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US says former GE engineer stole secrets for Beijing

Justice Department condemns state-led strategy to 'rob American companies'

Workers inspect a gas turbine under construction at the gas turbines production unit of the General Electric plant in Belfort, France.    © Reuters

NEW YORK -- A former General Electric engineer and a Chinese businessman were indicted Tuesday on charges of economic espionage and conspiring to steal the U.S. company's trade secrets related to gas turbine technologies, according to the Justice Department. 

The two passed on the stolen trade secrets, knowing it would benefit the Chinese government, the department said.

Xiaoqing Zheng, 56, was a former employee of GE Power and Water in Schenectady, New York. He allegedly emailed and transferred files involving design models, engineering drawings, configuration and material specification of GE gas and steam turbines to Zhaoxi Zhang, 47, in China, the department said.

They allegedly used the stolen information to further their business interests in two Chinese companies that produce turbine parts.

Zheng and Zhang allegedly received funding and other support from the Chinese government through these two companies and talked with government officials regarding the use of the stolen information for Chinese state-owned institutions.

The 14-count indictment "alleges a textbook example of the Chinese government's strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories, enabling Chinese companies to replace the American company first in the Chinese market and later worldwide," said John Demers, assistant attorney general for US national security.

"We will not stand idly by while the world's second-largest economy engages in state-sponsored theft. As part of the Attorney General's China initiative, we will partner with the private sector to hold responsible those who violate our laws, and we urge China's leaders to join responsible nations and to act with honesty and integrity when competing in the global marketplace."

Zheng, an American citizen, was arrested last August for stealing trade secrets from GE. He told FBI agents last year that he owns or works for Chinese companies that develop the same technologies that he does for GE, Nikkei reported. During a federal search of Zheng's home in Niskayuna, New York, agents found and confiscated a handbook detailing resources the Chinese government will give to individuals or entities for the provision of certain technologies.

"We have been in close cooperation with the FBI and the U.S. Attorney’s Office for some time on this matter," said a GE spokesperson in an email statement. "At GE, we aggressively protect and defend our Intellectual Property and have strict processes in place for identifying these issues and partnering with law enforcement."

Although Zheng was accused last year, the indictment unsealed Tuesday is the first time the U.S. has officially alleged that the pair were working to benefit the Chinese government.

The Justice Department also charged Zheng with making false statements to the FBI during a voluntary interview. Zheng was arraigned on Tuesday in Albany, New York, and remains free on bond. If convicted, the economic espionage charge and trade secrets theft charge alone could put the two in prison for a maximum of 25 years and face a hefty fine.

Zheng is scheduled to go to trial on June 26, but this will likely be moved to a later date this year, according to his lawyer, Kevin Luibrand, who also defended him last year.

"Dr. Zheng pled not guilty and we have substantial evidence to counter the government's allegations," said Luibrand in an email statement. 

Other U.S. companies have also brought up similar trade secret cases regarding businesses in China. Last month, Tesla sued one of its former engineers, Cao Guangzhi, for allegedly stealing self-driving technology materials before jumping to Xpeng Motors, a Chinese electric-vehicle manufacturer based in Guangzhou, reported Nikkei. Cao worked as a computer-vision scientist in Tesla's autopilot division.

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