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Chinese Spy Agency Rising to Challenge the C.I.A.

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The Chinese spies wanted more. In meetings during the pandemic with Chinese technology contractors, they complained that surveillance cameras tracking foreign diplomats, military officers and intelligence operatives in Beijing’s embassy district fell short of their needs.

The spies asked for an artificial intelligence program that would create instant dossiers on every person of interest in the area and analyze their behavior patterns. They proposed feeding the A.I. program information from databases and scores of cameras that would include car license plates, cellphone data, contacts and more.

The A.I.-generated profiles would allow the Chinese spies to select targets and pinpoint their networks and vulnerabilities, according to internal meeting memos obtained by The New York Times.

The spies’ interest in the technology, disclosed here for the first time, reveals some of the vast ambitions of the Ministry of State Security, China’s main intelligence agency. In recent years, it has built itself up through wider recruitment, including of American citizens. The agency has also sharpened itself through better training, a bigger budget and the use of advanced technologies to try to fulfill the goal of Xi Jinping, China’s leader, for the nation to rival the United States as the world’s pre-eminent economic and military power.

The Chinese agency, known as the M.S.S., once rife with agents whose main source of information was gossip at embassy dinner parties, is now going toe-to-toe with the Central Intelligence Agency in collection and subterfuge around the world.

Today the Chinese agents in Beijing have what they asked for: an A.I. system that tracks American spies and others, said U.S. officials and a person with knowledge of the transaction, who shared the information on the condition that The Times not disclose the names of the contracting firms involved. At the same time, as spending on China at the C.I.A. has doubled since the start of the Biden administration, the United States has sharply stepped up its spying on Chinese companies and their technological advances.

This article is based on interviews with more than two dozen current and former American officials, most of whom spoke on condition of anonymity, and a review of internal Chinese corporate documents and public M.S.S. documents.

The competition between the American and Chinese spy agencies harks back to the K.G.B.-versus-C.I.A. rivalry of the Cold War. In that era, the Soviets built an agency that could pilfer America’s most closely held secrets and run covert operations while also producing formidable political leaders, including Vladimir V. Putin, the president of Russia.

But there is a notable difference. Because of China’s economic boom and industrial policies, the M.S.S. is able to use emerging technologies like A.I. to challenge American spymasters in a way the Soviets could not. And those technologies are top prizes in espionage efforts by China and the United States.

“For China in particular, exploiting the existing technology or trade secrets of others has become a popular shortcut encouraged by the government,” said Yun Sun, director of the China program at the Stimson Center, a Washington-based research institute. “The urgency and intensity of technological espionage have increased significantly.”

The M.S.S. has intensified its intelligence collection on American companies developing technology with both military and civilian uses, while the C.I.A., in a change from even a few years ago, is pouring resources into collecting data on Chinese companies developing A.I., quantum computing and other such tools.

Though the U.S. intelligence community has long collected economic intelligence, gathering detailed information on commercial technological advances outside of defense companies was once the kind of espionage the United States avoided.

But information about China’s development of emerging technologies is now considered as important as divining its conventional military might or the machinations of its leaders.

David Cohen, the agency’s deputy director, said that under President Biden, the C.I.A. was making investments and reorganizing to meet the challenge of collecting on Chinese advances. The agency has started both a China mission center and a technology intelligence center.

“We’ve been counting tanks and understanding the capability of missiles for longer than we have been as sharply focused on the capability of semiconductors or A.I. algorithms or biotech equipment,” Mr. Cohen said in an interview.

But some policymakers say privately that the effort is still falling short, and that Chinese companies and the military are surprising the U.S. government with their advances.

In China, the status of the Ministry of State Security has only grown under Mr. Xi, who prizes bold intelligence action and a powerful security state.

In October 2022, the Communist Party promoted the ministry’s head, Chen Wenqing, to be the party’s top security official and a member of the 24-member Politburo, the first spy chief in decades to ascend to that body. His replacement, Chen Yixin, a longtime aide to Mr. Xi, has raised the public profile of the M.S.S. He has also been given a broad mandate, which encompasses leading a crackdown on American and other foreign companies that conduct corporate investigations of Chinese firms, including for military ties and human rights violations.

The ministry has the foreign responsibilities of the C.I.A. and the domestic mandate of the F.B.I., combined with an authoritarian edge. The M.S.S. is charged with carrying out intelligence collection and operations overseas, as well as limiting foreign influence within China and clamping down on so-called subversive activities. Its mission is avowedly political: to defend the Communist Party against all perceived threats.

The current minister, Mr. Chen, has repeatedly emphasized loyalty to Mr. Xi. In June, he told officers to “wholeheartedly embrace” Mr. Xi’s “core” status.’’

Under Mr. Chen, the ministry is embracing social media to spread messages about threats. “The United States’ multifaceted obstruction, containment and suppression will only make China more battle hardened and self-reliant,” it said on a new WeChat account.

In August, the ministry made separate announcements asserting that it had caught two Chinese citizens spying for the C.I.A., one recruited by an American agent in Japan and the other in Italy. In October, the ministry and Chinese state television announced a case in which a researcher at a defense industry institute had been recruited by a U.S. agent while he was a visiting scholar at an American university. He then transferred copies of secret documents to the Americans after he returned to China, before being detained in 2021.

The announcements suggested the C.I.A. had been rebuilding a network within China that Chinese counterintelligence officers decimated more than a decade ago.

The C.I.A. does not say whether people detained overseas on espionage charges are spies for the United States. But at least some of the Chinese citizens detained were working for the United States, according to people briefed on American intelligence reports. There is no evidence, however, that the M.S.S. has cracked the network, they said, and the Italy case is more than a year old.

The M.S.S. is making its own aggressive moves abroad, including recruiting a far-right Belgian politician and harassing ethnic Chinese critics of the party. One agent hired a local private investigator to physically attack a Chinese American candidate for U.S. Congress on Long Island, according to a Justice Department indictment. Another man is accused of helping to set up an organization in New York that lured in dissidents.

The central government in Beijing established the Ministry of State Security in 1983 during a reshuffling of security units. For decades, the agency struggled to win favor with party leaders. Its Chinese rival, the intelligence services of the People’s Liberation Army, had greater resources and better tradecraft, especially in cyberespionage.

The Ministry of State Security gradually improved its tactics, got bigger budgets and even built business expertise. Some M.S.S. officers who would be working under cover as business people were sent to private sector offices for training, said Peter Mattis, a former C.I.A. analyst and co-author of a book on Chinese espionage.

Chinese agents also expanded their foreign recruitment targets, including among U.S. citizens.

U.S. intelligence agencies were alarmed after discovering that the Shanghai M.S.S. had recruited an American student in China, Glenn Duffie Shriver, and got him to apply to the C.I.A. and State Department. Mr. Shriver was sentenced in 2011 to four years in prison. “It was a big sign of improved tradecraft from M.S.S., for the first time targeting non-Chinese Americans and attempting penetration of the U.S. intelligence community,” said John Culver, a former U.S. intelligence analyst.

The case has had far-reaching consequences. It made U.S. counterintelligence officers more suspicious of applicants for U.S. government jobs who had studied in China or had contacts there, and it turned their attention to M.S.S. provincial bureaus.

The bureaus are their own fiefs, based outside of the agency’s national headquarters, which is in the secretive Xiyuan compound of northwest Beijing. Under Mr. Xi, they have become more aggressive in operations overseas, with some specializing in recruiting and running informants in the United States.

The bureau in Jiangsu Province, next to Shanghai, is another one focused on getting American secrets, and particularly defense technologies, U.S. officials said.

Its officers recruited Ji Chaoqun shortly before he went to the United States in 2013 to study engineering at the Illinois Institute of Technology in Chicago, according to the Justice Department and court documents. His M.S.S. handler, Xu Yanjun, got him to provide the names of at least nine people in the United States for the Chinese spy agency to try to recruit to get aerospace and satellite technologies.

Mr. Ji eventually joined the U.S. Army Reserves, where he aimed to get a security clearance so he could eventually apply to work in the C.I.A., F.B.I. or N.A.S.A. He was arrested in Chicago in 2018 and sentenced this year to eight years in prison. Mr. Xu, his handler, was arrested in Brussels in 2018, in a related operation run by the F.B.I., becoming the first M.S.S. agent to be extradited to the United States.

Unlike Russian operatives, M.S.S. case officers generally avoid working undercover in the United States, preferring instead to run agents or assets from outside and recruit online, including using jobs ads with no apparent ties to China, U.S. officials said.

Around 2018, a Singaporean agent for the M.S.S. “created a fake consulting company that used the same name as a prominent U.S. consulting firm and posted online job ads under that company name,” said Michael C. Casey, director of the National Counterintelligence and Security Center.

The M.S.S. often directly hires from universities, especially for core positions, according to a review of more than 30 online job ads from the agency. In recent years, it has sought technology experts, including hackers, according to two people with knowledge of the recruiting efforts.

Beijing’s most acute worry is that the United States and its allies could choke China off from technological know-how vital for economic and military growth. Mr. Xi has stressed that risk.

Mr. Chen, the minister of state security, wrote in an article in September that “core technologies” remained under the control of other nations, and that reaching “technological self-reliance” was an urgent task.

Chinese government experts openly admire the collection capabilities of American spy agencies and their technology. Chinese intelligence journals often carry studies examining U.S. operations. A recent study of U.S. national security services by the China Institutes of Contemporary International Relations, the main M.S.S. research institute, said, “Drawing on an in-depth assessment of the relevant methods of the United States, China should choose what works and dispense with what does not.”

The M.S.S. has also been elevating experts on the United States. Early this year, one such analyst, Yuan Peng, president of the main research institute, appeared under a new name, Yuan Yikun, as a vice minister of the ministry itself. Earlier in his career, Mr. Yuan often mixed with American scholars, some of whom saw him as a coolheaded observer of Washington.

While president of the research institute, Mr. Yuan became a champion of Mr. Xi’s sweeping concept of “overall national security,” which casts the United States as the main threat to China’s ascent.

“Biden said ‘America is back,’ but the world is not the same as it was, and if it can’t keep up with massive global changes, then this changing world will inevitably slip from U.S. control,” Mr. Yuan wrote in an international strategy assessment published in early 2022. “In judging current American grand strategy a few decades from now, its biggest mistake may be seen as choosing China as an enemy.”

One of the first major decisions by William J. Burns, the C.I.A. director, was to create the China Mission Center. The idea was to ensure that stations all over the world, not just in Asia, focused on collecting intelligence on China.

Mr. Burns took the step after a strategic review that was led by Michael Collins, a career intelligence officer. Under Mr. Burns, Mr. Collins was appointed director of strategy, with a mandate to help improve the agency’s work on China.

The China challenge requires the United States “to be smart on critical domains like biotechnology and semiconductors,” said Mr. Collins, who now leads the National Intelligence Council, a coordinating body across spy agencies. “We have to be better.’’

To get a sharper understanding of which technologies China is targeting, the C.I.A. has begun asking American executives and scholars for insights about what Chinese companies are trying to develop. American universities and companies, often approached by Chinese investors and researchers, have knowledge of the specific technologies, U.S. officials said.

But officials said it was important to bring in people with deeper knowledge of China’s commercial and technological ambitions. For now the spy agencies are struggling to get information to policymakers as quickly as they want it.

Last year, a Canadian firm, TechInsights, revealed that China’s leading chip maker, Semiconductor Manufacturing International Corporation, had developed a seven-nanometer chip. The U.S. government was unaware of the advance and was surprised that the Chinese firm had made the leap so quickly, said Jimmy Goodrich, an expert on Chinese technology who advises the RAND Corporation.

“The intelligence community is just not set up institutionally to be adept at understanding China’s commercial and tech issues,” he said “It’s hard to do. And more important, you really have to think like a Wall Street analyst, market researcher, talking to everyone up and down the supply chain.”

(A U.S. official said American intelligence agencies had assessed that the company had at least the capability to produce the smaller chip before the Canadian report.)

Part of the problem is that U.S. intelligence agencies favor information from satellites, intercept programs and human spies. One senior U.S. official said analysts were overlooking valuable insight from nonclassified sources in China.

“The U.S. intelligence community can do amazing things on focused targets,” said Mr. Mattis, the former C.I.A. analyst. “But it sometimes can struggle with broad-based awareness like understanding China’s technology prowess.”

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