US panel warns of Chinese espionage

[November 21, 2008]  WASHINGTON (AP) -- China has stepped up computer espionage attacks on the U.S. government, defense contractors and American businesses, a congressional advisory panel said Thursday.

The U.S.-China Economic and Security Review Commission also said in its annual report to lawmakers that aggressive Chinese space programs are allowing Beijing to target U.S. military forces better.

"China is stealing vast amounts of sensitive information from U.S. computer networks," said Larry Wortzel, chairman of the commission set up by Congress in 2000 to advise, investigate and report on U.S.-China affairs.

The commission of six Democrats and six Republicans said in the unanimously approved report that China's massive military modernization and its "impressive but disturbing" space and computer warfare capabilities "suggest China is intent on expanding its sphere of control even at the expense of its Asian neighbors and the United States."

The commission recommended that lawmakers provide money for U.S. government programs that would monitor and protect computer networks.

Messages left with the Chinese Embassy in Washington were not immediately returned. Officials in Beijing have responded to past reports by saying China does not try to undermine other countries' interests and seeks healthy ties with the United States.

The report comes two months before President-elect Barack Obama takes office. The Democratic Obama administration probably will continue the Republican Bush administration's efforts to work with and encourage China, a veto-holding member of the U.N. Security Council that the United States needs in nuclear confrontations with Iran and North Korea.

During the campaign for president, then-candidate Obama said that "China is rising, and it's not going away," adding that Beijing is "neither our enemy nor our friend; they're competitors."

In the commission's report, Chinese military strategist Wang Huacheng is quoted as calling U.S. dependence on space assets and information technology its "soft ribs."

China's space program is "steadily increasing the vulnerability of U.S. assets," the report said. For instance, improvements in satellite imagery allow China to locate U.S. carrier battle groups more accurately, faster and from farther away.

People's Liberation Army officer and author Cai Fengzhen is quoted as saying that the "area above ground, airspace and outer space are inseparable and integrated. They are the strategic commanding height of modern informationalized warfare."

"If this becomes Chinese policy," the report said, "it could set the stage for conflict with the United States and other nations that expect the right of passage for their spacecraft."

The commission also found fault with what it said was China's use of prison labor to produce export products and with Beijing's lax regulatory oversight of an estimated 4.5 million fish farms.

"Even more shocking is the lack of regulations and inspections within the United States," Commissioner Carolyn Bartholomew said.

The U.S. Food and Drug Administration, she said, inspects less than 2 percent of all fish imports. The FDA plans this week to open several offices in China, she said, but "the challenge is immense. More than a billion pounds of Chinese seafood, valued at $1.9 billion, was imported into the United States in 2006."

The commission also criticized China for violating commitments to avoid trade-distorting measures, adopting new laws that may restrict foreign access to China's markets and keeping its currency undervalued to get an export advantage.

It recommended that Congress enact legislation to respond to China's currency manipulation and create enforceable disclosure requirements on investments in the United States for foreign sovereign wealth funds and other foreign state-controlled companies.

[Associated Press; By FOSTER KLUG]

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