May 8, 2024:
China has developed an international network of spies, local agents, and operatives. The foreigners working for this network are often unaware that they are working for China. This is part of China’s concealment of the extent of their operations. China also obtains the services of internet hacking groups through a third party to conceal the fact that data is being stolen for the Chinese. Despite years of successful efforts to conceal the extent of their espionage network, that anonymity has unraveled during the last year and the process continues despite Chinese efforts to delay, disrupt, or stop it.
This result is that Chinese spies and espionage efforts are becoming known in Europe, the Americas, the Middle East, Africa and south, southeast, and east Asia. An increasing number of arrests have taken place and subsequently been publicized. It’s not just the espionage that annoys foreigners but the covert meddling the Chinese were engaged in worldwide. China sought to influence foreign governments to cooperate with local Chinese goals without knowing, or revealing what was being covertly done to benefit China.
Many of the operatives were nor local Chinese but ethnic locals
covertly hired to support the local Chinese agenda. Many of the Chinese
operatives convincingly presented themselves as anti-Chinese. This sort of deception was particularly
useful when it came to sabotaging efforts by the major foreign intelligence and
counterintelligence agencies of countries like the United States (FBI and CIA),
Britain (SIS), Germany (BND), France (DGSE), and Turkey (MIT).
In Europe, the 27 members of the EU (European Union) concentrate
on economic matters but are now more aware of the efforts and impact of foreign
intelligence agencies and operatives. This is particularly true with the
Chinese, who have the second largest economy in the world and want to obtain,
one way or another, more market share from the United States, which has the
largest economy in the world. American economic efforts are worth about $29
trillion while the Chinese economy is valued at nearly $19 trillion. The global
economy is worth $86 trillion with the Americans controlling 34 percent of it
and China 22 percent.
Government and corporate espionage are heavily involved with
monitoring and sometimes disrupting foreign economies when it suits them. The
countries with the largest economies, especially those in Europe and the
Americas, also depend on non-government BI, or Business Intelligence. The
Japanese pioneered the use of BI in the 1960s as they sought to establish
foreign markets in the United States, Europe and, as the Chinese economy grew
enormously from the 1980s to 2010, the Chinese commercial and consumer markets.
BI played a major role in exposing and documenting Chinese efforts to gain large shares of foreign markets in Europe and the United States. With this evidence available American and European efforts to disrupt and eliminate illegal Chinese trading practices have become effective and the Chinese don’t like it. With China on the defense, the Chinese have to use BI and other forms of espionage to get themselves out of that mess. The Chinese are patient and willing to wait a decade or more to do whatever it takes to recover their market share in western countries.
European nations are now more aware of Chinese using BI as part
of their economic trade practices. In the last few years European governments,
as well as the Americans have come to realize the extent of the deceptive
Chinese trade practices that brought great wealth to China without their
foreign trading partners being aware of what was going on. Western BI efforts
detected that something was up but not enough to act on. Chinese espionage was
more effective at supporting Chinese economic efforts. Some European historians
pointed out that, when Europeans began trading with China in the 1500s, the
Europeans eventually realized that the Chinese were better at this trade
business because they had an early version of BI while the Europeans were
learning the hard way what they were up against. It took the Europeans several
centuries to figure out how to deal with the Chinese trading practices and when
the Americans came along in 1784, after the American Revolution, they started
small but by 1844 had their first trade treaty with China and soon came to take
a disproportionate share of foreign trade with China.
That didn’t last long because in the 1860s China entered a century long cycle of civil war and economic disruption. China suffered greatly, with over 30 million Chinese dying and the economy collapsing. It wasn’t until the 1980s that China began to rebuild their economy and trade with foreigners. Western BI was primitive during that period and the Americans and Europeans could not come up with an effective way to make it better. As large as the Chinese market was, the western nations prospered during the 19th and 20th centuries as they traded with each other and jointly created the largest economies the world had ever seen. That lasted until the late 20th century when the Chinese economy began to make a comeback.
The Chinese frequently used BI to maximize their internal and
foreign trade. The trade advantages China gained began to weaken in the last
few decades as corruption in China and more efficient trade practices developed
outside of China, especially in South Korea and Japan. These two nations took
more of the trade that had long gone to China. The Japanese made good use of
the BI techniques they had pioneered. South Korea followed suit and also became
a major exporter. Both Japan and South Korea joined the list of top exporters,
with Japan at number five and South Korea at number six. China had surpassed
the United States in exporting activity to take first place, with the Americans
close behind. This development stirred more American firms to use BI to recover
their export markets. That will take a while because the other major trading
countries are also using BI.
The Americans also began to crack down on Chinese espionage. In
2023 the United States revealed that two American sailors were arrested and
charged with spying for China. Both men were ethnic Chinese who were born in
China but grew up in the United States, and one had applied to become a
naturalized citizen. Both men provided confidential, not highly classified
information, including technical manuals used by sailors to do their jobs on
various warships. The two sailors also provided details on planned deployments
of some ships. The mother of one of the sailors encouraged her son to cooperate
with Chinese intelligence because that might enable him to move back to China
and get a better civilian job. That will have to wait until they are out of
custody. Both men were jailed pending trial because both were considered a
flight risk to China.
Despite years of growing numbers of arrests and prosecutions of
Americans accused of spying for China, the Chinese persist. While ethnic
Chinese Americans are prime targets for Chinese recruiters of pies or
informants, any foreigners with pro-Chinese attitudes are potential candidates
for Chinese intelligence officers looking for potential recruits.
A favorite tactic of Chinese intel officers is to arrange for a
financial arrangement between Chinese organizations and people China considers
potential candidates for Chinese intelligence sources. Much of this effort is
concentrated in large English speaking nations like the United States and
Britain that have many trading relationships with Chinese firms and
institutions. Western universities and faculty were always a prime target
because these institutions and their key staff are not seen as a major target
for Chinese influence operations. China understands that the staff of
universities in the West are recognized by locals as a source of expert opinion
on many matters. These faculty members can also be influenced by gifts of cash.
These are not called gifts or, more accurately, bribes. Rather the money is
considered a grant to support further academic studies on one subject or
another. China arranges large grants for such purposes. Government and popular
opposition to these programs has not eliminated them, just forced China to
change how it implements the program. While Western intelligence agencies
remain alert and aware of this program, few others in government or academia
seem to be concerned. After several years of indifference by university administrators
towards requests to monitor and block Chinese influence efforts, governments
are becoming more energetic and aggressive about this.
This was a return to methods last employed over a decade ago. For example, in 2020 an American and two Chinese were indicted for secretly providing China with U.S. technology. The American was Charles Lieber, head of the Harvard Chemistry and Chemical Biology department. He was accused of secretly establishing a working relationship with a Chinese university at Wuhan. Lieber established research efforts at Harvard, recruiting top scientists to work on projects of interest to China and secretly passing research results to China. He also received millions of dollars from China to further this research. During the FBI investigation Lieber repeatedly lied about these activities, which did not prevent the FBI from eventually gathering all they needed to arrest Lieber and indict him. It is rare for China to convince a senior American academic, like Harvard department head Charles Lieber, to get involved in illegal research projects. Why Lieber got involved in such blatantly illegal activities was not disclosed and details probably won’t emerge until his trial.
Also indicted for Harvard related espionage was a Chinese
citizen, Zheng Zaosong, who was studying at Harvard on a student visa and was
accused of trying to smuggle 21 vials of biological material and research data
back to China. The third defendant was Yanqing Yeh, a Chinese student at nearby
Boston University. She was also an active duty lieutenant in the Chinese Army
who was supervised by a colonel at a Chinese military academy that was working
on new technology for the Chinese military. This school was on an American list
of Chinese educational institutions that were banned from working with anyone
in the United States. Yeh was also caught trying to smuggle research data back
to China. Yeh had lied about her military status when she applied for a student
visa, asserting that she had been discharged from the army and left out her
connections with the banned (in the U.S.) Chinese military academy she was
working for as an army officer. She was also accused of being an unregistered
foreign agent. Among the items uncovered by the FBI was that Yeh had been
assigned to investigate one American academic at the U.S. Naval Postgraduate
School who was researching computer security. Given how active China has been
using hackers to steal valuable data from the United States, that particular
assignment was ominous. Yeh had presented herself as a student but further
investigation showed she was a very active Chinese spy.
It is illegal for American academics and researchers to secretly work for Chinese government or commercial firms. These restrictions won’t trigger similar measures for Americans in China because China has long assigned police and intel specialists to closely observe who visiting Americans visit. This surveillance often involves MSS (secret police) agents advising Chinese to refuse such meetings or only do it with an MSS agent present, usually pretending to be an employee of the firm.
Meanwhile, China has been making the most of their access. One
recent FBI investigation documented the use of the Chinese Confucius
Institute's cultural centers at American universities and how these programs
were actually part of a widespread intelligence operation that employed visa
fraud for Chinese visiting scholars who were actually MSS operatives. This
program recruited Chinese-born businessmen, academics, and others, often
naturalized American citizens, to participate in IP (Intellectual property) theft.
Further encouragement was that some of these operatives could sometimes profit
from it personally. Not all these recruits knew they were participating in
espionage but the Chinese could effectively pressure their citizens to
cooperate. Worse, the FBI discovered that many of the Chinese in the U.S. on
J-1 visas (for visiting scholars) spent most of their time on espionage and a
bare minimum on actual research.
As successful as this espionage effort was, most of the Chinese
Americans approached by recruiters were not interested and politely declined.
More importantly, many of them quietly reported their encounters to the FBI or
to friends they knew could do it for them. The Chinese knew these alerts to the
FBI posed a risk but considered it an acceptable risk given the amount of
intellectual property that was being stolen and put to work back in China. The
same thing happens when China seeks to recruit informants or spies in the
American armed forces.
The United States has been prosecuting and convicting a growing
number of Chinese-born men (and a few women) conspiring to commit or actually
carrying out economic espionage in the United States. Some of these suspects
are naturalized American citizens but a growing number are Chinese citizens
here on legitimate visas. As more suspects were identified, patterns began to
appear which revealed the inner workings of known Chinese intellectual property
espionage efforts.
It was known that China had a state-sponsored program to make it
easy for foreign-educated Chinese to return home and apply what they had
learned in the West to start their own companies. China offered billions of
dollars in venture capital for this program. This made it easier for Chinese
moving back to China from the West to establish their own companies using what
they learned in the West. This program helped create thousands of new firms.
Many of these firms were using stolen trade secrets and patents that were being
laundered. That is, changed sufficiently to make it difficult for the owners of
the stolen intellectual property to easily prove theft.
The FBI and CIA again noted several interesting patterns. While
many of the returning Chinese students were operating legally, a large number
of those new Chinese firms were operating illegally by depending on stolen IP
or Intellectual Property. There were other patterns as well. A lot of the
stolen tech seemed to involve Chinese and Americans associated with various
Chinese efforts that helped returning Chinese to profit from what they had
learned in the West. These programs involved establishing hundreds of Confucius
Institutes associated with Western universities, including a hundred in the
United States. Plus the aggressive recruiting of Chinese and non-Chinese
academics willing to help China perpetrate the largest IP theft in history.
Participating in this program has become riskier. The growing
number of convictions are for conspiring to steal or actually stealing trade
secrets. Many of the technologies involved are dual-use; for commercial and
military applications. Many of these investigations began when American
companies provided the FBI with documentation showing how the Chinese obtained
and applied the trade secrets. What the American firms usually lack is
information about who was getting the information, often including detailed
manufacturing techniques, to the Chinese. The U.S. is not the only victim here.
Many other Western nations are experiencing the same losses. Even Chinese
neighbor and ally Russia has suffered heavy losses due to this Chinese economic
espionage.
There have been a lot more court cases about this because
Chinese firms have become bolder in how they exploit stolen software, trade
secrets and other technology. In the past, the Chinese were careful in the use
of stolen tech when exporting their own military equipment copied from Russian
designs. The Chinese had started doing this during the Cold War, which
sometimes got fairly hot (there were some deadly border skirmishes in the
1970s) because China and Russia developed some territorial and ideological disputes
that did not settle down until the Soviet Union dissolved in 1991.
The Russians are still angry about the continued Chinese theft
of their tech, and growing Russian threats over this caused the Chinese to sign
agreements in the last decade that declared Chinese firms would stop stealing
and reselling Russian tech. In practice, this only slowed the Chinese down, but
it placated the Russians for a while. Currently, the Americans are starting to
sound like the Russians in the 1990s, but the Americans have more legal and
economic clout to deploy and this situation is liable to get ugly before (if
ever) it gets better.
By 2012 most American officials had come to openly admit that a whole lot of American military and commercial technical data has been stolen via Chinese internet (and more conventional) espionage efforts. Details of exactly all the evidence of this is unclear, but apparently, it was pretty convincing for many American politicians and senior officials who had previously been skeptical. The Chinese efforts have resulted in most major American weapons systems having tech details obtained by the Chinese, in addition to a lot of non-defense or dual-use technology. It’s not just the United States that is being hit but most nations with anything worth stealing. Many of these nations are noticing that China is the source of most of this espionage and few are content to remain silent any longer.
It’s no secret that Chinese intelligence collecting efforts since the late 1990s have been spectacularly successful. As the rest of the world comes to realize the extent of this success, there is a growing desire for retaliation. What form that payback takes remains to be seen. Collecting information, both military and commercial, often means breaking laws and striking or hacking back at the suspected attackers will involve even more felonies. China has broken a lot of laws. Technically, China has committed acts of war because of the degree to which it penetrated military networks and carried away copies of highly secret material. The U.S. and many other victims have been warning China there will be consequences. As the extent of Chinese espionage becomes known and understood, the call for consequences becomes louder.
China tries hard to conceal its espionage efforts. Not just
denying anything and everything connected to hacking and conventional spying
but also taking precautions. But as their success continued year after year,
some of the Chinese hackers became cocky and sloppy. At the same time, the
victims became more adept at detecting Chinese efforts and tracing them back to
specific Chinese government organizations or non-government hackers inside
China.
Undeterred, China has sought to keep its espionage effort going and has even expanded operations. For example, starting in 2008 China opened National Intelligence Colleges in many major universities. In effect, each of these is an Espionage Department where, each year, several hundred carefully selected applicants are accepted in each school, to be trained as spies and intelligence operatives. China has found that espionage is an enormously profitable way to obtain military and commercial secrets and now China trains and rewards those who have a talent for such things and make a career of it. The Internet-based operations, however, are only one part of China’s espionage efforts.
While Chinese Cyber War operations in this area get a lot of
publicity, the more conventional spying brings in a lot of stuff that is not
reachable on the Internet. One indicator of this effort is the fact that
American counter-intelligence efforts are snagging more Chinese spies. This is
partly due to increased spying efforts by China, which puts more of their
people out there to get caught, as well as more success by the FBI and CIA. All
this espionage, in all its forms, has played a large part in turning China into
one of the mightiest industrial and military powers on the planet. China is
having a hard time hiding the source of the new technologies they are
incorporating into their weapons and commercial products. Many of the victims
initially had a hard time accepting the fact that the oh-so-eager (to export)
Chinese were robbing their best customers of intellectual property on a grand
scale. Now Western firms are a lot more wary about dealing with the Chinese.
China has been getting away with something the Soviet Union
never accomplished, stealing Western technology, and then using it to move
ahead of the West. The Soviets lacked the many essential supporting industries
found in the West. These firms were largely founded and run by entrepreneurs,
which was illegal in the Soviet Union. Because of that, the Russians were never
able to acquire all the many pieces needed to match Western technical
accomplishments. Soviet copies of American computers, for example, were crude,
less reliable, and less powerful. It was the same situation with their jet
fighters, tanks, and warships.
China got around this by making it seemingly profitable for
Western firms to set up factories in China, where Chinese managers and workers
were taught how to make things right. At the same time, China allows thousands
of their best students to go to the United States to study. While many of these
students will stay in America, where there are better jobs and more
opportunities, a growing number are coming back to China and bringing American
business and technical skills with them. Finally, China energetically uses the
"thousand grains of sand" approach to espionage. This involves China
trying to get all Chinese going overseas, and those of Chinese 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, and that makes a difference. Supporting it all 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. This is where many of the
graduates of the National Intelligence College program will work.
It begins when Chinese intelligence officials examine who is
going overseas and for what purpose. Chinese citizens cannot leave the country
legally without 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 businesspeople before leaving
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, legal or otherwise.
There are over a million Chinese students attending foreign universities. Even
more Chinese 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. The more ambitious of these people are getting
caught and prosecuted. But the majority are quite casual and individually bring
back relatively little and are almost impossible to catch, much less prosecute.
Like the Russians, the Chinese are also employing the
traditional methods, using people with diplomatic immunity to recruit spies,
and offering cash, or whatever, to get people to sell them information. This is
still effective and when combined with the "thousand grains of sand"
method brings in a lot of secrets.
Not getting caught is becoming more important because that can
lead to increasingly dangerous diplomatic and legal problems. When the Chinese
steal some technology and produce something that the Western victims can prove
was stolen via patents and prior use of the technology, legal action can make
it impossible, or very difficult, to sell anything using the stolen tech
outside of China. For that reason, the Chinese long preferred stealing military
technology and tried to avoid using stolen commercial tech in a way that made
it easy to determine the source of stolen data. This meant keeping stolen
commercial tech inside China. And in some cases, like manufacturing technology,
there's an advantage to not selling it outside of China. Because China is still
a communist dictatorship, the courts do as they are told, and they are rarely
told to honor foreign patent claims when stolen tech is discovered in China by
its foreign owners.
Increasingly, Chinese firms are boldly using their stolen technology, daring foreign firms to try and use Chinese courts to get justice. Instead, the foreign firms are trying to muster support from their governments for lawsuits outside China. Naturally, the Chinese government will howl and insist that it’s all a plot to oppress China. This has worked for a long time, but many of the victims are now telling China that this conflict is being taken to a new, and more dangerous, level.