Saying Chinese economic espionage poses a grave threat to U.S. national interests, Attorney General Jeff Sessions on Thursday announced a new Justice Department initiative to combat China's alleged rampant theft of American intellectual property.
The China initiative "will identify priority Chinese trade theft cases, ensure that we have enough resources dedicated to them, and make sure that we bring them to an appropriate conclusion quickly and effectively," Sessions said at a news conference.
The attorney general also disclosed that a grand jury had issued an indictment in a new case of alleged Chinese economic espionage.
According to the indictment, filed Sept. 27 but unsealed Thursday, Fujian Jinhua Integrated Circuit Co. Ltd., a Chinese state-owned company; United Microelectronics Corp. (UMC), a Taiwanese semiconductor foundry listed on the New York Stock Exchange; and three Taiwanese nationals conspired to steal trade secrets from Micron Technology, a leading U.S. semiconductor manufacturer.
Cases under way
Sessions touted the Trump administration's stepped-up prosecution of Chinese espionage cases after a hiatus in such prosecutions during the final years of the Obama administration. Since the start of 2017, Sessions said, the Justice Department has charged three people with spying for China and is currently prosecuting five Chinese economic espionage cases.
"As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing — and it has been increasing rapidly," Sessions said.
The new China initiative will be led by John Demers, assistant attorney general for national security, and carried out by a senior FBI official, five U.S. attorneys and several top department officials.
Among other things, the initiative will be responsible for the department's review of foreign investments and licenses in U.S. infrastructure and telecommunications, as well as its enforcement of the Foreign Agents Registration Act "to counter covert efforts to influence our leaders and the general public," Sessions said.
"This will help us meet the new and evolving threats to our economy," he said. "Today, we see Chinese espionage not just taking place against traditional targets like our defense and intelligence agencies, but against targets like research labs and universities. And we see Chinese propaganda disseminated on our campuses."
Sessions said he'd asked the officials working on the China initiative to recommend legislation to Congress, if necessary.
Pressure on China
The announcement came amid an escalating trade war between the U.S. and China, and growing pressure on China over its alleged theft of hundreds of billions of dollars’ worth of U.S. intellectual property.
According to a 2017 report by the U.S. trade representative's office, Chinese theft of U.S. intellectual property costs the U.S. between $225 billion and $600 billion annually.
President Donald Trump said Thursday that he'd had "a long and very good conversation" with Chinese President Xi Jinping earlier in the day, and that "discussions are moving along nicely."
The launch of the China initiative followed three cases of Chinese economic espionage announced by the Justice Department since September.
In the Micron case, according to U.S. prosecutors, the conspirators worked to fulfill a key Chinese national economic priority: the development of dynamic random access memory (DRAM) and other microelectronics technology. Fujian Jinhua was founded in 2016 for the sole purpose of developing DRAM technology.
According to the indictment, Stephen Chen, a former president of a company Micron acquired in 2013, allegedly engineered the theft of DRAM trade secrets from Micron after he left the company to work for Taiwan-based UMC.
UMC then teamed up with Fujian Jinhua "so that ultimately, China could steal this technology from the United States and then use it to compete against us in the market," Sessions said. "This is a brazen scheme."
If convicted, the defendants could face up to 15 years in prison and $5 million fines. The two companies could face forfeiture and fines of more than $20 billion.
The Justice Department also filed a civil injunction on Thursday that would block the two companies from transferring the stolen technology or selling products based on the stolen technology in the United States.
Last week, the Commerce Department imposed sanctions on Fujian Jinhua.
Long-term problem
U.S. officials have been sounding the alarm about Chinese economic espionage for some time.
In February, FBI Director Christopher Wray told the Senate Intelligence Committee that Chinese students, academics and researchers were exploiting America's "very open research and development environment."
In a July, the National Counterintelligence and Security Center identified China, Russia and Iran as "three of the most capable and active cyber actors tied to economic espionage and the potential theft of U.S. trade secrets and proprietary information."
Sessions accused China of reneging on a 2015 agreement between Xi and former U.S. President Barack Obama that neither country would conduct economic espionage over the internet for the purpose of "providing competitive advantages to companies or commercial sectors."
Herb Lin, a cyber expert and senior research scholar at Stanford University, said the carefully worded agreement was not intended to stop all Chinese economic espionage.
The agreement "didn't say that the Chinese were all of a sudden going to stop all their efforts," Lin said. "In the narrow domain in which the agreement was intended to cover, there was indeed a significant reduction in the amount of activity that the agreement covered."
China has dismissed the charges of economic espionage as fabricated.
