If You Do It, It's Spying. If I Do It, It's Research -- August 10, 2020

If  You Do It, It's Spying. If I Do It, It's Research.

LARRY ROMANOFF • AUGUST 10, 2020

In the late 1950s and early 1960s there was an American TV series called “The Naked City”, set in NYC. The opening for each episode began with the intoned words, “There are eight million stories in the Naked City. This is one of them.” Well, there are probably 8 million American spy stories that have taken place in China during the past few decades. Here are two of them.

Introduction

Several years ago it was reported that the Pentagon was building an international spy network that might become even larger than that of the CIA, planning to have at least 1,600 “collectors of information” spread around the world. In addition to military attaches and others who do not work undercover, more clandestine operatives would be trained by the CIA and deployed overseas to undertake tasks the CIA was unwilling to pursue. It was duly confirmed that China was among the Pentagon’s top intelligence priorities, reflecting the American affinity for espionage and covert action, evidence of which we no longer need. Americans are frequently conscripted by the CIA or the US military into espionage service in China, operating with the assistance of the US State Department.

Foreign individuals in China, ostensibly acting independently, are regularly apprehended by Chinese authorities for carrying out illegal surveys and mapping, marking the location of key military and other facilities. Almost 40 illegal surveying and mapping cases were detected in China in the past several years alone, mostly surrounding some of China’s military bases and installations, and in sensitive border areas such as Xinjiang and Tibet, the data almost certainly used in planning the foreign-sponsored unrest that occurred in those provinces.

In one recent case, an American citizen was found using two professional surveying and mapping GPS receivers on which he had recorded more than 90,000 coordinates, 50,000 of those near military installations. He travelled to XinJiang on a pretext of registering a travel agency to offer outdoor tours to foreigners in Urumqi, and clearly was there on assignment from the US government when he was caught. This is the reason Google’s mapping service was killed in China. Google was busy collecting high-resolution intelligence for the CIA, again images of sensitive military areas.

It is widely-known in China that literally thousands of the staff of the US Embassy in Beijing and its various Consulates are engaged in activities which are clearly espionage. This was the reason the Chinese government selected the closure of the US Consulate in Chengdu. Chinese authorities had repeatedly objected to the US Embassy and the US Government that the staff in Chengdu were engaged in activities “not commensurate with their diplomatic designations”. That’s Chinese understatement.

The American media are fond of accusing the Chinese of “seeing a conspiracy around every corner”, but these events are sufficient in number to justify China’s concern, these same media neglecting to note that anyone collecting hundreds of thousands of GPS coordinates near American military bases, would have a very short future.

Coca-Cola

The Coca-Cola Company has always been involved in espionage for the US military and the State Department.[1] Oddly, neither the Coca-Cola company website nor Google have any knowledge of this, and the State Department had no one available to discuss this with me. Since at least the 1940s, when the company established bottling plants in a new country, OSS or CIA spies were automatically sent in as part of the staff. It wasn’t even much of a secret: when the US Senate held their famous Iran-Contra hearings in 1987, the link between the CIA and Coca-Cola was fully exposed.

And it isn’t only Coca-Cola, but let’s look at this company first. In March of 2013, Laurie Burkitt of the WSJ wrote a pleasantly uninformed article[2] about Coca-Cola having been charged with espionage in Western China, her curious but typically American media spin being that this highlighted “the perils of doing business in China”. Let’s look at the facts.

On 21 separate occasions, 21 different Coca-Cola trucks were apprehended while conducting what the Western media called ‘surveying’ or ‘mapping’ of some of China’s more politically-sensitive areas that included borders and military bases. The first question coming to mind is why drivers of Coca-Cola delivery trucks would be conducting “mapping operations” or “surveying” anywhere in the world, much less in Yunnan and other politically-sensitive areas of China, and especially of border areas and those surrounding military bases. Even more to the point, why would Coca-Cola drivers doing this ‘mapping’ be as much as 600 kilometers off their normal delivery routes?

Coca-Cola said the GPS units its employees used were “digital map and customer logistic systems commercially available in China”, a claim that was an outright lie. It is true that many truck fleets around the world install GPS devices in their vehicles to help track locations and improve their logistics efficiency, but these GPS units are permanently mounted and are generally ‘dumb’ units able to do no more than record and transmit their location to a central source, and indeed that is their only use. But in the case of the Coca-Cola trucks, the GPS devices were not mounted but were hand-held units of military grade and were so sophisticated in their programming that Chinese military officials at first had considerable difficulty in precisely determining all their functions. Many of those units contained nearly 90,000 coordinates of military bases and other sensitive areas. In her article, Burkitt ignored all of this with the foolish claim that the GPS units were “only being used to improve fuel efficiency and customer service”, her claim immediately picked up by the US media to paint Coca-Cola as the victim and portray China as sensitive to the point of paranoia.[3]

An official government statement was as follows:

“What we can say for now is that many subsidiaries of Coca-Cola are involved and this happens in many provinces. Due to the sheer scale of the case, the complexity of the technology involved and the implication to our national security, we are working with the Ministry of State Security on this.”

If the Ministry of State Security is involved, you can be sure this is a damned serious matter, and it was due to the use of what were called “devices with ultra high sensitivity” and GPS units containing “mapping technology with military-level algorithms” that got them involved.[4] The reason of course is that such geographical data is primarily used by cruise missiles directed against sensitive military facilities. These data must be obtained on the ground because, while observation satellites can provide very high resolution, their photos have no frame of reference and cannot provide sufficiently accurate location targeting data – no matter what the New York Times tells you. At the time, Han Qixiang, director of the administration’s law enforcement department, claimed that Coca-Cola was doing more than just improving its supply chain, and was using mapping technology so sophisticated that the administration had difficulty adequately analysing the company’s system. And, while it wasn’t widely reported at the time, these same “Coca-Cola drivers” were simultaneously conducting aerial photography of military bases with drones.

No further information was released, but it was clear from government statements that this Coca-Cola espionage event was much more serious than portrayed in the Western media. And, with due apologies to Laurie Burkitt, none of this was about “the perils of doing business in China”.

Another item may provide some insight into Coca-Cola’s involvement. One is that the Chinese media published stories at around the same time that appeared unconnected but that were almost certainly part of this same process. The stories involved Coca-Cola employees who had been arrested for accepting bribes. One such individual surnamed Zhu who worked in Coca-Cola’s Shenmei marketing department had apparently accepted more than 10 million RMB, about US$1.5 million, with several others having been accused and detained for the same offense.[5][6] It is true that employees of Coca-Cola and other American firms in China often demand bribes, but these are usually small-scale extortion attempts from company suppliers where the individual has authority to grant business contracts, and the police are generally uninterested in these matters unless the company itself requests a police investigation. But these payments were two orders of magnitude above the commercial extortion level, leaving the more logical conclusion that these additional Coca-Cola employees had received their payments from the same source as the truck drivers performing the GPS ‘mapping’, in other words, from some agency of the US government, with the money dispensed in cash through the Coca-Cola company from the US Embassy, but were caught before they could execute their espionage duties.

This is a good place to note that in a typical year (at least until recently) the American consulates in China were receiving about 800,000 visa applications per year from Chinese citizens, mostly for studying or tourism. The US Embassy and consulates charged a fee of 1,000 RMB for each application, with a stipulation that the fee be paid only in cash. To save you the math, that’s about 800 million RMB per year, or about US$130 million that by-passed the banking system and was available for black ops. A more recent but undated website page claims application fees can be paid by Visa or Master Card, American Express, Discover and Diners Club, of course every Chinese citizen carrying these American credit cards to the same extent that every American carries Bank of China credit cards.

The Interesting Case of Xue Feng

In 2010, a Chinese Court charged Chinese-American geologist Xue Feng with attempting to obtain and traffic in state secrets and sentenced him to eight years in prison with a 200,000 RMB fine, for his attempts at purchasing data on the Chinese oil industry. Naturally, the US government reacted with “dismay and puzzlement” at the prison sentence imposed and, just as naturally, the American media presented a distorted description of the surrounding events while withholding most of the crucial information. Let’s look at the facts.

From various sources, Feng had collected documents and proprietary data on the geological conditions of China’s on-shore oil wells, as well as a database providing the GPS co-ordinates of more than 30,000 oil and gas wells belonging to CNOOC and PetroChina. The information was then sold (or about to be sold) to US-based IHS Energy for US$350,000.

The primary issue is that without oil, a country has no military capability. Without a consistent supply of oil, ships cannot sail, aircraft cannot fly, tanks cannot move, and troops cannot be transported. The US, being one of only two nations in the world always looking for yet another war, is the only country that amasses data on the petroleum supply capability of all other nations. It does so because, in the event of an armed conflict, it wants to know the enemy’s military fuel capacity. This includes not only tanker supply routes but the production capability of all producing wells, the duration of maximum production and, perhaps most importantly, the precise GPS coordinates for launching missiles to destroy this capability. This is why information on China’s oil wells is of great interest to the US military, and of course why the information is considered by the Chinese government to be sensitive and confidential. It could be crucial to China’s survival.

Let’s look at Feng’s supposed employer, the mysterious IHS Energy, identified in the US media as an “information-services company” providing data on worldwide petroleum production to customers around the world. Not quite true. IHS is a secretive company primarily engaged full-time in espionage for the US military, and in fact IHS was born in the US military although neither Google nor Bing seem aware of this. This company was originally created to serve the US aerospace weapons manufacturing industry and to coordinate purchases from weapons contractors. The company publishes many books and military trade magazines that are used by Western governments as a prime source of military intelligence and information on defense and warfare. One company owned by IHS is Jane’s Information Group[7][8], perhaps the prime source of global aerospace and defense industry information and intelligence to all Western government agencies. IHS also owns a company named Cambridge Energy Research Associates[9], which is a military intelligence-gathering firm that advises the US and other Western governments on military strategy and what we might call ‘geopolitics’, related to the energy availability of foreign militaries, certainly including China.

More to the point is that one of IHS’s most critical assets is a massive database that contains all the production and technical information on the vast majority of oil and gas wells in the entire world[10], an asset collected exclusively for use by the US military, the CIA and the State Department. This information is a critical part of American war-planning since a prime objective in an armed conflict would be to neutralise or destroy an opponent’s energy supplies. And, since the US has for years been planning war scenarios involving China, this is why IHS was so interested in obtaining all that information.

From this, you can understand why IHS had Feng collecting information on such an enormous and detailed scale. For its war planning, the US military needs to know the precise production capacity of all China’s oil wells and whether their yields are increasing or declining, in order to estimate the ability of China’s military to function during a conflict if the US navy cuts off imported supplies of tanker petroleum to China through the South China Sea. IHS was tasked with obtaining this information, including the precise GPS coordinates of all producing wells of any consequence so the US military could target and destroy them with cruise missiles. And that’s why the information was worth $350,000 to IHS; they would have re-worked and resold it for millions to various departments of the US military and other government agencies.

Feng was not an employee of IHS. He was a freelancer who had been hired and trained by the CIA in espionage and data collection in China, then turned over to IHS under contract to collect the necessary information. The WSJ made a coy statement that Feng “had switched jobs shortly before he was detained for his work for IHS.” This was the reason.[11] Feng was not doing ‘research’ in any sense in which we use that word, nor was he collecting information that was already in the public domain as the Western media tried to portray him. Instead, he was engaged in an important program of espionage for the US military in an area crucial to China’s defense, and should have been executed for his actions. I cannot understand why he was not.

The information Feng attempted to collect was neither commercially available nor in ‘the public domain’ as the Western media suggested. Other media reports stated this information is publicly available in the US, a claim that may be true, but irrelevant. The US is not in danger of military attack and nobody is collecting GPS coordinates on American oil wells so as to direct cruise missiles in their direction. In any case, I could hardly escape arrest or imprisonment in the US by claiming that my ‘market research’ on their military assets was legal in some other country and therefore the US had no right to detain me, though Feng attempted this defense in the Chinese courts.

In one of its articles on this issue, the WSJ made this observation: “Mr. Xue was born in China, a reminder that ethnic Chinese may be more vulnerable to pitfalls of the country’s legal system than other foreigners. Like IHS, many multinationals have come to rely on people like Xue to run their China operations.” IHS had no “China operations” nor any presence in China, but the above comment is true in the sense that in such circumstances the Chinese authorities have tended to be more lenient with foreigners than with ethnic Chinese whom they deem traitors to their homeland.

The US invests considerable effort to locate and indoctrinate Chinese-born Americans who can be sufficiently “turned” to betray their own country. Feng was undoubtedly one of these, his attraction to the CIA based on the assumption that, being ethnic Chinese, he would attract less attention than other foreigners and might better understand how to fit into the cultural environment without drawing attention to himself.

The US government took a very strong interest in Feng’s case, and mounted a prolonged diplomatic campaign to have him released on “humanitarian” grounds. Former US ambassador Jon Huntsman visited Feng in prison, and even President Obama met with China’s President to beg for Feng’s release, while many other US government officials raised the issue privately. Just so you know, when the US government exhibits such keen interest in the fate of one such individual, it is only because those same officials were actively involved in placing the person in that situation, and feel some responsibility to save their “asset”. It was interesting that this case must have involved more than merely oil well production and location data because anyone from the US government was barred from the hearing[12], which would indicate there were additional and serious classified matters involved.

For your reading entertainment, here are some of the Western distortions:

The UK Independent carried a headline screaming, “US geologist jailed for eight years in China for oil research”[13], in a case that “highlights the government’s use of vague secrets laws to restrict business information”. The Wall Street Journal told us that “Mr. Xue’s case is the latest to highlight stark questions about the legality in China of conducting market research”, claiming “Mr. Xue’s case stems purely from his attempt to purchase commercially available data on the oil industry”. Notice the choice of words. Feng was imprisoned for conducting ‘market research’, in which capacity he attempted to purchase ‘commercially available data’, leaving an impression that was quite different from the facts. The UK Guardian[14] and the Telegraph[15] chimed in as well, and Fox News told us that “Chinese officials have wide authority to classify information as state secrets.” Unlike the Americans.[16] The US government played its part in the media circus, claiming Feng simply “received” information that “should be in the public domain”, and “was just doing his job”.

More amusingly, the WSJ claimed that China’s court announcing its verdict during an American holiday weekend, “appeared to be a calculated act of defiance” against the US [17, meaning that China should conduct its internal affairs with one eye on a calendar of US holidays to ensure Americans are properly informed. A Jewish-American law professor in New York, Jerome A. Cohen, who purports to be “an authority on China’s legal system”, claimed that this was a case of China’s “thumbing its nose at the US government” – apparently an unforgivable act of defiance against the Imperial Master. And the act of sending Feng to conduct espionage in China would be the US government’s ‘thumbing their nose’ at whom?

Notes

[1] https://cocacolaunited.com/blog/2012/11/12/supporting-u-s-military-and-veterans-since-1941/

[2]https://www.wsj.com/articles/SB10001424127887323826704578357131413767460

[3] https://www.cbsnews.com/news/china-accuses-coca-cola-of-misusing-gps-equipment/

[4] http://www.3snews.net/startup/246000023519.html

[5] https://www.nytimes.com/2009/09/14/business/global/14coke.html

[6] http://www.china.org.cn/china/news/2009-09/17/content_18543520.htm

[7] https://janes.ihs.com/

[8] https://www.janes.com/defence-equipment-intelligence/

[9] https://www.bloomberg.com/profile/company/376925Z:US

[10] https://ihsmarkit.com/products/international-well-data.html

[11]https://www.wsj.com/articles/SB10001424052748704594804575649722313164714

[12] https://www.nytimes.com/2010/12/01/world/asia/01beijing.html

[13] https://www.independent.co.uk/news/world/asia/us-geologist-jailed-for-eight-years-in-china-for-oil-research-2019192.html

[14] https://www.theguardian.com/world/2010/jul/05/us-geologist-china-prison

[15]https://www.telegraph.co.uk/news/worldnews/asia/china/7871740/American-geologist-Xue-Feng-jailed-in-China-for-eight-years.html

[16] https://www.foxnews.com/world/chinese-court-sentences-us-geologist-abused-by-state-security-agents-to-8-years-in-jail

[17] https://www.wsj.com/articles/SB10001424052748704738404575347901204454976

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Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He can be contacted at: 2186604556@qq.com

 Copyright © Larry Romanoff, Moon of Shanghai, 2020

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