San Francisco and Silicon Valley are top priorities for Beijing's efforts to steal US trade and technological secrets.

California is the only state where China's main intelligence agency has a dedicated unit focused on "political intelligence and influence operations."

Tech firms — even those with high-level government contracts — are apparently unprepared to respond to espionage and have few incentives to report such activities.

San Francisco and Silicon Valley are top targets for China's main intelligence agency and Beijing's efforts to steal billion of dollars in US trade and technological secrets are only set to increase, according to a new report from Politico.

The intelligence offensive being launched by foreign governments and led by China could also signal how they intend to operate in other US states and countries in the years to come, the Politico report states.

The national conversation regarding espionage might be dominated by discussions of Russian election interference, which is certainly a serious threat, but China's activities out West are reportedly becoming more and more sophisticated.

Russia and even US allies, such as South Korea and Israel, are also allegedly quite active in the region.

But it's China's Ministry of State Security (MSS), the country's primary intelligence agency, that has placed particular emphasis on California.

China is dedicating a lot of attention to spying in California

According to the Politico report, California is the only state where the MSS has a dedicated unit focused on "political intelligence and influence operations."

This is reportedly linked to the fact there are a significant number of influential Chinese immigrants and a large population of Chinese-Americans in the area, and MSS sees potential for recruiting local officials who might be able to move up the political latter.

Chinese officials also allegedly pressure Chinese nationals based in California into helping them gather intelligence on tech companies by using their family members back home as leverage or threatening students with a loss of government funding. The Chinese government also reportedly does this with US citizens who still have family in China.

Tech firms – even those with high-level government contracts – are also apparently unprepared to respond to espionage and have few incentives to report such activities, according to the Politico report. This is reportedly linked to the fact the local communities are quite liberal and the companies might fear being accused of profiling if they singled out Chinese employees, for example.

There have also reportedly been situations in which employees of tech companies have sold information to the Chinese or Russian governments and the executives decided not to pursue charges because they didn't want their stockholders or investors to know. In short, the tech companies would rather avoid the bad press than see employees face legal repercussions for potential espionage.

In this context, one former US official reportedly told Politico that San Francisco is like a "nirvana" for MSS.

'They have all the time in the world, and all the patience in the world'

Kathleen Puckett, who worked counterintelligence in the Bay Area from 1979 to 2007, told Politico, "The Chinese just have vast resources."

"They have all the time in the world, and all the patience in the world," Puckett added. "Which is what you need more than anything."

These sentiments were echoed by FBI Director Christopher Wray at the Aspen Security Forum last week.

"China from a counterintelligence perspective represents the broadest, most pervasive, most threatening challenge we face as a country," Wray said. The FBI director has consistently warned of China's efforts in this regard.

Similarly, a government report released on Thursday warned China, Russia, and Iran are ramping up cyber espionage efforts in the US and pose a "significant threat to America’s prosperity."

"Foreign economic and industrial espionage against the United States continues to represent a significant threat to America's prosperity, security and competitive advantage," the National Counterintelligence and Security Center said. "China, Russia and Iran stand out as three of the most capable and active cyber actors tied to economic espionage and the potential theft of US trade secrets and proprietary information."