China's Big Export

Ning Wen and his wife were arrested last fall at their home office in Manitowoc, Wis., for allegedly sending their native China $500,000 worth of computer parts that could enhance missile systems. As these naturalized citizens await trial, similar episodes in Mount Pleasant, N.J., and Palo Alto, Calif., point only to the tip of the iceberg, according to FBI officials keeping tabs on more than 3,000 companies in the U.S. suspected of collecting information for China. A hotbed of activity is Silicon Valley, where the number of Chinese espionage cases handled by the bureau increases 20% to 30% annually. Says a senior FBI official: "China is trying to develop a military that can compete with the U.S., and they are willing to steal to get [it]."

But instead of assigning one well-trained agent to pursue a target, "the Chinese are very good at putting a lot of people on just a little piece and getting a massive amount of stuff home," says a U.S. intelligence official. The number of Chinese snoops is staggering, if only because average civilians are enlisted in the effort. FBI officials say state security agents in China debrief many visitors to the U.S. before and after their trips, asking what they saw and sometimes telling them what to get.

The FBI, severely criticized for its investigation of physicist Wen Ho Lee in the mid-'90s, has added hundreds more counterintelligence agents and put at least one in every Energy Department research facility. The bureau also started cooperation initiatives with corporations, but still sees universities as a soft spot, with some 150,000 Chinese currently studying in the U.S. The FBI'S three most recent counterintelligence arrests were of suspects who had held student visas at some point. To help sort the few who go to America to spy from the thousands who go there for a better life, the FBI relies heavily on Chinese informants. Says a high-ranking Silicon Valley agent: "We have almost more assets than we can deal with." --By Brian Bennett. With reporting by Timothy J. Burger and Elaine Shannon