The whole thing started when folks working for the Dalai Lama in exile requested an audit of their computer setup. Lo and behold, they were infected with malware. Once the command and control servers were compromised, the extent of the infiltration became known.
It hasn't been definitively proven that the Chinese government is involved, although one group does think so. In addition, there are definitely signs that people connected with the Dalai Lama were targeted.