Chinese Spy Boss’ Conviction Marks New Chapter in War on Espionage

·8 min read
Butler County Sheriff’s Office
Butler County Sheriff’s Office

After a federal jury convicted a Chinese spy boss of espionage earlier this month, counterintelligence officials told The Daily Beast that the case could be a seminal moment for the United States, as it works to combat a problem that has the FBI opening a new counterintelligence case into China every 12 hours.

Yanjun Xu, a deputy director of a foreign intelligence branch of China’s Ministry of State Security (MSS), became the first Chinese intelligence official to be extradited to the United States for trial and convicted. But, according to Bill Evanina, a former top official in the Office of the Director of National Intelligence, Xu almost certainly won’t be the last.

“It is a very big deal that we were able to extradite a known [Chinese] intelligence official from Europe,” Evanina said. He left his role as chief of the National Counterintelligence and Security Center earlier this year and is now the CEO of The Evanina Group. “This [transcript] is going to be… used for decades as the proof that the Chinese Communist Party uses a whole of government approach to steal our technology.”

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Evanina continued that, “not to be hokey,” but the Xu case will likely be “analogous to the ’50s or ’60s when we had our first couple of La Cosa Nostra cases that prove they do exist.”

The Xu case is groundbreaking for a number of reasons. For one, it’s the first time a top Chinese spy has been extradited for trial and convicted. There’s importance to that history, as it’s bound to be a legal template for future cases. But there could be actual intelligence that U.S. officials could glean from Xu as well. And there’s diplomatic significance. The Chinese government will almost certainly want the United States to return Xu to China, and China could look to go after Americans in China in retribution—whether they’re suspected spies or not—as an eventual bargaining chip to help facilitate Xu’s homecoming.

Starting in 2013, Xu used multiple aliases to go after a slew of company secrets in the aviation field, targeting insider employees with enticing offers and payment to come to China and give presentations.

But his attempt to steal technology related to GE Aviation’s composite aircraft engine fan—which GE Aviation has guarded closely from competitors—is what did him in, according to court records. Xu targeted a GE employee and invited him to give a presentation at a university in China in 2017, trying to get the employee to hand off corporate secrets along the way. Xu eventually suggested they meet in Europe in 2018.

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The meet was set. But GE and the employee had begun working with the FBI. And when Xu tried his hand at the rendezvous in Belgium, he quickly learned he’d been duped. Xu was apprehended and extradited to the United States.

The stunning conviction comes as the U.S. government is trying to counter a vast array of espionage threats from China; intelligence officials say the United States has been pummeled by Chinese espionage operations in recent years. And as FBI Director Christopher Wray testified on Capitol Hill earlier this year, the U.S. government has experienced a 1,300 percent increase in economic espionage investigations over the last few years.

"I don’t think there is any country that presents a more severe threat to our innovation, our economic security, and our democratic ideas,” Wray told the Senate Intelligence Committee.

As Bloomberg reported last week, U.S. spy agencies have been struggling to provide the amount of information on China that would be helpful to policymakers. The CIA is currently working on launching a China Mission Center to step up intelligence collection on China to better understand Beijing’s every move—and to better fend off Beijing’s espionage operations against U.S. targets.

The timing of Xu’s conviction could get awkward in the coming days. President Joe Biden is set to meet virtually with Chinese President Xi Jinping Monday to discuss “ways to responsibly manage the competition between the United States and the PRC,” White House Press Secretary Jen Psaki said Friday. But Xu’s conviction almost certainly won’t help the relationship between Washington and Beijing, said Jim Olson, the former CIA Chief of Counterintelligence.

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”It’s going to be a setback of course because the Chinese interpret this as very hostile,” Olson told The Daily Beast. ”I don’t think that the Chinese intelligence services or the Chinese government will just sit idly by and let this happen. This is a major blow to them to lose a staff MSS officer and to have that person sitting in U.S. prison for what I anticipate is a lengthy sentence.”

Olson warned ​​Americans very well may be at risk in the coming days if the Chinese are looking for a way to put pressure on the U.S. to give up Xu.

The Chinese government will likely be interested in making a deal to bring home Xu before he can spill more MSS secrets to U.S. officials, Holden Triplett, a former FBI legal attaché in Beijing, told The Daily Beast.

“The longer he stays in the U.S., the more concern there could be from the Chinese side he’s given substantive critical information that could impact any other intelligence operations that he was a part of,” Triplett said. “The Chinese know that, and so will be very interested in getting him back as soon as possible.”

The White House did not return a request for comment.

In the meantime, the conviction against Xu will be helpful for guiding the United States and allies to go after Chinese espionage cells. Evanina said it would be a major step forward for the intelligence community to bring “the techniques, the tactics, the capabilities, the intent, and the tradecraft, to our partners to show them what this looks like, what this feels like so they can see it, identify it, and stop it globally.”

But the conviction wasn’t just going to have a massive impact in U.S. counterintelligence circles; the Chinese intelligence community is likely scrambling behind the scenes, said Olson.

“This is a huge shakeup for the MSS,” said Olson, the author of To Catch a Spy: The Art of Counterintelligence. “I can guarantee you that right now they are having lengthy meetings on how they’re going to revise their theft of American technology as a result of the Yanjun Xu case.”

The news could put the MSS on uneven footing, struggling to come up with new approaches to achieve similar espionage operations in the future. Duyane Norman, a former CIA officer who focused his final years of service on a CIA program meant to help spies and agents evade detection, said that if the MSS was being smart about its spying tactics, it’d take this conviction as an opportunity to regroup and change tradecraft to avoid getting caught up like this again.

“There’s always a question, when you’re using that old tradecraft, are you gonna be caught?” Norman told The Daily Beast. “This ought to be an indicator for them not to do that anymore.”

Chinese intelligence officials frequently go after their targets by contacting them with enticing offers to travel abroad to attend conferences or give presentations, only to later lure them into sharing trade secrets, according to U.S. intelligence officials.

The MSS might be more cautious about using that approach now, Olson said.

“This is going to have tremendous impact on how the Chinese conduct their espionage operations in the United States—particularly the theft of our technology,” he said. “They’re going to be, I hope, gun-shy. They’re going to be worried that the next American they try to recruit could actually be controlled by the FBI, run against them as a double agent.”

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The approach Xu used is a common Chinese espionage recruitment tactic, and the fumble in this case may very well be a black eye to the MSS, agreed John Wetzel, who previously served as a Counterintelligence Special Agent for the Department of Defense.

“These paid for ‘trips’ are a common tactic of Chinese intelligence officers targeting US engineers and academics” and exposing them in court could “inflict cost to MSS operations,” Wetzel told The Daily Beast.

The Chinese government, as it often does in cases of alleged espionage, is now publicly denying Xu tried to steal trade secrets.

A spokesperson from China’s U.S. Embassy, Liu Pengyu, told The Daily Beast that the allegations were “pure fabrication.”

“We demand that the U.S. handle the case according to the law and in a just manner to ensure the rights and interests of the Chinese citizen,” Pengyu said.

But the former U.S. intelligence officials seemed to think the reason why China didn’t fight harder to prevent the Xu case from going to trial—as intelligence services are wont to do—was because the case against him was too strong.

”They were caught so red-handed any kind of denial or obfuscation would be significantly embarrassing,” Evanina said.

Read more at The Daily Beast.

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