Beijing sees cyber espionage as necessary for China’s national progress and will not be ending the practice on current terms, an expert said on Friday after the U.S. Justice Department announced hacking charges against two Chinese nationals.

“I think it is very fair to say that China sees this cyber espionage for economic purposes as a necessary component of its national strategy to grow economically and to become a more powerful country, and that it is not going to stop — at least not with the current set of pressure that is being exerted by the U.S. and others, ” said Michael Fuchs, senior fellow at the Center for American Progress, a think tank.

U.S. prosecutors charged the two Chinese citizens for their involvement in a global hacking campaign to steal tech company secrets and intellectual property. They were also accused of stealing the personal information of more than 100,000 members of the U.S. Navy, and were allegedly working with the Chinese government.

Washington’s allies — Australia, Britain and New Zealand — also leveled criticisms at Beijing for economic spying after the U.S. announcement.

“China’s goal, simply put, is to replace the U.S. as the world’s largest global superpower,” FBI Director Christopher Wray said earlier at a press conference.

China, on Friday, responded by saying it resolutely opposed the accusations which it called “slanderous.”

The escalation of tensions come as Beijing and Washington are embroiled in terse trade negotiations ahead of a 90-day deadline. U.S. President Donald Trump and Chinese President Xi Jinping agreed early in December to hold off on additional tariffs on each other’s goods that were meant to take effect from Jan. 1, and continue negotiating as the two nations seek to break the impasse.

The talks have already been complicated by the Dec. 1 arrest of Huawei CFO Meng Wanzhou, one of China’s largest tech companies, who was detained in Canada at the request of the U.S. Washington has accused the Huawei executive of violating sanctions on Iran.

The hacking charges against the Chines nationals were just the latest in a series of moves from the Trump administration “to apply more pressure on China across the board,” said Fuchs, who highlighted Vice President Mike Pence’s October speech blasting China for “meddling in America’s democracy.”

Even though the U.S. government has for years tried to address and put a stop to cyber security threats in its discussions with China, the Justice Department made it clear that “the Chinese have not stopped,” according to Fuchs. “In many corners, they have perhaps tried actually to ramp up,” he added.

Addressing his nation as they marked 40 years of reforms last week, Xi struck a relatively defiant tone in response to international calls for changes to China’s economy.

Instead of giving clues on how he would approach the trade talks with Washington, Xi “made it very clear that the (Communist) party being in control of the country is the most important thing in China going forward, that he is going to continue, and the party will continue on the same economic path that they have been on in recent years,” said Fuchs.

He said that the Chinese leader was trying to make it clear “to the party and to his country that China is not going to be bullied by this trade war or frankly, by anybody else.”

China slams US accusations as ‘slanderous’

China’s Foreign Ministry fought back on Friday saying the Beijing resolutely opposed “slanderous” accusations from the U.S. and its allies criticizing China for economic espionage.

The U.S. should also withdraw charges against two Chinese citizens, the ministry said, adding that China had never participated in or supported any stealing of commercial secrets and had lodged “stern representations” with Washington.

GP: Donald Trump and Xi Jinping in China 171109
Chinese President Xi Jinping and U.S. President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on November 9, 2017.

Nationalistic Global Times called the allegations “whimsical thinking,” “hysterical” and rooted in “strong cultural arrogance.”

After all, if China is so good at stealing technological secrets for so long, how is it that the country still lags behind the U.S. in so many fields, the Global Times asked in an op-ed.

“Since the US has been combating hackers for such an extended period, then how is it that some are able to do whatever they want? If American institutions had such fragile cyber systems, then nothing would be worth stealing,” said the newspaper linked to the Chinese Communist Party.

By Huileng Tan
CNBC’s Kate Fazzini, Kevin Breuninger and Reuters contributed to this report.


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