The heads of the FBI and MI5 have warned that industrial espionage in China poses a growing threat to Western groups, including through special-purpose takeover companies.
In a joint action in London, the chiefs of US and British intelligence called on companies to be much more vigilant with regard to China.
FBI Director Christopher Wray said Beijing used “extensive shell games” to disguise its espionage and even abused Spacs.
“The Chinese government poses an even greater threat to Western companies than even many sophisticated businessmen realize,” Wray told business executives at an event with his MI5 counterpart, Ken McCallum. “I want to encourage you to look long-term while assessing the threat.”
Intelligence chiefs held the first public event between the two agencies, a move Wray said underscored the need to address the growing spying challenge from Beijing.
McCallum said MI5 had seen a sevenfold increase in China-related investigations since 2018, doubled its capacity to handle them in the past three years and was likely to double its capacity again in the next “handful of years.”
Wray said FBI field offices in the US opened an investigation into Chinese espionage every 12 hours on average.
“We’re not crying,” McCallum said. “China is the most groundbreaking of all threats in that it permeates so many aspects of our national lives.”
Wray said Beijing used “every tool” to steal Western technology in an effort to eventually undermine non-Chinese companies and dominate their markets — even stealing genetically modified seeds from U.S. farmland.
He added that the Ministry of State Security, which oversees China’s espionage efforts abroad, is targeting Western companies that wanted to “loot” it to obtain trade secrets. Meanwhile, assessing the risks of Chinese counterparts became more difficult as Beijing limited access to the data needed for due diligence, he said.
Both intelligence chiefs stressed that China often employed people not directly affiliated with its intelligence agencies to attack Western companies — a group Wray called “co-optants.”
They said companies should be more aware that their contacts with Chinese companies may have ties to Beijing’s intelligence services, which McCallum described as “hidden manipulation.”
“If you are dealing with a Chinese company, 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 urged companies to step up their cooperation with the FBI and MI5, emphasizing China’s ability to conduct large-scale espionage across a vast array of activities, and to and court politicians who are just starting their careers.
McCallum and Wray urged companies to be more vigilant, but not necessarily distance themselves from China.
“The goal here is not to cut off from China. We want a UK 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 vetting had resulted in the departure of 50 of those with military ties.
Wray also said business needs to think more about the implications of China’s threat to Taiwan in the wake of Russia’s invasion of Ukraine, stressing that Western companies had been caught on sanctions against Moscow and economic disruption.
“There were a lot of western companies that still had their fingers in that door when it slammed shut,” he said. “If China invades Taiwan, we could see the same thing again, on a much larger scale. As in Russia, Western investments built up over the years can become hostages.”
The Chinese embassy in Washington rejected Wray and McCallum’s allegations. “Some American politicians have tarnished China’s image and portrayed China as a threat with false accusations,” an embassy spokesman said. “We firmly oppose their comments.”