The U.S. Department of Justice (DOJ) said Monday (Nov. 16) that the “China Initiative,” implemented to counter China’s threats to the United States, has yielded significant results over the past year and will continue to work to achieve the goals of the initiative to address and deter China’s illegal and malicious activities.
“The China Initiative, which was launched in November 2018, is led by the Department of Justice’s National Security Division and includes participation from multiple agencies, including the Federal Bureau of Investigation. The goals of this action plan include investigating and prosecuting companies and individuals suspected of engaging in trade secret theft and economic espionage, addressing the threat posed by China’s overseas investments, and countering China’s intelligence activities and malicious overseas influence activities.
In a statement Monday, U.S. Attorney General William Barr said, “Over the past year, the Department of Justice has made incredibly significant progress in countering China’s systematic efforts to enhance its economic and military power at the expense of the United States. While much work remains to be done, the Department of Justice is committed to pursuing accountability against those who have stolen, or illegally acquired, American intellectual capital that will help drive future growth.”
FBI Director Christopher Wray said, “The theft of sensitive information and technology by the Communist Party of China is not a rumor or a baseless allegation. It’s real, and it’s part of a coordinated action by the Chinese government, and the ‘China Action Plan’ is designed to stop it. The FBI files a China-related counterintelligence case almost every 10 hours, and we will continue to take tough action in response to China’s illegal activities.”
Christopher Wray said earlier this year that Chinese spy infiltration of the U.S. is ubiquitous, and that almost half of the roughly 5,000 counterintelligence cases the U.S. has investigated have been linked to China.
Attorney General Barr has noted that about 80 percent of all federal economic espionage prosecutions are alleged to have engaged in conduct for the benefit of the Chinese government, and that about 60 percent of all trade secret theft cases have ties to China. “The head of the China Initiative, Assistant Attorney General for National Security John C. Demers, said in an interview with Politico earlier this year that the Justice Department expects the 94 U.S. jurisdictions to file China-related lawsuits every year.
Beijing has denied the allegations, accusing the U.S. China Action Plan of “political manipulation” and “McCarthyism.
On the second anniversary of its launch, the U.S. Department of Justice summarized the results of China Action Plan over the past year.
Investigating cases of economic espionage and trade secret theft
In prioritizing economic espionage and trade secret theft investigations, the DOJ stated that since the launch of the “China Action Plan,” five economic espionage cases and ten trade secret theft cases with some connection to China have been prosecuted, including three defendants who pleaded guilty in trade secret theft cases over the past year.
In particular, the DOJ cited criminal charges against Chinese state-owned Fujian Jinhua, Taiwan’s UMC and several individuals for stealing trade secrets from Micron Technology, a major U.S. semiconductor company. Taiwan’s UMC pleaded guilty last month and agreed to pay a $60 million fine and assist the U.S. government in its investigation of the accused Fujian Jinhua.
The case against Taiwan UMC is the clearest example of China’s strategy of ‘rob, copy and replace,’ which involves robbing U.S. institutions of their intellectual capital, copying the stolen technology, and then attempting to replacing American institutions.”
Talent Programs and Academic Infiltration
According to the Justice Department, the “China Action Plan” also develops law enforcement strategies to deal with non-traditional intelligence gatherers, i.e., the free and open tradition of the U.S. academic community, which is vulnerable to exploitation by China. The DOJ said the action plan adopts a two-pronged strategy to address the threat, first by raising awareness of the China threat among academic institutions and second by charging researchers who knowingly deceive authorities about their ties to China.
Over the past year, federal prosecutors have charged 10 academic staff members affiliated with U.S. research institutions with fraud, misrepresentation, tax evasion and other charges, and three have now pleaded guilty, the Justice Department said. Most of these indicted researchers have been linked to talent programs in China.
Adam Hickey, deputy attorney general for the Justice Department’s National Security Division, said, “While participation in talent programs is not illegal per se, and the research itself may not always be protected trade secrets, we know that China has taken advantage of these programs, such as the well-known ‘Thousand Talents Program’ ‘ to recruit individuals who could obtain U.S. government funding for research to serve the interests of the Chinese Communist Party.”
The FBI and federal prosecutors also indicted six Chinese military personnel this year for concealing their military backgrounds and studying in the United States, the Justice Department said. The Justice Department noted that the State Department closed the Chinese consulate in Houston after those investigations and charges came to light, and that a large number of researchers with undisclosed identities who had ties to the Chinese military fled the United States.
Responding to Chinese Intelligence Activities
The U.S. has also had many successes over the past year in countering China’s overseas intelligence activities, the Justice Department said. For example, in November 2019, a former CIA officer was sentenced to 19 years in prison for conspiring to provide defense intelligence to China, and in August 2020, another CIA officer was arrested on the same charges. In addition, Edward Peng Xuehua, a U.S. citizen, and Jun Wei Yeo, a Singaporean citizen, were sentenced to 48 months and 14 months in prison, respectively, for spying for China, and eight Communist Party “fox hunters” were indicted by the Justice Department, five of whom were arrested.
The FBI is also working with the National Counterintelligence and Security Center on an educational video to warn the public about the potential for Chinese intelligence agencies to use social networking to recruit Americans, especially current and former U.S. government employees who have been cleared for security purposes, the Justice Department said.
Responding to Chinese Cyber Activity
In a crackdown on malicious Chinese cyber activity, the Justice Department this year indicted several Chinese military hackers who hacked into the U.S. credit reporting agency Equifax, as well as individuals suspected of hacking into New Crown Vaccine research companies and institutions with ties to China’s Ministry of State Security. Two of the conspirators were arrested in Malaysia in a case linked to China’s security ministry, the Justice Department said.
In May, the Federal Bureau of Investigation and the Cybersecurity and Infrastructure Security Agency under the Department of Homeland Security also issued an alert that institutions researching the New Crown virus could be targets of Chinese cyber-sabotage activities and called on those institutions to take the necessary protective measures.
Addressing China’s Malicious Overseas Influence Activities
The DOJ also cited gains in addressing China’s malicious foreign influence activities, including the use of the Foreign Agents Registration Act (FARA) to increase the transparency and visibility of China’s foreign influence operations. The DOJ said that FARA investigations launched over the past year have hit a new high, with annual registrations of new foreign agents doubling since 2016, including a record number of registrations by Chinese media.
The DOJ said it also notified one Chinese media outlet registered as a foreign agent this year that they did not adequately disclose their U.S. operations, and the outlet later supplemented its filing. The DOJ did not specify which Chinese media outlet, but judging from news reports, it should be China Daily, the official Chinese media outlet that filed a supplemental FARA filing in June of this year, disclosing for the first time detailed information about advertising and printing fees paid to U.S. media outlets.
Foreign Investment Review and Telecommunications Security
The White House issued an executive order in April formalizing the review of foreign telecommunications companies by the “Telecommunications Panel”, which is permanently chaired by the Department of Justice. The “Telecommunications Panel” is a U.S. national telecommunications security review panel made up of officials from the Justice, Homeland Security, and Defense Departments.
The DOJ said the panel recommended this year that the FCC revoke the license of China Telecom (Americas), the panel’s first national security-based revocation recommendation. “The panel also later recommended that the FCC not initiate the construction of a submarine cable that will connect directly to Hong Kong.
The Justice Department said they have also worked over the past year to implement the Foreign Investment Risk Review Update Act, co-leading important Committee on Foreign Investment in the United States (CFIUS) review matters, including the merger of a Chinese company into a U.S. hotel management software company. President Trump has since signed an executive order barring this acquisition of StayNTouch by CFLAG.
The DOJ said that in addition to the above criminal enforcement activities and the implementation of the executive order, they also reach out to businesses and schools to better protect their interests through various programs and activities.
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