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Continuing Counterespionage Challenges
Chinese spies may rob us blind, but are we really losing in the long run?
Robert Hanssen looked like the beau ideal of an FBI special agent—patriotic, modest-living, ostensibly religious. But he was also one of the most notorious traitors in American history: As an FBI counterintelligence agent, he spied for the Russians over a span of 21 years, exposing to them our spies, intelligence budget priorities and even government plans in case of a nuclear attack. Hanssen was finally captured while making a dead drop in 2001, after a frustrated FBI investigator pitched $7 million to a Russian spy handler to give him up. Upon his arrest, he asked his arresting agents, “What took you so long?”
Last month, Hanssen died in prison, and his passing prompts us to look at the current state of counterespionage. As bad as the Hanssen case was, more damaging espionage incidents in recent years have baffled American intelligence. In his recent book “Spyfail,” U.S. intelligence community critic James Bamford argues the U.S.’s counterintelligence abilities have failed dramatically, pointing to several prominent cases of America being harmed by the Russians, Chinese, North Koreans and even the Israelis. One case, the theft of the National Security Agency’s computer hacking tools by “the Shadow Brokers,” has never been solved.
It is true the U.S. is a target-rich environment for spying. Also true is that the challenge of counterespionage has gotten much more difficult since the Hanssen era. Spy services now rely often on hacking computer systems to steal secrets. Capable and hostile intelligence services abound. And we are seeing concerted efforts against a wider range of targets, especially defense, aerospace and biotech corporations and research universities all over America.
But is Bamford right that our counterespionage capability has fallen and can’t get up? Does this mean that highly capable adversaries like China are on the road to winning and we’re on the road to losing? We need to see this in the context of the great spying game; after all, we are carrying out our own extensive spying operations on our adversaries. If you focus just on our losses, you are not reading the whole scorecard. While the failures are embarrassing and damaging, our adversaries don’t always have it all their own way. At least some of their spying points to desperation and lack of their own technical capabilities.
China Emerges as the Main Adversary
Even before Hanssen was caught more than two decades ago, Chinese spying and influence operations were already becoming the chief focus of America’s spy catchers. But the Chinese had long been very good at the game. In the early 1980s, a high-level defector revealed to the CIA that its top translator, Larry Wu-Tai Chin, had been working for Beijing since the 1950s. Later in the 1990s, another defector revealed to the FBI the Chinese had been stealing sensitive nuclear weapons technology. In 1999, the House of Representatives’ Cox Report detailed China’s decades-long theft of nuclear and military technology.
Historian Calder Walton believes that in 2005, China’s main spy service, the Ministry of State Security (MSS), began openly trying to undermine U.S. intelligence agencies and has been going strong ever since. Today, the FBI reports a new case of alleged Chinese spying every 10 hours, far outnumbering espionage activity by any other country. Beijing concentrates on cyber espionage—in 2007, the Chinese even hacked the plans for the advanced F-35 fighter jet—but much of its espionage efforts still involve recruiting agents. The Center for Strategic and International Studies details 224 cases of Chinese spying against U.S. interests, with 69% of these cases occurring since 2013. According to the report, the MSS is unlikely to recruit Americans of Chinese descent. Australian researcher Alex Joske in “Spies and Lies” claims MSS relies on professional intelligence officers, not recruited amateurs.
FBI experts dispute this theory. For years, the FBI has emphasized the Chinese executing a “whole-of-society” approach to spying. The MSS is liable to recruit anyone to spy for Beijing, but especially Chinese nationals living abroad. Top U.S. expert Nicholas Eftimiades, reviewing hundreds of cases of Chinese spying incidents, insists that the “whole of society” approach is still Beijing’s main strategy. Chinese patriotism remains a recruiting tool, but as the Chinese service has improved its resources, it also has broadened its tactics. A recent series of articles by Washington Post columnist David Ignatius, featuring a fictitious Chinese spymaster who graduated from a major U.S. university, explores the Chinese service’s evolving approach to recruiting spies.
The case of Jerry Chun Shing Lee suggests recruiting Chinese American citizens still remains part of the MSS’s bag of tricks. Lee, a former CIA officer recruited in 2010, might be the most damaging spy since Hanssen. It is believed he began revealing the identities of numerous CIA sources in China, some of whom were executed. In 2019, Lee was convicted for conspiring to commit espionage and sentenced to 19 years in prison. It is unclear how much of the U.S.’s Chinese spy network Lee compromised. At about the same time, Chinese intelligence cracked the CIA’s communication system with its spy network. Another Chinese American and former CIA officer, Alexander Yuk Ching Ma, gave secrets to Chinese intelligence and was arrested in 2020.
But the Chinese also recruit anyone who can help them, and leveraging greed by paying spying assets often works just as well. Just prior to Lee’s conviction, another former CIA officer, Kevin Mallory, was convicted of passing national security information to the Chinese. Last year, U.S. law enforcement busted a U.S. private investigator for helping China spy on its immigrants.
China, like other foreign services, sees these commercial targets as fair game, even though we may consider that outside the unwritten rules of the game. After it was revealed that the Chinese had hacked U.S. Office of Public Management computers, in 2015, Chinese Premier Xi Jinping promised President Obama that China would stay away from industrial targets, but he soon reneged on the deal. The Made in China 2025 plan seeks to ensure China’s independence from foreign technology in several key industries, and spying helps close the gap by stealing U.S. intellectual property.
Last year, MSS officer Yanjun Xu was sentenced to 20 years for trying to steal advanced jet engine technology from General Electric by recruiting numerous sources. Even our agricultural industry is in China’s sights. In her book, “The Scientist and the Spy” Mara Hvistendahl details the wide scope of technology China is interested in stealing, focusing on the case of Robert Mo, who stole genetically modified corn seeds from DuPont Pioneer and Monsanto in Iowa and shipped them to China. In 2016, he pleaded guilty and was sentenced to three years in prison. Participation in China’s “Thousand Talents Plan” that recruits science and technology experts has lured professors like Charles Lieber at Harvard, who lied to federal authorities about his lucrative and undisclosed relationship with a Chinese university.
The Chinese also engage in old school “honey trap” operations, using sex to trick officials into revealing secrets. In 2015, a socialite named Christine Fang ingratiated herself with certain U.S. congressmen and other politicians, but fled the country while under investigation; it has never been clear if she obtained secret information or not.
Keeping up with all these cases is difficult enough for our spy catchers. Complicating matters, writes intelligence expert Amy Zegart in “Spies, Lies, and Algorithms,” is that our efforts tend to swing between too much trust and too much paranoia. Two cases from the 1990s suggest the perils of both.
Too much paranoia in 1999 led to the botched case against Wen Ho Lee, a Los Alamos scientist suspected of passing secrets on the W88 nuclear warhead to China. Authorities could not prove spying by the Taiwanese American Lee, despite his mishandling of classified material and suspicious contacts with Chinese nuclear scientists. Lee accused the government of racial profiling, a charge that threw U.S. counterespionage on the defense.
Not long afterwards, we placed too much trust in Katrina Leung, an important FBI source who had been recruited despite her having been investigated for working for the Chinese government. According to David Wise in “Tiger Trap,” the FBI paid Leung handsomely for her reporting on high-level Chinese government officials—even after 1991, when the bureau discovered she was a Chinese double agent. Adding insult to injury, Leung carried on affairs with two of her bureau case officers. Despite the damage she caused, espionage charges against Leung were dismissed in court due to prosecutorial misconduct.
Chinese espionage excesses are finally provoking a strong backlash in the U.S. In 2018, the Justice Department’s “China Initiative” to find and convict Chinese spies sought to stem the tide. In recent years, the U.S. government has successfully prosecuted many spies working on behalf of China. The FBI and the Department of Defense finally succeeded in getting more than 100 universities to sever ties with China’s state-backed Confucius Institutes, which the State Department designated as foreign missions seeking to influence U.S. policy. In 2020, the U.S. government closed down China’s Houston consulate for stealing U.S. intellectual property.
But the aggressive approach raised concerns about growing paranoia and ethnically profiling Chinese. As Walton says in his article, Chinese espionage has forced us into a sensitive policy debate about the nature of Chinese students, scholars and businesspeople working in our country who might be spying for Beijing. As Bamford reports, California Rep. Judy Chu charged that the Justice Department unfairly targeted Asian Americans in 77 espionage cases, gaining only one conviction. Last year, the DOJ ended its “China Initiative,” acknowledging that some investigations had singled out some Chinese residents unfairly.
Adjusting our approach hasn’t stopped some counterespionage successes, with DOJ racking up some significant convictions last year. Eftimiades says Chinese intelligence officers and assets often employ only rudimentary tradecraft and poor operational security, making them easier to detect. Moreover, he believes Chinese intelligence services are too politicized, suffering from frequent political purges and rigid thinking about the West, making them ineffective evaluators of the intelligence they receive. In short, China, despite its successes, isn’t 10 feet tall—at least not all the time.
Losing in the Long Run?
In counterespionage, even victories are bittersweet. After all, as former counterintelligence officer James Olson relates, the spy may be caught, but significant damage has already been done. Major cases of espionage against the U.S. are embarrassing and harmful, at least in the short term. In his memoir “The Main Enemy,” former CIA case officer Milt Bearden judges that during the Cold War, the Soviets often beat us in the spy game, but our intelligence services performed just well enough to help ensure a final victory.
Perhaps Cold War history is repeating itself with current Chinese spying. Despite their tactical prowess, China’s espionage targets indicate they, like the Soviets, have significant weaknesses in developing their own military and commercial technology. They still haven’t built a fighter matching the capabilities of the F-35, despite the theft of its plans years ago. Stealing corn seeds from Monsanto and turbine plans from GE seem like acts of desperation because these activities point to China’s lagging innovation and production capabilities. Moreover, China’s Operation Fox Hunt, which goes after dissidents and fugitives abroad, suggests that Beijing itself is succumbing to paranoia. Cracking down on businesses operating in China for alleged espionage activity has American and other foreign firms wary of the increasingly restrictive business environment.
More significantly, rampant spying on issues beyond national defense hurts China’s national image and reliability as a commercial partner. A major trading state like China—37% of its economy is foreign trade—needs to develop relationships of trust with its partners. A recent Pew poll notes China’s poor image around the world. Last year, the head of MI5, the United Kingdom’s domestic spy service, said it opened seven times more investigations on Chinese spying than in 2018. Canada also has become more concerned with Chinese interference in Canadian elections and its retaliation against Chinese permanent residents. Several nations are investigating China’s 100 or so covert police stations operating around the world to track its citizens.
The United States likely will always suffer from embarrassing spy cases like Hanssen’s, but these episodes don’t mean we are losing the overall competition. Though China may be our biggest adversary today, its shady policies are clouding its record of economic success. Beijing has cracked down on the freedom of Hong Kong, punished its scientists for warning about COVID, and ratcheted up its social monitoring. By insisting on control above everything else, China undermines the groundwork for the innovative society of the future. Its aggressive spying activity provides short-term gains, but China’s overall strategy may be a long-term loser.