DOJ Indicts Two Chinese Intelligence Operatives In Corporate Hacking Scheme

In an indictment that amounts to the Trump Administration’s latest escalation of its crackdown on Chinese spying and intellectual technology theft, the Department of Justice on Tuesday indicted two Chinese intelligence officers for helping to direct “co-opted company insiders” and hackers to carry out “repeated intrusions” into internal company systems in the US and overseas. The alleged illegal activity took place over a five year period, according to the Justice Department’s statement.

Specifically, the agents were accused of stealing information related to a turbofan engine used in commercial airliners, as well as other unspecified intellectual property and “confidential business information.” The turbofan engine was developed through a partnership with a “French aerospace company” and a US-based company via an office in Suzhou Jiangsu province.


The intelligence officers charged include Zha Rong and Chai Meng, and other co-conspirators, including four alleged Chinese hackers. They allegedly worked for the Jiangsu Province Ministry of State Security, a regional arm of China’s Ministry of State Security.

Here’s a summary of the first indictment from Bloomberg:

  • “Ultimate goal was to steal, among other data, intellectual property and confidential business information, including information related to a turbofan engine used in commercial airliners”

  • Turbofan was being developed through a partnership between a French aerospace manufacturer with an office in Suzhou, Jiangsu province, China, and a US-based co.

  • Charged intelligence officers, Zha Rong and Chai Meng, and other co- conspirators, worked for the Jiangsu Province Ministry of State Security, which is a provincial foreign intelligence arm of China’s Ministry of State Security

  • Charges in the indictment are accusations, and the defendants are presumed innocent unless and until proven guilty: DOJ

According to the indictment, between 2010 and 2015, the team broke into the systems of companies that manufactured parts for the turbofan jet engine, including companies based in Arizona, Massachusetts and Oregon. At the time, a Chinese aerospace company was working on a similar engine that could be used for aircraft manufactured in China.

In a separate hacking case that was bundled into the indictment, two other intelligence agents, Zhang Zhang-Gui and Li Xiao, used the JSSD-orchestrated intrusions, which also infiltrated a San Diego-based technology company, for other unspecified “criminal ends”.

As the DOJ pointed out in its indictment, this represents the third separate case brought against Chinese intelligence agents and their assets (one of which included a US-based Chinese national) in the alleged theft of corporate trade secrets, some of which had defense-related applications.

“For the third time since only September, the National Security Division, with its US Attorney partners, has brought charges against Chinese intelligence officers from the JSSD and those working at their direction and control for stealing American intellectual property,” said John C. Demers, Assistant Attorney General for National Security. “This is just the beginning.  Together with our federal partners, we will redouble our efforts to safeguard America’s ingenuity and investment.”

“This action is yet another example of criminal efforts by the MSS to facilitate the theft of private data for China’s commercial gain,” said U.S. Attorney Adam Braverman.  “The concerted effort to steal, rather than simply purchase, commercially available products should offend every company that invests talent, energy, and shareholder money into the development of products.”

“The threat posed by Chinese government-sponsored hacking activity is real and relentless,” said John Brown, FBI Special Agent in Charge of the San Diego Field Office. “Today, the Federal Bureau of Investigation, with the assistance of our private sector, international and U.S. government partners, is sending a strong message to the Chinese government and other foreign governments involved in hacking activities.  We are working together to vigorously investigate and hold hackers accountable regardless of their attempts to hide their illicit activities and identities.”

The indictment included a total of three counts. The charges in the two lesser counts are detailed below:  

Count Two of the indictment charges a separate conspiracy to hack computers in which Zhang Zhang-Gui, a defendant charged in Count One, supplied his co-defendant and friend, Li Xiao, with variants of the malware that had been developed and deployed by hackers working at the direction of the JSSD on the hack into Capstone Turbine. Using malware supplied by Zhang, as well as other malware, Li launched repeated intrusions that targeted a San Diego-based computer technology company for more than a year and a half.  These intrusions caused thousands of dollars of damage to protected computers.

Count Three of the indictment charges Zhang Zhang-Gui with the substantive offense of computer hacking a San Diego technology company, which was one of the targets of the conspiracies alleged in Counts One and Two.

Even if the subjects of the indictments will likely avoid prosecution because China will almost certainly refuse extradition, they show that the Trump Administration is serious about stopping China’s theft of corporate intellectual property, a practice that was reportedly rampant during the Bush and Obama administrations – and which Trump has pledged to stop. China’s penetration of US companies was laid bare in a disputed Bloomberg report alleging that China’s intelligence service managed to infiltrate servers used by the DoD and major American companies like Apple and Amazon.

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