Top intelligence and law enforcement officials in Washington are issuing a stark warning to American companies: The Chinese government wants to replace you.
The news emerged in a new CNBC documentary, “China’s Corporate Espionage War,” which details Beijing’s increasingly sophisticated efforts to steal sensitive U.S. technology and corporate information.
For years, corporate America has largely viewed Chinese government and state-owned theft as an attempt to catch up with advanced U.S. technology. But officials now say the effort is more nefarious than widely understood, arguing — in many cases — that adversaries want to eliminate the U.S. companies they target, not just narrow the gap between Chinese companies and their U.S. rivals. gap between.
Asked whether the Chinese government wanted to compete with or eliminate American companies, FBI Director Christopher Frey told CNBC: “Well, I think their definition of competition includes accepting the idea of elimination.”
In an interview, Republican Senator Marco Rubio of Florida warned that U.S. companies doing business with China and risking their high-tech trade secrets are committing “chronic suicide.”
“I think every major American company in any of these areas needs to assume they’re a target to either be replaced or destroyed,” Rubio said.
His Democratic opponent on the committee, Sen. Mark Warner (D-Va.), acknowledged in an interview with CNBC that he had an approach to China that proved to be wrong.
“I’m part of a broader consensus: the more you get China into the (World Trade Organization) … everything happens,” Warner said. “That assumption that we’re all working on, that the closer we get, it’s going to be kumbaya, I think that’s been proven wrong.”
“China’s Corporate Espionage War” details an FBI spying operation that brought down Chinese State Security official Xu Yanjun, a spy who targeted iconic employees of the U.S. aerospace industry, including General Electric Company, Boeing and Honeywell.
In 2017, Xu Yanjun hired an engineer at GE Aviation who had valuable knowledge of the company’s jet engine composite fan blade technology. Posing as an academic official and using a false name, Xu was introduced to a GE engineer who was visiting Nanjing, China, to give a lecture at a prestigious university. Xu began pressing the engineer, who has family in China, to reveal more and more information about engine technology targeted by the Chinese government.
But the FBI discovered the GE engineer’s travels and notified GE, which confronted the engineer in a dramatic meeting at the company’s Cincinnati offices. FBI agents presented the engineer with a stark choice: He could face consequences for his actions thus far, or he could cooperate with U.S. law enforcement to expose China’s operations.
When the engineer agrees to cooperate, he becomes a double agent — working for the FBI against Chinese spies.
James Olson, a former counterintelligence chief with 31 years at the CIA, called the operation a textbook double espionage operation. He added that U.S. intelligence should send more double agents against Chinese intelligence to thwart their efforts to gather U.S. secrets.
The Chinese embassy issued the following statement to CNBC:
The Chinese government has never participated in or supported anyone in stealing trade secrets in any form. Some people and institutions in the US continue to make false accusations. We ask the U.S. to uphold the fairness and handle the case in accordance with the law, and safeguard the legitimate rights and interests of Chinese citizens.
These facts show that China remains a popular destination for foreign investment. The American Chamber of Commerce in South China (AmCham South China) recently released the “White Paper on China’s Business Environment in 2023”, pointing out that more than 90% of the participating companies choose China as one of the most important investment destinations, and 75% of the companies plan to invest in China in 2023. invest again. This is because China has a huge market and a well-established industrial and supply chain network. This is also the result of our unremitting efforts to promote high-level opening up, support for the multilateral trading system, market-oriented, sound legal system, and a world-class business environment.
In January this year, foreign investment flooded into China. The actual use of foreign capital was 127.69 billion yuan, a year-on-year increase of 14.5%. Foreign companies, including American investors, have been bullish on the Chinese market and plan to expand there. According to statistics from the U.S. Department of Commerce, the total U.S.-China trade in goods will reach a record high of $690.6 billion in 2022. This shows that Sino-US trade and investment cooperation is mutually beneficial and win-win. The decoupling and cutting off of industrial and supply chains will not benefit anyone. It has no backing, nor will it lead anywhere.
No matter how the international situation changes, our determination to expand opening up and share development opportunities with the world will not waver. We welcome companies from the United States and other countries to enter the Chinese market, share development dividends, and jointly promote the development of the world economy.
A lawyer representing Xu Yanjun declined CNBC’s request for an interview. Former GE engineer David Zheng and GE Aerospace also declined to comment.
–CNBC’s Katherine Liu, Bria Cousins, Laura Measher and Wally Griffith contributed to this report.
“Chinese Enterprise Espionage War” An hours CNBC documentarypremiering Wednesdays on CNBC at 10 p.m. ET.