FBI and MI5 heads have warned that China’s industrial espionage poses a growing threat to Western groups, including through specialized acquisition firms.
At a joint appearance in London, the heads of the US and British secret services called on companies to be much more vigilant towards China.
FBI Director Christopher Wray said Beijing uses “elaborate shell games” to cover up its espionage, even taking advantage of spacs.
“The Chinese government poses an even more serious threat to Western companies than even many seasoned businesspeople realize,” Wray told business leaders at an event with his MI5 counterpart, Ken McCallum. “I encourage you to think long-term when assessing the threat.”
The intelligence chiefs held the first public event between the two agencies, a move Wray said underscored the need to address the growing espionage challenge from Beijing.
McCallum said MI5 has seen China-related investigations increase sevenfold since 2018, has doubled its capacity to handle them in the last three years and is likely to double that capacity again in the next “couple of years”.
Wray said that FBI field offices in the US opened an investigation into Chinese espionage every 12 hours on average.
“We’re not crying, Wolf,” McCallum said. “China is the most disruptive 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 to eventually undercut non-Chinese companies and dominate their markets — even stealing genetically engineered seeds from US farmland.
He added that the Ministry of State Security, which oversees Chinese spying efforts abroad, is tracking down Western companies it wants to “raise” for company secrets. Meanwhile, assessing Chinese partners’ risks has become more 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 affiliated with its intelligence agencies to target Western companies – a group Wray calls “cooptees.”
They said companies need to be more aware that their dealings with Chinese companies could have ties to Beijing’s intelligence agencies, which McCallum called “hidden manipulation.”
“When you do business with a Chinese company, you have to know that you are also dealing with the Chinese government – that is the MSS and the PLA [People’s Liberation Army] – also almost like silent partners,” Wray said in his speech.
The two intelligence chiefs called on the companies to step up cooperation with the FBI and MI5, highlight China’s ability to conduct large-scale espionage across a vast spectrum of activities, and think long-term and court politicians who are just starting out their career.
McCallum and Wray insisted companies are more vigilant but shouldn’t necessarily divest themselves of China.
“This isn’t about isolating yourself from China. We want a Britain that is both connected and resilient,” McCallum said.
He called the presence of 150,000 Chinese students studying at British universities “good for them and good for us”. But he said the review resulted in 50 of them leaving with military connections.
Wray also said companies should think more about the implications of China’s threat to Taiwan following Russia’s invasion of Ukraine, stressing that Western companies are implicated in sanctions against Moscow and economic disruption.
“There were a lot of western companies that still had their fingers in that door when it slammed,” he said. “If China invades Taiwan, we could see the same thing happen again on a much larger scale. Just like in Russia, Western investments built up over years could be held hostage.”
The Chinese Embassy in Washington has denied Wray and McCallum’s allegations. “Some US politicians have tarnished China’s image and made false accusations that China is a threat,” an embassy spokesman said. “We strongly disagree with their statements.”