A GUIDE TO CHINESE INTELLIGENCE OPERATIONS

PETER MATTIS

AUGUST 18, 2015

From government hacks to industrial theft, Chinese intelligence operations are making more headlines now than ever before.

Discussion of China’s intelligence threat often seems over-hyped if not disconnected from reality. Apart from cyber intrusions, little evidence suggests Chinese intelligence deserves the credit for quality that it has received. The most common anecdote of Chinese collection, repeated since the 1990s, is a Chinese official dipping his tie in a chemical solution to get a sample at a tradeshow, and one of the most recent Chinese intelligence success in the United States resulted from the hustling of a Louisiana furniture salesman. This is not the kind of operational sophistication and savvy one would expect of Sun Tzu’s successors.

Instead, the Chinese intelligence threat for many years has come from the scope, scale, and potential impact of Beijing’s collection efforts. From the 1980s onward, the FBI complained of hundreds of potential espionage-related cases involving China, and the Bureau continues to raise the alarm about thepersistence of Chinese collectors attempting to steal from U.S. companies. Amid the cacophony of potential economic espionage cases, the Chinese intelligence services have quietly attempted to penetrate foreign governments by recruiting serving officials, use retirees to work back against their former colleagues, anduse Track II or scholarly exchanges to capture the policy atmosphere in foreign capitals. These operations have never been about operational creativity and skill, but rather persistence and volume.

This is not to say that the Chinese Communist Party does not have a history of sophisticated intelligence operations in the 20^th century, or that its intelligence services are not capable of skilled operations. Many of China’s top diplomats and leaders, from Premier Zhou Enlai to the less well-known Li Kenong andXiong Xianghui spearheaded the party’s intelligence efforts during the civil war. However, in the battles between ideology and professionalism that characterized Mao’s China, many professional spies were purged, gutting the ranks of expertise to be passed down to the next generation on the current scale of the state intelligence bureaucracy. But, as China builds experience and Beijing becomes a global player, operational skill is likely to increase and add another dimension to Chinese intelligence efforts.

Scope and Scale

The range of targets pursued by Chinese intelligence services, and other organizations with surveillance responsibilities, makes it difficult to unravel who is doing what to whom. China’s effort to acquire intelligence for internal security, foreign and national security policymaking, as well as scientific research and technology, almost certainly dwarfs that of other modern states. As the Cox Committee investigating the possible transfer of U.S. nuclear weapons technology to China in the 1990s observed in their final report:

Those unfamiliar with the PRC’s intelligence practices often conclude that, because intelligence services conduct clandestine operations, all clandestine operations are directed by intelligence agencies. In the case of the PRC, this is not always the rule. Much of the PRC’s intelligence collection is independent of MSS [Ministry of State Security] direction.

For many years, variations of the following misleading description have circulated among the U.S. counterintelligence community about how China collects intelligence:

If a beach was an espionage target, the Russians would send in a sub, frogmen would steal ashore in the dark of night and with great secrecy collect several buckets of sand and take them back to Moscow. The Americans would target the beach with satellites and produce reams of data. The Chinese would send in a thousand tourists, each assigned to collect a single grain of sand. When they returned, they would be asked to shake out their towels. And they would end up knowing more about the sand than anyone else.

Keeping aside the fact that national security information is not a public beach, but heavily guarded, the catchy description implies that China’s collection effort is conducted and perhaps even led by amateurs. The metaphor emerged in the 1980s when the FBI became aware of the large number of Chinese nationals collecting seemingly random information without much direction. Upon their return to China, many of these people were then approached by their government. This metaphor also lumped together many different Chinese actors as “intelligence,” many of whom would not be recognized in the West as formal intelligence services or personnel. By combining so many different actors, the metaphor misses that multiple professional systems are operating in parallel to collect foreign intelligence, surveil overseas Chinese, maintain domestic security, and acquire scientific knowledge and technology.

The intelligence services can be divided into civilian and military sides. The Ministry of State Security (MSS) is not unlike an amalgam of CIA and FBI, with officers stationed overseas and distributed internally for counterintelligence and domestic security. Instead of one or two field offices per state like the FBI, the MSS consists of a central ministry, provincial departments, and a countless number of municipal bureaus — all of which possess operational capabilities. Most of their efforts are devoted to monitoring state security threats, including foreigners, within their jurisdiction. However, such surveillance offers useful insights into the potential for recruitment. Many people become potential recruitment targets after first being identified and surveilled inside China. The Ministry of Public Security (MPS) is a national police force, mirroring the MSS structure. After the MSS was created in 1983, the MPS lost most of its counterintelligence and counterespionage functions to the MSS. This ministry’s expanding internal security budget, control over national databases, cyber capabilities, and management of most cities’ networked surveillance resources has brought the police force back into the national security arena.

Within the People’s Liberation Army (PLA), intelligence organizations fall under the General Staff Department (the Second and Third Departments, or, respectively, China’s DIA and NSA equivalents); the General Political Department for intelligence and covert influence operations; the PLA Navy, Air Force, and Second Artillery headquarters; and technical reconnaissance bureaus in the military regions. Much of the military intelligence infrastructure is based in China, but defense attachés and clandestine collectors do operate abroad, including from the service intelligence elements. For example, Taiwan recently captured a “retired” PLA captain, Zhen Xiaojiang, running a spy ring inside Taiwan than ran back to a unit based in Xiamen unrelated to the General Staff Department.

The New China News Agency, better known by its Chinese name “Xinhua,” and other major media outlets file internal reports to the Central Committee or their respective policy systems on topics deemed too sensitive for publication. For those reporters posted abroad, these reports can deal with internal security targets (like Tibetans, Uighurs, Taiwanese, Falungong, and others) or more traditional intelligence targets. The original Xinhua charter explicitly noted this information gathering role. Although most Chinese journalists are not intelligence officers and do not recruit clandestine sources, good journalists can provide information that is not publicly-available, but also not classified.

The purpose of the party’s United Front Work Department is to build and wield political influence inside and outside China, or, as Mao Zedong so directly wrote in a phrase still carried on the department’s website, “to rally our true friends to attack our true enemies.” Though this sort of work is not often discussed in the West, a Politburo Standing Committee member, Yu Zhengsheng, heads this policy system from his position as chief of the Chinese People’s Political Consultative Conference, which provides policy direction for an apparatus that extends down from the center. The department’s responsibilities vary from establishing party committees in private firms to rallying pro-Beijing sentiment in Hong Kong to organizing cross-strait engagement with Taiwan.

The Overseas Chinese Affairs Office and the Ministry of Education also keep tabs on Chinese who live outside of China. The former office maintains ties to overseas Chinese communities and sponsors a variety of Chinese professional associations. The Ministry of Education keeps tabs on Chinese students abroad and helps support students’ and scholars’ associations. Both assist in mobilizing Chinese expats and émigrés for visible displays of support when Beijing wants, such as during the 2008 Olympic torch relay.

For the collection of technology, a formal system under Institute of Scientific and Technical Information of China (ISTIC) exists for the collection and cataloguing of foreign scientific publications and other public information. Chinese researchers are able to request research materials and briefing packets on the state of the field as they move forward. ISTIC was instrumental in developing graduate programs with top universities for informatics, convening professional associations, and publishing professional literature — the hallmarks of a professional cadre. This is all above-board and legal, and some knowledgeable Chinese within the ISTIC system credit the acquisition of foreign technological information with reducing research costs by 40 to 50 percent and time by 60 to 70 percent.

The intelligence agencies named above also have been active, but it would be a mistake to think that all illicit and clandestine theft of foreign technological secrets is handled by the intelligence services. Beijing essentially has createdmarket incentives for economic espionage, at least in strategic sectors, and many Chinese nationals have seen state protection and support as a means of getting ahead. For example, Jin Hanjuan, a Motorola employee, attempted to leave the United States with several hundred million dollars’ worth of the company’s intellectual property to either start her own business or enhance her standing at a Chinese telecommunications firm that also did business with the PLA, but was arrested at the airport.

Potential Impact

The consequences of China’s worldwide intelligence efforts — and especially those impacting U.S. interests — arguably outweigh the intelligence operations of other states, even ones with operational savvy like Cuba, Iran, and Russia. First and foremost, these intelligence efforts inform the policymaking of the world’s second largest economy with commercial interests stretching across the globe. The degree to which Beijing’s actions are thoughtful, deliberate, and well-informed affects nearly every country on the planet.

Second, at least since Chinese leaders brutally put down nationwide demonstrations in June 1989, Washington has been concerned about the possibility of an emerging security competition and the likelihood that the United States could be drawn into a war with China. Conflict could begin on the Korean Peninsula, in the East and South China Seas, or in the Taiwan Strait — or perhaps over something different entirely. Sino–American conflict might be one of those high-impact, low-probability events, but it cannot be dismissed summarily. Foreknowledge of U.S. weapon and surveillance systems as well as access to encrypted communications would allow the PLA to prepare to use its capabilities most effectively against technically superior U.S. forces. As the technology gap between the U.S. and Chinese militaries closes, the costs of a Chinese intelligence advantage go up considerably.

Third, unlike the Soviet Union’s scientific espionage program revealed in the “Farewell Dossier,” China’s program to collect foreign technology and proprietary techniques has a decent chance of propelling China’s economy forward. Much of this collection is not conducted by professional spies, but by scientific and engineering professionals who know exactly what they want to collect and why. They are intelligence amateurs, but subject matter experts. They often focus on acquiring parts to complete systems, because the information frequently is less sensitive — or seen by the United States and U.S. firms as such — and they are trying to solve specific problems as part of the larger project. Unlike the Soviets, the Chinese are not trying to integrate foreign systems into a backwards economy, but rather are trying to take advantage of available technology to make their own products and projects better.

Fourth, China’s intelligence operations affect U.S. security relationships in East Asia, such as encouraging caution on the part of U.S. officials on selling certain kinds of weapons or sharing intelligence. For example, the fact of Chinese espionage cases in Taiwan, rather than knowledge of what was actually stolen, drives some Americans’ concerns that anything shared with Taipei will reach Beijing.

Conclusion

The scope, scale, and potential impact of Chinese intelligence operations may have driven U.S. threat perceptions previously, but there are signs that greater operational sophistication is becoming part of the picture. For example, only recently have U.S. authorities decided to press charges against individuals who the Chinese recruited to feed into sensitive positions, despite a known history of such attempts. In 2010, the FBI arrested Glenn Duffie Shriver — the real case fictionalized in the FBI video “Game of Pawns” — because he nearly joined CIA while in the pay of the MSS. Beijing has gotten better at recognizing potentially useful targets with real potential in their home countries — a job that is now much easier against the United States.

Official Chinese sources, like the Science of Military Intelligence, and pioneers in China’s open source collection system, like rocket scientist Qian Xuesen, define intelligence in a way familiar to Westerners. Intelligence is about practical knowledge that facilitates decision making and reduces the uncertainty intrinsic to policymaking and research. As China’s interests expand and the number of Chinese living abroad increases, Beijing’s intelligence system will have to evolve comparably even as foreign governments become more likely to scrutinize their activities. To do this, ever-more sophisticated operations and tradecraft will likely emerge, whether it is to make officials committing treason feel comfortable and safe, or integrating human and technical means of collection to boost the effectiveness of both.

Peter Mattis is a Fellow in the China Program at The Jamestown Foundation and the author of the recently-published Analyzing the Chinese Military: A Review Essay and Resource Guide on the People’s Liberation Army.