American universities are a soft target for China's spies, say U.S. intelligence officials

University of Texas professor Bo Mao is the latest defendant in a string of U.S. criminal cases alleging Chinese spying in the academic world.
By Ken Dilanian

It was a brazen scheme to steal another company's product, according to a federal criminal complaint.

University of Texas professor Bo Mao, prosecutors say, took proprietary technology from an American Silicon Valley start-up and handed it over to a subsidiary of Huawei, the Chinese telecommunications conglomerate.

But what makes the case against Mao particularly noteworthy is how he was accused of carrying out the theft: By using his status as a university researcher to obtain the circuit board under the guise of academic testing.

Mao, who has pleaded not guilty, is among the latest defendants in a string of U.S. criminal cases alleging Chinese spying in the academic world. In late January, the chairman of Harvard's chemistry department was arrested by FBI agents in his office, charged with lying about a lucrative relationship with a Chinese talent recruitment program. The same day, a former Boston University student was accused of visa fraud after she allegedly failed to disclose her status as a lieutenant in the People's Liberation Army.

Department of Justice / FBI

America's world class university system has become a soft target in the global espionage war with China, intelligence officials say — and they are pressing universities to do something about it.

"A lot of our ideas, technology, research, innovation is incubated on those university campuses," said Bill Evanina, the top counterintelligence official in the Office of the Director of National Intelligence. "That's where the science and technology originates — and that's why it's the most prime place to steal."

Much of this campus spying is never caught, let alone prosecuted, officials say. But in recent months:

"No country poses a greater, more severe or long-term threat to our national security and economic prosperity than China," said Boston's top FBI agent, Joseph Bonavolonta. "China's communist government's goal, simply put, is to replace the U.S. as the world superpower, and they are breaking the law to get there."

In response to what they say is systematic espionage, the FBI and other agencies have been pushing universities and research institutions to tighten up policies governing outside relationships, travel disclosure and conflicts of interest for graduate researchers and professors.

But the government pressure — backed by the leverage of billions in federal grants to universities — has sparked accusations of racial profiling and pushback by college presidents who say they fear that a massive overreaction risks what makes America's university system special.

Bo Mao, a professor at Xiamen University in China and a visiting professor of computer science at the University of Texas at Arlington, departs federal court in the Brooklyn borough of New York on Sept. 11, 2019. The Chinese professor has been accused by a Silicon Valley startup in a civil lawsuit of stealing its trade secrets for Huawei Technologies Co. He now faces a federal criminal charge, as the U.S. escalates its crackdown on the telecom giant.Mark Kauzlarich / Bloomberg via Getty Images file

"Our greatest strength is our openness," Thomas Rosenbaum, president of the California Institute of Technology, said in an interview. "And if we wind up thwarting the ability of people to exchange ideas, we will not make discoveries."

Columbia University President Lee Bollinger was even more blunt in an op-ed in the Washington Post in August. The headline: "No, I won't start spying on my foreign-born students."

In September, hundreds of scholars, business leaders, politicians, activists and at least two former cabinet secretaries gathered at a Silicon Valley conference designed to highlight what the participants portrayed as a corrosive bias against ethnic Chinese in the United States.

"Today we face a dangerous narrative out there that anyone of Chinese ancestry out there could be a national security threat and should be viewed with more scrutiny and suspicion than others," said Rep. Judy Chu, a Democrat who represents parts of Los Angeles.

At the conference, Temple University physics professor Xiaoxing Xi choked up as he recalled being taken out of his house in handcuffs in front of his children by FBI agents who accused him of spying for China.

Four months later, prosecutors dropped the charges after it became clear the case was based on a misunderstanding of information Xi sent to scientists in China, which turned out to be available on the internet.

"There have been so many cases of wrongful prosecution, of lives ruined because of a rush to judgment," former Washington state Gov. Gary Locke, who served as U.S. ambassador to China and commerce secretary in the Obama administration, said at the conference.

Robert Daly, who directs the Wilson Center's Kissinger Institute on China and the United States, says concerns about broad brush suspicions are valid.

But it's too simplistic, he said, to dismiss the government's approach to Chinese espionage as a product of racism.

While many nations conduct economic espionage against the U.S. he said, China is in unique in the way it seeks to harness its citizens abroad in the service of a national policy explicitly designed to overtake the West in technological supremacy.

Critics "have been saying it's McCarthyism, its Reds under the bed, it's racial profiling," he said. "That danger is inherent in these issues. But they don't negate the security concern. The security concern is real."

A bipartisan November report by the Senate Permanent Subcommittee on Investigations highlighted China's Thousand Talents Plan, under which China recruits overseas scientists and induces them to sign secret contracts that "violate U.S. research values."

"The contracts include provisions that violate U.S. standards of research integrity, place (Thousand Talents) members in compromising legal and ethical positions, and undermine fundamental U.S. scientific norms of transparency, reciprocity, and integrity," the report says.

In the Boston case announced in late January, Charles M. Lieber, the chair of Harvard's Department of Chemistry and Chemical Biology, is alleged to have violated federal law by failing to disclose his involvement in China's Thousand Talents Plan to Harvard administrators, who allegedly then passed along false information to the federal government.

Court documents say Lieber was paid more than $1 million by China in exchange for agreeing to publish articles, organize international conferences and apply for patents on behalf of a Chinese university.

Lieber, who has not yet entered a plea, has been placed on administrative leave, Harvard officials said, adding in a statement that the charges were "extremely serious."

Lieber's case shows that China's alleged reach goes beyond Chinese nationals and Chinese-Americans. But the majority of China spying cases involve people of Chinese ancestry, complicating the discussion of the problem.

Daly, a fluent Mandarin speaker who has been studying China for years, said the Chinese government "does attempt to influence American views and gather American intelligence and information through Chinese Americans. You can't ignore that fact because it contains the danger of racial profiling, which it does. You just need to have an open discussion of the dangers."

In July, FBI Director Christopher Wray disclosed that the FBI has nearly 1,000 open investigations into economic espionage and attempted intellectual property theft, nearly all of them leading back to China.

"There is no country that poses a more severe counterintelligence threat to this country right now than China … and I don't say it lightly," Wray told the Senate Judiciary Committee.

The FBI doesn't seek those cases out, Evanina said — victims report the thefts. He rejects the idea that the government engages in ethnical or racial profiling.

"We respond to the threat," he said. "We don't racially profile anybody, but the numbers don't lie."

Evanina told NBC News the China spying threat is vastly underappreciated, adding: "The economic espionage threat from China is second to none."

William Evanina, Director of the United States National Counterintelligence and Security Center.Office of the Director of National Intelligence

U.S. intelligence agencies assess that America is suffering economic losses of up to half a billion dollars a year from Chinese espionage, he said.

"That's theft of intellectual property and trade secrets, which results in a loss of about $4 ,000 per American family of four after taxes," he added.

A significant portion of that loss comes when Chinese hackers, many backed by the country's intelligence services, siphon valuable information directly from U.S. corporate networks. There also have been many cases of Chinese operatives who embed themselves in U.S. companies to steal secrets.

But in recent years officials have grown increasingly concerned about spying at American universities, home to research that drives future innovation.

Chinese nationals made up about 30 percent of all foreign students in the U.S. and there are about 340,000 of them, according to government data.

The vast majority are there to study and learn, officials say. But if even a tiny portion are stealing research, that can add up to huge losses, they add.

The criminal cases involving alleged campus spying don't generally involve charges of espionage, which are specific to stealing national defense information.

Sometimes the charges can be as simple as concealing a foreign relationship. That's the case against "Franklin" Tao, 47, of Lawrence, Kansas, an associate professor at KU's Center for Environmentally Beneficial Catalysis, who was charged in August with one count of wire fraud and three counts of program fraud.

"Tao is alleged to have defrauded the U.S. government by unlawfully receiving federal grant money at the same time that he was employed and paid by a Chinese research university — a fact that he hid from his university and federal agencies," John Demers, the assistant attorney general for national security, said in a statement. "Any potential conflicts of commitment by a researcher must be disclosed as required by law and university policies."

Tao's lawyer, Peter Zeidenberg, declined to comment, but has argued in court papers that Tao rejected the offer from the Chinese university, so there was no hidden conflict.

Other cases go further. Ji Chaoqun arrived in the U.S. in 2013 on a student visa to study electrical engineering at the Illinois Institute of Technology in Chicago. In 2016, he enlisted in the U.S. Army Reserves under a special program for foreigners whose skills are considered vital to the national interest.

According to a federal criminal complaint filed last year, he was also working under the direction of a high-level intelligence officer in China's Ministry of State Security — tasked with providing biographical information on eight individuals for possible recruitment. The targets included Chinese nationals who were working as engineers and scientists for U.S. defense contractors, according to the complaint.

He has pleaded not guilty and his lawyers have moved to dismiss the charges on various legal grounds.

The case of Yi-Chi Shih, an adjunct professor of electrical engineering at UCLA, involves export control laws. Shih faces up to 219 years in federal prison after being convicted over the summer of conspiring to export semiconductor chips with military applications to China.

According to a statement by the Department of Justice, Shih, 64, accessed the unnamed victim company's web portal by posing as a domestic customer, purchased products, and sent them to China. The technology he sent is used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications, prosecutors said.

Academic leaders argue that these cases are outliers, and that whatever they cost the United States, that loss is outweighed by the benefits of having a university system open to the world's best and brightest.

At science powerhouse Caltech, in Pasadena, California, half the graduate students are international, many of them from China. This is to America's benefit, says Caltech president Rosenbaum.

"The influx of talent to the United States from around the world has been an extraordinary boon to our security, to our economy, to our way of life," he said. "If you look at Americans who won Nobel prizes in the sciences, physics, chemistry, physiology or medicine, 40 percent of them have been awarded to Americans who were born outside this country. If you look at the faculty of the California Institute of Technology, 45 percent of our faculty were born outside of America but are now productive American citizens producing knowledge for the benefit of society."

Daly, the China scholar, added: "There's no question that we benefit more than we lose" from Chinese students at American universities. "We have hundreds of thousands of American citizens of Chinese origin who are keeping companies and laboratories and hospitals going with the knowledge they got in American universities. It's profoundly in our interest."

It's important that the FBI remain vigilant, he said, "but the list of demonstrable harms to the United States, of loss of vital information via Chinese scholars, that list is relatively thin compared to the huge benefit we've had from the brain drain from China."

The harm Daly fears may already be occurring. U.S. universities this fall have reported drops, some by as much as 20 percent, in the numbers of Chinese students enrolling.

Jason Zhou of the University of Rochester.NBC News

Jason Zhou, a math and computer science major at the University of Rochester, told NBC News he has felt the chill in U.S.-China relations.

He says he was taken aback one day when a student in a driving course asked him an odd question, after he explained that he was from China.

"He was like, 'Do you work for the government?'"

Zhou says what he wants most is to work in tech in America. But he worries he won't be welcome.

"I'm in the center of some ocean, and I have, like, one foot in each boat," he said. And the boat is kind of sailing apart. And I'm basically in a bad situation."

Aliza Nadi and Tom Winter contributed.