China Is Recruiting US Citizens to Work for Its Government

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1:11Need to make your docs crystal clear? Do that with Acrobat. Want to make sure your clients get everything they need to hear? Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. Bloomberg Audio Studios, podcasts, radio, news. Growing national security concerns after a Democratic mayor in California admitted to secretly working for China. The former mayor of Arcadia, California, a city just outside Los Angeles, pleaded guilty in federal court to acting as an illegal agent of a foreign government. Federal investigators say instead of acting in the best interest of the people who elected her, Our Canadian Mayor Eileen Wang acted in the interests of the Chinese Communist Party.

1:58It's not entirely clear why Eileen Wang conducted these activities. This is essentially all in the same day. She's accused. She's charged of being an agent. She's already agreed to plead guilty to it. It got a lot of attention in the U.S. The court documents were unsealed just as President Donald Trump was preparing to leave for China for a summit with China's president, Xi Jinping. And it got our attention here at Bloomberg in part because two of our reporters spent the better part of last year working on a major project related to Chinese espionage in the U.S. called the Sixth Bureau. I now have several terabytes of an MSS officer, no doubt, no question, of his life.

2:37And that's a unicorn. This whole investigation case seemed like it was out of a movie at times. It was very clear to me that we were making history. Drake Bennett, a senior reporter for Bloomberg, and Jordan Robertson, a senior cybersecurity reporter here, co-hosted the series as part of their reporting on the case, which means they're just about the perfect people to talk to about the case of Eileen Wang.

2:59Jordan Robertson:I think one way in which this is indicative and interesting is that it happens at this very low level of American government. The value of Eileen Wang is not necessarily these propaganda articles she posted, but really it's a long game. It's a bet, you know, that this person will be of use to us.

3:21I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, a mayor of an American city pleaded guilty to being a Chinese agent. What the case tells us about the extent of Chinese propaganda and espionage in the United States amid ongoing tensions between the world's two superpowers.

3:41Drake and Jordan, from where I sit, this is a pretty extraordinary story. You have Eileen Wang, the mayor of this suburb outside of Los Angeles. She's pleaded guilty to being an agent for China. And according to the Department of Justice, she, quote, secretly served the interests of the Chinese government. What does that mean exactly?

3:59Jordan Robertson:She was essentially helping to spread pro-Chinese propaganda. Before she ran for office, she ran this news site and she would post these articles at the direction of officials from the People's Republic of China about issues like trying to rebut accusations of genocide and forced labor in Xinjiang and things like that. You've looked through the documents. How did prosecutors come to know all this, charge her with this? They got access to WeChat encrypted communications between these officials and Eileen Wang, where, I mean, it's actually kind of funny. They basically are like, could you please post this?

4:33Jordan Robertson:And then she posts it and she, you know, then there's sort of another follow up. It's like, thank you guys so much. It was her and some other people. They did it very promptly. They got pats on the back for it. There are other ones. There was another one that I, as a content creator, like particularly sympathized with where she's she sends this sort of like traffic report to the official. It's like we got 15 ,000 hits. And he's like, great. So it's that kind of back and forth. Jordan, let me stick with these documents. And as you read through them, did anything stand out to you or surprise you about what they were able to discover?

5:02Oh, yeah. I mean, you know, something that Drake and I are kind of often looking for in these stories are just kind of the humanizing elements of these cases. And, you know, it can kind of take people from caricature to a real person. And in these documents, you know, what you'll see is as she was posting these news articles on her very, very small website before she was an elected official, she would also get edits back. So her kind of Chinese handler would send her a document, say, post this. She'd post it. She'd respond. She'd say, great. Everybody's really happy. And then she'd hear back, actually, can you remove the name of this like private company that we weren't supposed to put in there?

5:37And she'll go do that. And then she'll get another message and say, well, actually, we put a photo in there that we weren't supposed to put in. Can you remove that? And so she was really engaged with her alleged Chinese handlers in posting this content, in curating the content, in making sure her handlers were happy with it. So there's really no way she'd be able to say, well, I didn't really know what we were doing. Another thing that I found just really compelling was kind of the scope of this case. Like, you know, we're obviously focused on, you know, the mayor of Arcadia here, but there are several other people involved with this and kind of understanding the FBI investigations of counterintelligence as we do, there's a lot of investigative effort to get to her.

6:21She's one rung on this ladder. And the FBI was working their way through multiple individuals who are kind of doing similar things. She's not somebody here who is working alone. So, you know, if you're following kind of California politics and these allegations, you'll find stories from a year or two ago as this community, the Chinese community in Southern California was, you know, pretty unsettled and disturbed by these allegations that, you know, individuals within the community, and we're talking about people in some cases, you know, 60, 70 plus years old, they've been, you know, kind of in the community a long time, they're well known, you know, being accused of acting as agents for the Chinese government.

6:59And in this case, Eileen Wang's co-defendant, essentially, is a 65 year old, you know, Chinese national who was, you know, once her fiance, was also her campaign manager, and was her partner in this very small website that where they were posting this pro-Chinese propaganda. If you follow his case back another level, you'll find another Chinese national, a former PLA official, moved to the US, also got arrested, was trying to bribe an IRS official into opening an investigation into the Falun Gong. So you find like layer upon layer of influence operations. And, you know, that's what we found generally with these Chinese influence operations.

7:41Like the value of Eileen Wang is not necessarily these propaganda articles she posted. Like, I mean, 15 ,000 people viewed it. It's just not a lot, but really it's a long game. It's a bet, you know, that this person will be of use to us. And then she gets elected, you know, and then she's moderately successful as an elected politician. you know, where could this individual eventually wind up? Could she become a state legislator? Could she arrive on the national stage? And that's ultimately the Chinese model. Drake, you heard Jordan talking about looking through these documents, trying to humanize these stories.

8:12Makes me wonder about what would motivate someone like her. What do we know of the motivations here?

8:18Jordan Robertson:That's one thing that was striking to Jordan and me in the course of our reporting about incidents like this. The sums of money are often not particularly large. I mean, it is basically, you know, illegal in China to not help out the Chinese intelligence services when they come calling. So basically, even if someone is here in the US, they often have family back in China, they have friends back in China. And it's totally commonplace for someone from the government to show up at the house of one of your relatives and sort of strongly suggest that you should be more cooperative with them if you show any reluctance.

8:52How widely does this extend beyond California? I noted here, two days after her court documents were made public, a Chinese American in New York was convicted of working as a foreign agent. Last year, a judge declared a mistrial in a case of a former top aide to New York governors, Kathy Hochul, Andrew Cuomo. How unique a story is this one that took place outside Los Angeles? How widespread is this phenomenon?

9:13Jordan Robertson:I mean, I don't think we exactly know. I think it would be incorrect to say that a majority or even a significant minority, even a meaningful minority of Chinese American politicians are working at the cat's paw for the Chinese government. But it is the case that, as Jordan mentioned, the Chinese government is interested in developing sources here. And, you know, there's all sorts of sources. And some of them are people who can kind of help with this soft power effort of improving China's image or sort of getting China's message out here in the U.S. I mean, I think one way in which this is indicative and interesting is that it happens at this very low level of American government.

9:54Jordan Robertson:But there's this idea that like, who knows where this person could end up. And if we make enough of these bets, one of them might pay off in a really significant way. So I think that's maybe the way to think about it. There's a real interest on the part of the Chinese government in developing a lot of people like this. After the break, what Drake and Jordan have learned about the inner workings of China's Ministry of State Security, and how this is all playing out against the backdrop of President Trump's latest negotiations with China's President Xi Jinping. So there's a lot of noise about AI, but time's too tight for more promises.

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12:03Eileen Wang pleaded guilty to working as an agent of the Chinese government. She was accused of spreading propaganda. But there are lots of ways a person can act on behalf of a foreign government, including something you both have covered for years, and that's espionage. As we've mentioned, you hosted a podcast series for us on this show called The Sixth Bureau. And that show followed an officer of the Ministry of State Security. Jordan, what is the MSS? So the Ministry of State Security is China's primary intelligence agency. It's also believed to be one of, if not the largest intelligence agency in the world.

12:34So the MSS doesn't tell the world how many officers it has and employees, but some estimates run into the high hundreds of thousands, potentially close to a million people. And it's kind of all the intelligence activities you could imagine rolled into one. So it's been described as both a combination of the FBI, which does domestic intelligence and law enforcement, and the CIA, which does foreign intelligence gathering and espionage abroad. It's an extremely, supremely powerful intelligence agency. Like if you think about one agency doing both domestic and foreign, what that means is it has a lot of latitude, has a lot of control and has a lot of responsibilities from, you know, including trade secret theft, industrial espionage, which is what our podcast series focused on.

13:17Jordan Robertson:Just to piggyback on that, it's like the CIA and the FBI combined. And then it has these additional powers, right? Partly because China is a one party state. It's a police state. And so the MSS does a lot of domestic surveillance in a way that is kind of hard to imagine in the United States. And then also there isn't the same distinction on the part of the Chinese government, on the part of the PRC, between government and commercial secrets. So the MSS, as an arm of the Chinese government, a lot of what it does is it goes out and tries to take intellectual property from Western tech companies, Western manufacturing companies, and then give it to Chinese companies to help them catch up or pass their competitors.

13:57Does China admit to having spies in the U.S.? Do they admit to doing this kind of work around the world? China acknowledges a lot about what it's doing. In the case that we wrote about, China itself did not come out and acknowledge that this person was an MSS officer, that he was working on behalf of the Chinese government to steal trade secrets, but his defense attorneys did. And in court, the prosecution stated that they believed the Chinese government was paying for Xu Yanjun, the MSS officer that we did the podcast on, that they were paying for his defense. So China has long denied that it steals trade secrets.

14:36That has been the government's official position. At this point, we've seen close to 20 years of prosecutions inside the United States of Chinese efforts to steal trade secrets. You know, the preponderance of evidence, you know, shows, especially in the case that we wrote about, is that the MSS, part of its job is to steal industrial trade secrets, primarily from the U.S. and European companies. But really, it's a global organization. You know, and as we learned in the case we did the series about, there's a merging within China of the intelligence apparatus and the state-owned enterprise apparatus.

15:10And they feed each other. So areas, technical areas where organizations within China may be having engineering difficulties and roadblocks to surpass. The intelligence agency is, you know, is tasked in many cases with going out and getting that information.

15:26Jordan Robertson:Spying on another country and not admitting you're doing it is not just something that China does. I mean, it's sort of the rules of the game. And so, I mean, I think the thing that China does that's distinctive, I think, is expanding this into the commercial sphere. So, I mean, everyone spies on everybody. Nobody really admits that they're doing it. China does it in a particular way. Someone you feature on the podcast series is James Olson, a spy in the CA for more than 30 years. He tells you this incredible thing, which I haven't been able to shake. I think if the American people truly understood the scope of Chinese espionage inside the United States right now, they'd be shocked.

16:03They'd be outraged. Looking at the case of Eileen Wang, the California mayor, is this what Olson is talking about when he says Americans would be shocked by the scope of Chinese espionage in the U.S.?

16:13Jordan Robertson:Yeah, I think it is an interesting example and a good example of how sort of widespread and diverse the effort is. So on the one hand, you have these efforts to try to steal advanced technology secrets from Silicon Valley companies or major multinational manufacturers. On the other, you have politicians in the local level who are basically being asked to, in some small way, help amplify and shape the public perception of China in this country. And so I think what some of the folks we talked to would say is that there's very much this all of the above approach that you see. Jordan, these documents in the Ali and Wayne case were unsealed right before the president took his trip to Beijing.

16:55And I'm curious how this plays out against that backdrop of an increasingly frosty or fraught relationship between the U.S. and China. Yeah, you know, the Trump administration both times has had, you know, a very contentious relationship with China. That's ebbed and flowed a little bit, depending on, you know, kind of the day. But, you know, in this case, I mean, this is a reminder that like, this is still a really fraught issue. This idea of Chinese espionage. It's not like, you know, you capture one person and it goes away. Like the model that's emerged through these prosecutions over the last, you know, couple of decades is one of lots and lots of little bets everywhere.

17:32You know, many, most of them might not be successful, but if you make enough little bets, one of them will pay off. That's all you really need. And the Eileen Wang case is a great example of that, which, you know, the communications show, you know, that this was kind of like a surprise to her handlers. Like, wow, she really did it. And now she's kind of working for us and let's keep this going. And who knows where this could go. That's the case with any of these operations. I mean, you know, we got a sense through Xu Yanjun's, you know, kind of MO. And, you know, he was doing something kind of similar, reaching out to people on LinkedIn and hoping they'd come to China for a talk and then hoping they'd give more more information later.

18:10And so the fact that these documents were unsealed kind of on the eve of Trump's trip to China, you know, I mean, who knows about what the coordination might have been. But the message clearly is the government telling China, we see you. We still see you doing all this and we're still going to pursue you.

18:27Jordan Robertson:We've basically been following this from the first Trump administration into the second Trump administration. And, you know, there was this kind of flurry of stuff that came out on the eve of the summit meeting where, you know, this stuff was unsealed. There was a memo that came out from the White House about sort of whole scale, like theft of American AI models. But then Trump himself, sort of the way he spoke to Xi, the way he talked about it, there was even, you know, someone asked him about the theft. And he was like, well, you know, we do it, they do it. Who knows what to do about it? And so there's a kind of it's kind of unclear exactly where he stands on this stuff.

19:03Jordan Robertson:And, you know, a lot of the emphasis in the meeting seemed to be like getting these trade deals, getting this Boeing deal. And in a weird way, it feels like we're rewinding this story that we've seen where a lot basically, you know, 15 years ago, all these multinationals were so excited to go into China that they were basically putting up with this stuff. And then there was kind of a backlash to that where they're like, you know what, actually, this is getting out of hand. And now it's like, let's try to sell them some more Boeing planes. So it's kind of an interesting moment and it's unclear kind of where we're headed.

20:03Our executive producer is Nicole Beamster-Boer. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back on Monday.

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