China accuses U.S. of 'hypocrisy' as hacking feud escalates

Beijing summoned the US ambassador and accused Washington of double standards Tuesday as a diplomatic row escalated over the unprecedented indictment of five Chinese military officers for cyber-espionage.

The world's top two economies have long been at loggerheads over hacking and China's defence ministry denounced Washington's allegations as "a pure fabrication by the US, a move to mislead the public based on ulterior motives".

"From 'WikiLeaks' to the 'Snowden' case, US hypocrisy and double standards regarding the issue of cyber-security have long been abundantly clear," the ministry said in a statement on its website.

China also summoned US ambassador Max Baucus to lodge a "solemn representation" over the indictment, suspended cooperation with the US on cyber-security issues and banned the use of Microsoft's Windows 8 operating system on all new government computers.

Beijing's furious response came one day after the US charged five members of a shadowy Chinese military unit with allegedly hacking US companies for trade secrets.

In the first-ever prosecution of state actors over cyber-espionage, a federal grand jury indicted the five on charges they broke into US computers to benefit Chinese state-owned companies, leading to job losses in the US in the steel, solar and other industries.

Cyber-spying has long been a major sticking point in relations but Washington's move marked a major escalation in the dispute.

Analysts said the US was unlikely to be able to put the men on trial but the indictments were an attempt to apply public pressure on China over the issue.

- Unit 61398 -

US prosecutors said the five officers belonged to Unit 61398 of the People's Liberation Army.

A report last year by US security firm Mandiant said the unit had thousands of workers operating from a nondescript, 12-story building on the outskirts of Shanghai to pilfer intellectual property and government secrets.

The grand jury indicted each of the five on 31 counts, which each carry up to 15 years in prison.

US Attorney General Eric Holder called on China to hand over the men for trial in Pittsburgh and said the United States would use "all the means that are available to us" should it refuse.

President Barack Obama's administration "will not tolerate actions by any nation that seek to illegally sabotage American companies and undermine the integrity of fair competition", Holder told reporters.

China's foreign ministry rejected the US indictment as "absurd" and suspended the activities of a bilateral cyber working group.

Its formation was announced last year by US Secretary of State John Kerry, but analysts said there had been little progress on the issue and Washington had probably decided to change tack.

"I think the US, they probably realised they're not going to get any cooperation from the Chinese, so they wanted to take things into their own hands," Hoo Tiang Boon, a China expert at the S. Rajaratnam School of International Studies in Singapore, told AFP.

The fact that the case was the first of its kind made Beijing's reaction difficult to anticipate, he said.

But he noted: "The US has been frustrated with the Chinese for quite some time, especially over cyber-security."

"It really sends a message to the Chinese to say, 'Look, we can actually identify the actual individuals.'

"It's a pretty calibrated move, because it basically means that these five individuals, they can't travel anywhere around the world to places where there are extradition treaties with the United States," he added.

China itself regularly seeks to use legalistic routes to pursue its interests, as in its proclamation of a so-called "nine-dash line" to justify its territorial claims over much of the South China Sea.

James Brown, a military fellow at the Lowy Institute for International Policy in Sydney, said that by trying to move the cyber-espionage debate into the legal realm, the US was taking a "taking a page out of China's playbook".

- Snowdon leaks -

Beijing has in the past accused the US of hypocrisy on cyber-spying and foreign ministry spokesman Hong Lei said Tuesday: "It is the US who has launched cyber-surveillance and wire-tapping against individuals, companies and institutions of many countries around the world. China is a victim of this."

Leaks by former government contractor Edward Snowden have alleged widespread US snooping in China including into telecom giant Huawei -- which has itself been the object of security allegations.

Xinhua cited data from an official Chinese network centre as showing that from mid-March to mid-May, "a total of 2,077 Trojan horse networks or botnet servers in the US directly controlled 1.18 million host computers in China".

Hoo said Beijing and Washington see cyber-espionage differently.

"I think all along the Obama administration has been trying to demonstrate that spying for national security purposes is fair game," he told AFP. "But if you do it for commercial interests, that's a different story altogether: that's intellectual property theft."