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U.S. report rips China, Russia on economic espionage, hacking

A girl holds a U.S. and Chinese flag as she waits for U.S. President Barack Obama to welcome Chinese President Hu Jintao during an official south lawn arrival ceremony at the White House in Washington January 19, 2011.

KEVIN LAMARQUE/Kevin Lamarque/REUTERS

China and Russia are using cyber espionage to steal U.S. trade and technology secrets to bolster their own economic development and that poses a threat to U.S. prosperity and security, a U.S. intelligence report said on Thursday.

So much sensitive information and research is on computer networks that foreign intruders can collect massive amounts of data quickly and with little risk because they are difficult to detect, according to the report to Congress titled "Foreign Spies Stealing U.S. Economic Secrets in Cyberspace."

The Office of the National Counterintelligence Executive report for 2009-2011 included input from intelligence agencies, the private sector, think tanks and academia.

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Foreign intelligence services, corporations and individuals increased their efforts to steal U.S. technologies which cost millions of dollars to develop, the report said. Methods included extracting information remotely from their home base, downloading data to a portable device, and transmitting information by e-mail.

Years ago, "spies were taking out information by file folders, today they're taken out in thumb drives," a senior U.S. intelligence official said.

"Our research and development is under attack," he said.

Intelligence services, private companies, academic institutions and citizens of dozens of countries target the United States, the report said. But it only named China and Russia.

"Chinese actors are the world's most active and persistent perpetrators of economic espionage," the report said.

While U.S. companies have reported cyber intrusions that originated in China, the intelligence agencies cannot confirm who is behind them, the report said.

When pressed about what undeniable evidence the United States has that China is conducting cyber espionage, the intelligence official declined to discuss details publicly. "We didn't pull this out of the air," he said.

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"Russia's intelligence services are conducting a range of activities to collect economic information and technology from U.S. targets," the report said.

Some U.S. allies and partners use their access to U.S. institutions to acquire sensitive U.S. economic and technology information, mainly through human spying tactics, the report said but did not name them.

China and Russia were singled out because the report sought to point out "who we consider the foreign intelligence services and the countries that are doing the most harm to ... our economic status," the intelligence official said on condition of anonymity.

"It could be the governments, the intelligence services, it could be private corporations and it could be individuals," he said. Cyber espionage by nation-states is increasing, he said.

"It's part of China and Russia's ... national policy to try to identify and take sensitive technology which they need for their development," the official said.

"As a national policy, we do not do economic espionage," he said.

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The State Department in June said it had asked Beijing to investigate Google's allegation of a major hacking attack that the Internet giant said originated in China.

China is often blamed for cyber attacks, but Beijing's response has been that it is unfairly accused by countries unhappy with its economic rise and that it has also been a victim of cyber attacks.

"We judge that the governments of China and Russia will remain aggressive and capable collectors of sensitive U.S. economic information and technologies, particularly in cyberspace," the report said.

Information and communications technology, military technologies such as unmanned aerial vehicles, and civilian technologies such as clean energy, and healthcare and pharmaceuticals are areas that may be of interest as foreign cyber espionage targets, the report said.

"The pace of foreign economic collection and industrial espionage activities against major U.S. corporations and U.S. government agencies is accelerating," the report said.

The National Science Foundation said research and development spending by government, industry and universities was $398-billion in 2008. But it is difficult to determine how much of that is stolen through cyber espionage.

"China and Russia view themselves as strategic competitors of the United States and are the most aggressive collectors of U.S. economic information and technology," the report said.

"Both will almost certainly continue to deploy significant resources and a wide array of tactics to acquire this information from U.S. sources, motivated by the desire to achieve economic, strategic, and military parity with the United States," it said.

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