China has adamantly denied any involvement in the Renault case. “We have noticed the relevant reports,” Foreign Ministry spokesman Hong Lei told a regular news briefing on Jan. 11. “We think that some people saying China is behind this case is totally baseless and irresponsible. China cannot accept it.”
Chinese media suggest that some in the west are simply struggling to accept the rise of Beijing’s international economic and political clout. “China’s growth not a result of espionage,” proclaimed a headline in the Global Times, a popular tabloid run by Communist Party mouthpiece the People’s Daily. “Surely, China’s modernisation includes some imitation of the west,” it wrote. “It is natural for western society to feel proud and the occasional cheap shot is even understandable. However, it is ludicrous to cast China as a thief that grabs any technology it can by illegal means to try and take a shortcut to power.”
Chinese automakers who spoke with Reuters say the scandal is “Renault’s internal business” and that Chinese companies are capable of doing their own research and development without stealing ideas. A spokesman for automaker Changan (000625.SZ), which has partnerships with Renault’s French rival PSA Peugeot Citroen (PEUP.PA) as well as Ford’s China arm, said it is investing 4.5 percent of its annual sales in R&D and already has several of its own electric vehicle models in production. Automaker Geely (0175.HK) and others have all unveiled electric and hybrid models over the past couple of years. “I really have nothing to say on this. I’d suggest (they) strengthen their internal control so as to prevent it from happening again,” says a Geely spokesman.
Security experts such as Control Risks say that proving the involvement of a state intelligence agency, whether acting through moles or by computer hacking and cyber attacks, would be difficult. Many firms face an increasing onslaught of cyber attacks, often from servers that appear to be located within China. But pinning an attack on Beijing itself is all but impossible.
Defence firms are most at risk, followed by resource and energy companies and software firms. One corporate security consultant said he was advising clients in East Africa that they should pay at least as much attention to Chinese risk as dangers from local politics, rebel groups or more traditional African dangers. “If you only worry about one thing, worry about China,” he said, warning that a Chinese rival could have access to local intelligence — including hacked e-mails — supplied by intelligence officers attached to the Chinese embassy.
“Most estimates say that more than half of corporate espionage cases have a Chinese link,” says Sean Noonan, a Stratfor analyst specialising in Chinese espionage, referring to U.S. cases. Stratfor advises a wide range of companies including many in the energy sector and believes China has a policy of sending out a “human wave” of hundreds or thousands of agents into the wider world, aiming to gather useful intelligence as well as furthering their own business interests.
“China’s intelligence services focus more on business and technology intelligence than on political intelligence,” Stratfor said in a 2010 report. “And Chinese companies have no moral qualms about engaging in business espionage whether they take orders from the government or not.”
The same can be said of some western companies — and capitals. During the Cold War, western intelligence agencies often tried to steal Soviet secrets for delivery to their own defence firms, and had no qualms about spying on allies. Even today, continental European governments suspect Britain and the United States sometimes use their powerful signals intelligence networks to spy for business ends.
A European parliamentary report in 2000 outlined the existence of a powerful U.S.-UK surveillance network called Echelon which had the potential for industrial espionage. It reported cases where European firms had their telephones tapped, most likely by intelligence agencies. The report also noted the difficulties of gauging the scale of the problem — not least because private security consultants had a vested interest in talking up the threat. Still, European government and defence firm officials sometimes avoid using BlackBerry smartphones because their traffic passes through servers in Britain and the United States.
“As long as the technology has been available, I think it is fair to say governments have at least sometimes used it for commercial ends,” says Alastair Newton, one-time British Foreign Office lead official for cyber warfare and now a senior political analyst for Japanese bank Nomura. “In the past, the French have accused the British of spying on their defence industry and vice versa. They were probably both justified.”
One veteran corporate security investigator said he simply took it as given that almost all governments would at least occasionally spy for corporate ends, at least in the military industry. “Sometimes it’s looking for technology, sometimes it’s tactics,” he said, asking not to be named for fear of jeopardising commercial relationships. “Understanding the differing sales methods a French defence firm might use versus an Italian defence firm would be useful for a British company, for example.”
Security consultancies such as Stratfor say that if the Renault theft were carried out by China, and did target investment strategy rather than technological know-how, that would represent a shift in China’s state espionage tactics. Stratfor’s Noonan says state spy agencies such as those of China, Russia and Israel tend to go after technology, while corporate spies for western firms tend to be looking for strategic and business related secrets — such as costings, overheads, and sales strategies.
This leads the consultancy to doubt that the Renault theft was perpetrated by the Chinese. “The leak suggesting otherwise was likely an assumption based on China’s frequent involvement in industrial espionage,” it said. “Still, it could be a sign of new methods in Chinese spycraft... If China is responsible for the Renault penetration, the case would represent a change in the Chinese espionage MO, one aiming at a higher level and willing to spend more money.”
Perhaps no western country has forged closer links with the intelligence services as France, whose “Economic Warfare School” describes itself as an alternative to business schools built on the American model. Based in the embassy- and museum-filled 7th arrondissement of Paris, the school is a stone’s throw from the vast, imposing Ecole Militaire training complex that was founded in 1750 by Louis XV.
One of the Economic Warfare School’s founders, Christian Harbulot, says a decade’s experience in the martial arts helped him see the scope for western business to absorb what he termed the more combative approach to strategy he saw in east Asia.