US detains alleged Chinese spy It says tried to steal GE trade secrets

A senior Chinese official and alleged spy has been charged with stealing US trade secrets after being lured by FBI agents to Belgium.

Herb Stapleton, FBI Assistant Special Agent in Charge, FBI, right, and US Attorney Benjamin C. Glassman, reveal details of the extradition of a Chinese intelligence operative has been charged with stealing trade secrets from multiple US aviation and aerospace companies. Picture: John Minchillo/AP

An alleged Chinese intelligence operative arrested in Belgium has been brought to the US and charged with conspiring to steal trade secrets from GE Aviation and other American aviation and aerospace companies, marking a rare break for the US in its increasingly aggressive effort to target Chinese industrial spying.

Prosecutors have previously charged Chinese government officials with economic espionage and hacking-related offences pointing to state-directed efforts to steal US technology, but have never publicly identified anyone in custody as a Chinese intelligence officer.

Yanjun Xu, an operative of the Chinese Ministry of State Security, is accused of recruiting experts who worked at aviation companies and paying them stipends to travel to China in order to obtain trade secrets, the Justice Department said.

FBI agents lured him to Belgium, where authorities transferred him this week to the United States for prosecution on economic espionage charges, US officials said

GE Aviation co-operated with the FBI early on in the investigation, which dates back more than a year, officials said.

According to the indictment, in March 2017 a deputy director at the university, described as an unindicted co-conspirator, began emailing with an engineer at GE Aviation and asked him to come to China for an “exchange.” In May and June of 2017, the engineer went to China, met Xu, who claimed to be from the science and technology association. The engineer put five corporate documents on his personal laptop, which he brought to the presentation, according to WCPO, an ABC News affiliate in Cincinnati, citing an FBI affidavit for a search warrant in the case.

In February, Xu began discussing with the engineer the possibility of meeting in Europe during one of the engineer’s business trips, the indictment said.

Xu asked the engineer to create a directory of files on his work computer and send a copy to him. Impressed, Xu in March asked the engineer if it was possible to “dump” the material from his laptop to a thumb drive when the two met in Belgium, the indictment said.

Belgian authorities co-operated with the investigation, U.S. officials said.

Xu was arrested after travelling to Belgium in April.

After his appeals failed, he was extradited to the United States on Tuesday and made his first court appearance in federal court in Ohio on Wednesday.

“This case is not an isolated incident. It is part of an overall economic policy of developing China at American expense,” John Demers, the head of the Justice Department’s national-security division, said in announcing the charges.

Escalating tensions

Mr Xu was identified in court papers as a deputy division director in a department of China’s Ministry of State Security, the country’s intelligence agency.

Prosecutors allege that he worked from 2013 through this year with others associated with the ministry and several Chinese universities to obtain sensitive and proprietary information from US aviation and aerospace companies.

They say he worked in part by recruiting US employees to travel to China for what was characterised as an exchange of ideas.

The case emerges amid growing tensions between the US and China on several fronts. On Monday, the top US and Chinese diplomats, Secretary of State Mike Pompeo and Foreign Minister Wang Yi, exchanged testy words over trade and other issues.

Trade talks between the two countries have made little progress, as have military discussions. And Vice President Mike Pence last week accused China of working against US interests in various ways, including by interfering in American elections.

Also on Wednesday the US Treasury Department issued new rules requiring all foreign investors in certain deals involving critical US technology to submit to national-security reviews, a move designed to address US concerns about a spate of Chinese technology deals in Silicon Valley.

A lawyer for Mr Xu couldn’t be identified. The Chinese Embassy didn’t immediately respond to a request for comment.

A General Electric representative said the Chinese official targeted a former GE Aviation employee and that the impact to the company was minimal.

“For months, GE Aviation has co-operated with the FBI investigation,” the company said in a statement, adding that “no sensitive information relating to military programs was targeted or obtained.”

US officials echoed those assertions, saying GE Aviation co-operated in the investigation, no defence-related information was removed, and internal controls protected the company’s proprietary information.

Mr Xu allegedly concealed the “true nature” of his employment and identified himself as affiliated with a provincial Chinese entity called the Jiangsu Science & Technology Promotion Association, according to court papers filed against him.

The development is the latest in an accelerating series of cases prosecutors have brought against foreign intelligence officers for behaviour the government alleges is criminal and outside the bounds of traditional espionage.

Last week the US unsealed the indictment of seven Russian intelligence officers, charging them with persistent efforts to hack into the networks of agencies that expose their misdeeds.

Prosecutors have also brought a number of cases accusing Chinese nationals of stealing proprietary information on sophisticated technology to benefit Chinese competitors. Officials say the theft of trade secrets costs the US hundreds of billions of dollars a year, and that China and Chinese companies are the leading offenders.

While previous defendants have either not been caught or have been identified only as private Chinese individuals, the case against Mr Xu suggests a stepped-up effort to target foreign intelligence officers engaged in criminal conduct.

“It’s unprecedented to lay hands on them and declare their intelligence role,” said Christopher Ott, a former prosecutor of cybercrimes and other offences who is now with the law firm Davis Wright Tremaine.

“That’s an expression of confidence in the evidence, and that they won’t have to reveal actual intelligence assets to convict this guy.” Joseph Campbell, a former FBI official now with Navigant Consulting, said the arrest could also provide the US with a window into Beijing’s operations in the US to target sensitive technology, either through Mr Xu’s own cooperation or through devices he had with him at the time of his arrest.

“This is an opportunity to gain much more current information about China’s efforts,” Mr. Campbell said.

The case came weeks after Ji Chaoqun, a Chinese national court documents linked to Mr Xu, was arrested in Chicago and charged with failing to register as a foreign agent.

Mr Ji allegedly performed tasks for Chinese intelligence agents, including buying background reports on potential espionage recruits.

Many of those targeted recruits were ethnic Chinese engineers or scientists who worked for cleared US defence contractors.

Mr Ji also enlisted in the US Army Reserves and failed to disclose his foreign contacts during his background investigation, according to the charges filed against him.

Mr Ji hasn’t yet entered a plea in the case and an lawyer representing him didn’t immediately respond to a request for comment.

— Wall Street Journal, AP