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How Xi Jinping’s ‘mole hunt’ led to CIA losing dozens of Chinese informants

In ‘Chinese Spies’, Roger Faligot writes about Chinese intelligence services that now rival CIA, Mossad, R&AW, DGSE, and MI6.

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On 20 May 2017, The New York Times caused a sensation with the publication of an explosive investigation into the CIA, which had reportedly “lost” dozens of Chinese sources, either volunteers or paid informants, who’d been furnishing valuable intelligence about the PRC since 2010. These sources, having been manipulated by the CIA, had now been arrested by Chinese counterintelligence and tried on camera, charged with spying for the “imperialist services”. Their fortunes varied; most were handed sentences of varying weight, depending on whether they agreed to collaborate during interrogation or, preferably, to return to spying, this time feeding the Americans false intelligence. Some were executed. The New York Times described a cadre shot in cold blood in front of his colleagues.

In its assessment of the roots and consequences of this disaster, the CIA tried to get to the bottom of how its agents and informers in the enemy camp had come to be identified in such large numbers. Had they been badly managed by their handling officers, or were some of their Chinese recruits in fact double agents, who had managed to pull the wool over the Americans’ eyes by pretending to work for the US while really being in the pay of the Chinese services? Had their communications been intercepted? Were coded instructions embedded in documents attached to emails?

Tactical blunders were also cited, including the possibility that CIA case officers had made the mistake of meeting their informants in unsecured locations, for example hotels studded with hidden microphones, such as the Hilton in Beijing, near the huge US embassy on An Jia Lu Street. However, the report of former CIA analyst Gregary Levin, now regional security officer in the US embassy, suggests that this hypothesis is unlikely. This document, entitled Crime and Safety Report and still accessible in 2018 via the US embassy website, clearly warns American businesspeople gallivanting in China: All visitors should be aware that they have no expectation of privacy in public or private locations. All means of communication, including telephones, mobile phones, faxes, emails, and text messages, are likely monitored.

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Holden Triplett, the FBI attaché at the US embassy in Beijing, officially in charge of liaison with the Chinese security services, sounded the same warning. Back at CIA headquarters in Langley, Virginia, they feared the worst, and with good reason. Though the focus in recent years had been on PLA hackers and cyber-warfare, human intelligence had continued to be vital. But, as evidenced by the China file bequeathed by Paul Brennan, the outgoing CIA director, to his successor Mike Pompeo in early 2017, this had been gravely compromised. The CIA’s internal counterintelligence service and the FBI set up a multidisciplinary team, located for security reasons in another part of Virginia. Its purpose was to conduct a “retrospective analysis”, called Operation Honey Badger, to try and work out what had led to this serious intelligence failure. The possibility that there were traitors within the US services could not be ruled out.

Meanwhile, the Chinese media applauded what they saw as an homage of vice to virtue: the US “imperialist” services finally recognizing the superiority of their Chinese opponent. What they conveniently ignored was the fact that the disaster had been brought to light because American journalists, unlike them, enjoyed freedom from state intervention. This game of smoke and mirrors was highly reminiscent of that between the KGB and the CIA at the height of the Cold War. The Chinese intelligence community was working hard at tracking down traitors both within and without the state apparatus, which is what had led to the loss of so many of the CIA’s sources. This Chinese mole hunt had begun under Hu Jintao in 2008.

On taking over in 2012, Xi Jinping had set up a taskforce, which he him self chaired, to “strengthen national security”. In 2017, the counterintelligence services launched a vast campaign to raise awareness of the problem of foreign espionage, with dedicated websites, animations explaining how to spot a spy, and TV soap operas glorifying the heroes of this “special work” (tewu gongzuo). It was journalists, academics, and Chinese-American and Taiwanese businesspeople who were to bear the brunt of the campaign. In April 2016, the Guoanbu promised a reward of up to $77,000 to any citizen who helped to uncover “a lead that played a decisive role in enabling the prevention or shut-down of spying activity.” None of the names of the lost CIA agents were published by The New York Times in 2017. However, it was clear from the focus of the Chinese investigation that moles had been recruited from the highest levels of diplomacy and government, and even in some cases the Chinese secret services.

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The Guoanbu was at the heart of this crisis, for two reasons. Firstly, a substantial number of its top-level managers and operatives had been recruited by foreign secret services; secondly, its internal counterintelligence service had been tasked with detecting “double agents” within either the Guoanbu or other parts of the state apparatus. Although the CIA had probably lost many informants, it had not been responsible for recruiting all these agents. Recruitment took place as little as possible within China itself, despite the fact that the main CIA station was located in Beijing. CIA satellites, located under diplomatic cover in consulates in Guangzhou, Chengdu, Shanghai, Shenyang and Wuhan, were under permanent surveillance. The station chief in Beijing was officially “accredited” through his counterpart at the Guoanbu office in Beijing, Li Dong, and his bosses at the East Gardens headquarters. This was part of the limited cooperation dating back to the days when the Chinese and Americans had worked together against the Soviets in Afghanistan. Because of this scrutiny, the CIA resorted to using operatives who were entirely clandestine and NOC (under “non-official cover”), and who sometimes made contact with their agents. Most of their recruits were Chinese—diplomats, scientists and special agents— from within China itself.

Other foreign services allied with the CIA helped to recruit these agents, whom they then either “shared” or passed on to the Americans, who had the largest budgetary and logistical capacity, not least when it came to offering these agents new homes if they decided to defect. These foreign services were primarily the Japanese, Taiwanese and South Korean, as well as British MI6 and the German BND, both of which had a strong presence in Singapore and Hong Kong.

The large number of spy networks dismantled in the United States and the cyber-attacks led by the PLA3, against well-chosen targets such as the US Office of Personnel Management—the hacking of which in 2015 forced the CIA to withdraw several of its officials from its embassy in Beijing. This further weakened the agency’s manpower, already greatly affected during this decade by the loss of so many of its sources. By summer 2017, after The New York Times broke that story, some experts were wondering if the CIA was not in fact embarking on a new strategy in its psychological warfare tactics, leaking information about its woes to the media.

Also read: Did a top Chinese intelligence official defect to US? Rumours grow, but China has a ‘counter’

This was clearly, for the CIA, a terrible series of unfortunate events. However, it was also extremely damaging to the Guoanbu’s credibility, its reputation damaged not only by this mole hunt, but also by a series of corruption cases that had done great harm to the entire Chinese administration. The result was that the Guoanbu’s role in counterintelligence (via its 8th Bureau) was restricted, only resuming in early 2018. Its rival ministry, the Gonganbu, now run by Guo Shengkun, saw its own counterintelligence department grow, along with its cyber-security service, which was distinct from that of the PLA.

This excerpt from ‘Chinese Spies: From Chairman Mao to Xi Jinping’ by Roger Faligot has been published with permission from HarperCollins India.

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