Speaking during a video event from the Hudson Institute in Washington, D.C., on July 7, FBI Director Christopher Wray said that the greatest long-term threat to the United States’ information and intellectual property, and to its economic vitality, is the counterintelligence and economic espionage threat from China. “It’s a threat to our economic security — and by extension, to our national security,” he said.
FBI Director Christopher Wray discusses the threat China poses to U.S. economic and national security during a July 7, 2020 video event at the Hudson Institute in Washington, D.C.
“We cannot close our eyes and ears to what China is doing — and today, in light of the importance of this threat, I will provide more detail on the Chinese threat than the FBI has ever presented in an open forum,” Wray said. “This threat is so significant that the attorney general and secretary of state will also be addressing a lot of these issues in the next few weeks. But if you think these issues are just an intelligence issue, or a government problem, or a nuisance largely just for big corporations who can take care of themselves — you could not be more wrong.”
The FBI director said that the people of the United States are victims of what amounts to Chinese theft on a scale so massive that it represents one of the largest transfers of wealth in human history. “If you are an American adult, it is more likely than not that China has stolen your personal data,” he said.
Wray explained that in 2017, the Chinese military conspired to hack Equifax and made off with the sensitive personal information of 150 million Americans, nearly half of the American population and most American adults. He said it was hardly a standalone incident. “Our data isn’t the only thing at stake here — so are our health, our livelihoods and our security,” he said.
According to Wray, the FBI is opening a new China-related counterintelligence case about once every 10 hours. Of the nearly 5,000 active FBI counterintelligence cases currently underway across the country, he said, almost half are related to China. He said China is working to compromise American health care organizations, pharmaceutical companies and academic institutions conducting essential COVID-19 research. Wray emphasized that he was not speaking of the Chinese people as a threat, saying he meant the government of China and the Chinese Communist Party.
Exploiting American Openness
Wray emphasized that China’s closed system is fundamentally different from the open U.S. system, which gives it a distinct advantage. “Many of the distinctions that mean a lot here in the United States are blurry or almost nonexistent in China — I'm talking about distinctions between the government and the Chinese Communist Party, between the civilian and military sectors, and between the state and the ‘private’ sector,” he said.
Wray said that for one thing, many large, Chinese businesses are state-owned enterprises that literally are owned by the government, and thus by the Communist Party. Even if they are not, he said, China’s laws allow its government to compel any Chinese company to provide any information it requests — including American citizens’ data.
Moreover, he said, Chinese companies of any real size are legally required to have Communist Party cells inside of them to keep them in line. Even more alarmingly, Wray said, Communist Party cells have reportedly been established in some American companies operating in China as a cost of doing business there.
Huawei at Mobile World Congress “These kinds of features should give U.S. companies pause when they consider working with Chinese corporations like Huawei — and should give all Americans pause, too, when relying on such a company’s devices and networks,” Wray said. “As the world’s largest telecommunications equipment manufacturer, Huawei has broad access to much that American companies do in China. It’s also been charged in the United States with racketeering conspiracy and has, as alleged in the indictment, repeatedly stolen intellectual property from U.S. companies, obstructed justice and lied to the U.S. government and its commercial partners, including banks.”
The FBI director said that the allegations are clear: “Huawei is a serial intellectual property thief, with a pattern and practice of disregarding both the rule of law and the rights of its victims. I have to tell you, it certainly caught my attention to read a recent article describing the words of Huawei’s founder, Ren Zhengfei, about the company’s mindset. At a Huawei research and development center, he reportedly told employees that to ensure the company’s survival, they need to — and I quote — ‘surge forward, killing as you go, to blaze us a trail of blood.’ He’s also reportedly told employees that Huawei has entered, to quote, ‘a state of war.’ I certainly hope he couldn’t have meant that literally, but it’s hardly an encouraging tone, given the company’s repeated criminal behavior.”
In our modern world, Wray said, there is perhaps no more ominous prospect than a hostile foreign government’s ability to compromise American infrastructure and devices. If Chinese companies like Huawei are given unfettered access to our telecommunications infrastructure, he said, “They could collect any of your information that traverses their devices or networks. Worse still: They’d have no choice but to hand it over to the Chinese government if asked — the privacy and due process protections that are sacrosanct in the United States are simply non-existent in China.”
Scope of Chinese Regime and Its Ambitions
“China — the Chinese Communist Party — believes it is in a generational fight to surpass our country in economic and technological leadership,” Wray said. He said that China is engaged in a whole-of-state effort to become the world’s only superpower by any means necessary.
China uses a diverse range of sophisticated techniques — everything from cyber intrusions to corrupting trusted insiders, according to the FBI director. He said they have engaged in outright physical theft and have pioneered an expansive approach to stealing innovation through a wide range of actors, including not only Chinese intelligence services but also state-owned enterprises, ostensibly private companies, certain kinds of graduate students and researchers, and a whole variety of other actors working on their behalf.
“To achieve its goals and surpass America,” Wray said, “China recognizes it needs to make leaps in cutting-edge technologies. But the sad fact is that instead of engaging in the hard slog of innovation, China often steals American intellectual property and then uses it to compete against the very American companies it victimized — in effect, cheating twice over. They’re targeting research on everything from military equipment to wind turbines to rice and corn seeds.”
Referring to what China calls the Thousand Talents Program, a talent recruitment program, Wray said the Chinese government tries to entice scientists to bring U.S. knowledge and innovation back to China secretly — even if that means stealing proprietary information or violating U.S. export controls and conflict-of-interest rules.
Citing the case of scientist Hongjin Tan, 36, a Chinese national and American lawful permanent resident, Wray said the scientist applied to China’s Thousand Talents Program and subsequently stole more than $1 billion worth of trade secrets from his former employer, the Oklahoma-based Phillips 66 petroleum company, and was caught. A few months ago, he was convicted and sentenced to two years in prison.
Another case Wray cited is that of Shan Shi, 55, a Texas-based scientist, also sentenced to prison earlier this year. He said Shi stole trade secrets regarding syntactic foam, an important naval technology used in submarines. Shi, too, had applied to China’s Thousand Talents Program, and specifically pledged to “digest” and “absorb” the relevant technology in the United States. “He did this on behalf of Chinese state-owned enterprises, which ultimately planned to put the American company out of business and take over the market,” Wray said.
The Chinese government is also making liberal use of hacking to steal U.S. corporate and personal data, using both military and non-state hackers to do it, Wray said. The intrusion into Equifax led to the indictment of Chinese military personnel, and he said it was hardly the only time China stole the sensitive personal information of huge numbers of the American public.
Wray cited examples including a 2015 incident in which China’s hackers stole the personal data of 80 million of health insurer Anthem’s current and former customers or one of its associated insurers. He said that in 2014, China’s hackers stole more than 21 million records from the federal government’s Office of Personnel Management.
“Why are they doing this?” Wray asked. “First, China has made becoming an artificial intelligence world leader a priority, and these kinds of thefts feed right into China’s development of artificial intelligence tools. Compounding the threat, the data China stole is of obvious value as they attempt to identify people for secret intelligence gathering. On that front, China is using social media platforms — the same ones Americans use to stay connected or find jobs — to identify people with access to our government’s sensitive information and then target those people to try to steal it.”
Threats to Academia
According to the FBI director, China pays scientists at American universities to bring U.S. knowledge and innovation secretly back to China, including valuable, federally funded research.
To put it bluntly, this means American taxpayers are effectively footing the bill for China’s own technological development.
— Christopher Wray, FBI Director
“To put it bluntly, this means American taxpayers are effectively footing the bill for China’s own technological development,” Wray said. “China then leverages its ill-gotten gains to undercut U.S. research institutions and companies, blunting our nation’s advancement and costing American jobs.”
In May alone, Wray said, the FBI arrested both Qing Wang, a former researcher with the Cleveland Clinic who worked on molecular medicine and the genetics of cardiovascular disease, and Simon Saw-Teong Ang, a University of Arkansas scientist doing research for NASA. The FBI alleged that both were committing fraud by concealing their participation in Chinese talent recruitment programs while accepting millions of dollars in American federal grant funding.
Malign Foreign Influence
Another tool that Wray said China and the Chinese Communist Party use to manipulate Americans is what the FBI calls malign foreign influence.
“Traditional foreign influence is a normal, legal diplomatic activity typically conducted through diplomatic channels,” Wray said. “But malign foreign influence efforts are subversive, undeclared, criminal or coercive attempts to sway our government’s policies, distort our country’s public discourse and undermine confidence in our democratic processes and values.”
Threats to the Rule of Law
Wray explained that since 2014, Chinese General Secretary Xi Jinping has spearheaded a program known as Fox Hunt. He said China describes Fox Hunt as some kind of international anti-corruption campaign, but it is not. Instead, he said, Fox Hunt is a sweeping bid by General Secretary Xi to target Chinese nationals whom he sees as threats and who live outside China, across the world. “We’re talking about political rivals, dissidents and critics seeking to expose China’s extensive human rights violations,” Wray said.
Hundreds of the Fox Hunt victims that China targets live in the United States, Wray said, and many are American citizens or green card holders. He said the Chinese government wants to force them to return to China, and he described China’s tactics to accomplish that as shocking.
Responding Effectively to the Threat
The Chinese government is engaged in a broad, diverse campaign of theft and malign influence, the FBI director said, and it can execute that campaign with authoritarian efficiency. He said that they are calculating, persistent and patient, all the while not being subject to what he called the righteous constraints of an open, democratic society or the rule of law.
“China, as led by the Chinese Communist Party, is going to continue to try to misappropriate our ideas, influence our policymakers, manipulate our public opinion and steal our data,” Wray said. “They will use an all-tools and all-sectors approach — and that demands our own all-tools and all-sectors approach in response. Our folks at the FBI are working their tails off every day to protect our nation’s companies, our universities, our computer networks, and our ideas and innovation. To do that, we’re using a broad set of techniques — from our traditional law enforcement authorities to our intelligence capabilities.”
Wray noted that the FBI is having success. He said that with the help of many foreign partners, the FBI has arrested targets all over the globe. He said the agency’s investigations and the resulting prosecutions have exposed the tradecraft and techniques the Chinese use, raising awareness of the threat and American industries’ defenses. The arrests also show American resolve and the ability of the United States to attribute these crimes to those responsible, he said.
“It’s one thing to make assertions — but in our justice system, when a person or a corporation is investigated and then charged with a crime, we have to prove the truth of the allegation beyond a reasonable doubt,” Wray said. “The truth matters — and so, these criminal indictments matter. And we’ve seen how our criminal indictments have rallied other nations to our cause — which is crucial to persuading the Chinese government to change its behavior.”
The FBI also is working more closely than ever with partner agencies in the United States and abroad, Wray said. “We can’t do it on our own; we need a whole-of-society response,” he said. “That’s why we in the intelligence and law enforcement communities are working harder than ever to give companies, universities and the American people themselves the information they need to make their own informed decisions and protect their most valuable assets.”
Confronting the threat effectively does not mean the United States should not do business with the Chinese, Wray said, nor does it mean the United States should not host Chinese visitors, welcome Chinese students or coexist with China on the world stage. However, he said, it does mean that when China violates U.S. criminal laws and international norms, the United States will not tolerate it, much less enable it.
“The FBI and our partners throughout the U.S. government will hold China accountable and protect our nation’s innovation, ideas, and way of life — with the help and vigilance of the American people,” Wray said.