Corporate Espionage: US & China Tensions Escalate As Chinese Operatives Discovered In US Companies

Over the past two months, there have been several instances that have led the United States to question its relationship with China.

  • On July 18, the US Department of Justice accused China of sponsoring hackers who were targeting American labs working on COVID-19 vaccines
  • On July 21, 2020, the US ordered China to close its consulate in Houston, Texas, giving them four days to comply with the order
  • After the order was given for the Chinese to leave the Houston consulate, the Houston Fire Department responded to fires at the consulate, suggesting documents were being burned
  • On that Friday, July 24, once the 4 p.m. deadline to vacate the property had been missed, the US pried open the doors of the consulate and took over the building
  • On August 19, 2020, satellites discovered Chinese nuclear Shang Class/Type 093 entering the “Bond Lair” which suggests the remaining Chinese submarine fleet is shadowing US Feet operations

Tensions between the US and China have been on the rise for several years, and the growth of the coronavirus on top of already tense trade wars has worsened the Chinese/US relationship.

We know there is a lot of information speculating why the US chose to close the Chinese consulate in Houston. We always have our finger on the pulse of the intelligence community and want to help you understand what this means to your company and why it’s important.

US Secretary of State, Mike Pompeo, said the decision to close the consulate was because China was “stealing” intellectual property. US Senator Marco Rubio of Florida said the consulate was a “massive spy center”. Additionally, the State Department accused China of engaging in illegal spying and influence operations.

At Kinetic Global, we also believe the consulate was shut down due to the number of originating operations and tradecraft initiatives that were happening inside its doors. The Trump administration themselves have said they believe the consulate was a hub of spy activity by the Chinese Communist Party.

A hotbed of Corporate Espionage

It is our belief that the consulate was shut down because the Chinese were using the embassy as a way to recruit individuals to spy against the United States. This is nothing new, it is part of the world, however, once it became abundantly clear that the Chinese were using the embassy as an instrument of espionage and as a base station of recruitment to launch operations against the United States government, it became a matter of national security.

Spying comes in all different forms. The most common stereotype of a spy is a government official that is blackmailed into spilling secrets. However, there are many other ways to recruit a spy. Many foreign governments target companies such as Boeing, Northrop Grumman, or another defense contractor for workers who have intimate knowledge of trade crafts and trade secrets.

An easy way to find someone with the knowledge needed to report on tradecraft issues is to sift through LinkedIn and search for relevant terms. While government officials such as those who work for the CIA understand they cannot put their work history on websites that are easily searched, others may not be as careful. The result is a simple to access database that is often mined by foreign governments seeking to recruit assets.

There are five steps used by foreign governments to identify a target and bring them on as a part of a corporate espionage operation for both company infiltration.

  1. Spotting: The first step in any espionage recruitment is identifying the right target. The people who “spot” a potential target are usually separate from intelligence officers and often work at think tanks, universities, or corporations.
  2. Assessing: Once the spotter has identified a target, the intelligence officers will examine how they might encourage those targets to spy. Usually, they utilize one of the following tactics: money, ideology, coercion, and ego. Spies want to be paid for their work, believe in the cause, can be blackmailed, or want the ego boost that comes with leading a double life. While they often rely on ideology or coercion in pressuring ethnic Chinese to spy on their behalf abroad, China has proved particularly successful in luring Westerners with money.
  3. Developing: In this stage, a recruiter will begin asking trivial requests or favors to establish rapport. As former CIA director John Brennan said last year, “Frequently, people who go along a treasonous path do not know they are on a treasonous path until it is too late.”
  4. Recruiting: This stage is the direct request to spy. It can be extremely fraught, or extremely easy depending on the target and their motivation.
  5. Handling: Once a spy has been recruited, it must be handled, and it is a daily task to maintain communication. Today’s spy no longer relies on physical “dead drops,” or in-person “brush passes” for covert information exchanges and instead relies on encrypted communication tools, surreptitious cell phones, and emails left in draft folders.

As the Chinese used their embassy to continue to identify, assess, develop, recruit, and handle spies against the United States, it reached a boiling point where our government could no longer allow the behavior to continue. They had to shut down the embassy.

We are always working to keep our customers safe and will continue to monitor the situation as it unfolds.

About Kinetic Global

Kinetic Global is a global duty of care and security company operating in over 175 countries. Utilizing patented technology and ground assets, Kinetic Global provides global threat intelligence, personal safety, travel security, and enhanced mass notification with comprehensive global imagery and proprietary AI algorithms. The Kinetic Global platform ensures operational safety and security oversight to businesses operating worldwide, in partnership with Constellis, the world’s leading risk management organization. A wide range of companies and organizations have implemented Kinetic Global services and products, including several Agencies, NGOs, and Fortune 500 companies. Kinetic Global answers the question of how to inform, notify and provide global response to crisis management.

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