Two years after his arrest in the United States, Chinese born Sixing Liu was recently sentenced to six years in prison, for providing China with American military technology. Liu was an engineer for a firm that built navigation systems for defense equipment. Liu was raised in China but had lived in the U.S. for two decades. Liu is a legal U.S. resident and was arrested in 2011 because of a trip to China in 2010. There he had described to Chinese officials what his company was doing on Department of Defense projects. The evidence was found on one of Liu's personal computers. Liu made the trip without informing his employer.
American counter-intelligence efforts are catching and convicting a growing number of Chinese spies in the United States. This may be more because of increased spying efforts by China than because of better FBI and CIA methods. The culprits have been caught, for example, with electronic versions of classified army manuals, valuable trade secrets (with military applications), and documents containing technical details of the Space Shuttle, the Delta IV satellite launcher, the F-15 fighter, B-52 bomber, CH-46/47 helicopters, and several other military systems.
Incidents like this are just another example of China's use of 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 and 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, as were their jet fighters, tanks, and warships.
China gets around this 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 whith 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 was 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 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" methods, brings in a lot of secrets. The final ingredient is a shadowy venture capital operation, 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.
But there are some 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 like to steal military technology. This kind of stuff (at least the most advanced models) rarely leaves 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.