November 29, 2010: A Chinese born engineer, Xiang Dong Yu who worked for Ford Motor Company for over a decade, pled guilty on November 17th of stealing over $50 million worth of Ford technology and selling it to a Chinese automobile company. The most Yu can get is six years in prison and a fine of $150,000. Many of the technologies Yu stole have military applications. This sort of thing is nothing new. Three years ago, another Chinese born man, Xiaodong Meng pled guilty to stealing source code for American military flight simulators and selling it to China.
The FBI and CIA have detected hundreds of such attempts to steal American military technology in the last eight years. That information led to over 500 formal investigations, and hundreds of arrests and prosecutions. Even with that, it appears that far more military technology is illegally making its way to China.
Thousands of Chinese citizens, and Chinese-Americans are caught up in what the Chinese call the "thousand grains of sand" espionage system. Basically, China tries to get all Chinese going overseas, and those of Chinsese ancestry living outside the motherland, to spy for China, if only a tiny bit. This approach to espionage is nothing new. Other nations have used similar systems for centuries. What is unusual is the scale of the Chinese effort.
Backing it all up is a Chinese intelligence bureaucracy back home that is huge, with nearly 100,000 people working just to keep track of the many Chinese overseas, and what they could, or should, be trying to grab for the motherland. It begins when Chinese intelligence officials examining who is going overseas, and for what purpose. Chinese citizens cannot leave the country, legally, without the state security organizations being notified. The intel people are not being asked to give permission. They are being alerted in case they want to have a talk with students, tourists or business people before they leave the country. Interviews are often held when these people come back as well. Those who might be coming in contact with useful information are asked to remember what they saw, or bring back souvenirs. Over 100,000 Chinese students go off to foreign universities each year. Even more go abroad as tourists or on business. Most of these people were not asked to actually act as spies, but simply to share, with Chinese government officials (who are not always identified as intelligence personnel) whatever information they obtained. China also considers that, ethnic Chinese who are citizens of other countries, are still subject to the Chinese government. Thus ethnic Chinese, even those who are American citizens, have something else to worry about if they visit China.
Of course, it's long been common knowledge in China, and in Western intelligence agencies, about what was going on. Quiet diplomatic efforts, over the years, to get the Chinese to back off, were politely ignored. Another problem is that China has never been energetic at enforcing intellectual property laws. If a Chinese student came back with valuable technical information (obtained in a classroom, in a job, or simply while socializing), the data was often passed on to Chinese companies, or military organizations, that could use it in new products. Since there were few individual Chinese bringing back a lot of data, or material (CDs full of technical data, or actual components or devices), it was difficult for the foreign counterintelligence agencies to catch Chinese spies. There were thousands of them, and most were simply going back to China with secrets in their heads. How do you stop that?
Some of the more ambitious of these spies have been caught red handed with actual objects (CDs, memory sticks, paper documents). But most of the information moves back to China unhindered, in tiny pieces. Naturally, the Chinese push their system as far as they can. Why not? There is little risk. The Chinese offer large cash rewards for Chinese who could get particularly valuable stuff back to China. Chinese intelligence looked on these "purchases" as strictly commercial transactions. If the Chinese spies got caught, they were on their own. The Chinese involved knew the rules. If you were successful, you also won favor with the government, and the Chinese government was agreeable to whatever business deals you later tried to put together back in China. This kind of clout is important in China, where a "friend in the government" is more valuable than in the West.
But more and more of these ambitious Chinese agents are getting caught because it is becoming known, to the Western business and academic community, what is going on. There are over ten million Americans and Europeans of Chinese ancestry. Many are recent immigrants, or simply students or people working in the United States temporarily for Chinese companies. Most have family back in China, and are thus vulnerable to getting recruited, usually unwillingly, as one of the "grains of sand."
Many of these overseas Chinese are not comfortable with betraying their new homelands, and in the U.S., the FBI is taking advantage of that. This is making the Chinese espionage effort less useful. Some of the information coming back has been planted by the FBI, to confuse the Chinese. That's also been part of the intel game for a long time. But, at the moment, the Chinese are way ahead on points.