Old School Chinese Espionage Behind Alleged NYU Theft

NEW YORK— Charges against three researchers at New York University provide an example of what experts call a classic example of Chinese espionage. Yudong Zhu, Xing Yang, and Ye Li allegedly provided a Chinese company with information on federally-funded research they were conducting.

Following an FBI investigation, Zhu and Yang were arrested, and Li is believed to have fled to China. They are being charged with commercial bribery in a conspiracy they were paid by a Chinese company and a research institution that is supported by the Chinese Communist Party (CCP). Zhu is also being charged for lying about his conflicts of interest.

While there has been a lot of attention on China’s use of cyber espionage lately, traditionally the Chinese regime’s major strategy has been to use insiders to steal information, just as these three are accused of taking information from their employer.

“China, for a long time, has been engaging in that kind of economic espionage using students, employees, and other insiders to do this,” said David Fiddler, a law professor and an expert on economic espionage.

Fiddler said the use of insiders is the Chinese Communist Party’s most common approach. “What we’re seeing at NYU is part of that classic strategy that Chinese companies and the Chinese government has used to get the economic information it wants to obtain,” he said.

The NYU project was on improving MRI technology, and was funded by a multi-million dollar federal grant from the National Institutes of Health. The researchers had undisclosed connections to China’s United Imaging and the Shenzhen Institute of Advanced Technology (SIAT).

A statement from the NYI Langone Medical Center said the department became aware of “possible irregularities” on the research project, and they alerted the U.S. Attorney’s Office. “Three researchers have been suspended and we continue to cooperate fully with the U.S. Attorney’s investigation of this matter,” it stated.

The SIAT is part of the Chinese Academy of Sciences, which was established in 2006 by the Shenzhen municipal government and the Chinese University of Hong Kong, according to the federal complaint.

The website of the Office of the National Counterintelligence Executive states that “In 2010, the FBI prosecuted more Chinese espionage cases than at any time in our nation’s history.” It adds that “some of the most damaging transfers of U.S. technologies to foreign entities have been conducted by insiders.”

According to an Oct. 4, 2011, report from the same department, “Foreign Spies Stealing US Economic Secrets In Cyberspace,” health care technology is a prime target for the Chinese regime’s system of economic espionage.

It states that the Chinese regime’s intelligence services and private companies try to recruit Chinese citizens, or even people with family ties to China, to work as insiders who can steal trade secrets.

The overall strategy ties to the CCP’s policy of “catching up fast and surpassing” Western powers. The report mentions that in 1986 the regime launched its Project 863, which aims to “enhance China’s economic competitiveness and narrow the science and technology gap between China and the West in areas such as nanotechnology, computers, and biotechnology.”

The report notes that “Healthcare services and medical devices/equipment will be two of the five fastest growing international investment sectors, according to a US consulting firm,” and the high costs of research and development in these fields—up to $1 billion for one drug—make them prime targets by the Chinese regime.

The website of the SIAT, which the Chinese researchers allegedly had secret ties to, backs these claims.

SIAT’s website states that high-end medical equipment in China is 10 years behind developed countries. Because of this, the country often depends on imports, and affects the regime’s ability to compete in the global market for medical equipment.

“China, both on the private sector and the government, it’s trying to get to be more of a player, a participant, or maybe even a leader in cutting edge high-technology products,” said Fiddler.

“They want to move away from being thought of as a manufacturing hub for low-skilled products.”

“Stealing trade secrets from companies that are on the cutting edge is just a quicker way to do it than developing it on their own,” he said. “That’s what they’re trying to do, so they’re trying to skip over the costs and investments that are necessary for developing high technology by getting in the race faster by appropriating information knowledge.”