Chinese Espionage Cases - Message from the Director

 

Chinese Espionage: A Far-Reaching and Long-Lasting Threat

By William Tucker

Speaking at a recent event hosted by the Hudson Institute, FBI Director Christopher Wray discussed Chinese espionage, the threat it poses to the U.S. economy and national security. Director Wray characterized the theft of U.S. intellectual property as “one of the largest transfers of wealth in human history.”

Some U.S. businesses have closed their doors and many Americans have lost their jobs because of this effort by the Chinese. Overall, the losses to U.S. businesses come to over a trillion dollars.

To place this amount in perspective, consider the Sinovel espionage case. American Superconductor, a U.S. company, had its proprietary software stolen by Sinovel, a Chinese wind turbine manufacturer. The theft cost the U.S. company $800 million, forcing it to lay off 600 of its 900 employers. It also cost investors one billion dollars.

The Sinovel case is but one example. Director Wray remarked, “We’ve now reached the point where the FBI is opening a new China-related counterintelligence case about every 10 hours. Of the nearly 5,000 active FBI counterintelligence cases currently underway across the country, almost half are related to China. And at this very moment, China is working to compromise American health care organizations, pharmaceutical companies, and academic institutions conducting essential COVID-19 research.”

The Potential for More Chinese Espionage Cases Continues to Rise

With half of the FBI’s espionage caseload related to China, there is a strong potential for more Sinovel-type events in the cases that are currently under investigation. While it is true that some cases will not exceed the financial toll of the Sinovel case, others certainly will cost the U.S. economy even more money.

No matter how one calculates the numbers, there is always a significant loss. This espionage issue is what underlies the tensions between the U.S. and China, and the tit-for-tat consulate closures are just one part of this battle.

Chinese Espionage Is More than Just Cybersecurity Attacks

Chinese espionage has been quite aggressive over the past three decades, but the U.S. media has long focused on the cybersecurity angle of Chinese intelligence collection, creating the illusion that China gathers much of their information from hacking. When the U.S. indicted several Chinese generals for their role in running the Chinese cyber units, it caused quite a stir, again reinforcing that belief that the problem of espionage was firmly in the cyber realm.

The 1990s and early 2000s saw some successful prosecutions of Chinese insiders working within the U.S. government and private sectors stealing information. These acts were characterized as a cottage industry and not something run by the Chinese government.

But the disjointed nature of news reports on Chinese espionage efforts led to poor education within both the U.S. government and private sectors, creating exploitable gaps for foreign intelligence agencies. Instead of recognizing the Chinese intelligence collection program as a single effort of the Chinese government, many in the U.S. viewed the collection effort as something akin to petty crime — a notion furthered by Chinese disinformation. The U.S. is now paying dearly for that mis-characterization.

Chinese Intelligence Is Using Social Networking Sites to Recruit New Spies

Though the U.S. is pushing back against all things China, that has not stopped or even slowed down Beijing’s intelligence collection efforts. A Singaporean Ph.D. student, Jun Wei Yeo, recently pled guilty to one count of “acting within the United States as an illegal agent of a foreign power without first notifying the Attorney General.”

Yeo, like many others, never set out to act as a Chinese spy. But after delivering remarks on Chinese foreign policy, several individuals claiming to represent Chinese think tanks approached the student and offered to pay him for political reports. According to the U.S. indictment, Yeo eventually realized the think tank representatives were in fact Chinese intelligence, but he opted to maintain contact with them.

Yeo quickly became a talent spotter for Chinese intelligence; he played the role of intermediary and cultivated contacts in the U.S. with the intention of turning those individuals into Chinese intelligence assets. To reach those people,  Yeo used the social network LinkedIn to recruit people who would be amenable to Chinese intelligence recruitment.

Though Yeo used a modern social networking site to find and recruit people, the approach he took involved traditional tradecraft aspects of the recruiting process including spotting, assessing, and potentially developing those assets.

At some point, Yeo would hand off the individual to others in Chinese intelligence for recruiting. Chinese intelligence officers would then make a pitch to the new recruit to work for China and eventually serve as the recruit’s handlers.

The use of LinkedIn or other social network platforms seems to obfuscate the more traditional methods of recruiting, but traditional spy recruitment methods can certainly be used on these sites. As pressure on Chinese collection faces a significant pushback from the U.S., China will have to adapt its recruitment techniques to target Americans directly.

China has long relied on students and other members of academia to infiltrate the U.S., but Washington is hitting visa fraud rather aggressively to stymie this approach.

China’s need to collect information has not diminished, making the need to further diversify its approach to collection all the more necessary. The aggressiveness of Chinese espionage, however, will not diminish any time soon.

 

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