China allegedly tapped computers and phones of Fed employee, Sen. Portman says in report

Chinese officials allegedly compromised IT equipment belonging to a Federal Reserve employee and copied information from the individual’s WeChat account, according to a report published yesterday by the Senate Homeland Security and Governmental Affairs Committee.

An investigation by minority staff on the committee alleges that the equipment was compromised while the Fed employee was detained four times by Chinese government staff during a trip to Shanghai in 2019.

Officials working for China also used threats against the individual’s family in an attempt to coerce him to provide economic information and assistance, according to the report. Information copied from the detained Fed employee’s WeChat account included contact details for other federal government employees.

The report stated that China has targeted the U.S. Federal Reserve System since at least 2013, with the intention of undermining American economic and monetary policy. A 2019 bipartisan report previously detailed how China uses talent recruitment programs, including the Thousand Talents Plan, to target science and technology sectors.

The espionage allegations emerge amid heightened tensions between the U.S. and China, and after the Chinese government earlier this week warned of “serious consequences” if a trip to Taiwan by House Speaker Nancy Pelosi, D-Calif., goes ahead as planned.

The report also comes as widespread concerns over the ability of the Chinese government to compromise U.S. government IT systems. These include the prospect that China may be leveraging American-designed semiconductors to enhance its artificial intelligence capabilities, which may have sweeping civilian and military applications.

In the realm of quantum technology, where China and other nation states have made significant recent advances, cybersecurity leaders have warned that the technology may be used to break the public-key cryptography that secures most federal systems.

Sen. Rob Portman, R-Ohio, who led the report, said: “This investigation makes clear that China’s malign efforts at influence and information theft are not limited to science and technology fields — American economic and monetary policy is also being targeted by the Chinese government.”

“I am concerned by the threat to the Fed and hope our investigation, which is based on the Fed’s own documents and corresponds with assessments and recommendations made by the FBI, wakes the Fed up to the broad threat from China to our monetary policy,” Portman added. “The risk is clear, I urge the Fed to do more, working with the FBI, to counter this threat from one of our foremost foreign adversaries.”

China’s embassy in Washington D.C. did not respond to a request for comment.