Stealing Trade Secrets – But for Whom?

Six Chinese professors have been arrested by the U.S. on charges of espionage for allegedly stealing information about mobile phone technology from American companies where they had worked. From Kevin Johnson at USA Today:

The professors, who attended the University of Southern California, allegedly obtained the trade secret information — designed in part to limit interference in mobile phone reception and other devices — as part of a “long-running effort” to benefit universities and companies controlled by the Chinese government.

Tianjin University professor Hao Zhang, 36, was arrested Saturday in Los Angeles shortly after stepping off a plane from China. Fellow professor Wei Pang, 35, and four other alleged co-conspirators are believed to be in China.

According to the 32-count indictment, Pang and Zhang met during their doctoral studies in electrical engineering at USC. While at the university, the two conducted research related to the acoustic technology that was funded by the U.S. Defense Advanced Research Projects Agency, known as DARPA.

Shortly after earning their doctorates in 2005, Pang was employed as an engineer in Colorado for Avago Technologies, while Zhang went to work for Skyworks Solutions Inc., in Massachusetts, the two companies that developed the proprietary trade information. [Source]

This case exemplifies what many in the intelligence community see as the Chinese government’s new strategy in acquiring trade secrets from abroad, Joshua Keating reports for Slate:

China’s works a bit differently that other countries’ efforts. It relies less on placing undercover officers in sensitive positions than on recruiting and periodically debriefing Chinese businesspeople, academics, and travelers to obtain small amounts of information that can be assembled over years into valuable intelligence. Many of these assets aren’t full-time spies, and some may not think of themselves as spies at all. This type of distributed can be extremely difficult to counteract. It’s believed that the hack of Google’s servers several years ago was aimed at uncovering information about Chinese intelligence assets under U.S. surveillance.

U.S. firms long viewed a certain amount of as the price of doing business with China, but have grown more alarmed as the practice has seemed to expand dramatically in recent years. There’s been more pressure on the U.S. government to put a stop to it. [Source]

Because of this pressure, some hailed the recent arrests as a rare success in U.S. efforts to crack down on Chinese espionage:

“Bravo, FBI,” said a former senior intelligence official. He described it as an “efficient case”, saying it shows US officials are attempting to stop Chinese efforts at espionage.

Still, he said, it’s only one case, “a small piece of the total picture of economic espionage and the outward flow of intellectual property”.

Others have a grudging admiration for Chinese spies. “They’re very thorough,” said Gordon Adams, a former senior White House official for national security budgets.

Yet, he said, it’s not that big a deal. “The reality is that nations are always spying on each other,” he said. ‘It’s consistent.” [Source]

The six men worked for ROFS Microsystem, a joint venture at Tianjin University, which, like most universities in China, is administered by the government. However, it is not clear if the men’s alleged theft was instigated by anyone in the government. From Chun Han Wong at the Wall Street Journal:

The indictment didn’t say university administrators or other government officials were involved. Still, “this case sends a strong message to the Chinese government that it should take serious note about such activity,” said Huang Jing, an expert on U.S.-China relations at the Lee Kuan Yew School of Public Policy in Singapore. “If such theft is found to be state-sponsored, it would do serious damage to the bilateral relationship.”

A spokesman for China’s Foreign Ministry said Wednesday that Beijing opposed theft of intellectual property, reiterating the government’s longstanding position, but declined to say whether U.S.-China relations would be damaged by the indictment.

“China is severely concerned” over this case, spokesman Hong Lei said at a daily briefing. “The Chinese government will make sure the rights and interests of Chinese citizens are guaranteed during their interactions with American personnel.” The six defendants couldn’t be reached to comment. [Source]

Edward Wong at the New York Times looks at the scientists’ work that the indictments are linked to and the connections between their project and the government:

At least three of the six men teach at the university. But Shen Dingli, an associate dean at the Institute of International Studies at Fudan University, said that their affiliation with the school did not mean the men had the direct support of the central government or were working for the government’s benefit.

“I’m a professor at a university, but any stealing that I do might have nothing to do with the Chinese government,” Mr. Shen said.

Some analysts have also questioned whether the Chinese government had anything to do with other cases of alleged industrial theft by Chinese hackers. Last year, the Justice Department indicted five men in the Chinese Army, accusing them of hacking into the computers of American companies to steal commercial secrets.

But it is rarely obvious for whom such hackers are working — for the military, another government agency, a state-owned enterprise, a private company or themselves, according to cybersecurity experts in China, where a freelance culture of hacking and economic espionage is common. [Source]

Last month, the New York Times profiled Sherry Chen, an employee of the National Weather Service who was arrested on charges of spying for China until the charges were dropped, with no explanation, five months later.

May 21, 2015, 2:12 PM
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