China retaliates U.S. hacking charges

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NEW YORK -- China has told its state-owned enterprises to sever links with American consulting firms just days after the United States charged five Chinese military officers with hacking U.S. companies, the Financial Times reported Sunday.

China's action, which targets companies such as McKinsey & Co. and The Boston Consulting Group, stems from fears the firms are providing trade secrets to the U.S. government, the British international newspaper reported, citing unnamed sources close to senior Chinese leaders.

"We haven't received any notification of this kind," said Margaret Kashmir, a spokeswoman for Strategy& -- formerly Booz & Company -- in an email, adding that serving clients in China and globally continues to be the company's main priority.

"We are unaware of any government mandates," Bain & Co. spokeswoman Cheryl Krauss added.

A McKinsey spokeswoman did not return a call seeking comment. A spokeswoman for Boston Consulting was not immediately able to comment.

The companies have large operations in China, the Financial Times reported. McKinsey, BCG and Strategy& all have Chinese state enterprises as clients, the newspaper said.

China warned last week it would retaliate if Washington pressed ahead with allegations that the Chinese officers hacked into U.S. nuclear, metal and solar companies, including Alcoa Inc, Allegheny Technologies Inc, United States Steel Corp., Toshiba Corp. unit Westinghouse Electric Co., the U.S. subsidiaries of SolarWorld AG and the United Steelworkers union.

Officials in Washington have argued for years that cyber-espionage is a top national security concern.

The May 19 indictment was the first criminal hacking charge the United States has filed against specific foreign officials. It follows a steady increase in public criticism and private confrontation, including at a summit last year between President Barack Obama and China's President Xi Jinping.

In the wake of the charges, Chinese media labeled the U.S. government a "high-level hooligan," while officials in Beijing accused Washington of "double standards" on issues of cyberspying.

China also said it would investigate providers of IT products and services to guard "national security," and "economic and social development." It also banned new central government computers from using Windows 8, Microsoft Corp.'s latest operating system.


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