Chinese man charged with U.S. aviation 'espionage'

U.S. Attorney for the Southern District of Ohio Benjamin Glassman stands at the podium as Assistant Special Agent Herb Stapleton listens at a Wednesday news conference

The indictment and complaint were unsealed Wednesday - the same day that Xu appeared in federal court in Cincinnati. "But we can not tolerate a nation stealing our firepower and the fruits of our brainpower".

Yanjun Xu is accused of trying to steal trade secrets from leading aviation firms.

The court indictment does not name GE Aviation but the description of "victim company A" makes it all but certain.

Other entities linked to the Chinese economic espionage operation involving Xu included the Commercial Aviation Corporation of China and the Aviation Industries of China.

"This case is not an isolated incident", Assistant Attorney General for National Security John Demers said of Xu's alleged actions.

Justice officials cast the arrest of Xu as part of the global fight against China's alleged campaign to steal United States economic secrets.

"This unprecedented extradition of a Chinese intelligence officer exposes the Chinese government's direct oversight of economic espionage against the United States", said Bill Priestap, the assistant director of the FBI's counterintelligence division.

Starting in 2013, court papers say, Xu targeted experts and engineers at American and foreign aviation and aerospace companies, including General Electric's Cincinnati-based jet engine subsidiary, GE Aviation.

"Currently, the Ministry of State Security (MSS) is the primary government agency engaged in the majority of cyber attacks with Chinese-government nexus, and CrowdStrike has observed multiple intrusions demonstrating their sophisticated tradecraft", Dmitri Alperovitch, Co-Founder and CTO of USA cyber-intelligence firm CrowdStrike, told ZDNet today.

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"It is part of an overall economic policy of developing China at American expense", Demers said.

He also "identified experts who worked for these companies and recruited them to travel to China, often initially under the guise of asking them to deliver a university presentation".

Testifying before a Senate panel on Wednesday morning, FBI Director Chris Wray said: "China in many ways represents the broadest, most complicated, most long-term counter-intelligence threat we face".

The two nations agreed to cease all hacking operations aimed at intellectual property (IP) theft in the autumn of 2015, when the countries' two presidents, US President Obama and Chinese President Xi, signed a political agreement on the matter.

Glassman said he had no plans to charge the GE Aviation employee, who no longer works at the company.

"In reality, the presentations were for the benefit of the Chinese government", the indictment said.

The indictment does not say if the employee was aware Mr. Xu was a spy or if they ever met in Europe.

The move is in line with a new law passed in August - the Foreign Investment Risk Review Modernisation Act of 2018 (or FIRRMA) - in response to warnings from intelligence officials that advanced U.S. technology transferred to Chinese companies through acquisitions and other means may have undercut the American military's advantages over China.

Late last month, the Department of Justice reported the arrest of a Chinese citizen in Chicago on charges he covertly worked for a high-ranking Chinese intelligence official to help try to recruit engineers and scientists, including some who worked as U.S. defense contractors. All were naturalized US citizens born in Taiwan or China.

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