China’s principal foreign intelligence agency is the Ministry of State Security (MSS), an organization shrouded in mystery until the defection of Yu Zhensan in November 1986. Since his debriefing, much more has become
known about the MSS, its concentration on technology transfer, and its exploitation of ethnic Chinese across the world. It seems that the MSS’s operations, which are organized very unconventionally, tend to be dependent on recruits of Chinese ancestry and rely on a concept of obligation, rather than any financial or ideological motivation. Instead of running operations from diplomatic premises like most of its counterparts, the PRC tends to manage its activities centrally, from Beijing, and makes extensive use of ethnic expatriate Chinese communities.
Uniquely, the MSS takes full advantage of a Chinese cultural tradition known as guanxi, which is an effective social relationship built on personal favors, gifts, undertakings, and obligations. Guanxi is really a network of social contacts built on interpersonal relations that have been cultivated over long periods, and the patrons dispensing favors develop what could be described as a capital that can be called upon later. Thus in the Chinese system someone might readily go to considerable effort on behalf of an individual he or she has never met, purely on the basis that an intermediary has made a demand on that accumulated capital. In China itself guanxi is an accepted route to circumvent the stifling bureaucracy to achieve a specific objective. In an espionage context, guanxi can be the key to access.
This distinctive methodology has the advantage of isolating diplomatic personnel from espionage, but it does make its agents very vulnerable to arrest and interrogation. However, there have been rare exceptions that may have served to fashion the MSS’s unusual tradecraft. In December 1987 Hou Desheng, the PRC military attaché in Washington, D.C., and Zang Weichu, a consular official based in Chicago, were arrested in a Federal Bureau of Investigation sting as one of its informants, ostensibly with access to National Security Agency documents, handed them classified material in a Chinese restaurant. Both diplomats were expelled, the first to be declared persona non grata since formal relations had been reestablished in 1979. The case illustrated the PRC’s interest in the NSA and appeared to confirm that, to some extent, the Chinese conformed to the orthodox Soviet and Western style of espionage, with “legals” operating under diplomatic cover to recruit potential agents. However, as the FBI was to discover, the example of Hou was more of an exception than the rule in Chinese intelligence collection.
The MSS concentrates on technology transfer, with a distinct focus on nuclear knowledge and illicit acquisition of military equipment, rather than the collection of political information. In addition, the MSS appears to exercise total control over all aspects of the operations conducted by its agents, right down to the detail of companies operated as cover firms. A hallmark of MSS operations is their unorthodox construction, their highly ambitious objectives, the preference for personal meetings instead of using more routine tradecraft,
the absence of financial motives, and the participation of Chinese émigrés, often working under entirely authentic business covers, such as restaurants, normally associated with Chinese expatriate communities. While such backgrounds might not, at first glance, give much opportunity for access, this is merely a function of generation, and the real concern is that the next generation of the Chinese diaspora, with the advantage of college education, is much more likely to find government jobs and employment in fields of great interest to the MSS. Add to this group the very large number of students from the PRC who have chosen not to return home at the conclusion of their studies, and a picture emerges of a very large pool of potential talent available for possible cultivation and maybe recruitment.
In the nuclear field, the evidence of Chinese espionage is overwhelming, although little effort was made by the Clinton administration to limit or monitor scientific exchanges with physicists from the PRC. An investigation conducted by the General Accounting Office in 1988 estimated that over the previous two years as many as a hundred PRC scientists had been welcomed into U.S. weapons laboratories, and that information leaked from the Lawrence Livermore National Laboratory outside San Francisco had contributed to the successful Chinese test of a neutron bomb in 1988.
In December 1993 a restaurateur, Yen Men Kao, was arrested at his home in Charlotte, North Carolina, and charged with conspiring to procure and export embargoed military hardware, including the U.S. Navy’s Mk 48 advanced capability torpedo, General Electric jet engines for the F/A-18 Hornet fighter, and the fire-control radar for the F-16 Falcon. The investigation into Kao lasted six years, and his organization succeeded in passing oscillators used in satellites to his PRC handlers, although this matériel had been sold for $24,000 by an FBI informant. Kao was never prosecuted, apparently to avoid upsetting Beijing at a sensitive period in Sino-American relations, but instead was deported to Hong Kong, leaving behind his wife, who
had become a naturalized U.S. citizen, and their two children. According to the FBI, Kao had been paid more than $2 million by PRC agents for the illicit procurement of embargoed technology, but this money had actually been used to feed his gambling addiction. A citizen of Hong Kong, Kao had first visited the United States in 1971, claiming that he had a small import business there.
The FBI was tipped off to Kao’s espionage in 1987 by an Army veteran and private investigator in Charlotte, Ron Blais, who was approached by Kao to help him with his procurement projects as his grasp of English was poor. Blais was promised $100,000 for an example of the Mark 48 torpedo, and during a meeting in Beijing was offered a further $4 million for the F/A-18 engines. During the investigation into Kao, attention focused on Bin Wu, ostensibly a philosophy instructor from Nanjing who received a visa to study in Norfolk, Virginia, in 1990 but subsequently dropped from sight, only to emerge two years later as the proprietor of the Pacific Basin Import-Export Company of Virginia Beach. His partner in the business was Li Jing Ping, a former PRC official in the Ministry of Finance who also ran Comtex International in the same town. Also linked to Comtex was Zhang Pin Zhe, a former PRC diplomat. In March 1992 the trio used their firms to buy military technology, such as image intensifiers from Varo, Inc., and export them to a purchaser in Hong Kong.
These transactions breached the export ban on sensitive military equipment and after a surveillance operation conducted by U.S. Customs, all three men were arrested in October 1992. They were convicted of money-laundering offenses in June the following year, and Wu received 10 years’ imprisonment.
Prior to the mid-1980s, the overt characteristic of Chinese espionage had been the relatively low-echelon effort made in the illicit procurement of banned matériel, a process known in the jargon as technology transfer, but in reality there had been an incident in the late 1970s that had gone unreported. The design of the W.70 nuclear warhead, used on the Lance missile, had been stolen from the Lawrence Livermore National Laboratory and the FBI had identified an Asian-American suspect who was believed to have passed the data to the PRC, which had used it to develop a neutron bomb, subsequently tested successfully in 1988. On that occasion no charges had been brought, through lack of evidence, and he was allowed to resign in 1981, but later he was monitored making several trips to the PRC, although again no action could be taken against him.
The news in April 1995 that the most recent series of Chinese nuclear tests, which had commenced in 1992, had benefited from American designs of advanced thermonuclear warheads served to reopen the 1981 investigation. Whereas the Soviets and Americans had conducted thousands of tests to achieve their respective levels of sophistication, the Chinese had been monitored conducting only 45 such experiments since 1964, and their efforts had been handicapped by the excesses of the Cultural Revolution, which had removed scientists from their laboratories and sent them to work in the fields.
However, according to a report written by two senior scientists, Larry Booth and Bobby Henson, the Chinese must have had access to the blueprints of the W.88, a miniaturized warhead created for the submarine-launched Trident D-5 missile system which was the most advanced in the U.S. arsenal. But how had the Chinese acquired this highly secret information? A research group code-named KINDRED SPIRIT was empaneled to review the evidence, and it came close to reaching a consensus that the Chinese must have had foreign help when the CIA revealed that in 1995 a walk-in had produced a Chinese document dated 1988 that not only contained a comparative analysis of seven American nuclear weapons but also contained the most secret details of the W.88. When the authenticity of the document was verified, it amounted to convincing proof that the Chinese had penetrated the U.S. weapons development program, and an intensive investigation followed. The consequence of the leak was that the Chinese had gained a 10-year leap in research and would be able to deploy the warhead on the DF-31, a road-mobile intercontinental ballistic missile (ICBM) scheduled to enter service with the Peoples’ Liberation Army in 2002.
In 1996 a further study of Chinese nuclear espionage concluded that the compromised warhead technology included the W.87 (used on the Peacekeeper ICBM), W.78 (Minuteman III), W.74 (Trident C-4), W.62 (Minuteman III), and the W.56 (Minuteman II), as well as high-performance supercomputers used to conduct simulated tests.
The only successful espionage prosecution concerning the loss of nuclear secrets to China was that of Dr. Peter Lee, which was linked to another, more notorious investigation, that of Dr. Wen Ho Lee. Combined with the Cox Report, which documented the Clinton administration’s unhealthy courtship of Beijing at the expense of America’s national security, the Lee case revealed the vulnerability of the Department of Energy’s (DOE) nuclear weapons facilities and proved beyond a doubt that the Chinese had achieved significant penetration at minimal cost. It also provided an opportunity for the release of some uncomfortable statistics which hitherto had been hard to come by, the most recent published figure being a total, from 1978, of 25,000 official PRC delegations visiting the United States in a single year. Quite apart from the escalating numbers of official, overseas visitors to the country’s most important sites, it also revealed that 25 percent of the nuclear weapons development program’s employees from foreign countries came from Russia, China, Iraq, Iran, India, Pakistan, and other places on the DOE’s list of sensitive countries.
As for sending vulnerable personnel overseas, technicians from the U.S.’s most secret weapons laboratories routinely traveled abroad to attend academic seminars in some very high-risk destinations. Indeed, security and counterintelligence appeared to be such a low priority that even the most fundamental measures to ensure the laboratories’ physical integrity had been overlooked. Wen Ho Lee had often slipped into the secure area at Los Alamos National Laboratory, even when he had lost his clearance, simply by “slipstreaming” through barriers with colleagues. Incredibly, no logs had been maintained on who had gained access to the security vaults or had removed the nation’s most precious secrets. Almost no attention had been paid to recommendations of improvements to security procedures, and consequently the blueprints of at least seven American nuclear weapons had been received in Beijing.
As the FBI learned, the MSS regularly used the tactic of sponsoring visits from ethnic Chinese to their homeland, and sometimes even to the villages of their families, and then asking them to attend, and speak at, scientific symposia where classified issues would be raised.
Having been softened up with reference to their ancestors and appeals to their ethnic loyalty, the target would then be pitched, and none too subtly. Numerous identical reports reached the security authorities of flattering behavior, followed by an unmistakable plea to help China’s research. Among those who acknowledged having succumbed inadvertently into the transparent strategy was George Keyworth, President Ronald Reagan’s chief scientific adviser, who had been tempted unwisely to expound on implosion principles as applied to the neutron bomb. In short, the Chinese pitched everyone indiscriminately, regardless of stature, and the only suspicion really attached to those scientists who either failed to report the approaches or later denied they had taken place.