Intel community warns of Chinese espionage after DOJ kills program to combat Chinese espionage

Just two weeks after the Justice Department ended its program to thwart Chinese spies, the U.S. intelligence community warned Congress that China's espionage efforts pose a major threat to America's economy and national security.

Director of National Intelligence Avril Haines on Tuesday submitted the intelligence community's annual assessment of worldwide threats to the House Intelligence Committee, which held open and closed hearings on the report.

"China will remain the top threat to U.S. technological competitiveness as Beijing targets key sectors and proprietary commercial and military technology from U.S. and allied companies and institutions," the assessment states. "Beijing uses a variety of tools, from public investment to espionage, to advance its technological capabilities."

The document adds that China's "willingness to use espionage, subsidies, and trade policy to give its firms a competitive advantage represents not just an ongoing challenge for the U.S. economy and its workers, but also advances Beijing's ability to assume leadership of the world's technological advancement and standards."

Haines told lawmakers that China "remains an unparalleled priority" for the intelligence community, challenging the U.S. for supremacy across a range of economic, military, and technological domains.

Chinese espionage costs the U.S. between $200 billion-$600 billion dollars a year in stolen intellectual property, according to Mike Orlando, acting director of the National Counterintelligence and Security Center.

"This is theft of America's future, a mortal wound to our economy," said Gordon Chang, author of "The Coming Collapse of China and The Great U.S.-China Tech War." "China is trying to destroy the U.S."

"No country poses a threat even close to that," Chang continued. "We need to understand China's malicious ends."

FBI Director Christopher Wray expressed similar sentiments in a Jan. 31 speech on the threats posed by China inside the U.S.

"When we tally up what we see in our investigations — over 2,000 of which are focused on the Chinese government trying to steal our information or technology — there is just no country that presents a broader threat to our ideas, our innovation and our economic security than China," he said.

Wray has testified his agency is opening counterintelligence investigations into China "every 12 hours."

In 2018, the Trump administration launched the so-called China Initiative to combat these threats and preserve America's technological edge. The program, run by the Justice Department, was designed to identify and prosecute those engaged in hacking, stealing trade secrets, and conducting economic espionage for the Chinese government on U.S. soil.

The China Initiative has led to several arrests and convictions. In January, for example, a federal jury found Charles Lieber, a renowned nanotechnology professor who chaired Harvard's Chemistry Department, guilty of lying to government authorities about multiple links to Beijing.

In November, to cite another example, a federal jury convicted Yanjun Xu, deputy division director of China's Sixth Bureau of the Jiangsu Province Ministry of State Security, for attempting to steal trade secrets and commit economic espionage.

The push to shut down Chinese espionage activities seemed to have deterred at least some potential spies. More than 1,000 researchers who had hidden their affiliation with the Chinese military fled the United States last summer, according to the Justice Department.

Despite such successes, however, the Biden administration ended the China Initiative last month.

In a speech announcing the termination of the program, Assistant Attorney General Matthew Olsen of the Justice Department's National Security Division said that, while China "stands apart" as a "brazen" espionage threat, a "broader approach" is needed to confront threats from a "variety" of countries. Olsen called this new effort a "strategy for countering nation-state threats."

The Justice Department didn't respond to a request for comment when asked whether it will replace the China Initiative with a program designed to combat Chinese espionage specifically or whether such efforts will fall under this new, broader strategy.

In ending the China Initiative, the Justice Department appeared to bow to pressure from a loose coalition of lawmakers, nonprofits, and academics who argued the initiative targeted people of Asian descent with racial profiling.

"We have heard concerns from the civil rights community that the China Initiative fueled a narrative of intolerance and bias," Olsen said in his speech. "By grouping cases under the China Initiative rubric, we helped give rise to a harmful perception that the department applies a lower standard to investigate and prosecute criminal conduct related to that country or that we in some way view people with racial, ethnic, or familial ties to China differently."

Critics of the China Initiative have also claimed the program mainly focused on innocent academic researchers and largely yielded charges of fraud — such as lying about links to Chinese entities or accepting foreign money — as opposed to concrete espionage.

Olsen said the initiative's efforts to prosecute academic researchers with ties to Chinese entities, including the Chinese military, "can lead to a chilling atmosphere for scientists and scholars that damages the scientific enterprise in this country."

Not everyone agreed with such a characterization.

"The China Initiative only had a chilling effect on spies committing espionage against America," said Chang. "The program was a damn good thing. It shouldn't have ended."

Defenders of the initiative reject accusations of racial profiling, noting that the overwhelming majority of China's espionage activities are carried out by individuals of Chinese ethnicity and that each individual accused of spying for China gets due process under U.S. law.

Chang told Just the News that, under China's totalitarian system, no Chinese national can resist an order from the ruling Chinese Communist Party, including demands to spy for the government and steal U.S. intellectual property.

"Beijing has made every Chinese national a proper target of U.S. counterintelligence investigations," he said.

Nonetheless, progressive groups and individuals had been lobbying the Biden administration to end the China Initiative — as had the Chinese government, using the same arguments.

The Justice Department program "exacerbates racial discrimination in the U.S., severely harms Asian-American groups, and also poisons the atmosphere of China-U.S. mutual trust and cooperation," a spokesperson for China's Foreign Ministry said at a press conference following Olsen's speech.

According to Chang, the Biden administration has "adopted Chinese government narratives" about America being racist that Beijing uses as weapons to divide and undermine the U.S. "This is mortally dangerous," he said, adding that China opposed the Justice Department initiative because it was effective, not because it was discriminatory.

Missouri Attorney General Eric Schmitt echoed those points in a letter he sent to Attorney General Merrick Garland on Tuesday decrying the decision to end the China Initiative.

"The world is a dangerous place and liberty is not preserved with pandering and political correctness," Schmitt wrote. "This decision by President Biden and his senior leadership projects weakness, emboldens our enemies, makes our country less safe and puts at risk the personal security of each and every American citizen."

Schmitt's letter — and Haines' testimony — came on the same day that Mandiant, a private cybersecurity firm, revealed that hackers working on behalf of the Chinese government broke into the computer networks of at least six state governments in the U.S. in the last 10 months. The hacks were part of an espionage campaign to gather information.

"We assess that China presents the broadest, most active, and persistent cyber espionage threat to U.S. government and private sector networks," the intelligence community's threat assessment states. "China's cyber-espionage operations have included compromising telecommunications firms, providers of managed services and broadly used software, and other targets potentially rich in follow-on opportunities for intelligence collection, attack, or influence operations."

Haines echoed this assessment of the Chinese cyber threat to lawmakers this week.