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China cyber crime cooperation stalls after U.S. hacking charges

By Alina Selyukh and Doina Chiacu

WASHINGTON (Reuters) - Fledging cooperation between the United States and China on fighting cyber crime has ground to a halt since the recent U.S. indictment of Chinese military officials on hacking charges, a senior U.S. security official said on Thursday.

At the same time, there has been no decline in Chinese hackers' efforts to break into U.S. networks, the official said.

In May, the Justice Department charged five Chinese military members with hacking the systems of U.S. companies to steal trade secrets, prompting Beijing to suspend a Sino-U.S. working group on cyber issues. China denies the charges and has in turn accused Washington of massive cyber spying.

U.S. and Chinese officials had started working together to combat certain types of online crime, including money laundering, child pornography and drug trafficking, the U.S. official said. But that cooperation has stopped.

"We are in time out," the official told Reuters. "They don't want to talk to us. Everything is really cold."

Asked whether attempts to hack into U.S. networks that originate in China had slowed, the official said: "They have been very active and this hasn't changed a bit."

The new chill underscores the fragility of the efforts to ease tensions and mutual accusations of hacking and Internet theft between China and the United States, at the expense of the security areas where the nations had reached some understanding.

The indictments, the first criminal hacking charge the United States has filed against specific foreign officials, put more strain on a complex commercial relationship between the two economic powers and created new troubles for some U.S. technology companies doing business in China.

Beijing has responded with a promise to investigate all U.S. providers of important IT products and services, though it has not specified the move was a direct retaliation.

Chinese state media has also lashed out, without indicating a connection, at U.S. firms including Google, Apple, Yahoo, Cisco Systems, Microsoft and Facebook with allegations of spying and stealing secrets.

The charges added to the existing tensions stemming from revelations by former National Security Agency contractor Edward Snowden of vast U.S. Internet surveillance.

Some technology executives have privately complained about the lack of warning from the U.S. Justice Department. The U.S. official said only "a small group" was informed about the indictments ahead of time.

Though unlikely to result in arrests, U.S. observers saw the charges as an aggressive move to thwart the theft of trade secrets. Max Baucus, the new U.S. ambassador to China, called Chinese cyber espionage a threat to U.S. national security in his first major public address on Wednesday.

"We will continue to use diplomatic and legal means to make clear that this type of behavior must stop," Baucus said.

(Reporting by Alina Selyukh and Doina Chiacu in Washington; Editing by Ros Krasny and Leslie Adler)

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