Top intelligence and law enforcement officials in Washington are issuing a stark warning to American firms: The Chinese government wants to interchange you.
That message is available in a latest CNBC documentary, “China’s Corporate Spy War,” which details the increasing sophistication of Beijing’s efforts to steal sensitive U.S. technology and company information.
For years, corporate America largely saw theft by the Chinese government and state-run firms as an try and meet up with advanced U.S. technology. But officials now say the hassle is more nefarious than generally understood, viewing — in lots of cases — an adversary that desires to eliminate the American firms they’re targeting, not only narrow the gap between Chinese firms and their U.S. competition.
Asked whether the Chinese government desires to compete with or eliminate American firms, FBI Director Christopher Wray told CNBC: “Well, their definition of competing, I believe, involves embracing the concept of eliminating.”
In an interview, Sen. Marco Rubio, R-Fla., warned that U.S. firms are “committing long-term suicide” by doing business with China and risking their high technology trade secrets.
“I believe every major American corporation in any of those fields must assume that they’re a goal to be either replaced or gutted,” Rubio said.
His Democrat counterpart on the committee, Sen. Mark Warner, D-Va., admitted in an interview with CNBC that he brought an approach to China that has turned out to be mistaken.
“I used to be a part of the more general consensus: the more you bring China within the [World Trade Organization] … every part’s going to come back along,” Warner said. “And that presumption that we were all working on, that the closer all of us come together, it is going to be kumbaya, I believe has proven to be factually mistaken.”
“China’s Corporate Spy War” details an FBI sting operation that took down Chinese Ministry of State Security officer Xu Yanjun, a spy who targeted employees at icons of the U.S. aerospace industry, including GE, Boeing and Honeywell.
In 2017, Xu Yanjun pursued an engineer at GE Aviation who had precious knowledge of the corporate’s jet engine composite fan blade technology. Posing as an educational official and using a fake name, Xu was introduced to the GE engineer who was visiting Nanjing, China, to present a speech at a prestigious university. Xu began a pressure campaign to get the engineer, who had family in China, to disclose an increasing number of information in regards to the engine tech the Chinese government had targeted.
However the FBI discovered the GE engineer’s travel and alerted GE, which confronted the engineer in a dramatic meeting at the corporate’s Cincinnati offices. FBI agents presented the engineer with a stark alternative: He could face the implications for his actions to this point, or he could cooperate with U.S. law enforcement in an operation to show the Chinese operation.
When the engineer agreed to cooperate, he became a double agent — working for the FBI against the Chinese spies.
Decorated 31-year CIA veteran James Olson, the agency’s former chief of counterintelligence, called the operation a textbook double agent operation. U.S. intelligence must be running more double agents back against Chinese intelligence with a view to frustrate their efforts to collect American secrets, he added.
China’s embassy issued the next statement to CNBC:
The Chinese government has never participated in or supported anyone in any form in stealing business secrets. Some people and institutions within the US have been making false accusations. We ask the US side to handle the case without bias and in accordance with the law and protect the lawful rights and interests of Chinese residents.
These facts show that China stays a preferred destination for foreign investment. The American Chamber of Commerce in South China (AmCham South China) recently released its 2023 White Paper on the Business Environment in China, which noted that greater than 90% of the participating firms select China as one of the crucial vital investment destinations and 75% of the businesses plan to reinvest in China in 2023. It is because China has an enormous market and full-fledged industrial and provide chain networks. It’s also a results of our relentless effort to advance high-level opening up, our support for the multilateral trading system and a market-oriented, world-class business environment governed by a sound legal framework.
This past January saw an influx of foreign investment into China. The paid-in foreign investment reached 127.69 billion yuan, up 14.5% 12 months on 12 months. Foreign firms including US investors have been upbeat in regards to the China market and plan to expand in China. In keeping with statistics from the US Department of Commerce, total trade in goods between the US and China hit a record $690.6 billion in 2022. All this speaks to the incontrovertible fact that trade and investment cooperation between China and the US are mutually useful and win-win. Decoupling and cutting off industrial and provide chains advantages nobody. It has no support and is not going to lead anywhere.
Regardless of how the international landscape may change, we is not going to waver in our resolve to open wider at a high standard and our determination to share development opportunities with the remainder of the world. We welcome US and other foreign firms to access the Chinese market, share development dividends and work together for a stronger world economy.
Xu Yanjun’s attorney declined CNBC’s interview request. Former GE engineer David Zheng and GE Aerospace also declined to comment.
–CNBC’s Katherine Liu, Bria Cousins, Laura Measher and Wally Griffith contributed to this report.
“China’s Corporate Spy War,” an hourlong CNBC documentary, premieres at 10 p.m. ET Wednesday on CNBC.