FBI Assistant Director Dan Szady, who heads the agency’s
counter-intelligence division, made a rare public appearance to speak
at the National Intelligence Conference and Exposition held last month
in Alexandria, Virginia,
it wasn’t to discuss Iran,
or any country in the Middle East,
as many may have expected. Instead, the 33-year veteran of the Bureau
discussed the “huge” threat posed to our national security by the
Chinese intelligence apparatus.
His most harrowing
charge, among many other disturbing accusations, concerned the
existence of an estimated 3,000 Chinese front companies that presently
operate within the US.
The main purpose of these pseudo-businesses, he said, is to facilitate
often-illegal technology transfers to the Chinese government. In a USA
interview conducted nine months earlier, Szady had detailed the same
threat. He suggested that this intensifying Chinese effort was
targeting a wide expanse of American assets, including defense research
labs and universities.
While some neophytes may have been surprised by the
emphasis on China,
those with experience in such matters welcomed it as a long awaited
realization. The transfer of highly sensitive technology to foreign
countries has recently increased exponentially, with the number of
cases growing 20 to 30 percent every year, the main culprit being China.
The People’s Republic has recently initiated a full-scale assault on
sectors critical to America’s
national security and economic viability. When combined with its
rapidly advancing military and economic power, China’s
thriving espionage network within the United
States allows it to challenge American
power on the world stage.
Flooding the Zone
cannot be gotten from ghosts and spirits, cannot be had by analogy,
cannot be found out by calculation. It must be obtained from people,
people who know the conditions of the enemy”.
-Sun Tzu, The Art of War
Chinese seem to have taken Sun Tzu’s sage advice to heart. As detailed
in the Cox Report of 1997, the Chinese have created an intricate
network of spies that continues to provide them with a wide range of
classified American technology. As the Cox committee stated
forebodingly eight years ago, “The PRC’s appetite for information and
technology appears to be insatiable, and the energy devoted to the task
enormous.” The Chinese do little to hide their desire for advanced
technology, producing intelligence manuals that detail, in exact terms,
methods through which agents can procure advanced technical information
from American sources. Recently, this strategy appears to have been
honed to a sharp edge.
is this massive theft felt more acutely than in the heart of America’s
technical development industry, Silicon Valley.
Rather than dispatching a few agents to the area, the Chinese have
“flooded the zone,” enlisting dozens, possibly hundreds, of their own
citizens to aid the overall effort. One US
intelligence source detailed the strategy, stating to Time Magazine
last month that, “The Chinese are very good at putting a lot of people
on just a little piece and getting a massive amount of stuff home.”
Numerous cases over the past decade have demonstrated the depth and
reach of the network. Several of these instances of Chinese espionage
have come to the forefront within the past year. The cases that have
been uncovered are alarming. But they become terrifying when one
considers that they represent only the tip of the iceberg.
the most troubling instances is the case of Martin Shih. A 61-year-old Silicon
Valley businessman and resident of the United
States, Shih owned an impressive
coterie of corporations, including Night Vision Technology in San
Jose and Queening Hi-Tech in Taiwan.
At the same time as Shih ran his profitable international businesses,
he was also a critical asset of Chinese intelligence. At Beijing’s
behest, Shih shipped cutting edge night vision technology to Chinese
technical research centers, such as the North China Research Institute,
which are closely linked to the PRC military. Taking his betrayal a
step further, Shih traveled to China
in June 2002 where he met with Chinese scientists, to whom he imparted
the latest American advances in the field. They were then able, with
Shih’s invaluable aid, to manufacture optical technology on par with
modern American designs. Shih was arrested in May 2004 and faces 45
years in prison. But the damage had been done. Almost single-handedly,
Shih destroyed America’s
advantage in night optic technology—a critical component of our
continuing dominance on the battlefield.
night vision technology was not the only modern weapon system that China
hoped to compromise. Also in Chinese crosshairs was the newest version
of the Hellfire anti-tank missile, which utilizes an advanced radar
guidance system. In early 1999, the University
of Beijing placed an order
with a California
firm for 25 low-noise amplifier chips that are an important component
of the overall guidance system. When unable to make the delivery
because of export laws, the California
firm was told by the university that they had another supplier. This
supplier was Ting-Ih Hsu, a former employee of Lockheed Martin who ran
several Orlando based
corporations. One of these corporations, Azure Systems, ordered the
same chips six months later from a Lockheed subsidiary. Fortunately,
this came to the attention of U.S. Customs, which put Mr. Hsu under
surveillance. Custom agents witnessed a business associate of Hsu
receive the chips, then attempt to send them to Hong Kong, where they
were to be forwarded to Beijing Ghz Electronics, a state owned
corporation. In 2004, both Hsu and his associate were charged with
illegally attempting to export protected technology. The Hsu case is
yet another example of China’s
unrelenting style in procuring technologies they consider important in
their quest to challenge American supremacy.
list of additional recent Chinese espionage cases is long and
disturbing. It includes, among others, the theft of Blackhawk
helicopter engines and optical devices by a South Korean man arrested
last year. A Chinese-American couple in Wisconsin was arrested in 2004
for sending over $500,000 worth of computer parts to the Chinese
government that can be used to improve missile guidance systems.
Statements from officials such as Szady hint that cases like these are
just a small sample of the overall secret Chinese war against America.
Indeed, in the words of one unnamed senior FBI source, “the Chinese are
stealing us blind, the 10 year technological advantage we had is
Manning the Gates
defend itself from this wave of Chinese espionage, America
relies on its primary counter-intelligence agency, the FBI.
Unfortunately, just as the Chinese efforts against the United
States accelerated in the 1990s, the
bureau’s political masters saw fit to cripple their ability to counter
such a threat. Under the Clinton
administration, joining the counter-intelligence division became a good
way to ruin a promising FBI career. Funds were cut, hundreds of agents
were transferred to other divisions, and morale was at an all-time low.
This degradation of America’s
counterintelligence defense would set the stage for some high-profile
blunders on the part of the FBI.
such misstep was the controversy surrounding the Taiwanese-American
nuclear scientist Wen Ho Lee. Lee, who had been an employee at the Los
Alamos National Laboratory since 1978, was considered by the FBI to be
a major security risk. In 1999, Lee was fired and then imprisoned for
nine months on 59 felony counts. His case, however, quickly became a
total debacle. In the words of prosecutor and special investigator
Randy Bellows, "This investigation was a paradigm of how not to manage
and work an important counter-intelligence case.” With the collapse of
the investigation, questions concerning Lee’s suspicious actions, such
as his transfer of classified nuclear data to computer disks that have
never been found, will probably go forever unanswered. The FBI’s
mishandling of the Lee counter-intelligence investigation either
imprisoned and defamed an innocent man or, quite possibly, allowed an
American scientist who would have been considered a top Chinese agent
to walk away from his betrayal a free man.
further disaster was in store for the FBI’s struggling anti-China
effort. In the late 1970’s, the FBI recruited Katrina Leung, a Chinese
student at the University of
However, according to government prosecutors, Leung was actually a
highly effective Chinese double agent. When Leung was arrested in 2003,
she had in her possession extremely sensitive classified documents
dealing with the FBI’s efforts against Chinese espionage, including the
home phone numbers of FBI counter-intelligence agents. It was revealed
early on in the government’s case against Leung that she had conducted
relationships with two high ranking FBI agents, giving her access to
comprehensive accounts of espionage investigations carried out at
government labs, including the inquiry into Wen Ho Lee. The stark
conclusion of some FBI counter-intelligence experts was that Leung had
fed her Chinese handlers detailed information concerning the
investigations, allowing them to tailor their espionage efforts
accordingly. The FBI also realized that perhaps Leung’s highly regarded
information, which had landed on the desk of four U.S.
Presidents, might have all been a wildly successful Chinese
disinformation plot. Leung’s case was overturned by a federal judge
last month on the grounds of prosecutorial misconduct, a dismissal
which is currently being challenged by the government.
budget cuts, failed investigations, and reckless actions taken by two
high ranking agents, the FBI has proven to be a brittle shield against
the veritable deluge of Chinese intelligence operatives infiltrating
the United States.
Fortunately, in the past four years, the FBI leadership seems to have
awoken to the threat, with Director Robert Mueller making
counter-intelligence his second highest priority, after
counter-terrorism. This reemphasis is a long time coming, and will
hopefully be continued by administrations that realize the importance
of a concerted government effort against Chinese espionage. Still, even
with these positive developments, the bureau faces a monumental
challenge, considering the scope of the PRC’s espionage effort.
Rooting Out the Network
Chinese have constructed a spy network whose scope would have impressed
even the KGB. The existence of such an apparatus should trouble
American policy makers who only recently listened as CIA director
Porter Goss testified in unusually blunt terms about China’s
efforts to counter American military power throughout Asia.
In addition, the Pentagon’s upcoming Quadrennial Defense Review is
expected to express a harsher and more realistic view of China’s
military ambitions than ever produced before. The Chinese, for their
part, have responded with their standard bellicose rhetoric: China
has recently approved an “anti-succession law,” which serves as a
severe warning to U.S.
is obvious that effective intelligence is a vital part of the Chinese
effort to achieve their goal of regional dominance. One senior FBI
official put it best: “China
is trying to develop a military that can compete with the U.S.,
and they are willing to steal to get [it]." As they mine the American
defense industry for technology, the Chinese also appear to be close to
procuring European weapon equipment, allowing them to quickly make up
for their deficiency in sophisticated command and control technology.
As prominent military experts recently suggested, the European
technology represents “The missing pieces of the People's Liberation
their fervent pursuit of American secrets and their newfound ability to
purchase advanced western weaponry from our French and German “allies,”
the Chinese seem well on their way to achieving their stated goal of
effectively countering American military might in the Pacific. While
the recent steps taken by the Bush administration against Chinese
espionage are promising, it will require a determined government-wide
effort—backed by a significant amount of political will—before the
United States can begin to root out the powerful Chinese intelligence
network in its midst.