Part I: Chinese dragon awakens
Second of two parts.
China is stepping up its overt and covert efforts to gather intelligence and technology in the United States, and the activities have boosted Beijing's plans to rapidly produce advanced-weapons systems.
"I think you see it where something that would normally take 10 years to develop takes them two or three," said David Szady, chief of FBI counterintelligence operations.
He said the Chinese are prolific collectors of secrets and military-related information.
"What we're finding is that [the spying is] much more focused in certain areas than we ever thought, such as command and control and things of that sort," Mr. Szady said.
"In the military area, the rapid development of their 'blue-water' navy -- like the Aegis weapons systems -- in no small part is probably due to some of the research and development they were able to get from the United States," he said.
The danger of Chinese technology acquisition is that if the United States were called on to fight a war with China over the Republic of China (Taiwan), U.S. forces could find themselves battling a U.S.-equipped enemy.
"I would hate for my grandson to be killed with U.S. technology" in a war over Taiwan, senior FBI counterintelligence official Tim Bereznay told a conference earlier this year.
The Chinese intelligence services use a variety of methods to spy, including traditional intelligence operations targeting U.S. government agencies and defense contractors.
Additionally, the Chinese use hundreds of thousands of Chinese visitors, students and other nonprofessional spies to gather valuable data, most of it considered "open source," or unclassified information.
"What keeps us up late at night is the asymmetrical, unofficial presence," Mr. Szady said. "The official presence, too. I don't want to minimize that at all in what they are doing."
China's spies use as many as 3,200 front companies -- many run by groups linked to the Chinese military -- that are set up to covertly obtain information, equipment and technology, U.S. officials say.
Recent examples include front businesses in Milwaukee; Trenton, N.J.; and Palo Alto, Calif., Mr. Szady said.
In other cases, China has dispatched students, short-term visitors, businesspeople and scientific delegations with the objective of stealing technology and other secrets.
The Chinese "are very good at being where the information is," Mr. Szady said.
"If you build a submarine, no one is going to steal a submarine. But what they are looking for are the systems or materials or the designs or the batteries or the air conditioning or the things that make that thing tick," he said. "That's what they are very good at collecting, going after both the private sector, the industrial complexes, as well as the colleges and universities in collecting scientific developments that they need."
One recent case involved two Chinese students at the University of Pennsylvania who were found to be gathering nuclear submarine secrets and passing them to their father in China, a senior military officer involved in that country's submarine program.
Bit by bit
To counter such incidents, the FBI has been beefing up its counterintelligence operations in the past three years and has special sections in all 56 field offices across the country for counterspying.
But the problem of Chinese spying is daunting.
"It's pervasive," Mr. Szady said. "It's a massive presence, 150,000 students, 300,000 delegations in the New York area. That's not counting the rest of the United States, probably 700,000 visitors a year. They're very good at exchanges and business deals, and they're persistent."
Chinese intelligence and business spies will go after a certain technology, and they eventually get what they want, even after being thwarted, he said.
Paul D. Moore, a former FBI intelligence specialist on China, said the Chinese use a variety of methods to get small pieces of information through numerous collectors, mostly from open, public sources.
The three main Chinese government units that run intelligence operations are the Ministry of State Security, the military intelligence department of the People's Liberation Army and a small group known as the Liaison Office of the General Political Department of the Chinese army, said Mr. Moore, now with the private Centre for Counterintelligence Studies.
China gleans most of its important information not from spies but from unwitting American visitors to China -- from both the U.S. government and the private sector -- who are "serially indiscreet" in disclosing information sought by Beijing, Mr. Moore said in a recent speech.
In the past several years, U.S. nuclear laboratory scientists were fooled into providing Chinese scientists with important weapons information during discussions in China through a process of information elicitation -- asking questions and seeking help with physics "problems" that the Chinese are trying to solve, he said.
"The model that China has for its intelligence, in general, is to collect a small amount of information from a large amount of people," Mr. Moore said during a conference of security specialists held by the National Security Institute, a Massachusetts-based consulting firm.
In the learning phase
Mr. Szady acknowledges that the FBI is still "figuring out" the methods used by the Chinese to acquire intelligence and technology from the United States.
Since 1985, there have been only six major intelligence defectors from China's spy services, and information about Chinese activities and methods is limited, U.S. officials said.
Recent Chinese spy cases were mired in controversy.
The case against Katrina Leung, a Los Angeles-based FBI informant who the FBI thinks was a spy for Beijing, ended in the dismissal of charges of taking classified documents from her FBI handler. The Justice Department is appealing the case.
The case against Los Alamos National Laboratory scientist Wen Ho Lee, who was suspected of supplying classified nuclear-weapons data to China, ended with Mr. Lee pleading guilty to only one count among the 59 filed.
The FBI has been unable to find out who in the U.S. government supplied China with secrets on every deployed nuclear weapon in the U.S. arsenal, including the W-88, the small warhead used on U.S. submarine-launched nuclear missiles.
"I think the problem is huge, and it's something that I think we're just getting our arms around," Mr. Szady said of Chinese spying. "It's been there, and what we're doing is more or less discovering it or figuring it out at this point."
Mr. Bereznay said recently that Chinese intelligence activities are a major worry. FBI counterintelligence against the Chinese "is our main priority," he said.
In some cases, so-called political correctness can interfere with FBI counterspying. For example, Chinese-American scientists at U.S. weapons laboratories have accused the FBI of racial profiling.
But Mr. Szady said that is not the case.
China uses ethnic Chinese-Americans as a base from which to recruit agents, he said.
"They don't consider anyone to be American-Chinese," Mr. Szady said. "They're all considered overseas Chinese."
So the answer he gives to those who accuse the FBI of racial profiling is: "We're not profiling you. The Chinese are, and they're very good at doing that."
Pushing an agenda
China's government also uses influence operations designed to advance pro-Chinese policies in the United States and to prevent the U.S. government from taking tough action or adopting policies against Beijing's interests, FBI officials said.
Rudy Guerin, a senior FBI counterintelligence official in charge of China affairs, said the Chinese aggressively exploit their connections to U.S. corporations doing business in China.
"They go straight to the companies themselves," he said.
Many U.S. firms doing business in China, including such giants as Coca-Cola, Boeing and General Motors, use their lobbyists on behalf of Beijing.
"We see the Chinese going to these companies to ask them to lobby on their behalf on certain issues," Mr. Guerin said, "whether it's most-favored-nation trade status, [World Health Organization], Falun Gong or other matters."
The Chinese government also appeals directly to members of Congress and congressional staff.
U.S. officials revealed that China's embassy in Washington has expanded a special section in charge of running influence operations, primarily targeting Congress.
The operation, which includes 26 political officers, is led by Su Ge, a Chinese government official.
The office frequently sends out e-mail to selected members or staff on Capitol Hill, agitating for or against several issues, often related to Taiwan affairs.
Nu Qingbao, one of Mr. Su's deputies, has sent several e-mails to select members and staff warning Congress not to support Taiwan.
The e-mails have angered Republicans who view the influence operations as communist meddling.
"The Chinese, like every other intelligence agency or any other government, are very much engaged in trying to influence, both covertly and overtly," Mr. Szady said.
The real danger to the United States is the loss of the high-technology edge, which can impair U.S. competitiveness but more importantly can boost China's military.
Immigration and Customs Enforcement (ICE), a part of the Department of Homeland Security, is concerned because the number of high-profile cases of illegal Chinese technology acquisition is growing.
"We see a lot of activity involving China, and I think it would be fair to say the trend is toward an increase," said Robert A. Schoch, deputy assistant director in ICE's national security investigations division.
Mr. Schoch said that one recent case of a South Korean businessman who sought to sell advanced night-vision equipment to China highlights the problem.
"We have an awesome responsibility to protect this sensitive technology," he said. "That gives the military such an advantage."
ICE agents are trying hard to stop illegal exports to China and several other states, including Iran and Syria, not just by halting individual exports but by shutting down networks of illegal exporters, Mr. Schoch said.
Another concern is that China is a known arms proliferator, so weapons and related technology that are smuggled there can be sent to other states of concern.
"Yes, some of this stuff may go to China, but then it could be diverted to other countries," Mr. Schoch said. "And that is the secondary proliferation. Who knows where it may end up."
As with China's military buildup, China's drive for advanced technology with military applications has been underestimated by the U.S. intelligence community.
A report prepared for the congressional U.S.-China Economic and Security Review Commission found predictions that China was unable to advance technologically were false.
In fact, the report by former Pentagon official Michael Pillsbury highlights 16 key advances in Chinese technology -- all with military implications -- in the past six months alone.
The failure to gauge China's development is part of the bias within the U.S. government that calls for playing down the threat from the growing power of China, both militarily and technologically, Mr. Pillsbury stated.
"Predictions a decade ago of slow Chinese [science and technology] progress have now proved to be false," the report stated.
Unlike the United States, China does not distinguish between civilian and military development. The same factories in China that make refrigerators also are used to make long-range ballistic missiles.
At a time when U.S. counterintelligence agencies are facing an array of foreign spies, the Chinese are considered the most effective at stealing secrets and know-how.
"I think the Chinese have figured it out, as far as being able to collect and advance their political, economic and military interests by theft or whatever you want to call it," Mr. Szady said. "They are way ahead of what the Russians have ever done."
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