China's Espionage Community: A Macro View

(This is an excerpt (Chapt. 27) of the book "Treatise On China’s Clandestine Financial Warfare: China’s Intelligence Community And The Communist Party As Key Players In Geofinance In The 21st Century") 

The government of China is engaged in espionage overseas, directed through diverse methods mainly via the Ministry of State Security, the Ministry of Public Security, the United Front Work Department, and People's Liberation Army military intelligence, but also using a variety of para-military organizations (People's Armed Police, Coast Guard Corps, and China Militia), VIP body guard agencies (Central Security Bureau and Central Guard Unit), government ministries (Foreign Affairs, Education, Commerce, Overseas Chinese Affairs Office), front organizations (universities, think tanks, Confucius Institutions, student organizations, China corporates and banks), business associations, or Chinese ethnic associations[i].

It employs a variety of tactics including cyber spying to gain access to sensitive information remotely, Signals intelligence (SIGINT), Electronic intelligence (ELINT) and Human agents (HUMINT). China is also engaged in industrial espionage aimed at gathering information to bolster its economy, as well as monitoring dissidents abroad such as supporters of the Tibetan independence movement, Uyghurs, the Taiwan independence movement, Falun Gong, and democracy activists.

It is believed that Chinese espionage is aimed at the preservation of China's national security through gaining commercial, technological, and military secrets. 

China’s intelligence services, like those of most other countries, are split between civilian and military intelligence agencies[ii]. Their objectives are similar to the ones of Western intelligence agencies, namely[iii]:

1.     determining sources of energy and maintaining the security of delivery routes.

2.     protecting Chinese officials and citizens working abroad.

3.     preserving markets for Chinese goods and defense of critical supply chains, among many others.

However, there is one notable difference that is a definite breaking point between China and the West: whether it is the civilian or military intelligence apparatus, the Chinese devote considerable resources in preserving internal stability, a euphemism for maintaining at all cost the Communist Party of China in power and crushing down all potential dissidence. That is why massive resources are allocated to domestic security, a budget[iv] that officially surpasses the defense budget of the PLA[v]. Indeed, across China, national domestic security accounted for CNY 1.378 trillion in 2018 ($200 billion), that comprises central and local government spending for public security) compared to CNY 1.128 trillion ($164 billion) in central-government funding for the military[vi]. National domestic security spending can be broken down into central government spending (CNY 204.15 billion, or $29.7 billion)) and regional level spending (CNY 1.174 trillion, or $170.9 billion), with the latter representing to the sum of domestic security expenditures for all provinces and autonomous regions.  The domestic security spending for FY 2018 represents on average a threefold increase in the past decade, reflecting the impact of the rise of Xi Jinping as the leader of China. The domestic security expenditure includes state security, police, domestic surveillance, armed civil militia (and other measures to deal with public disturbances). 

Since 2010, it has surpassed the country's military (PLA) spending with a difference of roughly CNY 200 million in 2018. Guangdong, Jiangsu, and Xinjiang were the top three provinces in terms of public security spending. The existence of the Central National Security Commission, that was created in November 2013, should be providing a formal central mechanism for assessing intelligence reports and filtering them into a common position for the government to consider. One can assume that the Chinese Communist authorities, since end 2013, have an official way to integrate reporting into considered strategic analysis, or the ability to distil assessments into a single whole‐of‐government view. However, it is highly likely that what reaches the top levels has been influenced by multiple procedures and biases, leading to a less reliable finished intelligence product, because of:

-       the sheer number of agencies involved in collecting intelligence. 

-       the fact that Chinese intelligence agencies, both military and civilian, also have components that operate at the provincial level (i.e., that might be leading to regional differences in their analysis, performance and equipment).

-       the existence of multiple layers between the intelligence sources and China’s leaders.

-       of the fact that an authoritarian system is not necessarily a unified and uncompetitive one[vii].

There are reportedly tens of thousands of Chinese intelligence officers (and hundreds of thousands of agents) around the world[viii]. In the appendix, the reader will find a table that compares the manpower in intelligence and law enforcement between China and the United States (per December 2018). While these numbers are a rough estimate, they at least provide a base for comparison. These numbers are extracted from official numbers of the Chinese and U.S. government (cf. there are more details on the sources in the next sections). Note, that many scholars conduct research and describe at length the history and activities of the Chinese intelligence and security apparatus, but fail in providing one of the most crucial data: what is the strength of these agencies. 

Similar to Western intelligence agencies, Chinese embassies around the world are a hotbed of Chinese intelligence officers (mostly from military intelligence and Ministry of State Security). China’s espionage services do not entirely work in just the same way as the old Soviet intelligence services or the American or Australian intelligence services. Chinese intelligence is also collected through, amongst others, Chinese journalists based overseas, so-called fraternal Chinese associations, Chinese students studying in foreign universities, Chinese tourists travelling abroad, or Chinese diaspora around the world. This is what is meant by Chinese intelligence community:  it is much larger than the official Chinese intelligence agencies and relies heavily on the system of intelligence collection of a ‘Thousand Grains’. 

In essence, aside from the Chinese intelligence officers that are on the payroll of the Ministry of State Security, Ministry of Public Security, and the People’s Liberation Army, the Chinese intelligence community also consists of, amongst others:

-       A vast network of diplomatic offices (source: Lowy Global Diplomacy Index): China has 276 posts, three more than the U.S., and 96 consulates to the U.S.’s 88, a reflection of its emphasis on its economic and diplomatic interests. Beijing's new missions have been popping up especially in countries that it wooed away from ties with Taiwan: Burkina Faso, the Dominican Republic, El Salvador, the Gambia, and Sao Tome and Principe.

-       In the U.S.A. alone, there are currently some 2600 Chinese diplomatic and consular officers; 

-       Nearly 2,500 companies[ix] operating in the U.S. and owned by Chinese investors and Chinese firms[x].

-       662,000 Chinese students overseas, of which 370,000 enrolled in the U.S. with more than 2,800 U.S. schools.

-       25,000 visiting Chinese delegates each year in the U.S. alone.

-       A large overseas ethnic Chinese community totaling around 60 million with (2019 estimates)

 Comparison With Soviet Intelligence

While not something appreciated, Chinese espionage right now is occurring on a scale that dwarfs what the Soviet Union accomplished during the height of the Cold War[xi], and it has three sources or enablers[xii]:

-       First, China, unlike the Soviet Union, is now a commercially thriving state, doing vast volumes of trade all over the world. Such economic wealth provides the country both the incentive and the means to conduct espionage of every kind to an extent that the Soviet Union could have envied[xiii].

-       Second, there is a vast Chinese diaspora and China’s intelligence services, unlike their Soviet counterparts, have always depended primarily on first-generation immigrants to foreign countries and students or tourists travelling abroad, to gather much of their intelligence for them, a handful at a time. 

-       Third, China is now conducting cyber-espionage—something that was never possible for the Soviet Union. It was not technically possible in the Cold War years and, in any case, information science was one of the many areas in which the Soviet Union was left behind by the West in the 1970s and 1980s[xiv].

Weaknesses Of The Chinese Intelligence Services

-       Structure of PRC intelligence framework does not reflect the status of a global power, but, notwithstanding aspirations, rather a regional power. This is amongst others mirrored by the MSS’ presence on a provincial level, not to mention the countless number of municipal bureaus  (unlike the CIA and FBI with officers stationed overseas and distributed internally for counterintelligence and domestic security). Yes, the PRC’s cyber activities and espionage are global, but its intelligence gathering is not geared towards analysis activities directed at global political-military alliances outside its sphere of influence (South and East China Seas)[xv].

-       The MSS is much more focused on internal control and surveillance than overseas work, and its overseas work is still heavily geared toward Taiwan and Hong Kong. Japan and the U.S.A. take up the next big effort, and so India, despite its proximity and vast size, has fewer resources devoted to it.

-       The MSS remains too focused on ‘counter-revolutionary activities designed to sabotage, destabilize or overthrow China's socialist system. In other words, the MSS continues to dedicate many resources in hunting down and arresting dissidents, which represents a domestic drag that constrains the Chinese intelligence services from fully focusing on intelligence and counterintelligence. Indeed, maintaining domestic political stability remains a critical aspect of the MSS activities, together with increasing economic development and modernizing the armed forces[xvi].

-       The MSS is the secret police of the Communist Party of China, and not of the Chinese state, even though they are intermingled due to the one-party nature of the political regime in China. The logo of the MSS is unique among Chinese government agencies as it displays the Party emblem instead of the state emblem.

-       The MSS pursues high volumes of low-grade (if not entirely unclassified) information using the system of vacuum (Thousand Grains approach) whereby a large number of Chinese nationals are randomly gathering small numbers of information simultaneously that, once collected, constitutes together meaningful intelligence. Chinese intelligence services play a secondary role relative to large, informal networks of amateurs, vacuuming up information irrespective of Beijing’s economic, military, and political priorities. Chinese intelligence officers do not rely on the traditional tradecraft of clandestine collection, such as paying or blackmailing for secrets. Second, that their secret services rely on the efforts of ethnic Chinese émigrés and citizenry abroad[xvii].

-       The consequences of the vacuum cleaner view go far beyond a lack of operational guidance and into the realm of politics. Playing up a shapeless, insidious threat provides a useful political weapon with which to admonish a serving government for being weak on national security, regardless of the actual merits of counterintelligence and security efforts. The resulting atmosphere of suspicion discourages cooperation among the very parties who must cooperate to counter Chinese intelligence.

-       Overlapping and redundancy in tasks: There is a certain degree of overlap with the intelligence departments of the People’s Liberation Army (the PLA) in respect of foreign intelligence, and with the Ministry of Public Security in the field of domestic intelligence.

-       Highly bureaucratic and dictated by political agendas rather than pure national security objectives. All intelligence agencies are meant to uphold first and foremost the power of the Communist Party of China[xviii].

-       The complex and expansive structure of China’s espionage apparatus offers an explanation for why an MSS collection operation might waste resources and risk political repercussions for materials seemingly in Chinese possession. China’s security establishment is mostly divided in two between civilian and military elements, and observers cannot be sure how these competitive and stove-piped systems interact and at what levels of policy and operations[xix].

-       Strained relations between MSS and police forces. While Western countries face similar challenges, the China situation is more than merely structural as both the MPS and MSS are conducting similar activities in terms of political police and state security. Additionally, the MSS can instruct the MPS to engage into police actions such as taking suspects into custody or searching premises. This subordination is not always to the liking of the MPS as it views the MSS as trampling on its exclusive areas of competences[xx].

-       The typical problem affecting a one-party state. Too powerful security and intelligence apparatus might end up running everything, and CPC officials are worried about getting arrested by the police (i.e. look at Stalin’s lieutenants). Another problem is that powerful state security and intelligence apparatus have no one to monitor them, except the Secretary General, Xi Jinping. The absence of an independent court and judicial system creates the risk of making wrong decisions without being accountable[xxi].

-       There appears to be little supervision of foreign intelligence activities at the policy level and with the approval of the CMC secretariat. There are CPLAC offices at the district, province and county levels to supervise internal operations by serving as the central point for communication between local intelligence and law enforcement agencies.[xxii]  

-       The CPC is so frantic about being a fear of being removed from power that, according to some estimates[xxiii], on a purchasing power parity basis, China’s domestic security spending in 2017 was equivalent to about $349 billion, more than double the United States’ estimated $165 billion[xxiv].

-       Being a dictatorship that is focused on repressing dissidence, both civilian ministries (MSS and MPS) also have substantial portions—probably the majority—of their personnel in provincial departments or local bureaus, which report to the provincial and local party committees in addition to their home ministries[xxv]. Foreign affairs however are not handled at the subnational level, encouraging these local MPS and MSS units to focus on provincial, rather than national, concerns like internal stability[xxvi].

-       Significant regional differences in performance and equipment will exist throughout the PLA’s military (for example 3PLA) as well as MSS/ MPS intelligence organizations as they have all a large number of offices and technical reconnaissance bureaus in each of China’s seven military regions and several major cities, and the Chinese services likely have their training and procurement units in these areas.

-       It is highly likely that whatever reaches the top will have been influenced by local procedures and biases given the existence of multiple levels between the sources of intelligence and China’s leadership, whether it is for the civilian or military intelligence apparatus[xxvii].

-       Given the Thousand Grains approach, one might wonder how the Chinese take on the challenge of processing vast amounts of data that human beings, even in the large numbers Chinese intelligence presumably could recruit, can process[xxviii].

-       Despite the various reforms affecting respectively the PLA[xxix] as well as the security and intelligence apparatuses, President Xi Jinping has not able to streamline very efficiently the governance of all these agencies and ministries resulting still in a large number of stakeholders with competing interests.

[i] See The China Quarterly ‘Chinese Military-Related Think Tanks and Research Institutions’:https://www.cambridge.org/core/journals/china-quarterly/article/chinese-militaryrelated-think-tanks-and-research-institutions/DF8CA75D428A5F3AB0ED49400A8F97CF

[ii] See DIA ‘China Military Power Modernizing A Force To Fight And Win’: https://www.dia.mil/Portals/27/Documents/News/Military%20Power%20Publications/China_Military_Power_FINAL_5MB_20190103.pdf

[iii] See The New Yorker ‘A New Kind of Spy

How China obtains American technological secrets. ‘: https://www.newyorker.com/magazine/2014/05/05/a-new-kind-of-spy

[iv] It is very difficult to obtain data on China’s national domestic security budget as it not available through the National Bureau of Statistics database, nor  the Ministry of Finance budget report. The FY 2018 data was obtained by the author through Statista.com, but the accuracy of the resulting absolute number could not be verified independently. Note that the Wall Street Journal in an article on 6 March 2018  provides information till FY 2017 that seems to be in line with the data supplied by Statista.com thereby providing some credibility and reliability to the data of Statista.com.

[v] See World Security Network ‘Considerations about the Chinese Intelligence Services (II)’: https://www.worldsecuritynetwork.com/China-Europe-Asia-United-States/Dumitrescu-Octavian/Considerations-about-the-Chinese-Intelligence-Services-II

[vi] See Statista ‘Expenditure on public security in China from 2008 to 2018, by government level’: https://www.statista.com/statistics/1049749/china-public-security-spending-by-government-level/

[vii] See 

International Journal of Intelligence and CounterIntelligence  ‘Assessing Western Perspectives on Chinese Intelligence’: https://www.tandfonline.com/doi/abs/10.1080/08850607.2012.678745?scroll=top&needAccess=true&journalCode=ujic20

[viii] Typically, an intelligence officer is directly on the payroll of the intelligence agency (f.ex. MSS, MPS, or the MID of the PLA JSD), while the agent is the one recruited and run by the intelligence officer.

[ix] See Axios ‘Chinese investors and firms own majority of 2,400 US companies ‘: https://www.axios.com/working-for-china-1515542281-d4bc0ab4-bed6-4085-a26e-c5d7c66be74c.html

[x] See Marco Polo ‘Close Up: Chinese Investments in America’: https://macropolo.org/know-the-numbers/

[xi] See CIA ‘The Analytic Challenge of Understanding Chinese Intelligence Services’: https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol.-56-no.-3/pdfs/Mattis-Understanding%20Chinese%20Intel.pdf

[xii] See The

U.S.-China Economic And Security Review Commission ‘China's Intelligence Services And Espionage Operations‘: https://www.uscc.gov/sites/default/files/transcripts/June%2009,%202016%20Hearing%20Transcript.pdf

[xiii] See Quadrant ‘Chinese Spies and Our National Interest’: https://quadrant.org.au/magazine/2012/06/chinese-espionage-and-australia-s-national-interest/

[xiv] See World Security Network ‘Considerations about the Chinese Intelligence Services (II)’: https://www.worldsecuritynetwork.com/China-Europe-Asia-United-States/Dumitrescu-Octavian/Considerations-about-the-Chinese-Intelligence-Services-II

[xv] See War on the Rocks ‘A Guide To Chinese Intelligence Operations’: https://warontherocks.com/2015/08/a-guide-to-chinese-intelligence-operations/

[xvi] See Quadrant ‘Chinese Spies and Our National Interest’: https://quadrant.org.au/magazine/2012/06/chinese-espionage-and-australia-s-national-interest/

[xvii] See The Diplomat ‘China’s Misunderstood Spies’: https://thediplomat.com/2011/10/chinas-misunderstood-spies/

[xviii] See The

U.S.-China Economic And Security Review Commission ‘China's Intelligence Services And Espionage Operations‘: https://www.uscc.gov/sites/default/files/transcripts/June%2009,%202016%20Hearing%20Transcript.pdf

[xix] See International Journal of Intelligence and CounterIntelligence  ‘Assessing Western Perspectives on Chinese Intelligence’: https://www.tandfonline.com/doi/abs/10.1080/08850607.2012.678745?scroll=top&needAccess=true&journalCode=ujic20

[xx] See World Security Network ‘Considerations about the Chinese Intelligence Services (II)’: https://www.worldsecuritynetwork.com/China-Europe-Asia-United-States/Dumitrescu-Octavian/Considerations-about-the-Chinese-Intelligence-Services-II

[xxi] See War on the Rocks ‘A Guide To Chinese Intelligence Operations’: https://warontherocks.com/2015/08/a-guide-to-chinese-intelligence-operations/

[xxii] See CIA ‘The Analytic Challenge of Understanding Chinese Intelligence Services’: https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol.-56-no.-3/pdfs/Mattis-Understanding%20Chinese%20Intel.pdf

[xxiii] See Adrian Zenz, China’s Domestic Security Spending: An Analysis of Available Data, China Brief, Vol. 18, No. 4, March 12, 2018. 

[xxiv] See The New Yorker ‘A New Kind of Spy

How China obtains American technological secrets.’: https://www.newyorker.com/magazine/2014/05/05/a-new-kind-of-spy

[xxv] See The Cipher Brief ‘The Black Box of China’s Chinese Intelligence Services’: https://www.thecipherbrief.com/column_article/black-box-chinas-chinese-intelligence-services

[xxvi] See International Journal of Intelligence and CounterIntelligence  ‘Assessing Western Perspectives on Chinese Intelligence’: https://www.tandfonline.com/doi/abs/10.1080/08850607.2012.678745?scroll=top&needAccess=true&journalCode=ujic20

[xxvii] See The

U.S.-China Economic And Security Review Commission ‘China's Intelligence Services And Espionage Operations‘: https://www.uscc.gov/sites/default/files/transcripts/June%2009,%202016%20Hearing%20Transcript.pdf

[xxviii] See Observer Research Foundation ‘Few grains from the “Thousand Grains of Sand’: https://www.orfonline.org/expert-speak/few-from-thousand-grains-of-sand/

[xxix] See NDU Press ‘Appendix: Central Military Commission Reforms’:  https://ndupress.ndu.edu/Portals/68/Documents/Books/Chairman-Xi/Chairman-Xi_Intro-Appendix.pdf?ver=2019-02-08-112005-443