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The U.S. Ratchets Up Fight Over ‘China 2025’ by Accusing Chinese Spies of a Plot to Steal Jet Engine Tech

October 31, 2018, 9:57 AM UTC

The U.S. unveiled charges against two alleged Chinese spies for orchestrating a conspiracy to steal prized jet engine technology from private companies, as the Trump administration raises pressure on Beijing to address its trade grievances.

The U.S. Justice Department said Tuesday the Chinese intelligence officers worked with hackers and “co-opted company insiders” to acquire commercial aviation technology in a campaign of computer intrusions that lasted more than five years. They sought to obtain intellectual property and confidential business data, including information related to a turbofan engine used in commercial airliners, the government said.

The case comes amid growing trade friction between the U.S. and China and follows on the heels of another case in which a Chinese intelligence official was extradited from Belgium and charged with conspiring to steal trade secrets from an Ohio aviation company earlier this month. A U.S. Army recruit was also indicted in September for working as an agent of a Chinese intelligence officer.

Intellectual property theft is among the Trump administration’s chief complaints in a trade war that has rattled global markets and seen the world’s two largest economies slap tariffs on hundreds of billions of dollars of each other’s goods. China has long been focused on acquiring advanced jet-engine technology in its efforts to close the gap with Western manufacturers on the production of commercial and military aircraft.

‘Concerted Effort’

“This action is yet another example of criminal efforts by the MSS to facilitate the theft of private data for China’s commercial gain,” U.S. Attorney Adam Braverman, of the Southern District of California, said in a statement, referring to China’s Ministry of State Security. “The concerted effort to steal, rather than simply purchase, commercially available products should offend every company that invests talent, energy, and shareholder money into the development of products.”

Chinese Ministry of Foreign Affairs spokesman Lu Kang dismissed the allegations as “purely groundless and fabricated” at a regular news briefing Wednesday in Beijing.

The turbofan engine mentioned in the latest case was being developed through a partnership between a French aerospace manufacturer with an office in Suzhou, in the eastern province of Jiangsu, and a company based in the U.S. The first alleged hack took place no later than January 2010, when members of the group infiltrated Capstone Turbine (CPST), a Los Angeles-based gas turbine company, the department said in the statement.

Alleged Spies

Among 10 individuals charged were two people the U.S. identified as spies working for the Jiangsu provincial arm of the Chinese security ministry. Division Director Zha Rong, also known as “Leanov,” and Section Chief Chai Meng, also called “Cobain,” were each charged with one count of gaining unauthorized access to a protected computer, according to the indictment dated Oct. 25.

For decades, China has sought to develop its own commercial jet to break the duopoly held by Airbus SE (EADSY) and Boeing Co. (BA). In 2016, it set up state-owned engine maker Aero Engine Corp. of China to develop engines to be fitted on homegrown commercial aircraft.

Beijing’s Made in China 2025 blueprint specifically identifies aerospace as a key sector that can help match or exceed the high-end manufacturing output of countries such as Germany, Japan and the U.S. Trump administration demands that China roll back support for the plan have been a major sticking in discussions to resolve the trade dispute.