U.S.-China spy games flare

The sun was setting over Chengdu when they grabbed the American.

It was January 2016. The U.S. official had been working out of the American consulate in the central Chinese metropolis of more than 10 million. He may not have seen the plainclothes Chinese security services coming before they jumped him. In seconds he was grabbed off the Chengdu street and thrown into a waiting van.

The Chinese officials drove their captive — whom they believed to be a CIA officer — to a security facility where he was interrogated for hours, and, according to one U.S. official, filmed confessing to unspecified acts of treachery on behalf of the U.S. government.

It wasn’t until the early morning hours of the following day that other U.S. officials — who were not immediately informed by their Chinese counterparts of the consular official’s capture — arrived to rescue him. was eventually released back to their custody and soon evacuated from the country.

Both Chinese and U.S. officials kept quiet about the previously unreported incident, described to POLITICO and confirmed by multiple U.S. officials. But it threatened to spill into an international incident in the early days of the 2016 presidential campaign. U.S. officials strongly protested the abduction to their Chinese counterparts and, according to one official, issued a veiled threat to kick out suspected Chinese agents within the U.S.

U.S. officials consider the abduction an unusually bold act in a long-simmering spy game between Washington and Beijing, one recently overshadowed by a newly aggressive Russia. But U.S. officials and China experts say the two countries are engaged in an espionage battle that may be just as fierce, if far less publicized.

“The Chinese have not gone away,” one counterintelligence official who recently left government said. “The things going on with Russia right now really have distracted from China.”

POLITICO spoke with more than half a dozen current and former national security officials for this story. Almost all requested anonymity to more freely discuss sensitive intelligence matters.

China’s ongoing espionage within the U.S. was clear at a July pre-trial hearing at a Washington courthouse for former CIA officer Kevin Mallory, charged in June with passing at least three top secret U.S. government documents to a Chinese intelligence operative in exchange for $25,000 in cash.

“Your object is to gain information, and my object is to be paid for it,” prosecutors said the 60-year-old Mallory, then a government contractor, wrote in a message to a Chinese agent.

During the packed hearing, Mallory, who sat quietly in a dark jumpsuit, showed little emotion as prosecutors played a recording of a phone call he made to his family in which he frantically directed his children to find a device on which he stored information, including CIA material, for his Chinese contacts.

On the recording, Mallory can be heard worriedly shushing his son as the boy begins to describe the device—perhaps out of well-grounded fear that federal investigators might be listening.

Government witnesses testified that data Mallory allegedly stored on the device was sensitive enough to compromise critical U.S. intelligence gathering inside China—and specific enough to reveal and gravely endanger U.S. sources there.

The CIA and State Department declined to comment.

Some officials and China experts said Beijing uses a softer touch in its espionage. Where Moscow stomps, Beijing tiptoes — focusing heavily on the theft of economic secrets and making no known effort to influence U.S. electoral politics.

China is an important, if uneasy, strategic partner for the U.S. — particularly as President Donald Trump seeks Beijing’s help in taming North Korea’s nuclear program. And American corporations that care little about Russia’s stunted economy want good relations with China’s potential market of more than 1 billion consumers.

“It’s a much more sophisticated effort than Russia’s,” Daniel Blumenthal, a China expert at the American Enterprise Institute and a former commissioner of the U.S.-China Economic and Security Review Commission, said of Chinese spying. “They’re stronger, they’re more ambitious, they’re more powerful. And there are more U.S. stakeholders who want a positive relationship with China.”

Mallory is just one of two U.S. government employees charged this year with passing U.S. state secrets to China.

The other, 60-year-old Candace Marie Claiborne, was a State Department veteran whose postings included Beijing and Shanghai. A March federal indictment charged her with accepting tens of thousands of dollars in cash and gifts from Chinese officials, including a laptop computer and international vacations, in return for U.S. government documents on U.S.-China economic relations.

U.S. officials interviewed by POLITICO said that, while visiting China, their colleagues are often “pitched,” or approached by suspected Chinese intelligence operatives believed to be trying to recruit them.

Chinese efforts to recruit spies expand far beyond U.S. government employees. In a 2014 counter-recruitment video, titled “Game of Pawns,” the FBI tells the story of Glen Duffie Shriver, who as a U.S. student in Shanghai struck up a relationship with a woman he eventually discovered was a Chinese government operative. Shriver took $70,000 from the woman as he sought a U.S. government job that would give him access to secret information he could pass to his handlers. He was sentenced to four years in prison.

“We live in a very sheltered society," Shriver says in the video. "And when you go out among the wolves, the wolves are out there."

One former U.S. official said the cases show the way Chinese intelligence services, which long sought to appeal mainly to Chinese-Americans, are now recruiting from a far broader pool.

“The way the Chinese have gotten more aggressive is, they’ve looked at recruiting more than just ethnic Chinese,” one Obama-era National Security Council official said.

Officials and experts are especially concerned about China’s 2015 hack of the Office of Personnel Management, which saw the theft of personal data from millions of U.S. federal workers. That information went well beyond Social Security numbers or birthdays—officials confirmed that China-linked hackers accessed troves of “SF-86” forms. That extensively detailed document—required for government employees seeking a security clearance—includes everything from relationships to the month-by-month minutia of a personal history.

The scope and detail of the files may serve as a kind of recruitment road map for years, Michelle Van Cleave, former director of the Office of the National Counterintelligence Executive, said at a U.S.-China Economic and Security Review Commission hearing this summer.

“The threat will grow as a result of their successes against us, because of the integration of those cyber successes and their human espionage capabilities,” Van Cleave said. “I’m looking at what was lost through the OPM breach … and I’m saying this is, this is staggering. This is staggering.”

The snatching in Chengdu is an extreme illustration of current and former officials’ description of intense surveillance of Americans by Chinese security authorities in China. The officials described how their rooms or belongings were “tossed” — searched by Chinese operatives — while they were staying in the country.

“They were as fundamentally aggressive in their activity [as the Russians],” one former U.S. diplomatic official told POLITICO. Calling China’s approach more “subtle” than Russia’s, he added: “They always knew what we were doing and where we were.”

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