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Japan to establish intel unit to counter economic espionage

Ruling party guards against Chinese spies in industry and academia

Technicians build LEAP engines for jetliners at a highly automated General Electric factory in Lafayette, Indiana. A Chinese spy was caught trying to steal secrets on blade development from the group.   © Reuters

TOKYO -- GE Aviation, one of the world's leading providers of aviation equipment, has spent decades developing jet engine blades that have the right durability and weight to enable lower operating costs.

Those trade secrets, polished over several generations of blade models, give GE Aviation, the Evendale, Ohio-based unit of General Electric, a significant competitive advantage over rivals in the industry.

That is why alleged Chinese spy Yanjun Xu, a deputy division director of the Jiangsu Province branch of the Ministry of State Security, China's intelligence agency, used an alias and fake academic title to approach and befriend a GE Aviation employee.

Offering to pay all expenses for the trip, Xu invited the employee to visit China to give a presentation to industry experts and to exchange views, according to court documents.

The communication intensified, to the point where Xu was encouraging the employee to download company documents onto a portable hard drive. In 2018, an arrangement was made for the two to meet in Belgium, and the GE employee was asked to bring his company computer for inspection.  

When Xu arrived, he was arrested by Belgian authorities as part of an international sting operation and extradited to the U.S. 

In an effort to prevent such industrial espionage from occurring in Japan, the ruling Liberal Democratic Party has begun to prepare a set of recommendations to the government to help businesses and universities guard themselves.

"The need for intelligence capabilities is broadening beyond sensitive military-related information to a wide range of private-sector data," said LDP heavyweight Akira Amari at a meeting Wednesday of a party task force covering the issue.

Akira Amari, who chairs an LDP task force for international order and innovation, speaks at the party headquarters in Tokyo on Wednesday. 

Creating a new body specifically to investigate and analyze economic security issues -- something Japan's intelligence agencies reportedly lack -- is expected to be a centerpiece of the LDP recommendations, which will be submitted this year.

The U.S. Central Intelligence Agency and the U.K.'s MI6 both have specialized economic intelligence teams that exchange information with businesses and academic institutions, says Toshifumi Kokubun, a professor at Tokyo's Tama University and an economic security expert.

The new Japanese team would follow the example set by these groups.

The LDP will encourage the government to create operating guidelines for businesses that handle important information, as well as call on corporate executives to set up internal counterintelligence teams. Businesses will be urged to send periodic reports to the government with any concerns about possible leaks.

The party will push Tokyo to provide more money and staff to its intelligence agencies, which lack the resources of counterparts in major Western countries.

There are also hopes for personnel exchanges between the public and private sectors, like those seen in the U.S., where the FBI, CIA and Department of Homeland Security send staff to private companies and vice versa.

"American companies employ former FBI and CIA officials and ex-military personnel," Kokubun said. "There are few real-world examples of that in Japan."

In addition to the Xu case, Washington has arrested a number of Chinese nationals on industrial espionage allegations in recent years.

On Monday, the Department of Justice announced charges against a professor at an American university who engaged in research for NASA while allegedly hiding affiliations with Chinese institutions.

Concern about potential leaks is growing in Japan as well, particularly in light of Beijing's expanding intelligence-collecting powers. China's 2017 National Intelligence Law obligates private citizens and organizations to cooperate in state intelligence operations.

There have been instances of Japanese manufacturers and financial institutions partnering with Chinese companies and migrating to Chinese information systems. "There's a risk that important technology, data or financial or personnel information will leak to China," Amari said.

The recent discussion of Japan working more closely with or even joining the Five Eyes intelligence-sharing alliance provides further motivation for Tokyo to improve its information security.

"If we don't strengthen our counterintelligence capabilities, we won't be able to go deep into the top-secret information held by Five Eyes," said Kentaro Sonoura, state minister for foreign affairs.

Additional reporting by Ken Moriyasu in New York.

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