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US preparing China sanctions after hacking: report

[WASHINGTON] The United States is drawing up economic sanctions to target Chinese firms and individuals that profited from cyber attacks on American targets, the Washington Post reported on Monday.

The report, citing administration officials, said President Barack Obama's government has not yet decided whether to put the sanctions in place but is now preparing the ground.

Any move by the world's biggest economy to punish the second largest could have global political and economic consequences and would likely trigger retribution.

And it will be all the more controversial in the run-up to next month's much-anticipated state visit to Washington by China's President Xi Jinping.

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"It sends a signal to Beijing that the administration is going to start fighting back on economic espionage," an unnamed US official told the Post. "It tells China, enough is enough." The world's economic giants have deep economic ties but a tense relationship.

The United States is an ally of Taiwan, which Beijing sees as a renegade province, and sides with Beijing's Asian neighbors in territorial disputes over sea lanes and island chains.

But the immediate cause of the sanctions threat, according to the Post, is Washington's anger over a series of alleged cyber attacks on US companies and government agencies.

In May, US prosecutors unsealed indictments leveling spying charges against five Chinese military personnel they believe hacked into US networks to profit Chinese firms.

The sanctions, if they come about, would be designed to counter the unfair advantage Washington fears Beijing has developed by illegally gathering US economic intelligence.

But there is also deep concern here about a series of hacks apparently aimed at gathering political intelligence, some of them blamed on hackers with Chinese or Russian links.

On Monday, citing US intelligence officials, the Los Angeles Times said Russian and Chinese foreign spy services are cross-indexing hacked databases to identify American agents.

Recent breaches of US federal government personnel files and email systems, when combined with private data such as medical record and airline bookings, could leave US spies exposed.