US and UK intelligence chiefs urge caution against China’s industrial spies

US and UK intelligence chiefs urge caution against China’s industrial spies

The heads of the FBI and MI5 have warned that Chinese industrial espionage poses a growing threat to Western groups, including special purpose acquisition companies.

In a joint appearance in London, the heads of the US and British intelligence agencies urged companies to be much more careful China.

FBI Director Christopher Wray said Beijing uses “elaborate games” to cover up its spying and even uses Spacs.

“The Chinese government poses an even more serious threat to Western companies than even many sophisticated business people realize,” Wray told corporate leaders at an event with his MI5 counterpart, Ken McCallum. “I want to encourage you to take the long view when assessing a threat.”

The intelligence chiefs held the first public event between the two agencies, a move that Wray stressed the need to address proliferation espionage a challenge from Beijing.

McCallum said MI5 had seen a sevenfold increase in China-related investigations since 2018, had doubled its capacity to deal with them in the past three years and was likely to double capacity again in the next “handful of years”.

Wray said FBI field offices across the US open an investigation into Chinese espionage on average every 12 hours.

“We’re not crying wolf,” McCallum said. “Of all the threats, China is the most game-changing in the sense that it permeates many aspects of our national life.”

Wray said Beijing is using “every tool” at its disposal to steal Western technology in an effort to eventually undermine non-Chinese companies and dominate their markets – even stealing genetically modified seeds from US farmland.

He added that the Ministry of State Security, which oversees China’s espionage efforts abroad, was cracking down on Western companies it wanted to “search” to help find corporate secrets. Meanwhile, assessing risks from Chinese counterparts has become increasingly difficult as Beijing has restricted access to data needed for due diligence, he said.

Both intelligence chiefs stressed that China often employs people not directly connected to its intelligence services to they target western companies — a group Wray called the “kooptees.”

They said companies needed to be more attuned to the fact that their dealings with Chinese companies could have ties to Beijing’s intelligence services, which McCallum described as “covert manipulation”.

“When you’re dealing with a Chinese company, know that you’re also dealing with the Chinese government – that’s the MSS and the PLA [People’s Liberation Army] — also, almost as silent partners,” Wray said in his speech.

The two intelligence chiefs urged companies to step up cooperation with the FBI and MI5, highlighting China’s ability to carry out espionage on a large scale across a vast range of activities, and to take the long view, wooing politicians just starting out in their careers.

McCallum and Wray insisted that companies should be more vigilant, but not necessarily give up on China.

“The goal here is not to cut off from China. We want a United Kingdom that is both connected and resilient,” McCallum said.

He cited the presence of 150,000 Chinese students studying at UK universities as “good for them and good for us”. But he said the vetting led to 50 with military connections leaving.

Wray also said business should think more about the implications The Chinese threat to Taiwan after Russia’s invasion of Ukraine, pointing out that Western companies are caught up in Moscow’s sanctions and economic disruptions.

“There were a lot of Western companies that had their fingers in that door when it slammed shut,” he said. “If China attacks Taiwan, we could see the same thing again, on a much larger scale. Just like in Russia, Western investments built up over years can become hostages.”

The Chinese Embassy in Washington denied the allegations by Wray and McCallum. “Some American politicians tarnish China’s image and present China as a threat with false accusations,” the embassy spokesman said. “We strongly oppose their comments.”

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