California tour guide Xuehua Peng, accused by US of spying for China, pleads guilty in hotel room ‘dead drop’ sting

• Xuehua ‘Ed’ Peng was accused of using coded messages and secret ‘drop box’ deliveries to help pass on classified material
• He was charged in September with acting as unregistered agent of a foreign government

Bloomberg

A screen grab from footage provided by the US Justice Department in its case against Xuehua Peng. 

A California man accused of spying for China’s security service pleaded guilty to a US criminal charge in a case touted by prosecutors as a “rare glimpse” into how Beijing gathers intelligence in America.
Xuehua “Ed” Peng, who became a naturalised US citizen in 2012, was charged in September with acting as unregistered agent of a foreign government.
As part of his plea agreement, the US will recommend a four-year prison sentence and a US$30,000 fine, instead of the maximum penalty of 10 years’ incarceration and a US$250,000 fine, a prosecutor told a judge Monday in Oakland federal court.
A US crackdown on national security espionage by the Chinese government and theft of intellectual property that began under former president Barack Obama has escalated during the Trump administration’s trade war with China.
At three former US intelligence officers have been convicted in recent years of spying for China.

Last year, the Justice Department launched a China Initiative targeting trade-secret theft, hacking and economic espionage.
Peng, 56, worked as a guide for Chinese tourists in the San Francisco area, according to prosecutors. He was snared in a sting operation in which he hid envelopes with US$10,000 to US$20,000 in cash in hotel rooms and returned later to pick up memory cards containing classified security information that had been planted by US agents.

US Attorney David Anderson holds a memory card as he announces charges against Xuehua Peng in September. 

After staging each of the so-called dead drops at hotels in Oakland and Newark, California, as well as Columbus, Georgia – at least one of which the FBI recorded with a hidden video camera – Peng would later fly to China with the cards to deliver them to his handlers at the Ministry of State Security, prosecutors alleged.
The US said it uncovered Peng’s identity as a spy through a double-agent operation in China started in March 2015.
John Demers, the Assistant US Attorney General for national security, said when Peng was arrested that his case exposes how Chinese intelligence officers collect information “without having to step foot in this country”.
Peng’s lawyer declined to comment after Monday’s hearing.

Sino-American doubtful loyalty

Sino-American tour guide worked as spy for Chinese intelligence

By Caitlin Yilek

Chinese spy Xuehua “Edward” Peng

A California man who worked as a tour guide for Chinese visitors and students was actually a spy for Chinese intelligence, the Justice Department alleged Monday in an unsealed criminal complaint.
Authorities charged 56-year-old Xuehua “Edward” Peng, a naturalized U.S. citizen, with acting as an illegal foreign agent for the Ministry of State Security, China’s intelligence agency. 

He was arrested Friday at his home in the San Francisco Bay Area and is accused of completing dead drops involving a double agent and tens of thousands of dollars in cash, then delivering the information to Chinese intelligence.
Peng’s work for the Chinese was exposed in a double-agent operation that began in 2015, according to the complaint. 

Peng is accused of taking part in six dead drops, where he passed on classified information from a double agent to the Chinese and gave the double agent cash in return.
The double agent was not identified in the criminal complaint and has been paid nearly $200,000 by the U.S. government as of June. 

Court documents did not detail what classified information was given to Peng at the direction of American authorities, but the complaint said “at all times the government carefully selected the classified information for the Source and were aware of the materials that the source passed.”
“The conduct charged in this case alleges a combination of age-old spycraft and modern technology,” U.S. Attorney David Anderson for the Northern District of California said in a statement.
Peng made at least six dead drops, which included one dry run, from June 2015 to June 2018, the complaint said. 

In at least four of the dead drops — a method of spycraft used to exchange information without individuals meeting — Peng had left $10,000 to $20,000 in cash in envelopes hidden in hotel rooms in California and Georgia. 

Peng would then leave a room key for the double agent, who would retrieve the cash and leave a secure digital card with classified information, which Peng would later come back for, the complaint said.
The FBI secretly filmed at least two of the exchanges and monitored his "coded" discussions with Chinese intelligence officers about when and where to book the hotel rooms and when to travel to China.
Peng’s case is another instance of the U.S. government warning of Chinese espionage abilities.
“Coming on top of our many recent Chinese espionage cases — involving both national defense and intellectual property information — this case illustrates the seriousness of Chinese espionage efforts and the determination of the United States to thwart them,” John Demers, the assistant attorney general of national security, said in a statement.
Last week a former intelligence officer for the Defense Intelligence Agency was sentenced to 10 years in prison for spying on behalf of China. 

The case of Yujing Zhang, the Chinese woman who was convicted earlier this month of trespassing at President Trump’s Mar-a-Lago resort in Florida and lying to Secret Service agents about why she was there, is part of a counterintelligence investigation into Chinese espionage.

Sino-American Loyalty

Feinstein was 'mortified' by FBI allegation that staffer was spy for China

By Lukas Mikelionis 

U.S. Sen. Dianne Feinstein fired a staffer a few years back who was part of an effort to spy and pass on political intelligence to the Chinese government.
The staffer, based in the Democrat's San Francisco office, was delivering political intelligence to officials based at the local Chinese Consulate, Politico reported.
The FBI informed Feinstein, the then-chairwoman of the Senate Intelligence Committee, about five years ago about the staffer and allegations that the staffer was a spy.

The source who confirmed the incident to the San Francisco Chronicle said “Dianne was mortified” upon learning about it.
The Chinese spy served as the lawmaker’s driver in California, but took on other roles as well, including helping out in her San Francisco office and being Feinstein’s liaison to the Sino-American community in the state. 

He attended Chinese Consulate events on behalf of the senator.
The spy’s handler “got an award back in China” for his efforts to penetrate Feinstein’s office and pass on intelligence.

The driver was recruited years ago after he being befriended on one of the trips to Asia by someone from China’s Ministry of State Security, the country’s intelligence and security agency, the Chronicle reported.
“He didn’t even know what was happening — that he was being recruited,” a source told the publication. 

“He just thought it was some friend.”
The FBI wasn’t able to charge the individual, possibly because he was passing on political intelligence rather than classified materials – making the prosecution nearly impossible.
“They interviewed him, and Dianne forced him to retire, and that was the end of it,” the Chronicle’s source said. 

“None of her staff ever knew what was going on. They just kept it quiet.”

China Threat

San Francisco is a nirvana for China's main intelligence agency — and the center of an intensifying spy war
By John Haltiwanger
Chinese see San Francisco and Silicon Valley as top priorities in terms of economic and cyber espionage.

• San Francisco and Silicon Valley are top priorities for Beijing's efforts to steal US trade and technological secrets.
• California is the only state where China's main intelligence agency has a dedicated unit focused on political intelligence and influence operations.
• Tech firms — even those with high-level government contracts — are unprepared to respond to espionage and have few incentives to report such activities.

San Francisco and Silicon Valley are top targets for China's main intelligence agency and Beijing's efforts to steal billion of dollars in US trade and technological secrets are only set to increase, according to a new report from Politico .
The intelligence offensive being launched and led by China could also signal how it intends to operate in other US states and countries in the years to come, the Politico report states.
The national conversation regarding espionage might be dominated by discussions of Russian election interference, which is certainly a serious threat, but China's activities out West are reportedly becoming more and more sophisticated.
Russia and even US allies, such as South Korea and Israel, are also quite active in the region.
But it's China's Ministry of State Security (MSS), the country's primary intelligence agency, that has placed particular emphasis on California.

China is dedicating a lot of attention to spying in California
According to the Politico report, California is the only state where the MSS has a dedicated unit focused on political intelligence and influence operations.
This is linked to the fact there are a significant number of influential Chinese immigrants and a large population of Chinese-Americans in the area, and MSS sees potential for recruiting local officials who might be able to move up the political latter.
Chinese officials also pressure Chinese nationals based in California into helping them gather intelligence on tech companies by using their family members back home as leverage or threatening students with a loss of government funding. 

The Chinese government also does this with US citizens who still have family in China.
Tech firms -- even those with high-level government contracts -- are also apparently unprepared to respond to espionage and have few incentives to report such activities, according to the Politico report. 

This is linked to the fact the local communities are quite liberal and the companies might fear being accused of profiling if they singled out Chinese employees.
There have also situations in which employees of tech companies have sold information to the Chinese or Russian governments and the executives decided not to pursue charges because they didn't want their stockholders or investors to know. 

In short, the tech companies would rather avoid the bad press than see employees face legal repercussions for espionage.
In this context, one former US official reportedly told Politico that San Francisco is like a "nirvana" for MSS.

'They have all the time in the world, and all the patience in the world'
Kathleen Puckett, who worked counterintelligence in the Bay Area from 1979 to 2007, told Politico, "The Chinese just have vast resources."
"They have all the time in the world, and all the patience in the world," Puckett added. 

"Which is what you need more than anything."
These sentiments were echoed by FBI Director Christopher Wray at the Aspen Security Forum last week.
"China from a counterintelligence perspective represents the broadest, most pervasive, most threatening challenge we face as a country," Wray said. 

The FBI director has consistently warned of China's efforts in this regard.
Similarly, a government report released on Thursday warned China, Russia, and Iran are ramping up cyber espionage efforts in the US and pose a "significant threat to America's prosperity."
"Foreign economic and industrial espionage against the United States continues to represent a significant threat to America's prosperity, security and competitive advantage," the National Counterintelligence and Security Center said. 

"China, Russia and Iran stand out as three of the most capable and active cyber actors tied to economic espionage and the potential theft of US trade secrets and proprietary information."

Tibetan Filmmaker Flees to U.S. After ‘Arduous’ Escape from China

By SUI-LEE WEE

Protesters demanding the release of the Tibetan movie director Dhondup Wangchen protest outside the Chinese embassy in Tokyo in 2009. 

A prominent Tibetan filmmaker, who was jailed for making a documentary about Tibetans living under Chinese rule and had been under police surveillance since his release three years ago, has fled to the United States after an “arduous and risky escape” from China, according to his supporters.
Dhondup Wangchen, 43, arrived in San Francisco on Dec. 25 and was reunited with his wife and children, who were granted political asylum in the United States in 2012, according to Filming for Tibet, a group set up by Mr. Wangchen’s cousin to push for his release.
“After many years, this is the first time I’m enjoying the feeling of safety and freedom,” Mr. Wangchen said in the statement issued by the group. 

“I would like to thank everyone who made it possible for me to hold my wife and children in my arms again. However, I also feel the pain of having left behind my country, Tibet.”
Mr. Wangchen was a self-taught filmmaker from China’s western province of Qinghai who had spent five months in 2007 interviewing Tibetans about their hopes and frustrations living under Chinese rule. 

In his documentary, “Leaving Fear Behind,” many Tibetans talked about their love for the exiled Tibetan spiritual leader, the Dalai Lama, and how they thought the 2008 Beijing Olympics would do little to improve their lives.
Mr. Wangchen was detained in 2008 after his footage was smuggled out and shown at film festivals around the world and shown in secret to a group of foreign reporters ahead of the Olympics. 

He was later sentenced to six years in prison for “inciting subversion.”

During Mr. Wangchen’s time in prison, many rights groups, including Amnesty International, campaigned for his release, saying that he was denied medical care after contracting hepatitis B in jail, was forced to do manual labor and was kept in solitary confinement for six months. 

The United States raised Mr. Wangchen’s case with Beijing “at the highest level,” according to the International Campaign for Tibet, a Tibetan rights group.
Mr. Wangchen’s flight from China comes at a time of growing authoritarianism in the country under Xi Jinping. 

Two rights activists have been tried and one more is expected to go on trial on subversion charges this week. 

Since Xi came to power in 2013, his administration has imprisoned human rights lawyers and cracked down on civil society.
Mr. Wangchen’s supporters did not provide details of his escape and he could not be reached for comment. 

Police officials from Xining, the capital of Qinghai, and the Qinghai government did not answer multiple telephone calls seeking comment.

After his release from prison, Mr. Wangchen remained under heavy surveillance and his communications were monitored, according to Filming for Tibet. 

Mr. Wangchen’s fellow filmmaker, Golog Jigme, a Tibetan Buddhist monk, fled China to India in 2014 and was granted political asylum in Switzerland a year later.
Representative Nancy Pelosi, the House Democratic leader, whose district covers San Francisco, said on Twitter on Wednesday that it was an honor to welcome Mr. Wangchen to “our San Francisco community.”
Many Tibetans have complained about repressive conditions under China, which has ruled Tibet since 1950. 

Among their list of complaints: They are barred from publicly worshiping the Dalai Lama, who Beijing reviles as “a wolf in monk’s clothing”, and say that their language and culture have been suppressed. 

After widespread protests by Tibetans in 2008, China imposed a security clampdown.
More than 150 Tibetans have set themselves on fire since 2009 in protest against Chinese rule, according to the International Campaign for Tibet. 

On Wednesday, a young Tibetan man set himself on fire in the southwestern province of Sichuan, the group said. 

China has called the self-immolators “terrorists” and blamed exiled Tibetan rights groups and the Dalai Lama for inciting them.
“The six years Dhondup Wangchen had to spend in jail are a stark reminder of the human costs that China’s policies continue to have on the Tibetan people,” Matteo Mecacci, president of International Campaign for Tibet, said in a statement. 

“Dhondup Wangchen should have never had to pay such a high personal price for exercising his freedom of expression.”

Two Chinas Policy

Taiwan President Tsai Ing-Wen Heads to Americas. 

It should not surprise anyone if President Trump's advisers meet with President Tsai.

By THE ASSOCIATED PRESS

BEIJING — President Tsai Ing-wen pledged to bolster Taiwan's international profile as she set off on a trip to reinforce relations with diplomatic allies in Central America, a task that has taken on new urgency as Beijing ramps up efforts to diplomatically isolate Taipei.
Speaking to reporters before her departure, Tsai said the visits to Honduras, Nicaragua, Guatemala and El Salvador would "show the international society that Taiwan is a capable and responsible partner for cooperation."
She will transit through Houston and San Francisco.
Beijing regards the self-governing island as part of China and officials complained after President Donald Trump last month spoke by phone with the Taiwanese leader. 

Trump raised further concerns in Beijing when he questioned a U.S. policy that since 1979 has recognized Beijing as China's government and maintains only unofficial relations with Taiwan.
U.S. lawmakers often meet with Taiwanese presidents when they transit through the U.S. — most recently in June, when Tsai met in Miami with Republican Sen. Marco Rubio of Florida.
This time, it was not clear if Tsai would meet Trump, though some observers said a meeting with Trump's transition team could happen.
"It should not surprise anyone if the president's advisers who will be working on Asia policy meet with President Tsai," said Ross Feingold, a Taipei-based senior adviser at D.C. International Advisory, a consulting firm whose chief executive has been consulted by the Trump transition team.
"China might issue its usual statements of displeasure ... but it really doesn't depart from precedent," Feingold said. 

"A meeting with Trump would be the biggest precedent changer."
Regardless, Tsai is likely to keep the U.S. stops low-key to avoid further inflaming tensions with China, which has been angered by Tsai's refusal to endorse Beijing's concept that Taiwan and the mainland are part of a single China. 

In late December, in what Beijing called routine exercises, China's first and only aircraft carrier and a fleet of warships sailed past Taiwan's south, prompting Taipei to deploy fighter jets to monitor the fleet.
In Central America, Tsai will focus on strengthening ties with allies to fend off Beijing's efforts to draw governments away from Taipei and further diminish its global presence. 

Beijing and Taipei have competed for allies for much of the nearly seven decades since the end of China's civil war in 1949, when the defeated Nationalist government fled across the Taiwan Strait.
Tsai, who is leading a delegation of 120 people, will meet with most of the four countries' leaders and attend the inauguration of Nicaraguan President Daniel Ortega. 

She said she would also interact with the heads of state of other countries at the inauguration.
Beijing has intervened to prevent the island's participation in international forums and established diplomatic relations with former Taipei allies Gambia and Sao Tome and Principe. 

The moves have been seen as effectively abandoning the unspoken diplomatic truce that lasted eight years under Tsai's China-friendly predecessor. 

Just 21 countries and governments, mostly in Latin America and the Caribbean, now have official ties with Taipei.
Observers were watching to see if any of the four Central American nations might defect despite Tsai's efforts, but say stronger U.S. support under Trump's administration would help balance future diplomatic losses.
"We should expect that in the Trump administration the U.S. would be more vociferous and emphatic about Taiwan's participation in international organizations," Feingold said.
Washington remains Taiwan's main source of weapons, with $14 billion in approved arms sales since 2009, and is bound by law to consider threats to the island's security a matter of "grave concern."
If Beijing aggressively pursues existing Taipei allies, leveraging its growing economic, military and political clout, the competition could prove too expensive for Taipei and prompt Tsai to seek even deeper ties with the U.S.
"She may think now that it's America or bust," said Sean King, a Taipei-based senior vice president at consulting firm Park Strategies. 

"She's probably going to lose these peripheral countries eventually anyway, so why not go for the gusto and get as close to the U.S. while she can?"

Beijing Pathetic Monologue: China repeats call to block President Tsai's transit in US.

Tsai Ing-wen will visit Houston and San Francisco on her way to and from Latin America

By Nandini Krishnamoorthy

Taiwan's President Tsai Ing-wen (pictured speaking to US President Donald Trump at her office in Taipei, Taiwan) might meet Trump in January during her trip to three Central American nations
Taiwan announced its President Tsai Ing-wen's itinerary for US where she will transit through Houston and San Francisco on her way to visit allies in Latin America in January, her office said on Friday (30 December). 

The announcement has prompted Beijing to repeat calls to the US to block Tsai's stopover.
Tsai will arrive in Houston on 7 January and leave the following day. 

On her way back, after visiting Honduras, Nicaragua, Guatemala and El Salvador, she will visit San Francisco on 13 January, presidential office spokesman Alex Huang told daily news briefing.
Tsai's office denied commenting on whether she would be meeting President Donald Trump's transition team while she is in the US. 

However, the US mission in the self-governing island, the American Institute in Taiwan (AIT), said her visit would be "private and unofficial".
"President Tsai's transit through the United States is based on long-standing US practice and is consistent with the unofficial nature of our relations with Taiwan," Alys Spensley, acting AIT spokeswoman, told Reuters.
The already troubled China-US ties were further strained following Tsai's phone call to Trump earlier this month that resulted in Beijing in casting doubt on the incoming president and his administration's commitment to 'one China' principle.
China's Foreign Ministry repeated calls to stop Tsai from transiting through America and warned the US to not send any "wrong signals to Taiwan independence forces".
"We think everyone is very clear on her real intentions," Reuters cited the ministry as saying, without explaining.
Speaking to the members of parliament on Friday (30 December), Xi Jinping stressed the communist country would make "unremitting efforts" at unification and development of peaceful ties across the Taiwan Strait, Xinhua news agency reported.
Meanwhile, Tsai assured on Saturday (31 December) that her country will remain "calm" when dealing with issues concerning China, however, she warned of uncertainties in 2017 that could test Taiwan's national security team.