China is actively trying to recruit U.S.-based economists to feed information back to Chinese officials and has even managed to place cooperating sources inside America’s Federal Reserve banking system, according to a new Senate report Tuesday.
One employee provided information on the Fed’s economic modeling to a Chinese university, while another, who had connections with China’s international recruitment network, tried to send large sets of data from the Fed to an external site, according to the report by Republicans on the Senate Homeland Security and Governmental Affairs Committee.
Yet another employee kept tabs on arrests of accused Chinese collaborators and used “xijinping” — the name of China’s president — as a website password.
Investigators said the Fed identified 13 persons of “potential concern” in eight of the reserve’s 12 banks.
Sen. Rob Portman of Ohio, the top Republican on the committee, said the report follows a previous investigation that exposed China’s efforts to burrow operatives in the heart of America’s science and technology communities.
His investigators turned up one incident where a Federal Reserve employee traveling to China was detained by Chinese officials on four occasions, and the person’s family was threatened if the employee didn’t start leaking economic information.
“I am concerned by the threat to the Fed and hope our investigation, which is based on the Fed’s own documents and corresponds with assessments and recommendations made by the FBI, wakes the Fed up to the broad threat from China to our monetary policy,” Mr. Portman, Ohio Republican, said in announcing the report.
He said the Fed lacked the wherewithal to track and respond to China’s attempts.
The report comes amid rising tensions between the U.S. and China.
House Speaker Nancy Pelosi is planning a visit to Taiwan, clashing with the Biden administration, which says China is threatening retaliation if she goes. U.S. officials believe China is building its military capability for an attempt to capture Taiwan.
Meanwhile, U.S. officials like Mr. Portman continue to shine a spotlight on Chinese efforts to tunnel into America’s research industry.
The focus has chiefly been on China’s Confucius Institutes and its Thousand Talents program. The institutes were cultural education centers American officials saw as propaganda machines, while the talent program recruited American researchers to siphon information and technology to China, according to a 2019 investigation led by Mr. Portman and Sen. Tom Carper, Delaware Democrat.
In the new report, Mr. Portman’s investigators say China’s interests run deep into America’s economy, too.
Most pointed was the attempt to pressure a senior bank official who was part of China’s Thousand Talents program. In 2019, the man was detained while traveling in China, where interrogators demanded he share secret Fed data.
The man told investigators his handlers tried to get him drunk to pry more information.
Yet another Fed employee provided economic modeling code to Peking University.
The Federal Reserve itself flagged the employees’ behavior, but concluded none of them broke policy.
A 2020 attempt by the FBI to suggest better practices for weeding out foreign influence fell on deaf ears, investigators said.
