During the height of the Cold War, no other nation could match the desire and ability of the Soviet Union's KGB to steal American corporate and military secrets, particularly technology secrets. That has since changed, however. In today's information age, the People's Republic of China (PRC) has replaced and even improved on the KGB methods of industrial espionage to the point that the PRC now presents one of the most capable threats to US technology leadership and by extension its national security.
What we know, and don't know
What we know thus far about China's espionage activities against US weapons laboratories and other technology development programs is cause enough for concern. The US intelligence community's official damage assessment of Chinese espionage targeting America's nuclear technology secrets tells us this much:
What we know:
What we don't know:
Yet there is much more to China's quest for US technology. China has obtained a major advantage that the former KGB did not enjoy during the Cold War: unprecedented access to American academic institutions and industry. At any given time there are more than 100,000 PRC nationals in the United States attending universities and working throughout US industries. It is important to note here that these individuals are not assumed to be spies, but given their status as PRC nationals they remain at higher risks of being a major component of the PRC's nebulous industrial intelligence collection operation.
In fact, there are very few professional PRC intelligence operatives actively working on collecting US technology secrets compared to the number of PRC civilians who are actively recruited (either by appealing to their sense of patriotism or through other more coercive means) to routinely gather technology secrets and deliver those secrets to the PRC. Thus, the PRC employs a wide range of people and organizations to serve as its "white glove", and do its dirty work abroad, including scientists, students, business executives and even phony front companies or acquired subsidiaries of US companies as evidenced by a string of recent high profile cases.
Beijing's 16-character policy
Nowhere is the nexus of the military-industrial complex in the PRC more evident than in the codification of the 1997 "16-character policy", which makes it official PRC policy to deliberately intertwine state-run and commercial organizations for casting a cloud of ambiguity over PRC military modernization. In their literal translation, the 16 characters mean as follows:
Jun-min jiehe (Combine the military and civil);
Ping-zhan jiehe (Combine peace and war);
Jun-pin youxian (Give priority to military products);
Yi min yan jun (Let the civil support the military).
The 16-character policy is important because of what it does for the strategic development of the PRC's industrial and economic espionage program: it provides commercial cover for military industrial companies to acquire dual-use technology through purchase or joint-venture business dealings, and at the same time for trained spies who work directly for the PRC's military establishment, whose operational mandate is then to gain access to and steal the high-tech tools and systems developed by the United States and its Western allies .
The two primary PRC organizations involved in actively collecting US technological secrets are the Ministry of State Security (MSS) and the Military Intelligence Department (MID) of the People's Liberation Army (PLA). The MSS, now headed by Minister Geng Huichang, relies on professionals, such as research scientists and others employed outside of intelligence circles, to collect information of intelligence value. In fact, some research organizations and other non-intelligence arms of the PRC government direct their own autonomous collection programs .
According to US Federal Bureau of Investigation (FBI) estimates, there are currently more than 3,000 corporations operating in the United States that have ties to the PRC and its government technology collection program. Many are US-based subsidiaries of Chinese-owned companies; while in the past they were relatively easy to identify, recent studies indicate that many have changed their names in an effort to distance themselves from their PRC owners.
China's red spider's web
China's espionage efforts targeting proprietary technologies developed in the United States stretch back decades. But China's spy craft has evolved rapidly and now presents a serious challenge that many in the West are unprepared to counter. For example, recent cases investigated by the FBI have involved entire families of naturalized American citizens from China, prompting the bureau to take out a Chinese-language advertisement in San Francisco Bay area newspapers urging Chinese Americans to report suspicious activity. In addition, China has clearly taken a long-term view of espionage against the US technology industry, handling some agents for decades.
One of the most recent cases, for example, involves a former Boeing engineer who now stands accused of giving China proprietary information about several US aerospace programs, including the space shuttle. The affidavit in the case alleges that Chinese intelligence officials first approached Dongfan "Greg" Chung of Orange, California, with intelligence collection requirements in 1979. Chung was arrested on February 11, 2008, and was scheduled to be sentenced this month.
At the same time Chung was arrested and accused of stealing proprietary Boeing information, Chinese businessmen Tai Shen Kuo and Yu Xin Kang were arrested and charged with cultivating several US defense officials, one of whom passed information on projected US military sales to Taiwan for the next five years.
Many PRC domestic intelligence activities are directed against foreign businessmen or technical experts. The data elicited from unsuspecting persons or collected by technical surveillance means is used by Chinese state-run or private enterprises. Prominent Beijing hotels, such as the Palace Hotel, the Great Wall Hotel and the Xiang Shan Hotel, are known to monitor the activities of their clientele.
Chinese government-owned companies have also been involved in schemes to steal the intellectual property of US companies. They have done this using the corporate equivalent of sleeper cells - foreign executives hired by US companies on work visas, as well as naturalized American citizens who then establish US companies for the purpose of gaining access to the proprietary data of other US firms.