2 men charged with stealing turbine technology for China

TWITTER

FBI agents escort Xiaoqing Zheng upon his arrest last summer.

The government's apparent focus on alleged industrial espionage by China have Americans of Chinese descent nervous about being caught between a racial profiling dragnet and China's apparent efforts to steal ideas and technology.

An indictment unsealed Tuesday (April 23) charges Xiaoqing Zheng, 56, of Niskayuna, New York, and Zhaoxi Zhang, 47, of Liaoning Province, China, with economic espionage and conspiring to steal General Electric’s (GE’s) trade secrets surrounding turbine technologies, knowing and intending that those stolen trade secrets would be used to benefit the People’s Republic of China. 

Zheng, who gave up Chinese citizenship to become a U.S. citizen in 2001, pleaded not guilty and was released pending trial. Authorities believe Zhang, who is the nephew of Zheng's wife, is in China, thus out of reach of U.S. authorities.

“The 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 C. General Demers., Assistant Attorney General for 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,” said Demers.

Last week, Asian scientists were ousted from a cancer research center in Houston, Texas for allegedly conspiring to steal research secrets. The three researchers were the latest alleged victims in the government's crackdown on economic espionage.

Other Chinese American scientists accused of spying have lost their jobs, reputations and careers ruined even if they are eventually found innocent.

According to the 14-count indictment, Zheng, while employed at GE Power & Water in Schenectady, New York as an engineer specializing in sealing technology, exploited his access to GE’s files by stealing multiple electronic files, including proprietary files involving design models, engineering drawings, configuration files, and material specifications having to do with various components and testing systems associated with GE gas and steam turbines. 

Zheng's indictment followed months of failed plea negotiations between the U.S. attorney's office and Zheng's attorney, Kevin A. Luibrand, according to people briefed on the case. The investigation has also involved members of the U.S. Justice Department in Washington, D.C., who have examined Zheng's alleged ties to China and the Chinese government.

At a detention hearing last year, Luibrand said his client's reputation had been unnecessarily "destroyed" and he offered a forceful defense against many of the government's arguments. Luibrand said there was no evidence that Zheng colluded with the Chinese government or that he sold or used the GE data.

At the time, Zheng was released on $100,000 bail.Zheng is accused of e-mailing and transferring many of the stolen GE files to his business partner, Chinese businessman Zhaoxi Zhang, who was located in China. 

Zheng and Zhang allegedly used the stolen GE trade secrets to advance their own business interests in two Chinese companies - Liaoning Tianyi Aviation Technology Co., Ltd. (LTAT) and Nanjing Tianyi Avi Tech Co. Ltd. (NTAT), companies which research, develop, and manufacture parts for turbines.

The indictment also alleges that Zheng and Zhang conspired to commit economic espionage, as the thefts of GE’s trade secrets surrounding various turbine technologies were done knowing and intending that the thefts would benefit the People’s Republic of China and one or more foreign instrumentalities, including LTAT, NTAT, Shenyang Aerospace University, Shenyang Aeroengine Research Institute, and Huaihai Institute of Technology. 

The defendants, through LTAT and NTAT, allegedly received financial and other support from the Chinese government and coordinated with Chinese government officials to enter into research agreements with Chinese state-owned institutions to develop turbine technologies.

Zheng was arraigned Tuesday in Albany, New York, before United States Magistrate Judge Christian F. Hummel, and released with conditions pending a trial before United States District Judge Mae A. D’Agostino.

After Zheng's arrest last summer shone a spotlight on China's Thousand Talents Plan, for which he was allegedly recruited in 2012, according to Bloomberg News.

Many of the accused scientists and researchers caught up in the government crackdown are reportedly recruited by China's  program of seeking overseas Chinese to share their knowledge and talents with China. Chinese leaders once saw "talent" recruitment as crucial to their quest to be a global scientific and technological power by 2049, with Xi Jinping calling it “the key” to China’s scientific development.

One estimate said that 84% of Chinese students studying in the U.S. remained in the U.S. five years after their graduation, according to a U.S. study by the National Science Foundation.

Since Zheng's arrest, China has sought to downplay the plan's significance, purging terms depicting it as a menacing power and toning down language on plans for expansion.

"Keeping a humble attitude is constructive for China’s international relations, easing the doubts that China is anxious to overtake the U.S.’s position in leading the world,” said Wang Huiyao, founder of the Center for China and Globalization, an independent think tank.

Unfortunately, China's strategy has placed many Chinese and Chinese Americans in an awkward position. From China's view, they are encouraging overseas Chinese  and Americans of Chinese descent to share their knowledge and technology to create jobs for Chinese workers or family members remaining in China. Loyalty to family is one of the strongest values of most Asian immigrants.

On the other hand, from the U.S. perspective, that same desire to help family or to Chinese researchers' desire to benefit China and aid the relatives still in China, is giving the impression that they are "stealing" their knowledge and technology from the U.S economy and research institutions.

If found guilty of the multiple charges, Zheng could face up to 15 years in prison and fines in the hundreds of thousands of dollars.

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