The Chinese government carried out a decade-long information theft campaign against the Federal Reserve, a report released Tuesday from Republican members of the Senate Committee on Homeland Security and Governmental Affairs revealed.
The Federal Reserve, charged with executing a dual mandate of maximum employment and stable prices, is presently determining policy to navigate the United States economy through the highest inflation rates in four decades. The report found that China — which holds nearly $1 trillion in Treasury securities — has used talent plan recruitment and promises of academic positions in an effort to gain influence and glean information from the central bank.
“The Chinese government makes no secret of wanting to be the world superpower,” the report said. “No sector or institution is off limits, and China has shown that it will use any means necessary to achieve its goals.”
China has been conducting its campaign against the Federal Reserve since at least 2013, according to the report, with investigators identifying 13 “persons of interest” at eight of the 12 regional Federal Reserve Banks as of 2015, based on their international travel patterns and other factors. The report details five more recent case studies of China seeking sensitive information from American economists, with four of the mentioned individuals retaining their employment at the central bank, a committee aide told CNN.
An official who had previously held positions at the People’s Bank of China and maintained other links to the Chinese monetary system was forcibly detained on four occasions during a 2019 trip to Shanghai, with Chinese officials allegedly tapping his phones and computers while threatening his family. The Chinese officials claimed that the individual had committed crimes against China and needed to “share sensitive, non-public economic data” with the nation’s government.
According to the report, the Federal Reserve is “not aware” of other instances of Chinese officials forcibly detaining its employees.
Another individual likewise maintained close contacts with Chinese nationals, including government officials, and provided modeling code to advance research at Peking University’s National School of Development. The official also has ties to academic organizations affiliated with the Thousand Talents Program — a Chinese initiative that draws Western scientists to China to access their work for economic and military advancements.
A third individual, a senior economist at a Federal Reserve Bank, was observed assisting Chinese government news agencies with publications. Two other individuals are likely linked to the Thousand Talents Program.
The report also noted that the Federal Reserve “has been unable to counter China’s malign influence and collection campaign effectively.” It revealed that officials with known ties to talent recruitment programs “retain access to confidential information” — meaning that the central bank ought to improve relationships with members of the intelligence community and federal law enforcement.
The report recommended passing the Safeguarding American Innovation Act — a bill sponsored by Sen. Rob Portman (R-OH) and aimed at stopping “foreign governments, particularly China, from stealing American taxpayer-funded research and intellectual property” by introducing fines and prison sentences for those who “intentionally fail to disclose foreign support on federal grant applications.”
“We cannot continue to allow our adversaries to steal taxpayer-funded research and innovation to the detriment of hard-working Americans,” Portman remarked last year.