US Indicts Two Chinese Men for Stealing Secrets From GE to Aid China

A General Electric sign during the China International Import Expo in Shanghai on Nov. 6, 2018. Federal prosecutors charged two Chinese men with stealing information related to GE’s turbine technology for the benefit of the Chinese regime. Aly Song/Reuters

A Chinese former engineer and a Chinese businessman have been charged with economic espionage and conspiring to steal trade secrets from General Electric Co. to benefit the Chinese regime, according to a U.S. indictment unsealed on April 23.

Zheng Xiaoqing, 56, a former engineer at GE, was charged by the U.S. Justice Department last August with the alleged theft of intellectual property relating to GE’s turbine technology.

The latest unsealed indictment against Zheng and Chinese businessman Zhang Zhaoxi, 47, includes further details of the U.S. government’s case against the pair—notably, that the alleged theft was conducted to benefit China, and that the Chinese regime provided “financial and other support” to the Chinese companies that received the stolen information.

The 14-count indictment alleges that Zheng, while working at GE Power & Water in Schenectady, New York, stole multiple electronic files containing design models, engineering drawings, and material specifications relating to the company’s gas and steam turbines.

He emailed those files to his business partner Zhang, who was located in China, prosecutors said. The pair then allegedly used the stolen information to assist two turbine research and development companies that they were involved in—Liaoning Tianyi Aviation Technology Co. and Nanjing Tianyi Avi Tech Co.

Prosecutors allege that Zheng and Zhang intended for the trade secrets to benefit China.

In addition, the indictment charges that the pair, through these companies, coordinated with Chinese officials to enter into research agreements with Chinese state-owned institutions to develop turbine technologies.

“The indictment alleges a textbook example of the Chinese government’s strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories, enabling Chinese companies to replace the American company first in the Chinese market and later worldwide,” Assistant Attorney General for National Security John Demers said in a statement.

Gas turbines that power aircraft are critical to the development of the aviation industry, one of the fields targeted for aggressive expansion under the Chinese regime’s “Made in China 2025” industrial plan. The indictment stated that the pair acted with knowledge of the regime’s technological ambitions.

GE said in a statement that it has “been in close cooperation with the FBI and the U.S. Attorney’s Office for some time on this matter. At GE, we aggressively protect and defend our intellectual property and have strict processes in place for identifying these issues and partnering with law enforcement.”

Zheng and Zhang were formally indicted April 18.

Zheng was arraigned on April 23 and pleaded not guilty. He was allowed to remain free on bond. A jury trial has been set for June 24 in Albany, New York. Zhang is believed to be in China, the Justice Department said.

Background

Zheng was hired by GE in 2008. He has been suspected by his company for years, according to the federal criminal complaint issued last August.

“GE installed monitoring software on Zheng’s computer(s) in an attempt to determine what information he was encrypting, and what he was doing with the information,” according to the complaint.

Zheng is a naturalized U.S. citizen based in Niskayuna, New York. When the FBI searched Zheng’s home in 2018, they found from his passport that Zheng had been to China five times in the past two years. They also seized a handbook that described resources the Chinese regime offered to people who provide certain technological know-how to it, according to a report by the Albany Times Union.

The GE case is not the first instance of alleged intellectual property theft in the turbine industry. Last January, Chinese wind turbine maker Sinovel Wind Group Co. was convicted of federal charges that it stole trade secrets from AMSC, an American energy technology company, that resulted in losses of over $800 million for the latter.

Reuters contributed to this article. Staff writer Sunny Chao also contributed to this report.