Intelligence: China And The Economic Espionage Act of 1996


November 2, 2011: On October 18th, Chinese-born Kexue Huang pled guilty in an American court to stealing trade secrets from his employers (Dow Chemical Company and Cargill) and sending them to China and Germany. This was the eighth time someone was charged under the Economic Espionage Act of 1996, a law which made it a federal criminal offense to steal trade secrets. Most of these prosecutions have involved China.

Sometimes the Chinese connection is cleverly concealed. Four years ago, a Chinese engineer (Yuefei Ge) and a Chinese-American one (Lan Lee) were prosecuted for stealing military laser and communications technology, and then seeking backing from a company owned by the Chinese military, to finance the development of military equipment, based on the stolen technology. The two were tried for economic espionage, based on the 1996 Economic Espionage Act.

What was clever about Ge and Lee was that they were not stealing technology for a foreign power, but for the purpose of developing militarily useful applications of the technology. These items would then be sold to China, particularly if the Chinese came through with the research and development money. China has thus mobilized the power of venture capital to encourage their spies. Up until that point, only three people had been convicted of economic espionage, as defined by this Act, but the FBI was finding there was a lot more of it out there. The first conviction in a trial only occurred last year. Most of those caught tend to plead guilty in order to avoid a harsher sentence.

Some of these investigations are uncovering espionage efforts that have gone on for decades. Two years ago, a U.S. court convicted a Chinese born American citizen of spying for China for over 30 years. Born in China in 1936, Dongfan Chung arrived in Taiwan in 1948, and came to the United States in 1962. He then spent four decades working for aerospace firms, mainly Boeing, before he was arrested in 2006. Documents found in his home detailed his long relationship with Chinese intelligence, and his passing on technical details of the Space Shuttle (which Chung spent most of his career working on), in addition to the Delta IV satellite launcher, the F-15 fighter, B-52 bomber, CH-46/47 helicopters, and several other military systems. Chung was still working as a consultant for Boeing when he was arrested. He was sentenced to 16 years in prison, a sentence that was upheld on appeal this year.

Chung was the second person, and first American, convicted under the 1996 Economic Espionage Act. His lawyers admitted that Chung possessed thousands of classified documents in his home, but tried to make the case that he never actually transferred any of this material to Chinese intelligence. The jurors did not believe this defense.




Help Keep Us From Drying Up

We need your help! Our subscription base has slowly been dwindling.

Each month we count on your contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage.
Subscribe   Contribute   Close