China’s non-government economic espionage against US companies

From The Diplomat, 11 December 2011:

With each week seeming to bring with it a new example of a cyber attack launched from China, the issue has in many minds become inextricably linked with the Chinese government. And with China’s state-owned firms dominating the country’s economic landscape – and with Beijing’s apparent willingness to protect them – this perception is only likely to grow.

Yet the U.S. government’s recently released Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009-2011 may well overstate Beijing’s role, while understating the systemic factors, both inside China and internationally, that are now driving economic espionage.

This isn’t to suggest that Chinese intelligence services aren’t involved in the clandestine collection of foreign science and technology – there’s abundant evidence that they steal foreign secret, proprietary, and even open source technologies. The real questions are what kind of economic and industrial secrets are Chinese intelligence really stealing, and how much of the danger to Western interests is really state-directed?

The big espionage cases over the past decade in which Chinese intelligence is alleged to have stolen foreign technology have primarily involved military intelligence interests. For example, Chi Mak – a spy for Chinese military intelligence – reportedly provided the Chinese military with information on damage control systems for U.S. naval vessels and the new Quiet Electronic Drive for the Virginia-class submarine, as well as a specialized circuit break for submarines and the power distribution system for Aegis-related weapons and radar.

Between 2006 and 2008, a Chinese military intelligence agent attempted to use Defense Security Cooperation Agency official Gregg Bergersen to give the Chinese military access to the hardware associated with the Po Sheng – a sophisticated U.S. command, control, and communication systems suite to link Taiwanese forces together and enhance their interoperability with U.S. forces.

Even efforts to penetrate Taiwan’s Chungshan Institute of Science and Technology – the military’s premier weapons development institute – seem to have the Chinese military’s information technological needs at the forefront. For example, missile developer Huang Chen-an, who was arrested for espionage in 2003, provided China with information on Po Sheng and the electronic parameters of Taiwanese missiles.

Example can be piled upon example; however, the basic point remains: Chinese intelligence appears to be a secondary player in economic and industrial espionage. In a list of Chinese economic espionage cases released by the FBI, only four individuals out of 29 successfully prosecuted for economic espionage-related crimes between 2008 and 2010 were involved with Chinese intelligence agencies. Most of these economic spies sold highly technical components or export-controlled equipment that would be of use to engineers and industrial researchers rather than military planners and electronic warfare specialists. . .  [Read the rest]

Threats are Out There