November 20,2008: A Chinese-American scientist pled guilty to providing China with U.S. rocket technology. Quan-Sheng Shu, a 68 year old naturalized citizen who was born in China, was president of AMAC International Inc., a technology company with offices in the United States and China. Shu bribed Chinese officials to award a $4 million contract, for rocket technology, to his company. Shu was attempting to export technology to China without the required permits (that he knew he would not get.) Shu could receive up to ten years in jail, plus millions of dollars in fines. But he has a plea bargain agreement which prevented his wife from being prosecuted for her part in the transaction. The plea deal will probably get Shu a shorter jail term.

The Shu case is another example of the Chinese effort to use industrial espionage to turn their country into the mightiest industrial and military power on the planet. For over two decades, China has been attempting to do what the Soviet Union never accomplished; steal Western technology, then use it to move ahead of the West. The Soviets lacked the many essential supporting industries found in the West (most founded and run by entrepreneurs), and was never able to get all the many pieces needed to match Western technical accomplishments. Soviet copies of American computers, for example, were crude, less reliable and less powerful. Same with their jet fighters, tanks and warships.

China believes they can avoid the Soviet error by making it profitable for Western firms to set up factories in China, where Chinese managers and workers can be 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 most of these students will stay in America, where there are better jobs and more opportunities, some will come back to China, and bring 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. 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 to 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. The more ambitious of these people are getting caught and prosecuted. But the majority, who are quite casual, and, individually, bring back relatively little, are almost impossible to catch.

Like the Russians, the Chinese are also using 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" methods, brings in lots of secrets. The final ingredient is a shadowy venture capital operations, sometimes called Project 863, that offers money for Chinese entrepreneurs who will turn the stolen technology into something real. No questions asked. If you can get back to China with the secrets, you are home free and potentially very rich.

Shu was just trying to do some business, but he was also ensnared by this enormous Chinese espionage operation that has had far more successes than failures.