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From Dragon to Hydra: The US-Chinese Intelligence Rivalry

China’s espionage must be considered more broadly, as the CCP’s concept of intelligence efforts encompasses a much wider range of activities than the American perspective.

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The story of American and Chinese Espionage Photo Credits: Politico
Article byRule Johnstone
April 7, 2022

The story of American and Chinese espionage is an odd one, primarily for two reasons; the unusual relationship between the countries’ agencies in terms of norms and behavioral expectations, and the place which intelligence agencies hold in the bureaucratic panorama of the respective countries’ governments.

Although China’s intelligence services – primarily the Ministry of State Security (MSS[1]) – run traditional espionage activities (such as human intelligence collection), the CCP and its intelligence agencies have heavily invested in alternate types of espionage, notably industrial and intellectual property, areas often less utilized by other spy services in the international arena. Secondly, due to several peculiarities in the evolution of China's institutions over the last half century (such as heavy purges of talented officers during the Mao era), their intelligence capabilities tilt heavily towards the counterintelligence side at the expense of some other typical intelligence activities. This is not necessarily accidental however, as the CCP’s aim for its intelligence apparatus is “to create a panoptic state, a capacity that goes beyond what normally is thought of as domestic intelligence.[2]” This level of domestic intelligence is in service of a “social management system.”

Intelligence engagement with China is more difficult to define than with most countries; this is largely because China's spy agencies are so interwoven into the state that distinguishing their actions from the broader CCP regime is quite difficult.[3]

Human Intelligence

While stealing industrial and intellectual property secrets is arguably the core of Chinese collection efforts, the CCP still runs traditional human intelligence. One well-known example is Katrina Leung, who emigrated to the US from China as a teenager and, after finding success in academia and business, built a network of political and corporate contacts in Los Angeles. With her import-export contacts in China, Leung began to provide information to the FBI. However, not only was it revealed that Leung had been a double agent for the MSS all along but was also engaged in sexual affairs with two of her FBI handlers, likely providing her with additional access to sensitive information and documents.[4] Leung is a classic story of skillful human intelligence gathering and successful execution of the tradecraft method known as “honey trapping.”

The Road Diverges

Starting in 1989, the amount of foreign intelligence engagement within China and by the CCP increased significantly, China’s espionage demands surged, but the documentation of Chinese activity by foreign powers diminished.[5] Talent-wise, the post-Mao Chinese intelligence services had been reformed repeatedly and gutted of much of their best officers, largely a result of paranoia-fueled ideological purges.[6] Most pointedly, the United States’ victory in the 1991 Gulf War catalyzed the two primary focal paths for Chinese intelligence going into the future: large-scale industrial espionage, and an ideological reconceptualization of the classic strategic concept of encirclement.

Industrial Espionage

It is difficult to know the full reach of Chinese intelligence. Private properties all over the globe have been bought up by Chinese investors and it is hard to gauge whether these are mere investments or bear the fingerprint of the CCP. Yet, this raises suspicion, especially when many of these properties are so strategic, with their location adjacent to Western military bases, where such private properties could easily be used as SIGINT listening posts. An example is the purchase of the Hotel Del Coronado in San Diego – meters away from a huge portion of the US Pacific fleet, and the location of Naval Special Warfare Command, the home of the Navy SEALs.[7]

An effort of unquestionable scale, however, is industrial espionage. On the one hand, we could view China’s industrial espionage through the lens of the estimated $400 billion a year cited by former NSA director Keith Alexander’s famous “greatest transfer of wealth in history quote.” But the specifics are even more unnerving. Following the 1991 Gulf War, CCP leadership knew that they seriously lagged behind in terms of military technology. So, they decided to steal it. At present, it is estimated that every single major Chinese weapons platform is based on a stolen US equivalent.[8] A specific industrial espionage case illuminates the disturbing methodology behind this astonishingly successful effort.

To consider the gravity of this operational philosophy, consider the words of former CIA counterintelligence chief James Olson: “Their chosen method works, so they do the same thing repeatedly: they dispatch Chinese scientists, engineers, and students to the US in the hope that they can eventually acquire US citizenship, gain employment in the government or high technology sector, obtain a security clearance, and then, when all goes well, get access to classified or proprietary information of value to China...The onslaught of Chinese spying is so massive that it overwhelms US counterintelligence capabilities and resources.[9]” This is the day-to-day blocking and tackling of China’s grand-scale intellectual property theft.

An Evolution of Capabilities

The second focus of the MSS and China’s intelligence services stems from the work of two senior PLA Colonels, Qiao Liang and Wang Xiangsui, who in 1999, would write a seminal text called Unrestricted Warfare. Drawing on Sun Tzu-based concepts of strategic encirclement, this complex strategy – often compared to the game of Go as contrasted to comparatively linear Western chess[10] – became the core of CCP policy. Though written by military officers, this strategy’s core tenet is that it “dramatically broadens the definition of war beyond battlefield dominance,[11]” and is therefore critical to an understanding of Chinese intelligence, which places espionage at the tip of the spear of this dynamic strategy.

China’s espionage must be considered more broadly, as the CCP’s concept of intelligence efforts encompasses a much wider range of activities than the American view. Indeed, even some of the most astute Western analysts admit that to include the full range of activities Chinese intelligence actually engages in makes the category of intelligence meaningless.[12] But this is typical of Western thinking, which is accustomed to compartmentalizing separate political and security functions within government. But within an autocracy, a unified strategy is more attainable, and Unrestricted Warfare is so effective because it “involves expanding the definition of war, drawing in non-traditional categories of conflict, leveraging aspects of the international system to constrain the United States, and thereby creating a bandwidth challenge where Washington would struggle even to perceive the entire range of Chinese activity, let alone respond coherently to it.[13]” Since 2003, that strategy was officially codified as the “Three Warfares” policy, which combines media warfare, psychological warfare, and legal warfare under the umbrella of covert action.[14] Chinese intelligence undertakes a wide range of activities through this strategy to keep detection levels below the threshold of international condemnation.

Many Americans are aware of the widespread industrial and intellectual property theft perpetrated by China. But a prime takeaway should be how this massive effort is only part of the broader strategy employed by the CCP, and much, if not most, is channeled through the sprawling Chinese intelligence apparatus. Whether out of indifference or unawareness, American attitudes must collectively shift to understand a foe who has declared war on us through the cracks in our system. It is a different kind of Normandy, one where the Chinese intelligence agencies silently lead the assault. The beach has already been taken.

[1] Olson, James M. To Catch a Spy: The Art of Counterintelligence. Washington, DC: Georgetown University Press, 2019. Pg. 2.

[2] Mattis, Peter. The Analytic Challenge of Understanding Chinese Intelligence Services. Studies in Intelligence Vol. 56, No. 3 (September 2012)

[3] Mattis, Peter. China’s Digital Authoritarianism: Surveillance, Influence, and Political Control. Hearing Before the House Permanent Select Committee on Intelligence. May 16, 2019. Pg. 2.

[4] Olson, 4-5.

[5] Mattis, Peter and Brazil, Matthew. Chinese Communist Espionage: An Intelligence Primer. Annapolis, Maryland: Naval Institute Press, 2019. Pg. 12.

[6] Ibid., 10.

[7] Kilcullen, David. The Dragons and The Snakes: How the Rest Learned to Fight the West. New York: Oxford University Press, 2020. Pg. 168.

[8] Olson, 7-8.

[9] Olson, 132.

[10] Lai, David. Learning From The Stones: A Go Approach to Mastering China’s Strategic Concept, Shi. Carlisle, PA. Strategic Studies Institute, May 2004.

[11] Kilcullen, 201.

[12] Mattis, The Analytic Challenge of Understanding Chinese Intelligence Services, 49.

[13] Kilcullen, 204.

[14] Jones, Seth G. Three Dangerous Men: Russia, Iran, and The Rise of Irregular Warfare. New York: Norton, 2021. Pg. 147.

DISCLAIMER: All views expressed are those of the writers and do not necessarily represent that of the IWAB platform.