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Chinese Nationals Charged with Espionage in US

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By William Tucker
Chief Correspondent for In Homeland Security

A Chinese national accused of economic espionage was arrested Saturday in Los Angeles as he returned to the U.S. from China.

Following the arrest, federal prosecutors announced the indictment of five other Chinese nationals allegedly involved in the same scheme to steal U.S. technologies and market them from China under a different name.Chinese spies

This is the third indictment of Chinese nationals by the U.S. in the last three years for espionage related activities. Just last year, the U.S. Justice Department indicted five Chinese generals for allegedly leading the cyber unit of the Peoples Liberation Army that conducts cyber attacks.

Though those military leaders were indicted they are still at work in China. The Obama administration concedes that these Chinese nationals still in China may never see the inside of a U.S. courtroom; however it is part of an ongoing strategy to increase pressure on China in negotiations to scale back the number of illicit cyber based activities.

This is a strategy frequently employed by negotiating parties, and though it may bring some added weight to the ongoing talks, it is unlikely to completely dissuade China from stealing the proprietary or classified information from its competitors around the globe. Beijing will continue to collect intelligence on its adversaries – something that should be expected – but it is in the economic sphere that China cannot concede any ground.

This most recent case is an excellent example in long term Chinese planning and coordination to not only steal information from several different companies, but to then leverage that information into a new company in China with a university connection for both market exploitation and further development.

Reuters identified the indicted individuals citing the Justice Department press releaseas “Wei Pang, 35, a former Avago employee and a professor; Jinping Chen, 41, a professor and a member of the board of directors for ROFS Microsystems; Chong Zhou, 26, a Tianjin University graduate student and design engineer at ROFS Microsystems; Huisui Zhang, 34, who studied with Pang and Zhang; and Zhao Gang, 39, who is the general manager of ROFS Microsystems.”

The targeted U.S. companies were identified as Avago Technologies Ltd. of San Jose, Calif. and Skyworks Solutions Inc. of Woburn, Massachusetts. Both of these U.S. firms in Film Bulk Acoustic Resonator (FBAR) technology which can be used in military applications.

Prosecutors allege the six indicted individuals founded ROFS Microsystems in Tianjin, China with the purpose of exploiting the information stolen from Avago and Skyworks. The ability of six individuals to poach information from two U.S. firms only to then found a company with university connections demonstrates planning likely stemming from state involvement and not the “ad hoc” or “home grown espionage” so frequently associated with Chinese intelligence.

The indictment states that two individuals – Pang and Zhang – were studying electrical engineering at University of Southern California before taking positions at the two targeted companies. It is estimated that they met for the first time between 2006-2007 before leaving to become professors at Tianjin in 2009.

From there, Pang and Zhang used their positions and contacts among other Chinese engineers in the U.S. to found their new company. The founding of this company and the joint venture with the university at Tianjin would’ve been impossible without the support and capital from the government in Beijing.

As China continues to modernize its military with new communications equipment it will need to steal technology from the U.S. to cut costs typically associated with research and development, thus saving Beijing a substantial sum. That being said, it’s not just about the cost cutting and time saving approach to modernizing the military, China is also suffering from economic issues that are likely to increase in severity in the near term. Labor rates have fallen in several emerging industrialized nations thus undercutting the allure of doing business in China.

Additionally, the Chinese government, and its dedication to economic espionage, has created a unacceptable risk for many business operating on the Chinese mainland. This has undercut exports in a heavily export dependent economy.

China is attempting to increase domestic consumption of its products, but this plan has been rather lackluster. Because of this situation China will continue to cut costs where it can to better compete in the global arena. As such, its aggressive espionage will continue.

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