China’s Ministry of State Security’s (MSS) Economic Espionage Operations Against the United States

The 21st century will be marked by information wars and increased economic and financial espionage. All sorts of knowledge will become strategic intelligence in the struggle for power and dominance. The race for information of all kinds will be motivated not only by a desire to lead, but will be required to avoid obsolescence. It is information that will be the moving force in the 21st century.

         – Alvin Toffler1

 

The relationship between the United States and China has not always been a friendly one.  Both countries spied, and continue to spy, on one another through traditional human sources and through cyber space.  In the last decades, The People’s Republic of China’s (PRC) intelligence and security services have been profoundly devoted to gathering sensitive military, political, and economic information on the U.S. to bolster China’s military capabilities, foreign and domestic policy, and economic prosperity.  During the Cold War, CIA’s collection operations were solely focused on the Soviet’s KGB.  The two intelligence services collected and analyzed information on one another, and deceived and sabotaged each others’ operations.  The intense conflict between these two adversaries kept China in the blind spot, allowing it to evolve into a rival that posed a grave threat to the US.  The PRC was able to take advantage of the U.S’s inattentiveness, enabling China to conduct operations against the U.S. with significant results. The drastic success of China’s espionage pressured the FBI to rethink their counterintelligence priorities at the end of the Cold War (Wise 2011, 6).  The FBI shifted its focus to the PRC and especially to the espionage war with the Chinese foreign spy agency, the Ministry of State Security (MSS), and the intelligence branch of the People’s Liberation Army (PLA) (Wise 2011, 6).

The PRC’s intelligence services’ primary mission is to target U.S. nuclear weapons labs and US economic infrastructures. The MSS and PLA’s intelligence branches target the U.S. government and its multiple apparatuses “to collect technical and economic information with the dual purpose of making the Chinese military industrial base more sophisticated and the economy more competitive” (CRS Report China 2006, 14). The MSS also targets a “broad range of U.S. military technology, from the Navy’s most sophisticated weapons systems to the Air Force’s stealth bomber” (Wise 2011, 7) in order to strengthen its military arsenal.  In addition, The PRC also has another mission which is to penetrate the U.S. counterintelligence services to uncover US operations against China and disrupt them (Wise 2011, 7).  The PRC was previously successful at penetrating the U.S. intelligence community through the FBI by using “Honey traps” as in the case of Katrina Leung.  According to the Cox Committee Report, the PRC had stolen classified information for an enhanced radiation weapon “aka” neutron bomb and numerous designs and classified information regarding U.S. thermonuclear warheads in the U.S. ballistic missile arsenal (The Cox Committee 1999, ii-xxxvii). 

The PRC had updated its intelligence collection capacity and modified it to the changes that affect the international intelligence arena.  China has developed a new collection apparatus which is very difficult to discern, evaluate, and abolish (A Tradecraft Primer, 2009). This collection method is sculpted around the concept of “a thousand grains of sand” (Wise 2011, 9).  Detecting the PRC’s intelligence modus operandi is a fairly difficult task to accomplish especially through the cyber domain, demonstrating the difficulty to determine the threat analysis to thwart this adversary. Although China’s intelligence operations are known to target US cyberspace and military capabilities, China relentlessly targets the US economic structure.  But why is China interested in US economic property? Does stealing US information and technology aides China to become a more prosperous and strong nation? And what is the threat caused by China’s economic espionage?

Sharon Weinberger shed the light on some cases of economic and property espionage. However, she focused her article about the case of Ke-xue Huang and law aimed to guard intellectual property held by US corporations.  Ke-xue Huang was an engineer who worked at a biofuel company synthesizing genes for vitamin B12 (Weinberger 2010). The article talked about how this person was found guilty by the US government under the economic espionage law for communicating technical aspects of his function with a Chinese university. The article also mentioned six other similar economic espionage cases that were acquitted because of the difficulties faced the US government to prove their ties to the Chinese government.  This goes to underline the sophistication of the Chinese modus operandi and how it is very difficult to uncover China’s hand in such cases. Although the Justice Department attempted to fight the case, they failed to prove any ties between the Chinese university and the Chinese government (Weinberger 2010). This is because China’s economic espionage operations are cleverly planned and executed as China stays behind the scenes controlling its universities and companies.

A scholarly article by Peter Schweizer described how the dwindling global industrial business environment “sparked a growth in economic espionage and spying against and among companies.” (Schweizer 1998) The article also described how some nations like France and Japan conduct their economic espionage, preferring “Cold War recruitment and technical operations and generally includes bribery, discreet theft, combing through other people’s garbage, and aggressive wiretapping.” (Schweizer 1998) However, the article mainly discussed how China’s gathers its share of economic espionage and intellectual theft by targeting former employees who worked for US companies. This technique allows China to stay under the radar as they do not aggressively pursuit “technical data, marketing information, and customer lists.” (Schweizer 1998)  Furthermore, the article talked about the Economic Espionage Act of 1996 (EEA).  Schweizer stated that the EEA “represents the first coherent, modern body of criminal law designed to deter these crimes in the US.  EEA regulations render the theft of proprietary economic information such as trade secrets a federal crime and broaden criminal sanctions against computer hackers to cases that involve blackmail. Such acts subject the perpetrators to fines as high as $10 million and jail terms as long as 15 years.” (Schweizer 1998) From this definition, we can conclude that the US takes economic espionage very seriously as it hinders US technological and informational dominance and superiority. Additionally, China is considered the main consumer of US technical data and economic information and the law was put in place to prevent foreign adversaries from steal US economic and industrial trade secrets and especially China.

Similarly, William J Edelman debated the courts interpretation of the Economic Espionage Act of 1996 (EEA) based on a case of Chinese economic espionage. The article talked about the case of a suspect that “possessed stolen US trade secrets with the intent to benefit the Chinese government.” (Edelman 2011) This continues to show the persistence of the Chinese government in pursuit of US economic trade secrets. In addition, the article briefly touched on how the trial jury disagreed and were confused over “the statutory element of economic espionage that requires the government prove that the defendants intended or knew that the crime would benefit a foreign government.” (Edelman 2011) Lastly, the article debated the defendant’s attorney about the statute of the law and discussed the court’s attempt “to define the limits of the foreign benefit element of economic espionage”, adding the defendant’s attorney perspective to the court as “should not frame the issue in terms of whether the benefit alleged by the government is a “benefit” under the statute” (Edelman 2011).  China understands the US justice system, thus having the upper hand in keeping its intentions masked under the clock of US courts’ debates and law reforms. This also continues to demonstrate China’s involvement with targeting US economic property and industrial information.

In addition, Carl Pacini talked about the importance of protecting US economic and industrial trade secrets from foreign adversaries. The article addressed ways to protect trade secrets by US companies. One of the suggestions was the signing of employment “confidential non-disclosure agreements” (Pacini et al 2008).  The article also talked about China’s economic espionage techniques.  Some of these techniques are very simple, yet the average US businessman may not be vigilant enough to detect them.  The techniques mentioned in this article were “scanning trade show floors, combing through web sites, eavesdropping in airline terminals and on airline flights, reviewing filings with regulatory agencies, taking photographs of factories and businesses, using data-mining software to search databases on the internet, stealing laptop computers, dumpster diving, and application of the MICES principle.” (Pacini et al 2008)  Analyzing this article clearly demonstrates the length China will go to collect valuable information pertaining to US economic trade secrets.

Richard Friedman discussed why US adversaries conduct economic espionage against the US.  He stated that “spies are normally associated with wartime and the theft of military technology.” (Friedman 1998) However, this assessment is widely false. The article went on to talk about China’s espionage activities against US military and defense technology. Nevertheless, espionage operations do not discriminate between wartime or peacetime, military information or economic trades.  Nations collect all sort of information they may deem is valuable to their national security and economic prosperity. As the global stage becomes more and more weakened by the international economic crisis, countries scramble for information to either achieve dominance or ensure survival.  China’s continuous intelligence collection whether military, economic, or political, demonstrates its constant strive for world dominance.

After a lengthy analysis of credible information and according to the CRS Report for Congress about China, the U.S. government conducted a risk evaluation and a threat analysis of China’s espionage operations targeting the US, based on credible US intelligence indicating the severity of China’s constant espionage collection.  A collective ACH was conducted by the White house, the intelligence community, Stanford’s Critique, the Cox Committee, and the PFIAB (Rudman) Report, presenting China’s threat analysis (CRS Report China, 6-14). China’s relentless pursuit of US information and trade secrets makes it one of the primary advertises that poses a momentous threat to the US national security.  The intelligence community collected proof to substantiate their hypothesis about the hasty advancements of the Chinese nuclear programs, military capabilities, and economic prosperity and affluence.  Based on these governmental findings, the Cox Committee recommended the US intelligence community and the private sector to battle “the PRC’s vacuum operations” (CRS Report China, 6-14). 

From the study, some experts disagree about whether the US government is doing enough to combat and protect its interests and national security against China’s espionage threat.  Nonetheless, US government officials argue that even ally countries such as England, Australia, and Canada are not doing enough to assist the US in defending against the Chinese economic and intellectual property theft.  After evaluating the sheer size of the Chinese intelligence expansion, it is evident that smaller neighboring countries in the region are potentially amongst the most vulnerable to this Chinese intelligence grip.

Neglectfully, according to the analysis and findings about the study, most corporations and organizations are not doing enough to secure their technical data to keep up with China’s swiftly progressing and systematic espionage capabilities.  The PRC has proven to take full advantage of these opportunities (Newman 2011).   However, approaches and suggestions to battle this grave threat were projected by analysts questioned by The Diplomat and Carl Pacini in his scholarly article “Fighting Economic Espionage with State Trade Secret Laws”.   Some of these suggestions to defend against China’s economic espionage are “to restrict the number of Chinese nationals allowed into the US and to develop new multilateral institutions to address the problem” (Newman 2011), and ensure that employees sign “confidential non-disclosure agreements” (Pacini et al 2008).  Other recommendations are to devote “more resources to counterintelligence operations, tougher punishments for convicted spies, better encryption systems, and more private sector involvement were also all mentioned.” (Newman 2011)

The relationship between the United States and China has not always been a friendly one.  Both countries spied, and continue to spy, on one another through traditional human sources and through cyber space.  In the last decades, The People’s Republic of China’s (PRC) intelligence and security services have been profoundly devoted to gathering sensitive military, political, and economic information on the U.S. to bolster China’s military capabilities, foreign and domestic policy, and economic prosperity.  During the Cold War, CIA’s collection operations were solely focused on the Soviet’s KGB.  The two intelligence services collected and analyzed information on one another, and deceived and sabotaged each other’s operations.  The intense conflict between these two adversaries kept China in the blind spot, allowing it to evolve into a rival that posed a grave threat to the US.  The PRC was able to take advantage of the U.S’s inattentiveness, enabling China to conduct operations against the U.S. with significant results. The drastic success of China’s espionage pressured the FBI to rethink their counterintelligence priorities at the end of the Cold War (Wise 2011, 6).  The FBI shifted its focus to the PRC and especially to the espionage war with the Chinese foreign spy agency, the Ministry of State Security (MSS), and the intelligence branch of the People’s Liberation Army (PLA) (Wise 2011, 6).

The PRC’s intelligence services’ primary mission is to target U.S. nuclear weapons labs and US economic infrastructures. The MSS and PLA’s intelligence branches target the U.S. government and its multiple apparatuses “to collect technical and economic information with the dual purpose of making the Chinese military industrial base more sophisticated and the economy more competitive” (CRS Report China 2006, 14). The MSS also targets a “broad range of U.S. military technology, from the Navy’s most sophisticated weapons systems to the Air Force’s stealth bomber” (Wise 2011, 7) in order to strengthen its military arsenal.  In addition, The PRC also has another mission which is to penetrate the U.S. counterintelligence services to uncover US operations against China and disrupt them (Wise 2011, 7).  The PRC was previously successful at penetrating the U.S. intelligence community through the FBI by using “Honey traps” as in the case of Katrina Leung.  According to the Cox Committee Report, the PRC had stolen classified information for an enhanced radiation weapon “aka” neutron bomb and numerous designs and classified information regarding U.S. thermonuclear warheads in the U.S. ballistic missile arsenal (The Cox Committee 1999, ii-xxxvii). 

The PRC had updated its intelligence collection capacity and modified it to the changes that affect the international intelligence arena.  China has developed a new collection apparatus which is very difficult to discern, evaluate, and abolish (A Tradecraft Primer, 2009). This collection method is sculpted around the concept of “a thousand grains of sand” (Wise 2011, 9).  Detecting the PRC’s intelligence modus operandi is a fairly difficult task to accomplish especially through the cyber domain, demonstrating the difficulty to determine the threat analysis to thwart this adversary. Although China’s intelligence operations are known to target US cyberspace and military capabilities, China relentlessly targets the US economic structure.  Throughout this study, it has become evident that China targets the US economic infrastructure in an attempt to profit its own economy.  China has been very effective at this collection activity based on the literature review and the analysis and findings of the paper. Needless to say, China is a serious adversary that collected a tremendous amount of information pertaining to US economic advancements and strategies and does pose a serious threat to US national security and economic stability. 

 

 References

“A Tradecraft Primer: Structured Analytic Techniques for Improving Intelligence Analysis.”

U.S. Government.  https://edge.apus.edu/access/content/group/186440/Tradecraft Primer– Structured Analytic Techniques for Improving Intel Analysis – Apr 2009.pdf

Edelman, William J. “THE “BENEFIT” OF SPYING: DEFINING THE BOUNDARIES OF

 ECONOMIC ESPIONAGE UNDER THE ECONOMIC ESPIONAGE ACT OF 1996.”

 Stanford Law Review 63, no. 2 (01, 2011): 447-74,

 http://search.proquest.com/docview/853266535?accountid=8289.

“Foreign Espionage.” The Classical Method of Targeting the United States.

http://www.fas.org/irp/threat/handbook/foreign.pdf

Friedman, Richard S. “War by Other Means: Economic Intelligence and Industrial Espionage.”

 Parameters 28, no. 3 (Autumn, 1998): 150-4,

 http://search.proquest.com/docview/198054503?accountid=8289.

Kan, Shirley A. “China: Suspected Acquisition of U.S. Nuclear Weapon Secrets.” CRS Report

For Congress. 2006. http://www.fas.org/sgp/crs/nuke/RL30143.pdf

Newman, Alex. “China’s Growing Spy Threat” The Diplomat Blogs (2011),

http://thediplomat.com/2011/09/19/chinas-growing-spy-threat/5/

Pacini, Carl J., Raymond Placid, and Christine Wright-Isak. “Fighting Economic Espionage with

 State Trade Secret Laws.” International Journal of Law and Management 50, no. 3

 (2008): 121-35, http://search.proquest.com/docview/196367950?accountid=8289.

Schweizer, Peter. “The Growing Threat of Economic Espionage.” Business Forum 23, no. 1

 (Winter, 1998): 2-4, http://search.proquest.com/docview/210209437?accountid=8289.

United States House of Representatives 105th Congress, the Cox Committee. U.S. National

Security and Military/Commercial Concerns with the People’s Republic of China.

Washington, DC: U.S. GOVERNMENT PRINTING OFFICE, 1999.

Weinberger, Sharon. “US Charges Scientist with Economic Espionage.” Nature 466, no. 7306

 (Jul 29, 2010): 542-3, http://search.proquest.com/docview/741458819?accountid=8289.

Wise, David. Tiger Trap: America’s Secret Spy War with China. New York: Houghton Mifflin

            Harcourt, 2011.

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