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Following Hacking Indictment, U.S. Orders Chinese Consulate Closed

By Claire Meyer
22 July 2020

Today in Security

The United States has ordered China to close its diplomatic consulate in Houston, Texas, within 72 hours—a move made in response to alleged violations of American sovereignty and “massive illegal spying and influence operations” from China, including intellectual property theft, according to the U.S. State Department. Beijing has vowed to retaliate, calling the move an unprecedented escalation.

A spokesperson for the Chinese Ministry of Foreign Affairs, Wang Wenbin, urged a swift reversal of the decision, suggesting that otherwise China would likely close a U.S. consulate in response, according to the New York Times.

The order came shortly after the U.S. Department of Justice (DOJ) announced that two Chinese nationals were charged with a global computer intrusion campaign that targeted intellectual property, confidential business information, and most recently, COVID-19 research from companies in the United States, Austria, Belgium, Germany, Japan, Lithuania, The Netherlands, Spain, South Korea, Sweden, and the United Kingdom. The indictment alleges that Li Xiaoyu and Dong Jiazhi stole terabytes of data over the course of a decade, sometimes acting for their own personal gain and other times for the benefit of Chinese government agencies, including the Ministry of State Security, according to a DOJ press release on 21 July.

When announcing the charges, Assistant Attorney General for National Security John C. Demers said, “China has now taken its place, alongside Russia, Iran, and North Korea, in that shameful club of nations that provide a safe haven for cyber criminals in exchange for those criminals being ‘on call’ to work for the benefit of the state, here to feed the Chinese Communist party’s insatiable hunger for American and other non-Chinese companies’ hard-earned intellectual property, including COVID-19 research.”

The indictment charges the defendants with conspiring to steal trade secrets—including technology designs, manufacturing processes, test mechanisms and results, source code, and pharmaceutical chemical structures—from at least eight victims.

The FBI has more than 1,000 intellectual property (IP) theft cases open involving individuals associated with the People’s Republic of China, and those thefts have cost the United States nearly $500 billion a year, according to U.S. National Counterintelligence and Security Center Director William Evanina.

According to a Security Management interview with Evanina earlier this year, economic espionage and intellectual property theft is on the rise. “We’ve never seen the likes of economic espionage that we’ve seen in the past 24 months,” he said. “And a majority of that has come from the Communist Party of China.”

However, when it comes to COVID-19 research, there are multiple parties searching for a competitive advantage, Forbes reports. Earlier this month, analysis from the U.S. National Security Agency (NSA) and the UK National Cyber Security Center said that a Russian hacking group—believed to be employed by the Russian government—“has targeted various organizations involved in COVID-19 vaccine development in Canada, the United States, and the United Kingdom, highly likely with the intention of stealing information and intellectual property relating to the development and testing of COVID-19 vaccines.”

Confronting organized IP theft requires a coordinated approach between public and private partners, Evanina said. Learn more in “An Unfair Advantage: Confronting Organized Intellectual Property Theft.”

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