China’s state-owned sector told to cut ties with US consulting firms

Staff members with the Department of Justice, along with reporters, watch Attorney General Eric Holder announce a federal indictment against five Chinese military officials for cyber espionage at the Justice Department in Washington on May 19, 2014.
Staff members with the Department of Justice, along with reporters, watch Attorney General Eric Holder announce a federal indictment against five Chinese military officials for cyber espionage at the Justice Department in Washington on May 19, 2014. -- PHOTO: EPA

BEIJING (REUTERS) – China has told its state-owned enterprises to sever links with American consulting firms just days after the United States charged five Chinese military officers with hacking US companies, the Financial Times reported on Sunday.China’s action, which targets companies like McKinsey & Company and The Boston Consulting Group (BCG), stems from fears the firms are providing trade secrets to the US government, the FT reported, citing unnamed sources close to senior Chinese leaders.

“We haven’t received any notification of this kind,” said Margaret Kashmir, a spokeswoman for Strategy& – formerly Booz & Company – in an email, adding that serving clients in China and globally continues to be the company’s main priority.

“We are unaware of any government mandates,” added Bain & Company spokeswoman Cheryl Krauss.A McKinsey spokeswoman did not return a call seeking comment.

A spokeswoman for BCG was not immediately able to comment.The companies have large operations in China, the FT reported.

McKinsey, BCG and Strategy& all have Chinese state enterprises as clients, the newspaper said.China warned this week it would retaliate if Washington pressed ahead with allegations that the Chinese officers hacked into US nuclear, metal and solar companies, including Alcoa Inc, Allegheny Technologies Inc, United States Steel Corp, Toshiba Corp unit Westinghouse Electric Co, the US subsidiaries of SolarWorld AG and a steelworkers’ union.Officials in Washington have argued for years that cyber espionage is a top national security concern.The May 19 indictment was the first criminal hacking charge the United States has filed against specific foreign officials. It follows a steady increase in public criticism and private confrontation, including at a summit last year between US President Barack Obama and Chinese President Xi Jinping.In the wake of the charges, Chinese media labeled the US government a “high-level hooligan,” while officials in Beijing accused Washington of “double standards” on issues of cyber spying.China also said it would investigate providers of IT products and services to guard “national security,” and“economic and social development.”

It also banned new central government computers from using Windows 8, Microsoft Corp’s latest operating system.