BEIJING (REUTERS) - China summoned the US ambassador after the US accused five Chinese military officers of hacking into American companies to steal trade secrets, warning Washington it could take further action, state media said on Tuesday.
The US Ambassador to China, Max Baucus, met with Zheng Zeguang, assistant foreign minister, on Monday shortly after the US charged the five Chinese, accusing them of hacking into American nuclear, metal and solar companies to steal trade secrets.
Zheng "protested" the actions by the US, saying the indictment had seriously harmed relations between both countries, state news agency Xinhua said.
Zheng told Baucus that depending on the development of the situation, China "will take further action on the so-called charges by the US".
It was the first criminal hacking charge that the US has filed against specific foreign officials, and 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.
The indictment is likely to further roil relations between China and the US. Besides cyber hacking, Washington and Beijing have grappled over a range of issues, including human rights, trade disputes and China's growing military assertiveness over seas contested with its neighbours.
"The Chinese government and military and its associated personnel have never conducted or participated in the theft of trade secrets over the Internet," Xinhua quoted Zheng as telling Baucus.
Zheng told Baucus that the US attitude to Internet security was "overbearing and hypocritical" and urged the US to give China a clear explanation on reports that Washington has long spied on the Chinese government, businesses, universities and individuals.
The US Embassy to China spokesman, Nolan Barkhouse, declined to comment.
The angry reaction from Beijing is likely to be the first major test for Baucus, who arrived in Beijing in March, as he seeks to balance US interests with the desire for more economic cooperation with China.
China is the US's biggest foreign creditor. As of February, China held US$1.27 trillion (S$1.59 trillion) in US Treasury bonds, according to Treasury Department data.
On Monday, China's Ambassador to the US, Cui Tiankai, "made solemn representations" to the US State Department, the state-run China News Service said on Tuesday.
"The accusations that the United States have made against these Chinese officials are purely fictitious and extremely absurd," Cui was quoted as saying.
The foreign ministry said it would suspend the activities of a Sino-US working group on cyber issues.
The defence ministry issued a similarly pointed statement on Tuesday, saying the accusations contained "ulterior motives".
Sceptics said US authorities would not be able to arrest those indicted because Beijing would not hand them over. Still, the move would prevent the individuals from traveling to the US or other countries that have an extradition agreement with the US.
US Federal prosecutors said the suspects targeted 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 steel workers' union.
According to the indictment, all five defendants worked with Unit 61398 of the People's Liberation Army "which had been 'hired' by Chinese state-owned companies to provide information technology services" including assembling a database of corporate intelligence. The Chinese companies were not named.
An unnamed spokesman from the State Internet Information Office was quoted by Xinhua as saying that the US "attacks, infiltrates and taps Chinese networks belonging to governments, institutions, enterprises, universities and major communication backbone networks".
"Those activities target Chinese leaders, ordinary citizens and anyone with a mobile phone," Xinhua quoted the spokesman as saying. "China has repeatedly asked the US to stop, but it never makes any statement on its wiretaps, nor does it desist, not to mention apologise to the Chinese people."
Xinhua cited data from China's top Internet security agency, the National Computer network Emergency Response technical Team Coordination Center (CNCERT), which said a total of 2,077 Trojan horse networks or botnet servers in the US directly controlled 1.18 million host computers in China during the period from March 19 to May 18.
The CNCERT found 135 host computers in the US carrying 563 phishing pages targeting Chinese websites that led to 14,000 phishing operations. The centre also found 2,016 IP addresses in the US had implanted backdoors in 1,754 Chinese websites, involving 57,000 backdoor attacks, during the same period.
China has long singled out the US as the top source of intrusion on its computers and says it is a victim of cyber attacks.
Shi Yinhong, director of the Centre for American Studies at Renmin University in Beijing, called the US legal approach against China "very rude", saying China could respond by suing the US government and American businesses.
"If this develops to an even worse degree, then it would be tit for tat," Shi said.
(Additional reporting by Li Hui and Megha Rajagopalan; Editing by Simon Cameron-Moore)