Why do business with China when they do things like this?

 

Well, we do business with China because they've become the world's manufacturing hub, and they've bribed so many Congressional representatives and Senators and businessmen that they've bought their way in . . . but that doesn't mean we have to put up with this sort of thing.

China tried to build a network of informants inside the Federal Reserve system, at one point threatening to imprison a Fed economist during a trip to Shanghai unless he agreed to provide nonpublic economic data, a congressional investigation found.

. . .

The report doesn’t say whether any sensitive information was compromised. Access to such information could provide valuable insights given the Fed’s extensive analysis of U.S. economic activity, its oversight of the U.S. financial system, and the setting of interest-rate policy ... The report’s findings show “a sustained effort by China, over more than a decade, to gain influence over the Federal Reserve and a failure by the Federal Reserve to combat this threat effectively.”

. . .

China has mounted what U.S. counterintelligence officials say is among the broadest campaigns to obtain U.S. government information and proprietary business secrets and scientific and technology research. In doing so, it has frequently used talent-recruitment programs, which often include lucrative appointments at Chinese research institutes and which U.S. counterintelligence officials say offer an incentive to steal secrets.

The Chinese government denies that it conducts espionage and cyberhacking operations and has accused the U.S. of criminalizing normal academic exchanges.

. . .

After Congress began its investigation, the Fed began banning officials from accepting compensation from certain countries including China, the report said. The policies, however, don’t require employees to disclose membership in talent recruitment plans, the report said. Despite known ties to talent plans or relationships with members, committee aides said that four of the five people cited in their report retain access to confidential Fed information.

The congressional report details multiple instances involving “P-Network” individuals including one who gave economic modeling code to a Chinese university with ties to the People’s Bank of China, the report said.

Another attempted to transfer large volumes of data from the Fed to an external site on at least two occasions, the report said. This person had also previously received a request from a person linked to the Chinese government for nonpublic information on three Fed bank presidents’ views on rate increases, the report said.

A committee aide said he didn’t know if Chinese government officials received any of the information.

. . .

The most extreme example cited in the report involved the Fed economist who traveled to Shanghai in 2019 after the U.S. and China had levied tariffs on hundreds of billions of dollars of goods. Chinese officials detained the economist on four occasions during the trip, the report said.

The economist later reported to the bank that Chinese officials initially approached him at his hotel room “making the atmosphere frightening” and told him that they had been monitoring his phone conversations, including those involving a previous divorce, the report said.

There's more at the link.

This fits a pattern, of course, from buying land overlooking or near US military bases, to installing hardware on cellphone towers that can intercept US military communications, to constructing a garden on a high point in Washington D.C. that could gather electronic intelligence, to so-called "Confucius Institute" branches on all major US university campuses.  China's appetite for information about US policies, practices and procedures appears gargantuan and unending.  That fits in with Sun Tzu's famous dicta, of course.  For example:

• If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
• Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.
• Those who are victorious plan effectively and change decisively. They are like a great river that maintains its course but adjusts its flow...they have form but are formless. They are skilled in both planning and adapting and need not fear the result of a thousand battles: for they win in advance, defeating those that have already lost.
• Those who do not know the plans of competitors cannot prepare alliances. Those who do not know the lay of the land cannot maneuver their forces. Those who do not use local guides cannot take advantage of the ground.

All of those things depend on learning all one can about the enemy before hostilities break out.  I submit that the reason China is so hell-bent on discovering our every secret is that it's preparing for war with us, and making sure it knows our every weakness before that happens.

The trouble is, we're letting them do so.  We're letting them get away with it, and not doing enough to stop them.  Sun Tzu foresaw that, too:

The opportunity to secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.

We're providing China with the opportunity to defeat us.  We're handing it to them on a plate.

President Trump saw this coming, and clamped down as far as he was able, but the Biden administration is doing just the opposite.  "10% for the big guy", remember?  The Biden family is alleged to have made millions out of China.  If those allegations are correct, it's not surprising that they won't do anything to anger their paymaster.  Indeed, one of the current administration's first actions was to undo the measures President Trump had put in place.  I'd say that demonstrates the Chinese have got value for their money.

Peter