FBI warns of economic and other espionage from China, which seeks to upend US' lead

A senior FBI official on Wednesday said that Chinese economic espionage as well as efforts to steal U.S. research and influence American discourse amount to "the most severe counterintelligence threat" facing the United States today.

Bill Priestap, head of the bureau's counterintelligence division, joined two other senior security officials in outlining what they described as Beijing's long-term campaign to undermine the United States' economic and technological dominance and the government's efforts to counter it.

China's Communist Party "dominates every facet of Chinese life," from religion to freedom of expression and business, Priestap said at a Senate Judiciary Committee hearing. "It is therefore alarming that the Chinese government's economic aggression, including its relentless theft of U.S. assets, is positioning China to supplant us as the world's superpower."

The hearing on "Non-Traditional Espionage Against the United States" came as announcements of indictments of Chinese hackers and other actions planned for this week have been put off for now, officials said, declining to elaborate.

The hearing also came as U.S. private sector and government investigators have turned up evidence that the Chinese Ministry of State Security, the nation's main intelligence agency, was probably behind the hack of Marriott's Starwood chain hotel reservation system. That breach exposed the private data and travel details of as many as 500 million people.

Homeland Security official Christopher Krebs cautioned, however, that the investigation was in its early stages. Privately, other officials said no firm conclusion has been reached.

China has become the United States' top long-term strategic threat, officials and analysts say, with its modernizing military and its efforts to increase its global influence and to become the world leader in advanced technology - through, as Priestap said, "any means necessary."

Some of those means, he said, are "clearly illegal," such as hacking and commercial espionage. Some "appear legal" but rely on deception, such as the use of front companies. Some, he said, "are lawful but not reciprocal, exploiting the openness of free nations."

Assistant attorney General John Demers said: "The playbook is simple - rob, replicate and replace. Rob the American company of its intellectual property. Replicate the technology. And replace the American company in the Chinese market and one day in the global market."

The lawmakers expressed concern about the Chinese government's reported efforts to finance Chinese nationals' work or study in the United States and then pressure them to use their access to obtain research that would be of strategic value to China.

Priestap said the bureau has processed "thousands" of complaints and investigations about such activity.

"Every rock we turn over, every time we look for it, it is not only there - it is worse than anticipated," he said.

China's use of "Confucius Institutes," organizations set up on American college campuses with Chinese government funding to teach Chinese language and culture, also drew scrutiny.

Though China officially claims the institutes are set up by its Ministry of Education, they were in fact created by the United Front Work Department, a Chinese Communist Party organization responsible for guiding overseas influence and propaganda activities, according to James Mulvenon, a China expert who testified during a second panel before the Judiciary Committee.

"It's all we need to know about the intention of the Confucius Institutes," said Mulvenon, general manager of the special programs division of SOS International, an intelligence contractor. The United Front Work Department is "at the heart of (China's) influence efforts" overseas, he said.

But the institutes, of which Priestap said there are 150 on American college campuses, are just part of "a broader array of pressure that the Chinese are putting on American universities," Mulvenon said.

Mulvenon also testified that according to the website of the Chinese government's Thousand Talents Program, an effort launched in 2008 to recruit experts overseas and pay them to aid China's modernization, the program lists more than 300 U.S. government researchers who have accepted Chinese payment. It is unclear, he said, if they have received permission from their agency to receive such funds.