Red Chinese Stealing U.S. Trade Secrets
By Keith Wilkerson
Communist China is quietly robbing America blind by stealing our most valuable technologies, says the Wall Street Journal's John Fialka.
It's hard to get America excited about the crisis, however, he says. The press is not interested. The President of the United States apparently has the Chinese Reds to thank for financing his re-election - so, he's not about to bite the hand that fed his campaign with precious cash.
Also, spies are normally associated with wartime, says Fialka, a staff reporter for the Journal and author of a book on Chinese industrial espionage, War by Any Other Means.
"In the vast popular literature about espionage, there is hardly a mention of peacetime economic spies," Fialka told the Joint Economic Committee of the United States Congress in testimony on June 17, 1997. "One reason may be because spy stories tend to blossom when wars end. War is relatively clear cut: there is a winner and an eventual loser; a beginning and an end.
"Unless we can understand the efforts currently being made against us and raise our awareness to the point where we win at least as many episodes as we lose, we will be in serious trouble," he told Congress.
He told them how the National Economic Council, which includes experts from the CIA, FBI and the Departments of Treasury, State, Defense, Commerce, Justice and elements of the White House prepared a secret estimate of the current situation for Congress's intelligence committees in 1994."
Economic espionage newly important
Their paper was called The Report on U.S. Critical Technology Companies, Report to Congress on Foreign Acquisition of and Espionage Activities against U.S. Critical Technology Companies. It says that "economic espionage is becoming increasingly central to the operations of many of the world's intelligence services and is absorbing larger portions of their staffing and budget."
"This could involve a lot of people and a lot of power because nations have brought their Cold War spy apparatus with them into economic espionage including giant computer data bases, word-activated eavesdropping scanners, spy satellites and an almost unbelievable array of bugs and wiretaps," Fialka told Congress.
"Economic espionage carried out in the U.S. breaks down into three major styles. The study says agents from China, Taiwan and South Korea are aggressively targeting 'present and former nationals working for U.S. companies and research institutions.' Japan, which does not have a formal intelligence agency but sometimes collectively resembles one, uses Japanese industry and private organizations to gather 'economic intelligence, occasionally including classified proprietary documents and data.' The result is an exceptionally efficient spy network that 'is not fully understood' by the U.S. Meanwhile, France has relied upon 'classic Cold War recruitment and technical operations,' which generally include bribery, discreet thefts, combing through other peoples' garbage and aggressive wiretapping. There are recent signs, however, that France has decided to stop."
Russian, Germany, Israel all spying
"Another Cold War ally, Germany, is described as planning to increase the number of its Federal Intelligence Service (BND) agents in Washington to improve its collection capabilities. And Russia and Israel also conduct economic intelligence gathering operations in the U.S. with varying degrees of government sponsorship," Fialka told Congress.
"The most aggressive operations against U.S. companies occur overseas, especially in home countries where spy agencies are freer to act and where, the National Economic Council report notes, 'government controlled national phone networks' and other electronic means can be used to slither inside company communications and data banks. The best places to recruit foreign nationals who work for U.S. companies overseas is said to be in third countries where 'a host country's counterintelligence services do not pose a serious barrier to effective foreign intelligence operations directed against U.S. targets.
'"Furthermore, U.S. citizens tend to be more lax about security matters when living in countries perceived as friendly to the United States.'
'"Lax' is probably a polite way to describe the laid back attitudes that many Americans have toward our technology."
What is going on? Is war planned?
"One theory is that China is gearing up to export a large number of airliners, sales that would compete directly with Boeing and McDonnell.
"Another is that China is preparing what U.S. defense planners call 'surge capability,' the capacity to produce a large number of high technology military planes and precision-guided missiles in a hurry. What is worrisome to experts in the Pentagon is that, when it comes to China, the two goals are not incompatible.
"Pentagon experts, trying to block the sale, argued that as far as high technology military equipment is concerned, China is a sieve that steadily leaks it into the Third World. It has sold missile guidance systems and computerized milling machines to Iran and missiles and a jet trainer powered by a U.S. designed engine to Pakistan.
"F. Michael Maloof, the Pentagon's director of Technology Security Operations asserted that once Plant 85 machines arrived in China, the U.S. had no way to keep them from being put to military use."
Chinese Communists deny all
"China's position, according to Li Daoyu, its ambassador in Washington, is that it has 'all along adopted a serious and earnest attitude toward the issue of non-proliferation and opposed the proliferation of all weapons of mass destruction pending their complete elimination globally.'
"A mechanism that China uses to find and siphon away U.S. technology is its enormous stock of students studying here. Again, it is borrowing from Japan's model. While Japanese students were flooding the campuses in 1981, the Peoples Republic of China had no doctoral candidates in the U.S. Ten years later it had 1,596.
"The Chinese students tend to be super-bright, an elite skimmed from a nation of over 1.2 billion people. Some come from China's military elite.
"Gen. James A. Williams, former head of the Defense Intelligence Agency, recalls a chat with a number of lieutenant colonels in the Peoples Liberation Army during a visit to Beijing in 1983. They spoke with American-accented English and freely talked about their days on U.S. college campuses."
Were they here fraudulently?
"When he returned to the U.S., Gen. Williams, now retired, had their names checked against U.S. immigration records. There were no records. 'All I can figure is that they must have come in under different names,' says Williams.
"There are so many of them that they have come to dominate the lower levels of faculties in many universities and they regularly win highly-prized research and teaching assistantships, which means that they teach and have the keys to the laboratory and that their education is subsidized by the schools and U.S. taxpayers.
"It has reached the point where American undergraduates frequently complain that they can't understand their teacher's English.
"The idea that the U.S. can manage its growing dependency on these students is still popular on U.S. campuses. One reason is that it fits the needs of many senior U.S. scientists, who can select brighter researchers from overseas to do their research papers and their teaching, often at a fraction of the cost of a U.S. student.
Do the Chinese students stay here?
"For years the myth has been that most foreign science graduates remained in the U.S. The U.S. Immigration and Naturalization Service kept no records on it. 'It's not something we're interested in because it doesn't help with our work,' explained a spokesman for the agency.
But recently Michael Finn, an economist at the Department of Energy's laboratory at Oak Ridge, Tenn., found a way to test the myth. Checking students' Social Security numbers ten years after graduation, he found that between 50 and 60 percent of the graduates no longer worked in the U.S.
'"We definitely hear more anecdotal evidence that foreign countries are putting more efforts into recruiting students to come back,' says Finn. One exception is the Peoples Republic of China which, according to Finn, appears to have made a decision to keep a pool of talented scientists working in U.S. companies and university laboratories, a pool that China can draw on later.
"One reason may be that the U.S. pays their salaries as they continue to learn. Plus, according to Finn, the 'vast majority' of Chinese students in U.S. science and engineering schools are supported by assistantships or other means provided by the universities, usually through U.S. government funding."
Meanwhile, U.S. has fewer scientists
"Finn's agency worries that the dwindling number of U.S. scientists and engineers may mean that the nation will no longer have enough native-born scientists to work on classified weapons projects. When you think about it, that is a problem that should give us all pause."
So, what should America do?
Fialka says that our nation is at a decision point: "For the first time in almost a decade there appears to be growing awareness among the American public that China may not be the most exemplary trading partner.
"China continues to trample the human rights of its own people. It continues to proliferate weapons of mass destruction in the Middle East.
"It sends spies to steal U.S. weapons technology - which amounts to an act of war. At the same time, it makes secret moves to deny U.S. companies access to its markets, such as telecommunications. And now, in addition, we see growing evidence that it has tried to manipulate the U.S. political process to its own advantage."
It is time to say "no" to China
"The question is whether we continue to appear numb to this threat, or whether we do something that tells China it must modify its behavior.
'"Trade experts' would have you believe this is an enormously sensitive, touch-me-not question. In its simplest form, I'm not so sure that it is.
"Remember the third grade? What happened to you if you continued to appear weak and stupid in front of the class bully? Was that complex? No, it was predictable. You lost your lunch money.
"In past history, we protected our companies by erecting a wall of tariffs. I think that age is past, but selected trade barriers, such as removing China's most favored nation status, would send the message that our laws and our commercial and political processes must be respected, not abused. In the long run, however, I think the best defense will be an offense."
It is time to wake up
"We must make ourselves better, more world-savvy competitors. Companies should understand when they lose, we all do. Like some companies do now - notably Kodak and Motorola - they must be willing to take the fight overseas, studying foreign cultures to find legal means to learn what their competition is doing.
"Here, companies must also become more willing to bring cases to court," Fialka told Congress.
"Companies and the government must also be made aware that reliance on foreign scientists to develop and guard our secrets is - as the Romans once discovered - a short-run fix.
"In the long run we will either fail as a leader of technology, or we will have to restore our broken public school system so our students can continue to compete with the best in the world.
"As a body, China's students here are exemplary people that we can learn much from, but among them are some spies, people whose assigned mission is our downfall.
"We have a great deal to lose."
Christian Crusade
December, 1997
Back to Chuck's "Must Read List"
Back to Home Page
