Sessions unveils new Chinese economic espionage charges, ratcheting up pressure on Beijing

The Justice Department announced Thursday new charges against a Chinese state-owned company, a Taiwanese company and three Taiwanese nationals for engaging in economic espionage on behalf of the Chinese government. 

The entities and individuals charged are accused of stealing trade secrets from Micron Technology, an U.S.-based semiconductor company.

Attorney General Jeff Sessions announced the charges at a press conference, describing Chinese economic espionage as a grave threat to U.S. national security and economic competitiveness.

“The problem has been growing rapidly, and along with China’s other unfair trade practices, it poses a real and illegal threat to our nation’s economic prosperity and competitiveness,” Sessions said in remarks at the Justice Department. He suggested that the activity had been “overshadowed in the press by threats from Russia or radical Islamic terrorism.”

The charges are the second tranche related to Chinese economic espionage that U.S. officials have unveiled just this week. The announcement came days after the Justice Department charged two Chinese intelligence officers in a conspiracy to hack into U.S. firms and steal sensitive information on jet engines used in American and European commercial airliners.

On Thursday, Sessions also unveiled a new initiative to investigate trade theft cases by China. Assistant Attorney General for National Security John Demers will lead the initiative, with assistance from senior Justice Department and FBI officials as well as five U.S. attorneys. 

The new initiative is the latest flashpoint in the Trump administration’s efforts to curb what it views as malign activity by Beijing. Administration officials have ratcheted their rhetoric on China in recent months, accusing it of engaging in unacceptable behavior in the military, economic and cyber realms.

President Trump, Vice President Mike Pence and others have accused Beijing of meddling in the November midterm elections – a claim that spurred scrutiny from some critics that see it as an effort to distract from Russian interference and Special Counsel Robert Mueller’s investigation into collusion between the Trump campaign and Moscow.

The indictment unveiled Thursday alleges that the defendants conspired to pilfer trade secrets from Micron, particularly information about dynamic random-access memory (DRAM), a memory technology used to store data in electronic devices that is manufactured by Micron, and pass it to the Chinese government. 

Micron is headquartered in Boise, Idaho, but has a large office in the North District of California, where the economic espionage charges have been filed. 

The indictment, which was filed on Sept. 27 but only unsealed on Thursday, charges Fujian Jinhua Integrated Circuit Company, a Chinese state-owned semiconductor firm, Taiwanese company United Microelectronics Corporation, and Taiwanese nationals Chen Zhengkun, He Jianting, and Wang Yungming with conspiracy to commit economic espionage and other federal crimes.

While the charges carry significant prison time and fines, the defendants are unlikely to see their day in court, since the U.S. and Taiwan do not have an extradition treaty. The government has also filed a civil suit seeking an injunction preventing the Chinese and Taiwanese companies from transferring the stolen trade secrets or exporting products based on them to the U.S.

Sessions described the activity as a “brazen scheme” and signaled the Justice Department’s efforts were meant to deter further trade theft by China.

“Chinese economic espionage against the United States has been increasing and it has been increasing rapidly. We are here to say enough is enough,” Sessions said. “It is time for China to join the community of lawful nations.” 

“We will continue to charge wrongdoers based on carefully conducted investigations,” the attorney general said.

In a related development earlier this week, the Commerce Department restricted exports to Fujian Jinhua Integrated Circuit Company, citing a “significant risk” to U.S. national security interests. 

The new charges come days after U.S. officials charged two Chinese intelligence officers, Zha Rong and Chai Meng, who allegedly worked with a team of Chinese hackers in order to steal information on a turbofan engine being developed by a U.S. company and a French firm with offices in China.

The activity, which allegedly occurred between January 2010 and May 2015, preceded an agreement between then-President Obama and Chinese President Xi Jinping in 2015 to stop conducting cyber-enabled intellectual property theft. Experts observed a drop off in Chinese economic espionage following the agreement, though some have said it continued in some areas – such as the defense urgency – and has picked up in recent months. 

Tuesday’s charges represented the third time since September that the Justice Department had brought charges against Chinese intelligence officers for stealing U.S. intellectual property. 

In a striking development last month, U.S. officials announced that a Chinese intelligence officer accused of conspiring to steal trade secrets from major U.S. aviation and aerospace firms had been extradited to the United States to face charges. Yanjun Xu, the defendant, is accused of targeting GE Aviation and other companies in the U.S. and abroad since at least December 2013. Xu pleaded not guilty to the charges in October and is facing trial in federal court in Ohio. 

Thursday’s announcement is likely to exacerbate tensions with Beijing that are already running high over trade disputes.

Trump and Xi are expected to meet at the Group of 20 (G-20) summit in Buenos Aires in late November, amid heightened tensions over trade. On Thursday, Trump tweeted that he had a “long and very good conversation” with Xi largely about trade and signaled the two leaders would continue their discussions on the sidelines of the G-20.

The Chinese embassy in Washington did not immediately return a request for comment.