*

Xu Zewei arrested in Italy last week at US request

*

US wants him extradited, alleges he is part of group tied

to

Chinese government

*

Xu's lawyer says he is victim of mistaken identity

*

China denies involvement

(Adds quotes from Justice Department statement, comments from

lawyer of the man arrested, allegations against China and

China's denial, background of hack from paragraph 3 onward)

By Kanishka Singh

WASHINGTON, July 8 (Reuters) - The U.S. Department of

Justice said on Tuesday a Chinese state-sponsored contract

hacker was arrested last week in Italy at the request of

Washington, but the arrested man claimed he is a victim of

mistaken identity.

Xu Zewei, 33, was arrested on July 3, the Justice Department

said, adding a nine-count indictment was unsealed on Tuesday in

the Southern District of Texas alleging the involvement of that

individual and a co-defendant in computer intrusions between

February 2020 and June 2021.

Xu was arrested in Milan, Italy, and will face extradition

proceedings, the DOJ said in a statement.

It alleged China's ministry of state security had

directed theft of COVID-19 research and the exploitation of

Microsoft ( MSFT ) email software vulnerabilities.

The Chinese government has denied allegations of being

involved. The Chinese embassy in Washington did not immediately

respond to a request for comment.

Xu's lawyer said on Tuesday that he is a victim of

mistaken identity, that his surname is quite common in China and

that his mobile phone had been stolen in 2020.

The 33-year-old IT manager at a Shanghai company

appeared on Tuesday before an appeals court in Milan, which will

decide whether to send him to the United States. The man was

arrested last week after he arrived at Milan's Malpensa airport

for a holiday in Italy with his wife.

U.S. authorities allege that he was part of a team of

hackers who tried to access a COVID-19 vaccine being developed

by the University of Texas in 2020.

The DOJ also says that in 2021, he was part of a

cyber-espionage group known as Hafnium, which has alleged ties

to the Chinese government and which "exploited zero-day

vulnerabilities in U.S. systems to steal additional research."

Hafnium targeted over 60,000 U.S. entities, according to

the DOJ.

The charges listed on the arrest warrant were wire fraud

and aggravated identity theft, conspiracy to commit wire fraud

and unauthorised access to protected computers.