Tensions Mount over China’s Industrial Espionage in US

Tensions between the U.S. and China are escalating at a dizzying pace, with July 24 marking the lowest point of bilateral relations in decades. On that day, the Chinese consulate in Houston, Texas, was closed and taken over by U.S. officials.FILE – Secretary of State Mike Pompeo speaks during a news conference at the State Department in Washington, July 15, 2020.“We announced the closure of the Chinese consulate in Houston because it was a hub of spying and intellectual property theft,” said Secretary of State FBI Director Christopher Wray testifies during an oversight hearing of the House Judiciary Committee, on Capitol Hill, Feb. 5, 2020 in Washington.The FBI created a special economic espionage unit in 2010, and currently has over 2,000 active cases related to Chinese counterintelligence operations in the U.S. FBI director Christopher Wray recently said the bureau is opening a new China-related counterintelligence case about every 10 minutes.Economic espionage is certainly nothing new. When the U.S. passed the Economic Espionage Act of 1996, the focus was on Israel and France, and China wasn’t really in the picture.Hvistendahl said the shift of focus started in the mid-2000s, when the business community decided to join the intelligence community to address the issue. These U.S. companies had previously hoped that if they kept their mouths shut, they could eventually break into the Chinese market and begin to see significant market growth.“By the mid-2000s, it became clear to many companies that it was just not going to happen, they were going to get shut out of the market eventually,” Hvistendahl told VOA. “So many CEOs started to be more vocal about some of the problems that they have received with China.”The impact on the U.S. economy through loss of intellectual property (IP) is one of the main concerns among U.S. policy makers. According to a 2017 report by the Intellectual Property Commission, the cost of IP theft for the United States is somewhere between $225 billion and $600 billion. And China is responsible for 71% to 87% of that figure. (The percentage varies annually.) Apart from economic loss, there is also loss of domestic production capabilities, loss of industries, and loss of jobs along the way.Eric Zhang, former chief representative of the Oklahoma Foreign Direct Investment (FDI) Office in China, told VOA that America is also realizing the potential security threat posed by these China-related industrial espionage activities.“Espionage activities in other countries are mainly for economic gain, but China is different. Since Xi Jinping came to power, China has started to deem the United States as a competitor, especially in terms of military,” said Zhang. “In this sense, the purpose of Chinese industrial espionage is different from that of other countries. This is why the U.S. is very concerned now.”Full-scale effortUnder the Trump administration, federal authorities have launched full-scale efforts to ferret out economic espionage.In some high-profile cases, the FBI has recently arrested four Chinese research scientists in the U.S. who concealed their relations with Chinese military during their visa applications. Apart from the FBI, the Justice Department has also launched the China Initiative in 2018, with the goal of identifying and prosecuting those engaged in economic espionage, trade secret theft, hacking and other related crimes. Yet Zhang said that although there has been ample pushback, China has not slowed down its pace of stealing innovative technologies and trade secrets from developed countries.“Innovative technology is key to China’s economic growth, which is [a primary means] to legitimize CCP (Chinese Communist Party) rule. So if they can’t get anything from the U.S., I think Beijing will strengthen its economic espionage efforts in other developed countries,” Zhang said.Hvistendahl warns that when addressing the issue of industrial espionage and IP theft, the U.S. needs to be careful and avoid discrimination.“You have to keep in mind that much of the research force in the U.S. is ethnic Chinese. So you have to deal with the issue in a way that it’s fair, that doesn’t give way to allegations of racial profiling, ethnic bias,” she said.She added that it’s to America’s own benefit to keep the U.S. as an innovative place to which researchers from all over the world would want to come and study. 

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