You don’t have to look far to find evidence of the Ministry of State Security (MSS), China’s core intelligence agency, at work. The legal, manufacturing and intelligence sectors have MSS fingerprints all over them. The MSS has sole responsibility for China’s foreign intelligence, counterintelligence and political security. As one of the most powerful and secretive intelligence agencies in the world, it plays a fundamental part in Beijing’s efforts to protect the Chinese Communist Party (CCP) and maintain China’s position as a leading global economic power.
The intelligence gathered by the MSS allows it to make informed decisions about foreign policy and any potential internal or external threats to the CCP. The MSS toolkit includes:
- monitoring and retrieving intelligence on foreign governments and militaries;
- performing counterintelligence operations to prevent foreign propaganda from influencing its own subjects;
- monitoring and suppressing dissent among China’s own subjects;
- conducting cyber-intelligence espionage operations specifically targeting foreign governments and businesses in order to steal Intellectual Property (IP) and facilitate manufacture in China.
It is believed that the MSS is enforcing compliance by China’s law profession to directives issued by the CCP in favour of China. China’s legal services sector has been accused of unscrupulous drafting of legal documentation. Agreements are intentionally worded in favour of Chinese partners, even when a solicitor is representing the foreign party. Business trading contracts must be written in both Chinese and English – with Chinese as the legally binding language. In most cases, translations are far from accurate. Countless complaints have been made of a foreign party believing they were simply licensing their IP to a Chinese partner for manufacturing, only to discover that they were in fact giving it to them.
Contracts also stipulate that any legal disputes must be resolved in a foreign court. Since China does not acknowledge judgments made beyond its borders, Chinese parties can continue their business operations without any impact on their freedom, regardless of the legal verdict.
It is known that China manufactures most iPhones. However, China’s actual contribution to the smartphone’s value is just 6%. This is due to the value of other components used – like screens, processors and cameras – which are produced by other foreign businesses. China has subsequently invested vast amounts into the semiconductor industry and similar components to add greater value to its own offerings.
The CCP has desperately looked to encourage foreign tech firms to manufacture components in China by offering huge benefits and incentives. However, this strategy has fallen flat, as foreign businesses are reluctant to share their IP with a country that is known for stealing. The CCP is irritated by this.
China has a reputation for its various draconian laws that are used to supress dissent and keep the CCP in control of its subjects. Here are just some examples:
- The government can detain and prosecute all that threaten it via its National Security Law.
- The Counter-Espionage Law allows it to detain and prosecute anyone that is accused of espionage.
- The government can censor internet use and monitor the online activity of all its citizens by exercising the Cyber Security Law.
President Xi Jinping has also exploited these laws to monitor foreign businesses and personnel. Chinese businesses are encouraged to join in and gather intelligence on behalf of the CCP. Xi has further extended his power and influence by railroading foreign companies into co-operating through sharing technology and, in some cases, providing geopolitical information.
Here are some examples of China’s fusion of commerce and espionage:
- In 2017, the government approved a law requiring all foreign companies based in China to store their data on in-country servers. Foreign governments were highly critical, claiming that China simply wanted access to private commercial data.
- The CCP has encouraged/instructed large Chinese businesses to invest in foreign companies that have access to technology. For example, state-owned Huawei and Tencent have invested heavily in foreign telecoms and tech firms respectively.
- In 2018, the CCP threatened to ban Apple from continuing to manufacture in China if it didn’t share some of its technology with Chinese companies. It is unknown what agreement was eventually made.
- China pressured foreign businesses operating in China into agreeing that all their software should have back doors installed, allowing the CCP to gain unauthorised access to computer systems.
International intelligence agencies
MI5 has warned that China is considered a serious and grave threat to the UK’s national security, and that espionage attacks are at an all-time high.
In July 2023, MI5 Director General, Ken McCullum, said China was ‘trying to steal our secrets, undermine our democracy, and control our critical infrastructure’. He added that there are currently over 700 cases under investigation and that this figure was rising on a weekly basis. The Director General went on to highlight China’s particular interest in sectors such as universities, tech companies and government agencies. He said he believes that this prolific theft campaign has been initiated purely to assist in developing existing domestic technology in order to gain military advantage.
MI5 is not alone; its concerns are shared by intelligence agencies across the globe. The US’ FBI recently stated that it believes China is the ‘greatest long-term threat’ to US national security. Even though China officially denies these claims, the evidence has been damming. Several high-profile cases of Chinese spies being apprehended in the UK and Europe have occurred in recent years.
In response to the growing threat from China, the UK government has invested £200 million into MI5 and related agencies. In addition, new legislation has been introduced to make it more challenging for spies to enter the country.
Recruits and network
Rishi Sunak voiced his concerns with Xi Jinping recently, following the arrest of a young parliamentary researcher who was linked to security minister, Tom Tugendhat, and Foreign Affairs Committee chair, Alicia Kearns. It was believed that the researcher was spying for China. When the scale of the problem and sophistication of China’s techniques and capabilities are considered, the prime minister is fully aware that this revelation is just the tip of the iceberg. This year, 50 Chinese students were removed from British universities. All were highly skilled and intelligent individuals whose agenda was to extract information from either the institutions they studied in or from the large corporations that sought their skills and qualifications following graduation.
MI5 has announced that it is well aware of IP espionage within universities on British soil. Universities are a key target for China and they have been welcoming Chinese students and their sizable tuition fees for some time. In the last ten years, the number of Chinese students in universities in Britain has doubled to 150,000, with many of these being in research-based institutions.
It is not just students who have been approaching universities. Chinese businesses have also been funding British institutions and research centres. This has enabled foreign investors to gain access to formulae, blueprints and various other IP documentation. Finally, there has also been significant major overt investment into UK company stocks, which has also led to the theft of client data, business plans and IP.
In short, we have become too complacent. As usual, the fire has already started and now the West is installing the smoke alarms – as always, acting reactively to a problem having failed to take heed of early warnings.
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