Created: 1/1/2000

OCR scan of the original document, errors are possible


DATr: 6

SUBJECT: Report to Congress on Chinese Espionage Activities Against the United States


The "Intelligence Authorization Act for Fiscal", requires that the Director of Central Intelligence and the Director of the Federal Bureau of Investigation, jointly and in consultation with the heads of other appropriate federal agencies, prepare and transmit toeport on the intelligence activities of the People's Republic of China (PRC) directed against or affecting the interests of the United States. This is the second annual submission of that report.

Overview of the Threat

Beijing's national security priorities include maintaining internal stability, gathering science and technology information to advance China's economic development, and monitoring as well as influencing developments related to Taiwan and worldwide perceptions of China. Its foreign intelligence collection goals include gathering information about key players and developments -in countries that might affect China's interests. Penetrating. intelligence communityey objective of the Chinese.

Due to its limited resources, much of China's Intelligence collection8 continued to be accomplishedetwork of nonprofessional individuals and organizations acting outside the direction and control of the intelligence services. Non-intelligence organizations-such as private companies, research institutes, and defense facilities-conduct independent and uncoordinated collection activities to acquire sensitive information and technology. The Chinese intelligence servicesong history of using Chinese students studying abroad to collect information, either formally for those services or informally for their home-based research institutes or universities. Many Chinese students. graduate schools are studying hard sciences and are able toide variety of information that is of value to China's efforts to ascend the technology ladder.

Because the Chinese consider themselves to beevelopmental *catch-up" situation, their collection program tends toomparatively broad scope. Chinese collectors target information and technology on anything of value to China,

which leads them to seek to collect open-source Information as well as restricted/proprietary and classified information.

China's intelligence infrastructureariety of government entitles. The following are assumed to have directed resources8 to collection activities targeted at the United States:

The Ministry of State Security (MSS) is responsible for civilian collection of foreign Intelligence and for counterintelligence operations in China and abroad.

The Military Intelligence Department of the People's Liberation Army General Staff (MID/PLA or Second Department) collects military and technological information and foreign intelligence.

The Liaisonnit in the PLA's General Political Department, collects intelligence on Taiwan.

Foreign Intelligence Collection

Political Espionage: Beijing continues to view the United States as one of Its major targets for political collection. It focuses on the foreign policies and intentions of the United States as well as information. leaders and sensitive bi-or multi-lateral negotiations.

Military Espionage: As the most advanced military power with respect to equipment and strategic capabilities, the United States continues to be therimary target. Military intelligence collection against the United Statea is primarily conducted by military attaches assigned to the Defense Attache's Office in the Chinese Embassy in Washington and the Military Staff Committee at the United Nations in. New York City. For the most part, attaches openly collect information from Western publications as well as from their contacts in accordance with MID/PLA directives. Nonetheless,7 the FBI and. Customs Service have detected and interdicted at least two MID/PLA clandestine collection operations in the United States.

Chinese attempts to. military and military-relatedrecognition of the overwhelming technolcgical superiority enjoyed by the Western alliance in the Gulf War and Kosovo-have increased since the. Other topics of Interest to the MID/PLA are.. military operations overseas, and the sale. military technology to Taiwan.

Recent FBI Case: The sentencing of Dr. Peter H. Lee on8lose to an important FBI case that had its origins in. Lee, who had pleaded guilty the previous December to espionage charges for transmitting classified national defense information to the PRC, had admitted to sharing classified information with Chinese scientists during lectures he gave in the PRC5 Lee was also charged with making false statementsovernment agency when he denied giving technical talks to the Chinese, Leeuspended five-year prison term, one year of incarceration, three years of supervisedine,ours of community service*

Economic Espionage: 8 China's collection of open source, sensitive, and restricted proprietary/trade. technology and economic information, particularly advanced civilian, military, dual-use and bio-technology,riority. China's official collectors of economic intelligence prefer to use collection methods that are low-key and nonthreatening. For example, the MSS, operating both in the United States and in China, tries to collect proprietary or. information and technology in small increments,arge number of people for an extended period of time.

The MSS is particularly active. businessmen and other Westerners inside China, where MSS officers can be aggressive. Because most Chineseommon cultural and historical background, Chinese leaders refer to all individuals of Chinese ancestry as "overseas* Chinese. When approaching an individual of Chinese origin, the Chinese intelligence services attempt to secure his or her cooperation by playing on this shared ancestry-

The MSS and the MID/PLA play only a, small part in China's overall Skt collection process. Some of the thousands of Chinese students, scientists, researchers, and other visitors to the United States also gather information, working mostly for the benefit of government-controlled, end-user organizations and other scientific bureaus, research institutes, and enterprises. The MSS, when requested, assists these institutions by matching their information needs with assets the service has developed in the United States or elsewhere.

Chinese nationals working abroad lawfully gathernd economic intelligence through open sources, such. university libraries, research institutions, the Internet, and

unclassified databases, providing the Chinese Government with highly valued, yet unclassified information.

PRC scientists, through mutually beneficial scientific exchange programs,nformation. national laboratories. Programs to enhance cooperation between the two countries have created an atmosphere of informational exchange, creating vulnerabilities in. technical intelligence. These vulnerabilities emphasize the significant difficulty the United States encounters in detecting PRC espionage activity.

Political Influence Activities

China continues to devote attention to building political influence in the United States. The increased emphasis dates from the5 visit of Taiwan President Leeisit that caused Chinese leaders to redirect resources towardsetter understanding of Congress and greater political influence in the United States. The same year, Chinese leaders created the Central Leading Group. Congressional Affairs to oversee the task of Increasing support for Chinese objectives.

Much like the rest of the world, the Chinese Government continues to seek influence in Congress through various means, including Inviting Congressional members to visit the PRC, lobbying ethnic Chinese voters and. citizens, and. business Interests to weigh In on issues of mutual concern.

Use of Comnercial Entities for Intelligence operations

During the pastears, China hasotable intelligence capability in the United States through its commercial presence.

China's commercial entitiesignificant role In its pursuit of proprietary/trade. technology. The vast majority of Chinese commercial entities in the United States are legitimate companies; however, somelatform for intelligence collection activities. ommercial entity may not be directly Involved in the acquisition of information/technology, it may provide cover for both professional and non-professional intelligence collectors. Professional collectors are usually affiliated with one of China's Intelligence services, while non-professionals usually collect for themselves. These collectors enter the United States to gather sensitive and/or restricted proprietary/trade secret


information or to actiaison to consumers of intelligence back in China.

The primary targets from which China seeks to acquire sensitive and restricted proprietary/trade. technology are. Government,. corporations, academic institutes, laboratories, as well as persons involved in sensitive and/or restricted work. These operations are usually low-key and singular in nature, thusignificant counterintelligence dilemma for the FBI.

Propaganda and Perception Hanageaent

China primarily uses government-owned or government-controlled press to ensure its views on policy issues are heard in the United States. For example. Wen Wei Po, which appearseriodic supplement to Chinese-language newspapers published in the United States,avored outlet for reaching ethnic Chinese audiences, whose perspectives in turn can Influence the broader public's views of China.


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