Spy software is being blamed for stealing corporate information and helping the Chinese get the upper hand in negotiations.

In an excellent report by Shane Harris of the National Journal he really gets to the bottom cyber espionage.

Here's an excerpt...

Cyber-Espionage

In addition to disruptive attacks on networks, officials are worried about the Chinese using long-established computer-hacking techniques to steal sensitive information from government agencies and U.S. corporations.

Brenner, the U.S. counterintelligence chief, said he knows of “a large American company” whose strategic information was obtained by its Chinese counterparts in advance of a business negotiation.

As Brenner recounted the story, “The delegation gets to China and realizes, ‘These guys on the other side of the table know every bottom line on every significant negotiating point.’ They had to have got this by hacking into [the company’s] systems.”

Bennett told a similar story about a large, well-known American company. (

Both he and Brenner declined to provide the names of the companies.) According to Bennett, the Chinese based their starting points for negotiation on the Americans’ end points.

Two sources also alleged that the hacking extends to high-level administration officials.

During a trip to Beijing in December 2007, spyware programs designed to clandestinely remove information from personal computers and other electronic equipment were discovered on devices used by Commerce Secretary Carlos Gutierrez and possibly other members of a U.S. trade delegation, according to a computer-security expert with firsthand knowledge of the spyware used.

Gutierrez was in China with the Joint Commission on Commerce and Trade, a high-level delegation that includes the U.S. trade representative and that meets with Chinese officials to discuss such matters as intellectual-property rights, market access, and consumer product safety.

According to the computer-security expert, the spyware programs were designed to open communications channels to an outside system, and to download the contents of the infected devices at regular intervals.

The source said that the computer codes were identical to those found in the laptop computers and other devices of several senior executives of U.S. corporations who also had their electronics “slurped” while on business in China.

The source said he believes, based on conversations with U.S. officials, that the Gutierrez compromise was a source of considerable concern in the Bush administration. Another source with knowledge of the incident corroborated the computer-security expert’s account.

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