would put the challenges we face in the US down to is trade protectionism,” said Vice President Scott Sykes, the companyâ„¢s Shenzhen-based head of international media affairs. Å“I think thatâ„¢s the main, No. 1 reason. You could add on to that geopolitics: The fact is thereâ„¢s a strong anti-China rhetoric coming from Washington right now.”

China skeptics acknowledge that the report did not reveal any specific security violations by Huawei.

Å“The report itself … is incredibly thin on any real concrete claims about Huawei,” said Adam Segal, a senior fellow for China Studies at the Council on Foreign Relations who specializes in cyberconflict and cybersecurity. Å“Much of the criticism of Huawei you could have made about any telecom company ” they have global supply chains, theyâ„¢re susceptible to bribery, someone could insert malware somewhere along the line.”

Sykes said it would make no sense for the $35 billion company with a clean record in 140 countries to put its business in jeopardy to help the Chinese government. He said Huaweiâ„¢s competitors also use many Chinese-made components and that everyone is vulnerable to hacking.

Å“If we get a call from Beijing, we will refuse,” Sykes said. Å“So you could ask me, ËœWhy?â„¢ Well the reason is, that would be corporate suicide. We would lose 70 percent of our business [from outside China] like that, overnight.”

Despite its rhetorical push back, the company isnâ„¢t challenging US restrictions.

Å“If Huawei gets in the middle of US-China relations … itâ„¢s not worth it,” Ren told journalists in a rare interview in France last month. Å“Therefore, we have decided to exit the US market, and not stay in the middle.”

Huawei however says it will continue selling cell phones and pursue other activities in the US that havenâ„¢t attracted as much concern from lawmakers and regulators.

Bill Plummer, a US-based spokesman for the company, said Snowdenâ„¢s revelations have created momentum for telecom companies to work together on standards and third-party verification. Great Britain is already monitoring Huaweiâ„¢s equipment and software in exchange for letting the company operate in the United Kingdom.

Å“In the wake of the Snowden revelations,” he said, Å“thereâ„¢s a universal deficit of trust in information.”

But Segal said thereâ„¢s little appetite for letting Huawei gain a bigger footprint in the US He said the intelligence community has too many concerns ” even if they canâ„¢t be shared publicly.

Å“I donâ„¢t think it is tit-for-tat,” he said. Å“Here I just have to rely on people that I know in the intelligence community that they have their reasons. Itâ„¢s not particularly satisfactory ” even for me ” but thatâ„¢s just what I consistently hear.”

AHT/HJ