By Philip Caruso
On Jan. 15, FBI agents arrested Jerry Chun Shing Lee, a former CIA case officer, and charged him with unlawful retention of classified information. Lee is the sixth person charged by the Justice Department in the past two years for espionage-related offenses suspected to have been conducted on behalf of the People’s Republic of China. By comparison, prior to 2015, only one or two people on average per year were arrested for such offenses. The increased frequency of arrests—coinciding with a public March 2016 announcement by the Chinese government that intelligence efforts would be more heavily resourced—may indicate that China is scaling up traditional human intelligence efforts against the United States government.
Lee’s arrest seemingly stemmed from FBI agents’ discovery of classified information in his notebooks in 2012. The nature of that information—the identities, telephone numbers, and activities of CIA informants in China—has led intelligence officials to suspect Lee of exposing dozens of informants reportedly killed, imprisoned, or forced to become double agents by Chinese intelligence services since 2010.
Lee may have been one of the Chinese government’s most valuable spies in decades. But there are many other examples of Chinese intelligence efforts to recruit American informants. In June 2017, the Justice Department charged former State Department employee Kevin Mallory with providing classified information to Chinese intelligence officers in exchange for cash. In March 2017, the department charged State Department employee Candace Marie Claiborne with obstruction of justice and making false statements related to her contacts with Chinese intelligence officers, who lavished her with cash and gifts. In June 2016, former IBM employee Xu Jiaqiang was charged with economic espionage on behalf of China—two months after nuclear engineer Szuhsiung Ho was charged with conspiracy to act as an agent of the Chinese government. And in March 2016, the Justice Department charged FBI employee Kun Shan Chun with acting as a Chinese agent, having supplied sensitive information to Chinese intelligence officers in exchange for cash.
These cases might seem like relatively run-of-the-mill espionage and counterespionage affairs. However, over the last few years, the Communist Party has clearly turned its attention to both military and civilian intelligence reform, including the creation of a foreign-intelligence-focused entity. Moreover, the recent uptick in arrests comes against a baseline of historically limited Chinese human intelligence activity directed at foreigners. Chinese intelligence services have long co-opted the growing number of Chinese nationals living and traveling abroad for intelligence purposes, in part due to reduced risk. By leveraging a large network of individuals to each collect small pieces of information, the risk of detection and prosecution was diminished. But stealing valuable military and intelligence information requires the recruitment of American spies with privileged access to such information and in positions of scrutiny by U.S. counterintelligence entities—a far riskier proposition for China, potentially leading to embarrassment and international incidents. Thus far, that risk has made the relative anonymity of other espionage tools, such as cyber intrusions, more attractive for stealing government secrets.
So why does China appear to have stepped up this riskier form of human intelligence now? What’s changed?
The latest human intelligence campaign coincides with a decade of growing strategic competition between China and the U.S. for influence in the Asia-Pacific region, characterized by confrontational statements by both sides over trade, North Korea, the South China Sea, Taiwan, and more. The establishment of Chinese military bases in the South China Sea, U.S. naval freedom of navigation operations, China’s declaration of air defense identification zones, U.S. arms sales to Taiwan, and potential U.S. military action in North Korea have all raised the risk of miscalculation by either the U.S. or China, which in turn has motivated China to redouble efforts to better understand U.S. military capabilities, readiness, intentions, and decision-making regarding any future crisis. And to assess intentions and decision-making, few tools are as effective as human intelligence.
For this reason, the past ten years have given China a strong incentive to increase human intelligence directed towards U.S. government employees in order to avoid a catastrophic confrontation with the United States. And alongside this new incentive, several factors have combined to benefit Chinese intelligence services and enable the growth of the country’s human intelligence operations.
First, the free movement of people and information throughout the globalized world facilitates human intelligence collection targeting Americans. During the Cold War, few Americans and Chinese traveled between their respective countries. It was difficult for American agents of Chinese intelligence services to travel to or from the China without being caught. This intensified the risk of information and money transactions between countries.
Since the Cold War, however, such barriers have largely fallen. The number of Chinese visitors to the U.S. surged sixteen-fold to almost four million between 2002 and 2017. In addition, immigration from the China to the U.S. has increased from less than 40,000 annually in the late 1980s to almost 75,000 annually in 2015. Of course, the vast majority of such travel and immigration is benign. But the practical challenge of mounting an effective and continuous counterintelligence response to such a large influx of people creates an opening for foreign intelligence activity.
Second, the economic relationship between the U.S. and China enables Chinese human intelligence collection intertwined with legitimate business activities. Since Deng Xiaoping opened China to foreign businesses, U.S. and Chinese companies have become significantly more globalized in their operations and investments. China is the U.S.’s second largest trading partner. Despite rising manufacturing costs, many U.S. companies still depend on China for production, especially for advanced technology. Although entanglement—the interdependence between China and the U.S. that makes harm inflicted on the U.S. also impose costs on China—may prevent Chinese intelligence services from seeking to damage the U.S. economy, it also facilitates espionage by increasing access to people and information. Equally importantly, entanglement raises the costs for U.S. decision-makers contemplating counterintelligence measures. For example, due to the competing priorities of economic growth and foreign policy objectives like North Korean denuclearization, the U.S. government may be less likely to expel Chinese citizens suspected of espionage activity in the U.S.
Third, advances in technology and communication have empowered human intelligence operations broadly. Modern technology makes it much easier for foreign intelligence services to communicate with their informants in the U.S. from afar. Kevin Mallory, for example, transmitted classified documents to his Chinese handlers using an encrypted communication device; it was not until the device itself was searched by investigators that proof of information transmission was found.
Finally, additional factors impede counterintelligence efforts against Chinese espionage. The increasing number and scale of counterintelligence threats in the U.S. has made the job of counterintelligence and law enforcement officials significantly more difficult, the most obvious challenge being the proliferation of adversaries with an increasingly complex array of espionage tools at their disposal. In 1985, the former Soviet Union was the United States’ most capable and active adversary. Today, the U.S. faces both Russia—which has largely maintained the capabilities developed by the Soviet Union—and China, whose intelligence services have developed capabilities that compare to those of Russia. Meanwhile, Chinese intelligence services have adopted effective Russian tactics while developing others of their own. And in addition to the growing number and scope of counterintelligence threats, other national security threats like terrorism have captured the focus, resources, and attention of the U.S. intelligence community. These problems have generated a division of resources and focus that in turn have led to a lack of coordination by U.S. government agencies.
Faced with a heightened scope of Chinese human intelligence operations, how is the U.S. to best respond? The sophisticated tradecraft associated with espionage makes it challenging for U.S. law enforcement officers to collect evidence sufficient for espionage prosecution. However, prosecutors and investigators have more thanespionage laws at their disposal depending on available evidence. They can charge suspected spies with acting as an unregistered agent of a foreign government, mishandling or disclosing classified information, false official statements, and obstruction of justice, to name a few. By comparison, computer fraud, theft, economic espionage, and other charges are particularly useful for prosecuting cyberespionage, as demonstrated by the Justice Department’s unusual decision to charge People’s Liberation Army hackers directly in 2014.
But the toughest obstacles facing the enforcement of espionage laws in the U.S. involve the law enforcement apparatus itself. During the Cold War, the activities of foreign intelligence services captured the attention and emphasis of law enforcement and the broader national security establishment. Today, they are a smaller part of a broad and competing array of threats that have diverted resources and focus elsewhere. In the 1990s, the fall of the Soviet Union and the proliferation of nuclear weapons led to the rise of counterproliferation as a priority focus for many U.S. intelligence and law enforcement agencies. After 9/11, the rapid growth of counterterrorism as a focus further crowded competing priorities for agencies like the FBI, the CIA, and the Pentagon. And most recently, the threat of cyberespionage and cyberattacks have consumed yet even more bandwidth of intelligence and law enforcement agencies. Overall funding dedicated to national security, intelligence, and law enforcement activities has grown since its relative low in the period between the end of the Cold War and the 9/11 attacks. But this growing pie has been divided between more and more actors, and the result is that the same agencies devoted primarily to counterintelligence in 1985 find themselves atrophied and spread thin in 2018.
The U.S. government has also faced difficulty educating Americans and American businesses about foreign intelligence services’ efforts to steal information and recruit informants. Such initiatives are not without countervailing risks to society—the paranoia advocated during McCarthyism and the activities of the intelligence community during the J. Edgar Hoover era are clear examples. But the efficacy of recent efforts made by the U.S. government has been limited at best. Considering that counterintelligence awareness programs have focused on reporting and investigation rather than prevention, the U.S. government may be forced to step up its efforts to engage society proactively rather than reactively.
Ultimately, while escalated espionage activity is concerning for national security, two things have made the latest trend particularly worrisome for the United States. The national security ramifications of breaches involving Americans in the most sensitive positions are significant—rivalling some of the worst damage ever caused, such as that by Aldrich Ames and Robert Hanssen—but they also come at a time of immense strategic importance as Sino-U.S. tensions intensify. The damage caused by Ames and Hanssen occurred when their espionage patrons, the Soviet Union and later Russia, were in strategic decline that dampened the lasting effects of their espionage. But China-U.S. competition is anything but in decline, and the stakes could not be higher for both sides.
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