U.S. v. China: When Sovereign Sues Sovereign

by Alexander Goldman

In a case that may just be the first of many, the United States filed charges against five men who are accused of conducting cyber espionage attacks for the government of China against targets in the United States. Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui have been indicted by a federal grand jury in Pennsylvania on 31 counts of espionage for activities over the nine years from 2006 to 2014 (inclusive). The defendants were officers in the notorious Unit 61398 of the Chinese People’s Liberation Army (PLA). The U.S. government named six corporate victims of the attacks: Westinghouse, SolarWorld, U.S. Steel, ATI, USW, and Alcoa.

Because any judgment in a U.S. court is unlikely to be enforced in China, the suit is not likely to result in any direct consequences for the defendants.

SolarWorld and USW were involved in trade disputes against Chinese solar energy equipment manufacturers, according to the indictment. Other victims may be U.S. Companies with military ties, who are under constant attack but should be protected by a relatively new and nascent federal program called the Defense Industrial Base.

The case has complex diplomatic ramifications. It will certainly affect relations between the United States and China. Its effect on relations between parties and nonparties is difficult to forecast. Will other nations view the U.S. as sympathetic if they, too, realize they have been victims of state sponsored trade secret theft by Unit 61398?

The message is complicated by the extensive activities of the NSA. The United States is telling the world that espionage for the purposes of national security is legitimate, but that espionage for the purposes of trade secrets theft is not. That message, in turn, is complicated by allegations that the NSA's program included economic targets such as Petrobras (Brazil's national petroleum company), Huawei (a Chinese telecommunications equipment manufacturer), and others.

The Guardian quotes James Lewis, a cybersecurity expert at the Center for Strategic and International Studies, as saying that the practical effect of the case will be "intangible" but that it will send a "strong message" to the government of China.

China does have its own trade secrets laws but obtaining enforcement of them in China can be difficult.