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Economic Espionage: The Chinese Strike Again

Three Chinese professors and a graduate student from China-run Tianjin University were among six Chinese citizens indicted last month for alleged theft of technology that helps filter unwanted signals on mobile devices, adding to the lengthy list of economic espionage incidents involving China over the past year.

The 32-count indictment, which had previously been sealed, charged the six individuals with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain US trade secrets for the benefit of universities and companies controlled by the government of the People’s Republic of China (PRC).

According to the FBI, professor Hao Zhang was arrested on May 16, 2015, upon entry into the United States from the PRC in connection with a recent superseding indictment in the Northern District of California. The other five individuals are believed to still be in China.

“The conduct alleged in this superseding indictment reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable US technology through the use of individuals operating within the United States,” said FBI Special Agent in Charge David J. Johnson of the Bureau’s San Francisco Division. “Complex foreign-government sponsored schemes, such as the activity identified here, inflict irreversible damage to the economy of the United States and undercut our national security.”

The investigation is being conducted by the FBI’s Palo Alto Resident Agency/San Francisco Division. The prosecuted is being conducted by Assistant US Attorneys Matt Parrella and Dave Callaway ofthe Northern District of California and the FBI’s National Security Division’s Counterespionage Section.

The six indicted defendants include:

  • Hao Zhang, 36, a citizen of the PRC, is a former Skyworks employee and a full professor at Tianjin University. Zhang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets. Zhang was arrested upon entry into the United States on May 16, 2015.
  • Wei Pang, 35, a citizen of the PRC, is a former Avago employee and a full professor at Tianjin University. Pang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
  • Jinping Chen, 41, a citizen of the PRC, is a professor at Tianjin University and a member of the board of directors for ROFS Microsystems. Chen is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
  • Huisui Zhang (Huisui), 34, a citizen of the PRC, studied with Pang and Zhang at a US university in Southern California and received a Master’s Degree in Electrical Engineering in 2006. Huisui is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
  • Chong Zhou, 26, a citizen of the PRC, is a Tianjin University graduate student and a design engineer at ROFS Microsystem. Zhou studied under Pang and Zhang, and is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
  • Zhao Gang, 39, a citizen of the PRC, is the General Manager of ROFS Microsystems. Gang is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.

“The defendants leveraged their access to and knowledge of sensitive US technologies to illegally obtain and share US trade secrets with the PRC for economic advantage,” Assistant Attorney General John Carlin said in a statement. “Economic espionage imposes great costs on American businesses, weakens the global marketplace and ultimately harms US interests worldwide.”

Zhang and Pang met during their doctoral studies at the University of Southern California where they researched technology known as thin-film bulk acoustic resonator (FBAR) technology under funding from Defense Advanced Research Projects Agency. The technology under development helps to filter wireless signals in devices ranging from mobile phones to tablet computers. Apart from consumer applications, FBAR technology has numerous applications for a variety of military and defense communications technologies.

After earning their degrees in 2005 and 2006, both men accepted positions as FBAR engineers. Pang began working for Avago Technologies, a designer, developer and supplier of analog, digital, mixed signal and optoelectronics components and subsystems. Zhang started at Skyworks, a manufacturer of semiconductors for use in radio frequency and mobile communications systems.

By 2007, the duo were planning to steal the valuable mobile technology, which another conspirator described as simply “moving Avago to China,” according to the indictment. Pang, Zhang and their co-conspirators stole recipes, source code, specifications, presentations, design layouts and other documents marked as confidential and proprietary from the victim companies, and shared the information with one another and with individuals working for Tianjin University.

As this case "demonstrates, sensitive technology developed by US companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology,” said US Attorney Melinda Haag of the Northern District of California, who said, “Combating economic espionage and trade secret theft remains one of the top priorities of this office.”

Over the past ten years there has been a growing effort by the US government to crack down on economic espionage by the Chinese government. Last year, for example, five members of the Chinese military were indicted on charges of hacking six American companies involved in nuclear power, solar energy and metals.

But the espionage doesn’t not stop at there. Earlier this year, Homeland Security Today reported that a hydrologist employed at the National Oceanic and Atmospheric Administration (NOAA) was arrested and charged with stealing sensitive information from a federal database for the nation’s dams. The breach may have been part of a wide-ranging FBI probe of Chinese economic and other forms of espionage.

Furthermore, Homeland Security Today reported in June 2014 that cybersecurity firm Crowdstrike discovered a decade-long Chinese cyber espionage campaign targeting US space, aerospace and communications sectors.

“China’s decades-long economic espionage campaign is massive and unrelenting," CrowdStrike CEO George Kurtz said in a statement. "Through widespread espionage campaigns, Chinese threat actors are targeting companies and governments in every part of the globe."

Indeed. Classified reports shown to Homeland Security Today indicate Chinese espionage has resulted in the procurement of a variety of sensitive US technology going back several decades, including plans for stealth aircraft and the US Space Shuttle.

Although the numerous allegations of Chinese spying operations targeting the US have strained US-China relations over the past several years, the US Department of Homeland Security and China’s Ministry of Public Security have been working on reestablishing a cyber dialogue.

However, it remains to be seen whether the new cyber espionage charges against the six Chinese individuals will impact future cyber talks between the two countries.

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The Government Technology & Services Coalition's Homeland Security Today (HSToday) is the premier news and information resource for the homeland security community, dedicated to elevating the discussions and insights that can support a safe and secure nation. A non-profit magazine and media platform, HSToday provides readers with the whole story, placing facts and comments in context to inform debate and drive realistic solutions to some of the nation’s most vexing security challenges.

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