The heads of the FBI and MI5 have warned that China’s industrial espionage poses a growing threat to Western groups, including through special purpose acquisition companies.
In a joint appearance in London, the heads of the US and British intelligence agencies urged companies to be much more vigilant about China.
FBI Director Christopher Wray said Beijing uses “sophisticated shell games” to cover up its spying and even takes advantage of Spacs.
“The Chinese government poses an even more serious threat to Western business than even many sophisticated businessmen realise,” Wray told corporate leaders at an event with his MI5 colleague Ken McCallum. “I want to encourage you to take the long view as you assess the threat.”
Intelligence chiefs held the first public event between the two agencies, a move Wray said underscored the need to address Beijing’s expanding espionage challenge.
McCallum said MI5 had seen a sevenfold increase in China-related investigations since 2018, had doubled its capacity to deal with them in the past three years and was likely to double its capacity again in the next “handful of years”.
Ray said FBI field offices in the U.S. open an investigation into Chinese espionage every 12 hours on average.
“We’re not crying wolf,” McCallum said. “China is the most game-changing of all threats in the sense that it permeates so many aspects of our national life.”
Wray said Beijing is using “every tool” at its disposal to steal Western technology in an attempt to undermine non-Chinese businesses and dominate their markets – even stealing genetically modified seeds from US farmland.
He added that the Ministry of State Security, which oversees China’s espionage efforts abroad, is targeting Western companies it wants to “search” to help obtain corporate secrets. Meanwhile, risk assessment by Chinese partners has become increasingly difficult as Beijing restricts access to the data needed for due diligence, he said.
Both intelligence chiefs stressed that China often employs people not directly connected to its intelligence services to attack Western companies – a group that Ray called “co-opts”.
They said companies should be more attuned to the fact that their dealings with Chinese companies may have ties to Beijing’s intelligence services, which McCallum described as “covert manipulation”.
“When you work with a Chinese company, know that you are also dealing with the Chinese government – that’s the MSS and the PLA [People’s Liberation Army] “Also, almost like silent partners,” Ray said in his speech.
The two intelligence chiefs urged companies to step up cooperation with the FBI and MI5, pointing to China’s ability to carry out large-scale espionage across a huge range of activities and to take the long view, courting politicians just starting their careers.
McCallum and Ray urged companies to be more vigilant, but not necessarily pull out of China.
“The goal here is not to break away from China. We want a United Kingdom that is both connected and sustainable,” McCallum said.
He cited the presence of 150,000 Chinese students studying at British universities as “good for them and good for us”. But he said the vetting resulted in the departure of 50 of them with military connections.
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Ray also said businesses should think more about the implications of China’s threat to Taiwan after Russia’s invasion of Ukraine, stressing that Western companies have been caught up in sanctions against Moscow and economic turmoil.
“There were a lot of Western companies that still had their fingers in that door when it slammed shut,” he said. “If China does invade Taiwan, we could see the same thing again, on a much larger scale. Just as in Russia, Western investments built up over years can become hostages.”
The Chinese Embassy in Washington denied the allegations by Ray and McCallum. “Some US politicians are tarnishing China’s image and painting China as a threat with false accusations,” an embassy spokesman said. “We strongly oppose their comments.”
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