How China’s Spies Became Key Players in the Trade War

(Bloomberg) -- China's main intelligence agency, the shadowy Ministry of State Security, has found itself thrust into the global spotlight as political and trade tensions between the U.S. and China flare. Two of its alleged assets have been publicly named in a sweeping U.S. indictment involving hacking on a global scale. After a top executive of Huawei Technologies Co. was arrested in Canada on a U.S. extradition request, it was MSS agents who abruptly detained two Canadians in China, sparking a diplomatic feud. (Huawei itself has long been suspected of building telecommunications equipment that could give Chinese intelligence a back door to spy on U.S. networks, a charge it denies.) The ministry's reach continues to grow as President Xi Jinping strengthens security laws, while limits on its power remain vague.

1. What is the MSS?

Something of a mash-up, at least when compared with the U.S. It conducts intelligence operations abroad like the Central Intelligence Agency, counterespionage at home like the Federal Bureau of Investigation and cyber-snooping like the National Security Agency. Established in 1983, the number of employees is classified, as is the exact location of MSS headquarters, said to be a nondescript building in western Beijing. It has no public website or press office.

2. Who runs it?

Chen Wenqing, an ex-police chief who helped direct Xi's nationwide anti-graft campaign, took over officially in 2016. Chen also serves as deputy director of the party's National Security Commission, which was established by Xi in 2013 to give the party direct control over security affairs. The ministry is overseen by the State Council, China's cabinet, which is run by Premier Li Keqiang, although Xi has taken a greater role in policy making than past presidents.

3. What does it get up to?

The National Security Law of 2015 extended the MSS's powers from outer space to the ocean depths as well as the internet. It also required other government departments to cooperate. The MSS isn't known to have a paramilitary or “black ops” function like the CIA. It operates secret detention facilities in China and is infamous for putting dissidents under house arrest without criminal charges including Chen Guangcheng, a blind civil-rights lawyer who fled to the U.S. Embassy in Beijing in 2012 and eventually moved to New York. In cyberspace, the ministry benefits from close ties between the state and Chinese tech giants Baidu, Alibaba and Tencent, according to Richard McGregor, a senior fellow at the Lowy Institute in Sydney.

4. How's its reputation?

Chinese and foreign detainees have alleged rights violations by security agents. Some have spoken of daily six-hour interrogations, no access to lawyers and confinement in cells under lights that never go out. Michael Kovrig, one of two Canadians detained after the Dec. 1 arrest of Huawei Chief Financial Officer Meng Wanzhou in Vancouver, was said to be facing similar conditions. Swedish human rights campaigner Peter Dahlin was detained for “endangering state security” in 2016 and later paraded onto Chinese state television to make a forced confession.

5. What's the win/loss record?

The New York Times recently reported Chinese (and Russian) intelligence monitor President Donald Trump's calls on unsecured cellular devices. The most likely Chinese culprit? The MSS, Peter Mattis, a former China analyst at the CIA, told Foreign Policy. In 2017, the Times reported that Chinese authorities had dismantled CIA operations in China over several years, killing at least a dozen of the agency's sources in what U.S. officials called one of their worst intelligence breaches in decades. Australian outlets Fairfax Media/Nine News reported that the MSS was responsible for a wave of attacks on Australian companies in 2018, despite a bilateral agreement not to steal each other's commercial secrets. On the other hand, a senior MSS officer, Yanjun Xu, was arrested in Belgium and extradited to the U.S. in October on charges of conspiring to steal trade secrets from top aviation firms -- reportedly the first time a Chinese government spy has been brought to America to face charges, and one in a series of U.S. indictments alleging economic espionage.

6. Does it work alone?

The ministry plays a leading role in a vast spy apparatus that includes the military, police and other state organs, all funneling information to party central. Its regional branches appear to have specific portfolios and missions. The Beijing bureau has been taking the lead in the Kovrig case. The Shanghai bureau has surfaced in a number of U.S. espionage cases, including the conviction of Kevin Mallory, an ex-U.S. defense contractor and CIA officer who sold classified documents to Chinese intelligence officials.

The Reference Shelf

• China goes after pre-crime, a la “Minority Report.”
• Here's Wired on the U.S.'s first arrest of a Chinese state security officer.
• Bloomberg Opinion's Adam Minter on China's elusive spies.
• A Sydney Morning Herald investigation into agency cyber attacks.
• Peter Mattis in the National Interest on the ministry's inner workings.
• Listen to a CSIS podcast on the history of China's intelligence services.

To contact the reporter on this story: Karen Leigh in Hong Kong at kleigh4@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Paul Geitner

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