Biden team has no immediate plan to sanction China over hacks

The Biden administration has no immediate plans to levy economic sanctions on Chinese officials in response to the Microsoft Exchange hack that the U.S. blames on Beijing, according to people familiar with the matter.

Some in the administration cite concern that sanctions wouldn’t be as effective as other approaches in deterring future cyber attacks by China, according to two people who spoke on condition of anonymity to describe internal deliberations. But the U.S. hasn’t ruled out the possibility of sanctions in the future, they said.

For now, the U.S. sees the most effective response to China as joining with other countries to publicly expose and criticize the scale of Beijing’s cyber activities. The U.S., U.K., North Atlantic Treaty Organization and other allies on Monday formally attributed the Microsoft Exchange hack to actors affiliated with the Chinese government.

The White House communications staff declined to comment.

An effective sanctions strategy would be for a global coalition to impose economic and financial restrictions, the people said. But there are no current plans for coordinated action on sanctions, one person familiar with the deliberations said.

The attack against Microsoft Corp.’s Exchange email servers took place over the course of two weeks between late February and early March.

The group of nations that criticized China, which includes Australia, Canada, New Zealand and Japan, accused Beijing’s leadership of a broad array of “malicious cyber activities,” saying the Chinese government has been behind a series of data theft and cyber espionage attacks against public and private entities. They specifically cited the sprawling Microsoft Exchange hack earlier this year.

If the Biden administration were to act unilaterally on sanctions, officials say that any Chinese officials the U.S. could target aren’t likely to have assets in dollars or plans to visit the U.S., diminishing the impact, people familiar with the matter said.

Diminishing Effectiveness

President Joe Biden’s team is concerned that sanctions issued merely as punishment, rather than to change the behavior of adversaries, could undermine the effectiveness of sanctions in the future. That leaves public criticism as the administration’s primary first response to the Exchange hack.

China has rejected accusations by the U.S. and allies that actors linked to its government were behind the Exchange hack and other such attacks.

“The U.S. ganged up with its allies and launched an unwarranted accusation against China on cybersecurity,” Chinese Foreign Ministry spokesman Zhao Lijian said earlier this week. “It is purely a smear and suppression out of political motives. China will never accept this.”

The U.S. and China have increasingly been at odds over a range of issues, including economic and military matters. Those tensions were also on display last week when the administration warned investors about the risks of doing business in Hong Kong with an advisory saying China’s push to exert more control over the financial hub threatens the rule of law and endangers employees and data.

China imposed retaliatory sanctions against the U.S. over the Hong Kong business warning, the Ministry of Foreign Affairs said late Friday. The country imposed sanctions against seven individuals, including former President Donald Trump’s commerce secretary, Wilbur Ross.

White House Press Secretary Jen Psaki criticized China for imposing sanctions. “We’re undeterred by these actions, we remain fully committed to implementing all relevant U.S. sanctions authorities,” Psaki told reporters.