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This week, Attorney General Eric Holder reported that technologically skilled members of the Chinese military have hacked the systems of several American steel companies and other entities. The hacked steel companies include the United States Steel Corporation, Alcoa, Allegheny Technologies Incorporated and the United Steel Workers Union.

According to an article in CNN, the hacked companies have operations in Pennsylvania, and a grand jury in the state issued a 31-count indictment against the Chinese hackers. In the indictment, the jury charged the hackers with federal law violations as the computer experts lifted company secrets and spied on the businesses. The indictment specified that five men were involved in the scheme. The accused hackers are Wang Dong, Wen Xinyu, Huang Zhenyu, Gu Chunhui and Sun Kailiang.

The New York Times reported that United States Steel and Allegheny Technologies both lost confidential files to the Chinese hacking crew while the technology experts took computer records from the United Steel Workers Union.

About the Other Hacked Businesses 

The five military hackers are also accused of infiltrating the systems of Westinghouse and SolarWorld. When the hackers gained access to SolarWorld’s database, they were able to acquire technological secrets, cash flow forecasts and production cost information as well as details regarding the company’s legal tactics.

How will the Hacking Situation Affect the Steel Industry in the Future?

The hacking situation has resulted in lost capital investments in technology and research. The United States Attorney for the Western District of Pennsylvania, David Hickton, said, “The lifeblood of any organization is the people who work, strive and sweat for it. When these cyber intrusions occur, production slows, plants close, workers get laid off and lose their homes.”

Bloomberg also reported on the incident. The news company recounted a statement made by Jacob Olcott. He said, “Corporate value is closely tied to intellectual property and trade secrets. If companies aren’t protecting it, shareholders should know.” Continued hacking incidents could result in investor pullback, which may cause financial issues for the victimized companies. The Chinese military hackers appear to have conducted the spying action to gain a financial advantage for state-owned companies and other Chinese businesses. Consequently, the hacking incident could cause American companies to lose business.

Four of the companies that were victimized by the Chinese military were publicly advocating against China’s trade policies by contacting the World Trade Organization. Therefore, it would appear as though the Chinese hackers also targeted them for this reason.

Is the United States Handling the Situation Properly? 

According to Foreignpolicy.com, the indictment action issued by the United States could result in retaliation by China. For instance, Chinese bureaucrats could indict the United States officials who are responsible for the extensive hacking efforts of the National Security Agency. The organization spied on the Chinese government, country’s military and even commercial entities.

Foreign policy experts advise that a civil intellectual property or trade secrets lawsuit would have been a better course of action by the United States. With a civil conviction, Chinese state-owned companies would be negatively impacted as it would affect their ability to complete business transactions legally in markets overseas, submit applications for stock exchange listings and settle financial transactions in dollars.