By Justin Rohrlich
Chinese tourist-spiesOn June 28, 2019, Qingshan Li landed in Southern California on a flight from China.
Li, a Chinese national visiting the US on a tourist visa, was scheduled to return home 10 days later.
The day after he arrived, Li drove his rental car to a storage facility in the San Diego area.
There, he met up with an unidentified person named in court filings only as “AB,” from whom Li had arranged to purchase several pieces of sensitive military gear.
Li’s case, which has not been previously reported and is described in a federal charging document obtained by Quartz, is among the most recent incidents of Chinese civilians accused of spying on behalf of Beijing.
While Li was apprehended by authorities, he represents the immediate—and increasing—threat China poses to US national security, say experts.
One of the items Li was allegedly after, a Harris Falcon III AN/PRC 152A radio, is designated as a defense article on the United States Munitions List, and subject to international arms trafficking regulations.
This means the Falcon III, which provides US troops in the field with National Security Agency-certified encrypted communications, cannot leave the country without a special license issued by the State Department.
Li had agreed to pay AB a total of 50,000 renminbi, or roughly $7,200, for the radio.
He knew AB was already under investigation for export-related crimes and believed AB “was attempting to get rid of the radio in light of AB’s entanglement with law enforcement,” according to court filings.
Li told AB he planned to drive with the Falcon III to Tijuana, Mexico—about 30 minutes by car from San Diego—and ship it to China from there.
This, Li reportedly thought, would help him skirt American trafficking laws.
He gave AB a $600 down payment for the radio, and left the storage facility carrying it in a shoulder bag.
It is unclear from the court record whether AB was cooperating with authorities, or if they had become aware of Li’s activities during their ongoing monitoring of AB’s conversations, but the FBI was waiting for Li outside the building.
Agents intercepted him immediately after the transaction with AB was completed.
Li, they soon discovered, had a second Harris Falcon III in his possession, several antennas, a digital memory card, and a map of the North Island Naval Air Station, a nearby military base home to two US aircraft carriers.
According to an FBI affidavit filed in the case, Li came clean during questioning, confessing he had been tasked with obtaining the Falcon III radio by a contact Li claimed was an officer in the Chinese People’s Liberation Army (PLA).
He told the agents the PLA officer had given him a list of US military items to procure on his trip to the US, including the Falcon III.
Li was indicted by a federal grand jury less than two weeks after his arrest, and in September pleaded guilty to attempting to export defense articles without a license.
The charge carries a possible $1 million fine and 20 years in prison.
Last month, the Naval Criminal Investigative Service seized everything Li had on him at the time he was caught, including an iPhone 10 XS Max, which Li said he used to set up the radio purchase, as well as $2,844 Li said was intended for further illegal buys.
He remains in custody, pending a pre-sentencing hearing set for Feb. 7.
Jonathan Rapel, Li’s attorney, and assistant US attorney Alexandra Foster, the lead federal prosecutor on the case, both declined to comment on Li’s case.
Not the first attempt
Almost exactly a year ago, America’s top counterintelligence official sounded the alarm about Chinese espionage.
China’s spy services are more persistent than even Russia’s or Iran’s, with broader reach and a wider variety of operational techniques than any other US adversary, warned William Evanina, who has led the National Counterintelligence and Security Center, a government agency under the aegis of the Office of the Director of National Intelligence, since 2014.
“China is number one,” Evanina said in a 2018 podcast interview with former deputy CIA director Michael Morell.
“Existentially, long term, they’re the largest threat to our national security, bar none—it’s not even close.”
There has been a marked increase in non-traditional intelligence collection efforts, Evanina said. “Those out-of-embassy jobs where they send over engineers, businessmen, students to do the same type of collection, recruitment, co-opting of information… at mass scale,” he said.
The Chinese intelligence services possess practically unlimited financial resources, and use this wealth freely, said Janosh Neumann, a former counterintelligence officer with Russia’s Federal Security Service (FSB), which replaced the KGB at the end of the Cold War.
The US, as the undisputed leader in innovation and advanced technology, is the world’s top target for scientific and technical espionage of Chinese intelligence services.
Neumann, who defected to the US in 2008, describes the Li case as a “classic example” of the way China operates, using voluminous numbers of agreeable civilians as freelance agents, as well as private companies, to further its geopolitical aims. (In the espionage world, “officer” denotes a professional intelligence operative, while “agents” are roughly akin to confidential informants.)
“The standard scheme is when special services use agents—sources—for smuggling technical devices or technologies prohibited from export from the United States,” Neumann told Quartz.
“Most likely, Li was one of several agents whom the Chinese side sent with a similar task. To perform such operations, several agents are used simultaneously, thereby increasing the chances of success.”
Documents filed in the Li case do not provide any details about his background.
However, the circumstances do suggest he was a citizen agent.
The intelligence arm of the PLA, for whom Li said he was working, is tasked with obtaining military secrets and related foreign technology, mostly the illegal export of restricted military and dual-use technology, according to Nicholas Eftimiades, who spent 34 years as a senior official with, variously, the CIA, the Defense Intelligence Agency, and the State Department’s Bureau of Diplomatic Security.
Eftimiades, who is considered one of the country’s foremost experts on Chinese espionage, told Quartz that Li’s tasking from the PLA was a “very focused collection operation,” and said the objective for someone like Li is to get in and get out before US authorities can figure out what’s happening.
In this instance, however, Li’s contact, AB, was already in the FBI’s sights.
When Li suddenly appeared on their radar, Eftimiades said, he “walked right into a trap.”
The Li case does not mark the first time China has tried stealing the Harris Falcon III radio, Eftimiades said, pointing to a trio of Chinese agents prosecuted in 2009 for selling an earlier model of the Falcon III.
There is a civilian version of the Falcon III, Eftimiades noted, but that has already been knocked off by the Chinese and is not of particular interest to its spy services.
A threat to US troops
Although China is known for knocking off pilfered technology through reverse engineering, that may not have been the primary goal here.
If China were to successfully acquire a military-grade Falcon III, it could directly endanger US troops on the battlefield.
“What you’d want to do is take it apart and understand the guts of it,” Eftimiades said.
“It also has uploadable software. Were I a bad guy, I would want to know exactly how and where the software is uploaded, because it’s probably done from some central point. If I can get into that supply chain, I could theoretically upload software that may allow me access to [encrypted top secret] communications.”
Dan Grazier, a former US Marine tank commander, relied on the Falcon III regularly during tours of duty in Iraq and Afghanistan.
“This is the handheld unit used by our forward air controllers on the ground,” Grazier told Quartz.
“I would have a forward air controller with my tank company, and he would use this kind of radio to talk to aircraft, to guide close air support missions. So, this is an important system. It’s certainly something that we would not want to fall in the hands of a potential adversary.”
Now a fellow at the nonprofit Project on Government Oversight, Grazier said he assumes the Falcon III Li attempted to buy from AB was smuggled off of a US base, where it was almost certainly kept under lock and key within a secure area.
“The military works hard to control these sensitive items,” Grazier continued.
“When I was the officer of the day for the tank battalion, I had to check to make sure that the vaults were locked, I had to sign the sheet to show that I checked it. If it gets out and if it gets off base, then it becomes really difficult to keep track of these things.”
Li’s sloppy spycraft is another indication he was an asset recruited from outside of the official intelligence community.
If Li were a full-time spy, speculated Eftimiades, everyone involved would have first, at minimum, been vetted thoroughly by the PLA, including his source for the illicit military equipment, and would have established a secure means of communication before anyone was dispatched abroad.
The Li operation was “state-sponsored, clearly,” Eftimiades said, pointing out that Li told the FBI he was taking orders from the PLA, but fits into what Eftimiades described as China’s “whole-of-society approach” towards conducting espionage.
The “million grains of sand” method
In a 2018 op-ed for The New York Times, Paul Moore, a former China analyst for the FBI, explained the technique, which is also known as a “mosaic” or “million grains of sand” method:
“If a beach were a target, the Russians would send in a sub, frogmen would steal ashore in the dark of night and collect several buckets of sand and take them back to Moscow,” Moore wrote.
“The US would send over satellites and produce reams of data. The Chinese would send in a million tourists, each assigned to collect a single grain of sand. When they returned, they would be asked to shake out their towels. And they would end up knowing more about the sand than anyone else.”
Chinese citizens benefit in two ways from this arrangement.
Beijing’s spymasters pay well for valuable information, and a large number of individuals and companies are willing to work with the government.
This has to do not only with any immediate financial rewards, but also the promise of increased future earnings in one’s regular life, as well.
“If you’re an individual or a company, you stand in very good stead with the Chinese government for doing these sorts of things, which of course raises your own guanxi, your own reputation, inside those circles, and your ability to do more business,” said Eftimiades.
Knowing your adversary is a concept “as old as time,” said Grazier.
By the same token, it’s also incumbent upon US counterintelligence to protect the nation’s sensitive information and materiel as much as possible.
“We don’t want to make it easy for them, that’s the big thing,” Grazier said.
“We know that they’re doing this, but the counterintelligence aspect of the military is to thwart their efforts as much as we possibly can, and not do their jobs for them.”
To that end, the American counterintelligence apparatus is overdue for an update, Eftimiades said. For starters, he believes the federal government must start partnering with industry much more closely than it does now.
The FBI, as well as the Department of Homeland Security and the Department of Commerce are making attempts to strengthen ties with the commercial sector, but this sort of outreach is expensive and time-consuming, said Eftimiades.
Agents get taken off the street to conduct industry briefings, which Eftimiades says doesn’t typically impart much usable information, anyway.
Equally important, Eftimiades said, the US needs to strengthen laws on intellectual property and the Foreign Agents Registration Act (FARA), which requires anyone acting on behalf of a foreign government to register with the Department of Justice and disclose their affiliation.
FARA became law in 1938 to counter Nazi propaganda, and experts say it hasn’t evolved with the times—the 82-year-old regulations obviously don’t cover things like social media, and didn’t anticipate how blurred the lines between private industry and government would eventually become in countries like China and Russia.
“I testified before Congress a couple of times in the 90s, and I told them, ‘Do something about this problem now, because if not, in 20 years, you’re going to be calling me back crying: How did it get this bad?’” Eftimiades said. “And you know what happened? They didn’t do anything about it.”
