They’re Everywhere

FBI Probes ‘Hundreds’ of China Spy Cases

American companies are getting their secrets stolen like never before, the bureau says. And an ultra-aggressive China is to blame for almost all of it.

Edgar Su/Reuters

The FBI has seen a surge in cases of economic espionage in the past year, and the bureau says that China is largely to blame.

China’s intelligence services are “as aggressive now as they’ve ever been,” said Assistant Director Randall Coleman, who runs the bureau’s counterintelligence division. He and other senior FBI officials described the threat China poses to U.S. companies during a rare, on-the-record briefing with reporters Thursday. It was an event meant to underscore the pervasive nature of intellectual-property and trade-secrets theft and to alert businesses to protect themselves.

“The predominant threat we face right now is from China,” Coleman said.

The FBI has linked the theft of a broad range of technologies—from seeds to software—to the Chinese government, he said. The number of cases investigated by the division, which is responsible for stopping and catching spies, has shot up 53 percent in the past year, Coleman said. The precise number of total cases is classified, but Coleman said it’s “in the hundreds.”

The FBI’s willingness to call out China for spying on U.S. companies stood in contrast to the White House’s reluctance to blame China for the massive hack against the Office of Personnel Management. As The Daily Beast reported this week, Obama administration officials have privately concluded that hackers working with the Chinese government stole personal information on more than 22 million current and former government employees, in what experts have called one of the biggest intelligence disasters in recent memory.

Coleman declined to discuss the OPM hack, which he described as an ongoing investigation.

But the spying for which the FBI is blasting China is also distinct, U.S. officials have said, from traditional espionage that aims to steal government secrets. When Chinese hackers or human spies make off with companies’ pricing data, secret formulas, or software code, they’re giving it to Chinese companies to give them an unfair advantage in the global marketplace, officials argue. The Obama administration has tried to draw a line between that economic espionage and the global surveillance against terrorists or spying on foreign governments that the United States routinely conducts.

To bolster its case, the FBI released the results of a government survey of 165 companies—which it didn’t name—half of which reported said that their proprietary information had already been targeted by foreign spies. And in 95 percent of those cases, the companies suspected China was to blame, said William Evanina, a top U.S. counterintelligence official.

Evanina said that by the end of the year, his office will update a 2012 report that was the first to publicly name China and Russia as the leading offenders of industrial espionage. “Nothing has changed,” he said, noting that Iran has also been actively targeting U.S. companies.

Russian hackers have also stepped up their efforts to target U.S. government agencies, including the Defense Department.

The vast majority of economic spying cases the FBI investigates come from victim companies that report the theft, officials said. To encourage them to speak up and also to recognize the warning signs of industrial spying, the FBI produced of a short film called “The Company Man,” based on an actual case of two Chinese men that tried to steal information from an insulation manufacturer.

Special Agent Dean Chappell, who was the film’s executive producer, said the FBI chose a mundane technology to illustrate how foreign spies are targeting all manner of products, not just official military hardware or advanced electronics.

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In another bit of theater, FBI officials gave every reporter a three-pack of Oreo Double Stuf cookies. The creamy center filling, Chappell said, gets its brilliant and consistent whiteness from the chemical titanium oxide. Last year, a jury in California convicted two men of stealing the chemical’s formula and selling it to—who else?—China. The thieves pilfered the recipe from U.S. chemicals giant DuPont and passed it off for $20 million to Pangang Group, DuPont’s state-owned competitor, who had previously tried to buy the recipe without success.