China's Growing Spy Threat (Page 2 of 5)

And while experts agree that the United States is the single most important target, Chinese agents involved in military and political espionage have been convicted all over the world. In late July, for example, Taiwanese General Lo Hsien-che was sentenced to life in prison for handing over military secrets to Beijing. The case shocked the nation. But it wasn’t necessarily surprising to some observers.

‘Anyone who has followed developments in Taiwan over the years knows how deeply Chinese forces have infiltrated Taiwan’s military, especially its senior officers,’ noted Taiwan-based journalist and security analyst J. Michael Cole in a recent opinion piece for the Wall Street Journal. He noted that, because Taiwan is so infested with Chinese spies, any US weapons sales to the nation could result in sensitive military secrets ending up in Beijing. 

Europe isn’t immune either. In Belgium, headquarters of NATO and the European Union, the Minister of Justice and the Minister of Foreign Affairs separately accused China of cyber spying and attempting to compromise critical government networks in 2008. The next year, reports of Chinese intelligence efforts directed at top Australian officials, including the prime minister, made headlines worldwide.  

Even in Russia, widely considered at least a tenuous ally of the Chinese regime, Chinese spies have been convicted in recent years. One man, Igor Reshetin, was found guilty of providing information useful in designing nuclear missiles to a Chinese state-owned firm. In early September, Russian prosecutors charged two more academics with selling military secrets to China.  

Aside from stealing political and military information, another important goal of Chinese intelligence agents is to gain influence among members of a target country’s political elite. According to experts, China uses bribes, blackmail, women, lavish vacations in China, and other means to compromise officials worldwide.

Even former US President Bill Clinton was widely accused of being too close to Beijing for comfort. ‘President Clinton promised to restrain those who ordered the Tiananmen Square massacre, but he has now allowed these men whose hands are stained with the blood of martyrs of freedom into the highest reaches of our military defences, and made available to them significant portions of our advanced military technology,’ charged former US Joint Chiefs of Staff Chairman Admiral Thomas Moorer in a letter to congressional leaders.

Indeed, one of the prime targets of Chinese intelligence, according to analysts, is information to create comprehensive databases on current and future leaders of free countries. ‘They want to arm their diplomats and businessmen with the inside scoop to be able to expand their political and economic allies to help foster ruling elites that will never challenge the legitimacy of the Chinese Communist regime,’ says Fisher.

In Canada, the issue was raised just last year. During a TV interview, Canadian Security Intelligence Service (CSIS) Director Richard Fadden suggested that some politicians in Canada were connected to certain foreign governments—almost universally assumed to mean China.

After causing an uproar among some sectors, however, the Canadian spy chief tried to downplay the remarks. ‘He was very rapidly shut down by some irresponsible—almost suspicious’—officials, who denied that there was any problem, says Michel Juneau-Katsuya, the former Asia-Pacific head of CSIS.

‘Actually, Mr. Fadden was talking about something that has been happening for decades,’ Juneau-Katsuya says. The strategy of gaining influence among foreign power brokers is an important tool in China’s espionage arsenal, he says. It’s also one that is rarely discussed.

Theft of Trade Secrets

The theft of trade secrets, technology, and corporate information is another one of China’s specialties. ‘When it comes to economic espionage, China is universally recognized as at the top,’ says Juneau-Katsuya, who now serves as the CEO of security consulting firm The Northgate Group. ‘What we know is that, by far, they are at the top when it comes to stealing information.’ 

Oftentimes the line between military and economic espionage is blurry. The case of engineer Dongfan ‘Greg’ Chung, sentenced last year, is just one example among many. Chung was caught passing sensitive US aerospace and rocket secrets to China that he stole while working for defence contractors Boeing and Rockwell International.

In other cases, the foreign technology stolen by Chinese spies is used to further oppress the population. A revealing lawsuit filed by US software maker Cybersitter, seeking more than $2 billion in damages, accused China and other conspirators of stealing its proprietary filtering code. The software was then apparently used to help censor the web in China.

‘They have a multitude of goals all at once: To catch up on the difference in technology, to gain influence around the world, to know more about where the competition is, and definitely to not have to pay for research and development,’ says Juneau-Katsuya. The R&D element is key.

Often, the motivation for stealing trade secrets is purely economic. In addition to saving unfathomable amounts of time and capital, using stolen information crucial to a company’s survival can actually lead to shutting down China’s foreign competition.

So, partly because the return on investment from spying is so much greater than from R&D, experts say the budgets of Chinese intelligence agencies have soared in recent years. That trend is expected to continue indefinitely.

But while it may be cost effective for China, the price tag paid by others is massive. Precise figures are, of course, impossible to calculate. But in 1995, when Juneau-Katsuya was at CSIS, he tried to get an estimate: It was somewhere in the neighbourhood of $10 billion to $12 billion per year. Since then the problem has only grown.

In Germany, the cost is high, too, Berthold Stoppelkamp of the German Association for Security in Industry and Commerce (ASW) told the press in 2009. He estimated the damages from economic espionage—primarily Russian and Chinese—at around €20 billion every year. But it could be closer to €50 billion, he noted.

An estimate on the cost of economic espionage to the US economy was offered by FBI Director Robert Mueller in 2003: over $250 billion per year. And counterintelligence officials with the Bureau and other experts agree that China is by far the most serious threat. 

‘This espionage saps US companies of their industrial lead in the new technologies and materials,’ notes Wortzel. ‘And often the Chinese incorporate what they have learned into new weapon systems that can be used against the US, its allies, and friends.’

And because the threat is continually evolving and comes from multiple directions, it’s difficult to deal with, experts say. China uses all known means of stealing information even as it develops ever more ingenious schemes.

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