Industrial espionage: How China Steals America’s Tech Secrets

Former General Electric Power employee Zheng Xiaoqing was stunned by the seemingly harmless image.

According to the DOJ indictment, a U.S. citizen hid private material stolen from his employer in his binary digital photograph of the sunset, which Mr. Zheng sent to himself.

This was a method of hiding a data file within the code of another data file known as steganography. Zheng used it multiple times to steal important files from GE.

GE is a multinational company best known for the healthcare, energy and aerospace industries, making everything from refrigerators to aircraft engines. The turbine was designed by Zheng Zheng. It was sent to his accomplice in China and was worth millions of dollars. Ultimately, it will benefit not only the Chinese government, but also Chinese companies and institutions.

Zheng earlier this month he was sentenced to two years in prison. This is the latest in a long line of similar indictments by US officials. Chinese national Xu Yanjun, described as a career spy, was sentenced to 20 years in jail in November for conspiring to steal trade secrets from multiple US aviation and aerospace businesses, including GE.

It is part of a larger conflict in which China seeks technological know-how to fuel its economy and threaten the geopolitical system, while the United States works hard to prevent a major opponent to American power from forming.

Trade secret theft is appealing because it allows countries to “leapfrog up global value chains very quickly – and without the costs, both in terms of time and money, of relying entirely on indigenous skills,” according to Nick Marro of the Economist Intelligence Unit.

Last July, FBI Director Christopher Wray told a group of business leaders and academics in London that China intended to “ransack” Western companies’ intellectual property in order to accelerate its own economic development and eventually dominate critical industries.

He said that it was snooping on organizations everywhere “from major cities to tiny towns – from Fortune 100s to start-ups, folks that focus on everything from aviation, to AI, to pharma”. At the time, Chinese foreign ministry spokesman Zhao Lijian said Mr. Lei had “slandered China” and had a “Cold War mentality.”

“China is trying to destabilize our position,” he said.
FBI agent Alan Kohler Jr. said in a DOJ statement on Zheng that China was targeting “American innovation” and “seeking to overthrow its position as world leader.”

Zheng is a Turbine Seal Technology Engineer, working on various leak containment solutions for Steam Turbine Engineering. According to the DOJ, such seals improve turbine performance “by improving power output, efficiency, or by extending engine life.”

The development of China’s aviation industry depends on the development of the gas turbines that power aircraft. Aerospace equipment is one of 10 areas targeted for rapid development by Chinese authorities to reduce, and ultimately exceed, the country’s dependence on foreign technology.

However, Chinese industrial espionage also targets various other areas.

According to Ray Wang, founder and CEO of Silicon Valley-based consulting firm Constellation Research, these include drug development and nanotechnology (nanoscale technology used in areas such as health, textiles, fabrics, and automobiles). engineering and technology). A nanometer is one billionth of a meter in length.

Pharmaceuticals are part of this, as is bioengineering, and is concerned with replicating biological processes for goals such as the development of biocompatible prostheses and the growth of regenerative tissue.

Wang recounted an incident in which the former director of research and development at a Fortune 100 company said he was “the person he trusted the most” — someone close enough that his children grew up with. The Chinese were the Communist Party.

“He made it clear to me that there are spies everywhere,” he claimed.
Maro explained that industrial espionage from countries such as Japan, South Korea, Taiwan and Singapore has been a problem in the past. But as indigenous businesses establish themselves as creative leaders and want to protect their intellectual property, governments begin to introduce laws to take the issue more seriously.

“We have seen a significant increase in domestic intellectual property protection over the past decade as Chinese companies have become more inventive,” he added. China has also accumulated know-how by requiring foreign companies to share their technology in exchange for access to the Chinese market through joint venture agreements. Despite protests, the Chinese government has consistently denied allegations of coercion.

“Joke” Hacking Deal
There have been initiatives specifically to limit hacking.

In 2015, the United States and China signed a pact that committed them not to engage in “cybercriminal theft of intellectual property, including trade secrets and other sensitive company information, for financial gain.

The following year, the U.S. National Security Agency accused the Chinese of violating the agreement, but admitted that the number of attempts to access government and corporate data had dropped “dramatically.” However, many believe the overall impact of the deal will be small. Wang called it a “joke”. Chinese cyber espionage in the United States is “pervasive” and extends to academic labs. “It’s happening in every sector of Western industry,” he told the BBC.

However, Lim Taiwei of the National University of Singapore said there was no “conclusive and incontrovertible study” on the scale of the incident. “China’s cyber espionage against the U.S. dipped temporarily, but some believe it has since returned to previous levels. explained.

On the other hand, the United States deliberately undermines China’s progress in critical semiconductor businesses that are vital to everything from mobile phones to weapons of war by claiming that China’s use of semiconductor technology poses a threat to national security. trying to hinder

Washington in October enacted some of the broadest export restrictions ever, requiring licenses from companies shipping chips containing U.S. equipment or software to China, regardless of where in the world they were manufactured. Did. Washington-imposed restrictions also bar US citizens and permanent residents from working for some Chinese chip companies. Green card holders are permanent residents of the United States who have the right to work in the United States.

The US beats China in the chip war.
While these moves will hinder China’s technological progress, they will also accelerate China’s efforts to exclude U.S. and other foreign products from its technology supply chain, Maro said.

“China has been trying to do this for years, with modest success, but recent U.S. sanctions mean that these policy goals must now become more urgent.

And with China at the forefront of national security, the race for technological supremacy between her two largest economies in the world is only intensifying. But Wang believes the US still has the upper hand.

“My cybersecurity friends told me that when they attack Chinese sites, the only valuable technology they can discover is US intellectual property.

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