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Chinese Industrial Espionage: Major Economic Security Threat

The 2007 annual report from the Congressional United States-China Economic and Security Review Commission was released to Congress and select media outlets yesterday and it is hard hitting. The report accuses China of vast industrial spying without dissenting views from any of the commissioners of bi-partisan make-up. (Note: The July 2007 report on the Commission's website is not the one referenced here or in news articles today.)

China is running an "aggressive and large-scale industrial espionage campaign" against American technology, a US congressional commission says, in a report that will exacerbate growing tensions between the two countries.

The hard-hitting report, by the US-China Economic and Security Review Commission, accused China of backsliding over free trade reforms and of using spies to enable its companies to get hold of technology without having to pay for the research.

"Chinese espionage activities in the United States are so extensive that they comprise the single greatest risk to the security of American technologies," it said, adding that scientists and engineers were enlisted to get hold of secrets "by whatever means possible - including theft".

When the full report is attained, we will make the PDF accessible at ThreatsWatch in full.

This should come as no surprise to even casual observers. The level of Chinese espionage that took place (and continues to take place) within our own Department of Energy nuclear research facilities since the 1980's and peaking in the 1990's has been catastrophic in scope and scale. Attained by the Chinese without the expense of research were - among many other things - designs for our W-88 miniaturized multiple-warhead nuclear MIRV weapon, the most deadly on the planet.

The scope of this report goes beyond the nuclear research facilities and investigates the impact on the broader economic and industrial base.

Economic security is as important as any aspect of security, and industrial advances must be protected and industrial espionage confronted at all turns. The health and competitiveness of the economy we leave our children demands it.

1 Comment

Steven, you beat me to the post of this one. I was trying to write it, but business "issues" got in the way.

A very important add-on to your information is that you never know where or how industrial espionage will occur.

The industrial espionage is happening on a large scale, yes. Last week it was reported that Maxtor external hard drives manufactured by Seagate Technology LLC in China had been infected with a Trojan Horse virus. This was disclosed by the Chinese Investigation Bureau (similar to our F.B.I.)

Seagate's press release can be seen here, describes the Trojan Horse and how to detect it. The thing steals passowrds and other information and downloads it to a remote computer.

Times have changed since I became aware of the problems of industrial espionage after getting briefings through the F.B.I. program, ANSIR, over a decade ago. Back then it was countries like Russia, Israel and France that were the primary culprits. The emergence of China as a major culprit is not unexpected, although the magnitude is "impressive." I'll see if I can get my hands on the new report.