[Congressional Record Volume 149, Number 141 (Wednesday, October 8, 2003)]
[Extensions of Remarks]
[Page E2002]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             CHINA'S SPYING

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                           HON. FRANK R. WOLF

                              of virginia

                    in the house of representatives

                       Wednesday, October 8, 2003

  Mr. WOLF. Mr. Speaker, over the last two weeks I have submitted 
testimony from various groups that I have been meeting with regarding 
China's continual abuse of human rights. Whether it be restrictions on 
religious freedom; the persecution and arrest of Catholics and 
Protestants; the use of barbaric labor camps; the continual 
victimization of members of the Falun Gong; or the abhorrent and 
coercive One-Child policy, China's government continues to show nothing 
but contempt for its citizens and the opinions of the rest of the 
world.
  These offenses alone should be enough to condemn the government of 
China. However, on top of these crimes the People's Republic of China 
poses a great and serious counterintelligence threat to America, the 
extent of which will, I have no doubt, concern our colleagues greatly.


 An Unclassified Report from the FBI on the People's Republic of China 
                    Intelligence Collection Efforts

       The People's Republic of China (PRC) poses a significant 
     counterintelligence threat to the United States (U.S.) via 
     its cadre of professional intelligence officers who collect 
     political, military and economic intelligence, and its 
     network of non-professional individuals and organizations 
     that collect science and technology, high-tech and 
     proprietary information completely outside the direction and 
     control of the PRC Intelligence Services.
       The PRC's professional military intelligence organization, 
     the Military Intelligence Department of the People's 
     Liberation Army (MID/PLA), also known as the Second 
     Department of the PLA (2PLA), relies mainly on intelligence 
     collection through its military attaches. The PRC's military 
     seeks military, science and technology, and some political 
     information through its contacts and agents. In 1987, PRC 
     military attache Hou Desheng was interdicted by FBI Special 
     Agents in Washington, D.C. while receiving and paying for 
     classified U.S. Government information.
       The PRC's professional civilian intelligence, the Ministry 
     of State Security, targets U.S. political and policy 
     information, runs influence operations against Taiwan and 
     other political targets, attempts to penetrate the U.S. 
     Government, and directs a growing number of covert science 
     and technology collection operations. Collection operations 
     from this civilian segment of the PRC Intelligence Services 
     are difficult to counter because the Chinese typically insist 
     that the physical transfer of documents or items take place 
     in the PRC. PRC civilian intelligence officers in the U.S. 
     direct part of their efforts toward developing as many 
     Americans of Chinese ancestry into what the PRC terms 
     ``patriotic Overseas Chinese.''
       An example of the Ministry of State Security's success in 
     penetrating the U.S. Government was the Larry Wu-tai Chin 
     case. Chin, a U.S. Government employee of 30 years, was an 
     actual agent of the Ministry of State Security. While 
     residing in the U.S. and during his employment with the 
     government, Chin provided information to the Ministry of 
     State Security for over 40 years. Chin was arrested for 
     espionage activities in 1985 and was subsequently convicted 
     of those charges in 1986. Chin committed suicide prior to 
     being sentenced.
       Like most countries operating intelligence services within 
     the U.S., the PRC employs a number of commonly-used 
     collection techniques. Their intelligence services attempt to 
     gain access to sensitive foreign facilities, try to meet 
     individuals with access to classified information, and 
     attempt to photograph military installations and equipment. 
     However, the PRC employs several non-traditional methods and 
     unlike most other countries, the PRC makes extensive use of 
     non-intelligence personnel.
       Consumers of intelligence such as China's production 
     facilities, laboratories and research institutes often bypass 
     professional intelligence services in favor of direct 
     intelligence collection efforts. Opportunities to accomplish 
     direct collection within the U.S. are facilitated through the 
     very large number of temporary visitors in private companies, 
     academic institutions, and U.S. Government facilities. A 
     significant number of these delegation members are science 
     and technology experts, often characterized by their American 
     hosts as aggressive and extremely knowledgeable in their 
     professional fields. In many cases, Chinese-Americans 
     employed by these entities and institutions are sought out by 
     members of the PRC delegations as persons who might be 
     willing to assist them.
       In 1997, Peter Lee pleaded guilty to transmitting U.S. 
     national defense information to the PRC. The consumer of 
     Lee's information was a PRC institute, not a traditional PRC 
     intelligence service. In 2002, a PRC national was arrested 
     for attempting to steal proprietary seismic-imaging software 
     from a Silicon Valley company. This was the second 
     unsuccessful attempt by an employee of a PRC based company to 
     obtain this proprietary software within a span of five years. 
     Later in 2002, two PRC nationals were indicted for economic 
     espionage related to their attempted theft of trade secrets 
     from several Silicon Valley companies. These two individuals 
     were subsequently linked to a PRC based high-technology 
     research and development program.
       As the PRC's varied presence in the U.S. continues to grow, 
     more PRC nationals find themselves in positions of direct or 
     indirect access to items of intelligence interest to China. 
     If they can find the right consumer, PRC nationals involved 
     in intelligence collection may be in a position to profit 
     from their services. These individuals do not operate under 
     the direction or control of either the military or civilian 
     PRC intelligence services.
       In 1994, two PRC nationals were indicted on computer fraud 
     and fraud by wire in connection with the theft of $950,000 of 
     proprietary computer source code developed by a U.S. firm. 
     The end-user of the code was a Chinese machinery import and 
     export company. Evidence collected in the investigation 
     indicated that the two perpetrators had shopped the computer 
     source code around for the best price.
       Whether directed by one of its intelligence services, 
     manufacturing sectors or research institutes, the PRC threat 
     to U.S. policy, intelligence, military, national security and 
     proprietary/economic information is growing. In response to 
     this expanding PRC threat, the FBI, in conjunction with the 
     U.S. Intelligence Community, continues to pursue an 
     aggressive and focused counterintelligence program.




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