How does China develop world-class espionage service to counter U.S.

2011-12-11 (China Military News cited from nytimes.com and by DAVID WISE ) -- IN 1995, a middle-aged Chinese man walked into a C.I.A. station in Southeast Asia and offered up a trove of secret Chinese documents. Among them was a file containing the top-secret design of the American W-88 nuclear warhead that sits atop the missiles carried by Trident submarines.
He told a story to the C.I.A. that was so bizarre it might just be true. He said that he worked in China's nuclear program and had access to the archive where classified documents were stored. He went there after hours one night, scooped up hundreds of documents and stuffed them into a duffel bag, which he then tossed out a second-story window to evade security guards. Unfortunately, the bag broke and the papers scattered.
Outside, he collected the files and stuffed them back into the torn bag. Although many of the documents were of interest for their intelligence content, it was the one about the W-88 that roiled American counterintelligence most because it contained highly classified details about a cutting-edge warhead design.
The United States had been producing small nuclear warheads for decades, and the Chinese were desperate to find out how to build miniaturized warheads themselves. China's military was, and still is, playing catch-up to the United States.
China's success in obtaining the secret design of the W-88 is the most dramatic example of a fact that United States counterintelligence agencies have been slow to recognize: just as China has become a global economic power, it has developed a world-class espionage service one that rivals the C.I.A.

J-20 Fighter

During the cold war, dozens of counterintelligence agents in the F.B.I. and the C.I.A. pursued Soviet and then Russian spies. The K.G.B. was seen as the enemy; China took a back seat. Only a handful of F.B.I. agents specialized in Chinese spy cases, and their work was not regarded as career-enhancing. Washington's ongoing failure to make Chinese espionage a priority has allowed China to score a number of successes in its espionage efforts against the United States.
China's foreign intelligence service and its military intelligence agency actively spy on the American defense industry, our nuclear weapons labs, Silicon Valley, our intelligence agencies and other sensitive targets.
In January, when Robert M. Gates, then the defense secretary, was visiting China, Beijing unveiled a stealth fighter jet, the J-20. The disclosure demonstrated that China had achieved a stealth capability, allowing it to conceal its planes, ships and missiles from radar similar to the American stealth technology that China has been seeking to acquire by clandestine means for years.
Later that month, an engineer who worked on the B-2 stealth bomber for Northrop Grumman was sentenced to 32 years in prison for passing defense secrets to China. In exchange for more than $100,000, he had helped design a stealth exhaust system for China's cruise missiles to make it difficult to detect and destroy them.
And in August, reports attributed to American intelligence officials asserted that Pakistan had allowed Chinese experts to inspect the remains of the stealth helicopter that crashed during the May mission to kill Osama bin Laden. Although Pakistan and China denied the reports, Beijing would have a great interest in examining the tail of the Black Hawk helicopter, the part of the aircraft that was not destroyed by the Navy Seals team, to learn more secret details of American stealth technology.
Meanwhile,! the mys tery of the leaked W-88 warhead design remains unsolved. At first, the American government suspected that Wen Ho Lee, a Los Alamos nuclear scientist, had leaked the W-88, but it produced no evidence that he had done so. He was held in solitary confinement for nine months, eventually pleaded guilty to one count of mishandling classified information and won an extraordinary apology from the federal judge who presided over the case.