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US planning actions targeting Chinese hackers, spies, sources say

U.S. President Donald Trump speaks before signing the Section 232 Proclamations on Steel and Aluminum Imports during a ceremony at the White House Thursday, March 8, 2018 in Washington, D.C. (Olivier Douliery/Abaca Press/TNS)

The Trump administration is planning to take several actions aimed at calling out China for efforts to steal intellectual secrets from American high-tech companies, according to two people familiar with the matter.

The Justice Department is set to indict a number of alleged hackers it believes work for Chinese intelligence, according to one of the people. The Justice Department plans to make a China-related announcement on Thursday, according to the other person, although it’s not clear if it’s tied to the pending indictments.

Other expected actions include declassifying some U.S. intelligence concerning Chinese espionage activities, according to one of the people. The pending indictments were reported earlier by the Wall Street Journal and the Washington Post.

The tougher steps come as the U.S. continues to pursue a truce with China in an escalating tariff battle. The Trump administration has been trying to negotiate a trade deal on automobiles, agricultural purchases and other issues, even while pledging to keep fighting what it says are intensive ongoing Chinese efforts to steal U.S. intellectual property.

Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer spoke by phone Tuesday morning Beijing time, exchanging views on a road map for negotiations. Lighthizer has been tasked with reaching a deal over “structural changes” to China’s economic model by March 1.

But U.S. outreach on the trade talks has sometimes been accompanied by tough actions against China on related issues.

On the same day that President Donald Trump was dining with Chinese President Xi Jinping in Buenos Aires at the recent G-20 summit, the U.S. arranged for Canadian authorities to arrest the chief financial officer of China’s Huawei Technologies Co. over accusations she helped the company evade sanctions against Iran.

A Canadian judge said this week that he’s not satisfied with a bail proposal by the executive, Meng Wanzhou, who faces extradition to the U.S. Her lawyers reject the accusations.

The latest U.S. moves follow debates within the Trump administration about imposing sanctions on Chinese entities caught stealing U.S. intellectual property through cyber attacks, three people familiar with the matter said.

The plan being discussed would use an Obama administration executive order that lets the U.S. impose sanctions on individuals or entities engaging in “malicious cyber-enabled activities.” But it has sparked a heated debate among administration officials, with Mnuchin, who has jurisdiction over the potential sanctions, said to be blocking the effort, according to the people.

If the administration chooses to go ahead it could seize or freeze the assets of Chinese companies caught stealing U.S. firms’ intellectual property. It could also ban them from doing business with American companies.

The ongoing debate highlights how the Trump administration has been looking at raising the pressure on Beijing via measures beyond tariffs, in what officials see as an existential war with China over innovation.

The president faced bipartisan criticism in May that he was going soft on China after he intervened at Xi’s request in a Commerce Department case against ZTE Corp. that would have driven it out of business. The Chinese telecommunications equipment company has been accused of repeatedly violating sanctions by illegally selling equipment containing U.S. components to Iran and North Korea.


© 2018 Bloomberg News

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