May a Thousand Spies Bloom

The silhouette of a paramilitary guard is seen as he stands at attention as the Chinese flag is raised during a ceremony at Tiananmen Square in Beijing on August 8, 2008. Behrouz Mehri/AFP/Getty

Who knew China needed tips on rice cultivation?

When Customs and Border Protection agents opened the luggage of a Chinese agricultural delegation last August, they found envelopes containing specially engineered rice and other seeds allegedly stolen from a company in Arkansas. According to a criminal complaint filed last month in Kansas, the seeds - genetically engineered for pharmaceutical uses at a cost of millions of dollars - were illegally obtained with the help of two Chinese immigrants, one a plant geneticist at a USDA-funded research center in Arkansas, the other an LSU-educated biotechnologist at the Colorado company that manufactured the seeds.

Just next door in Iowa, in 2011, a farm field manager for DuPont Pioneer, a top seed-development company, confronted a Chinese man digging up genetically engineered corn in an open field. Another man was waiting nearby in a car. After an awkward exchange about what they were doing, the two sped off - but not before the farmer took down their license plate.

The FBI entered the case and bugged the car of two of the suspects. "These are actually very serious offenses," one was overheard saying. The other agreed: "They could treat us as spies!"

Six Chinese nationals were eventually charged with conspiring to steal trade secrets in this case, all of them employees of Chinese seed firms. The suspected ring leader, according to the indictment, was Mo "Robert" Hailong, of Boca Raton, Fla., a naturalized U.S. citizen who is director of international business for the Beijing Dabeinong Technology Group Company. Investigators suspect that someone at DuPont Pioneer tipped the accused spies to the location of the seedlings. Hailong is in custody, the others are at large.

According to intelligence experts, Hailong and the other seed-spy suspects are just a few of the locusts in a swarm, feasting on American technological secrets. Their Iowa caper drew fleeting attention last year because of its quirky audacity, but Chinese business spies are rounded up nearly every week in the U.S., with but a sliver of the attention given to China's cyberwar. While some agents are professional spies dispatched by Chinese intelligence to pursue U.S. military secrets, far more are "amateurs" deployed to get five-finger discounts on U.S. business samples, the experts say.

While the CIA is chasing terrorists across deserts, the Chinese are chasing U.S. brain products from coast to coast, from advanced cancer research in Wisconsin to wind power software in Massachusetts, according to scores of cases currently filling state and federal court dockets.

Michelle Van Cleave, a former head of the National Counterintelligence Executive (NCIX), told Newsweek this week, "It's true that China has experienced amazing economic growth, but what most people don't realize is that part of that growth is fueled by a state-run systematic program of theft, pure and simple. Companies like Motorola, Ford, GM, DuPont and more - the private-sector engines of innovation and wealth - are all targeted by the Chinese."

Van Cleave and other counterintelligence officials say the Chinese are uncommonly clever and patient. "They clandestinely employ commercial firms in technology collection activities," she explained. "They insert collectors inside U.S. companies to facilitate technology acquisition...

"Beijing has informal organizations in the U.S. to help track the access of these experts so they can plan their next moves - which means things will continue to get worse. The numbers of businessmen and commercial enterprises, scientists, engineers, academics working in the U.S. from China keep growing, far exceeding our ability to keep tabs on potential illegal activity."

There also appear to be using sleeper cells. Many students are sent to the U.S. and lie low for years before they're called into action, usually after they've gained employment in high-tech firms.

"I like to equate the Chinese approach to sowing grass seed," says I.C. Smith, a retired FBI China expert who is co-author (with British espionage scholar Nigel West) of the Historical Dictionary of Chinese Intelligence. "They go out in the yard, throw down a sack of seed, but don't water and fertilize it, knowing that not all the seeds will sprout but they're willing to take the losses. They've 'over-seeded' [the U.S.] and know that some of the seeds will indeed grow grass."

Added bonus, says Smith: China's intelligence investment "is virtually nil, and they have great plausible deniability.

"If we look at all the Chinese 'spy' cases," he adds, "virtually all those involving ethnic Chinese are first-generation emigrants to the U.S. - they're the ones with ethnic, cultural and emotional ties to mother China." Non-Chinese Americans get involved, too, Smith says, "but overall, I suspect most cooperate with the Chinese simply because they are mercenary - for the money. And the Chinese are good at exploiting whatever makes them susceptible to cooperation."

On Thursday, Treasury Secretary Jack Lew maintained that Chinese commercial espionage is unlike anything done by the U.S. or other governments. He also rejected a suggestion that Beijing's spying on U.S. soil was equivalent to the National Security Agency's penetration of other countries. "I don't think there's any way to compare the kinds of intelligence activities that almost every country engages in for national security purposes with the deliberate theft of trade secrets for commercial advantage," Lew said during a Q&A after a speech at the Council on Foreign Relations in Washington, adding later that the issue has not "in any way been taken off the table in terms of our conversation with the Chinese."

Some pleasant chat that must be.

In the meantime, the FBI can't possibly keep an eye on every Chinese student who comes here to enroll in advanced technology courses - nor should it try. NSA eavesdropping on China can generate hundreds of leads that require tedious, time-consuming follow-ups, and by many accounts, the bureau has its hands full with terrorism.

Following an eruption of Chinese espionage in Wisconsin last year, an FBI special agent advised business leaders there to take more care in protecting proprietary research and trade secrets. But treating all Chinese-American employees as possible spies is impractical, not to mention distasteful and possibly illegal.

The U.S. lacks a comprehensive strategy to counter Chinese espionage, says Van Cleave, but the Obama White House begs to differ. Last February it issued a paper, "Strategy on Mitigating the Theft of U.S. Trade Secrets," that cited "five action areas: diplomatic engagement, industry-led voluntary best practices, domestic law enforcement investigations, legislative reviews, and stakeholder outreach and public awareness campaigns," according to Patrick Ventrell, a White House National Security Council spokesman.

To that Van Cleave adds, Go after them in Beijing! U.S. intelligence should recruit more moles in Chinese intelligence, she says, "to find out what they are doing and how they are doing it, in order to be able to identify vulnerabilities and stop them."

Both the FBI and the CIA have such a mandate, but it hasn't made a dent in Chinese espionage, judging from those cases piling up in state and federal courts. Between 2008 and 2010, the Justice Department prosecuted 26 cases that resulted in the convictions of over 40 Chinese nationals on charges of espionage, stealing U.S. government and industrial secrets and illegally exporting sensitive materials to China. Of some 280 arms export prosecutions in the past eight years, 66 involved Chinese nationals, a Reuters investigation found.

U.S. intelligence is, however, paying attention: The FBI's new head of counterintelligence, Robert Anderson, Jr., made his mark in Chinese espionage cases. The current head of NCIX, Frank Montoya, Jr., formerly headed the FBI office in Honolulu, which has prosecuted several Chinese espionage cases. At the CIA, "there's been a huge increase in quality, in depth, and understanding" of China, says David Sedney, a former assistant secretary of defense for East Asia who also served as deputy chief of the American embassy in Beijing from 2004 to 2007. "I lay a lot of that on the overall U.S. improvement in understanding China and East Asia. They are hiring people who have really good, solid undergraduate and graduate degrees and who have lived in China and have studied at places like Beijing University."

But realistically, U.S. intelligence hasn't a chance of "flooding the zone" in police state-China. So until American spy catchers come up with a better trap, China's agents will roam virtually free, vacuuming up U.S. secrets.

"It's just a giant sucking sound," Sedney said.