Chinese technology theft on the rise, U.S. says

U.S. government investigators say the number of cases involving China and its middlemen who have illegally obtained sensitive or classified U.S. weapons technology is growing.

In the past few years, Chinese agents illegally purchased or were caught trying to steal night-vision technology, restricted electronic components, embargoed components for precision-guided missiles, radar and electronic warfare, and communications systems, according to Immigration and Customs Enforcement (ICE) officials.

China also sought to purchase encryption devices that are embargoed for export and computer software used in missile development, ICE officials said.

In one recent case, China tried to purchase parts for F-4 and F-5 jets and Hawk missiles from U.S. suppliers that were intended for reshipment to Iran.

Officials said one of the most damaging illegal technology exports to China took place in the late 1990s.

In that case, China secretly obtained technology related to the Aegis battle management system, used in the most modern U.S. warships.

A Chinese front company won a contract from the system manufacturer and then stole details about Aegis, according to FBI counterintelligence officials.

By 2004, China had deployed its first two Luyang II guided-missile destroyers, both equipped with the Chinese version of the Aegis system.

The Aegis system is used for tracking and shooting at enemy aircraft and also is the heart of the Navy’s new sea-based missile defense.

Earlier, in 1997, two American satellite companies, Space Systems/Loral and Hughes Space and Communications Co., violated U.S. export laws when they helped China fix an electrical glitch in the Long March space launch booster, which had direct applications for Chinese long-range missiles. Those missiles are aimed at U.S. cities.

In 2002, Loral agreed to pay a $20 million fine for passing the missile data, and in 2003, Boeing Satellite Systems Inc., which purchased Hughes, agreed to pay $32 million in fines.

Pentagon and ICE officials say it is difficult to determine how much technology China has obtained because, in recent years, Beijing has begun using third-party nationals to obtain embargoed goods.

“We know of some cases that lead us to say affirmatively that we see an increase,” one ICE official said. “But in the larger picture, there [are] many other cases that are associated with China.”

ICE agents have approached about 6,000 U.S. companies that are known targets of illicit Chinese technology and equipment theft. The program is designed to win the cooperation of company managers and their employees in thwarting foreign-technology spies.

Some of the U.S. companies are more concerned with making money than protecting America’s national security, the officials said.

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