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April 24, 2019

US accuses pair of stealing GE secrets and passing them to China

HBJ File Photo General Electric's former Fairfield headquarters.
By CNN BUSINESS

The US government has alleged that a GE engineer and Chinese businessman stole tech secrets with the intention of passing them onto Beijing.

The Justice Department in a release Tuesday night said it had charged former GE employee Zheng Xiaoqing and Chinese businessman Zhang Zhaoxi with economic espionage. The department said the pair had conspired to steal GE trade secrets related to turbine technologies for the benefit of the Chinese government.

The indictment claims Zheng, while employed at the conglomerate's New York office, used his access to GE's computer system to download tech designs and other files between 2016 and 2018. Zheng --- a US citizen --- subsequently emailed the files to China-based businessman Zhang.

The Justice Department alleges that GE's technology was used to benefit Chinese companies in which the pair had business interests. The indictments also alleged Zheng and Zhang stole the GE designs with the knowledge that the theft would benefit Chinese government-sponsored research institutes with which they have ties. The indictments further allege the two have received financial support from Chinese authorities via these research institutes.

The US government is seeking lengthy prison sentences and financial penalties for Zheng and Zhang.

Chinese efforts to get hold of American companies' tech secrets are a sensitive issue. It's one of the main reasons cited by the Trump administration for launching a trade war with China last year.

"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 assistant attorney general for national security, John Demers, in a statement.

"We will not stand idly by while the world's second-largest economy engages in state-sponsored theft," Demers added.

Zheng and Zhang could not immediately be reached for comment.

A spokesperson for China's Ministry of Foreign Affairs did not immediately respond to a request for comment.

A statement from GE said: "We have been in close cooperation with the FBI and the U.S. Attorney's Office for some time on this matter.

"At GE, we aggressively protect and defend our Intellectual Property and have strict processes in place for identifying these issues and partnering with law enforcement."

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