Even Spies Embrace China's Free Market

By Ariana Eunjung Cha
Washington Post Foreign Service
Friday, February 15, 2008

MOUNTAIN VIEW, Calif. -- Engineers Lan Lee and Yuefei Ge had drafted a business plan that they promised would roil the U.S. microchip industry. Using blueprints they allegedly stole from their Silicon Valley employer, the men proposed to reproduce a super-fast chip in China at a much lower cost.

The documents, recovered by FBI agents, included a contract with a venture-capital firm in Beijing that would bankroll part of the estimated $3.6 million the would-be entrepreneurs needed and seek additional funding from the Chinese government.

The case of Lee and Ge, who pleaded not guilty in October to charges of theft of trade secrets and the more serious charge of economic espionage to benefit a foreign government, is one of more than a dozen involving the alleged sale or attempted sale of purloined technology to China that are making their way through U.S. courts this year.

Stolen from laptop computers and luggage of engineers working for U.S. companies en route to China are designs for some of the country's most sophisticated technology -- flight-simulation programs, microwave devices, electronic propulsion systems for submarines and night-vision equipment.

On Monday, U.S. officials announced arrests in Alexandria and California in connection with alleged plots to steal high-tech military secrets for the Chinese government. In Alexandria, Assistant Attorney General Kenneth L. Wainstein said "there are a number of countries that have proven themselves particularly determined and methodical in their espionage efforts." China, he said, is one of those.

The plots that prosecutors described on Monday allegedly involved direct contacts between the defendants and the Chinese government. But in many cases on the books, the question of involvement by the Chinese state is tricky to pin down because the line between where the government starts and ends is constantly shifting. U.S. officials say there is an underground bazaar of people trying to sell information to the Chinese government and military but that no one knows how many deals are made or whether the government is soliciting such business. Nonetheless, U.S. authorities fear the potential consequences.

The Chinese government has repeatedly denied being involved in any high-tech theft in the United States. Foreign Ministry spokesman Liu Jianchao has called the allegations "insulting" and "misleading."

"The so-called accusation against China on the issue of espionage is totally groundless and has ulterior motives," Liu said at a press briefing Thursday.

The U.S. government's reports note that many of the thieves caught were not Chinese agents in the traditional sense. The Office of the Director of National Intelligence says the perpetrators did not come to the United States at the direction of the Chinese government to steal technology; they were entrepreneurs who figured out that they could make quick cash by selling it to China.

There is a "seismic shift toward increasing reliance on the private sector in the intelligence world," for information about technology, Joel F. Brenner, national counterintelligence executive in the Office of the Director of National Intelligence, said in a recent speech.

In the United States, some Chinese Americans have expressed worry about racial hysteria, that Chinese Americans and Chinese nationals are being targeted in the way Russian emigres were accused of spying for the Soviet Union in the 1950s. They say U.S. law enforcement officials have unfairly turned what would otherwise be run-of-the-mill charges of stealing trade secrets into international espionage cases simply because defendants are ethnic Chinese.

"There is a mentality that pervades all of Washington, which is that China is our big adversary and enemy -- if not today, then tomorrow -- so we need to deal with them on that basis. So there are a lot of heavy biases," said George Koo, a business consultant in Silicon Valley who is a member of the Committee of 100, a group of influential Chinese Americans that was founded by the cellist Yo-Yo Ma and the architect I.M. Pei.

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