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Thu, Jan 16, 2003 - Page 12 News List

Indictments underscore market for trade secrets

NY TIMES NEWS SERVICE , SAN FRANCISCO

In three separate cases since October, natives of China have been accused in indictments in San Francisco of obtaining technology from Silicon Valley companies with the intent of exporting it to China.

While China-policy experts say there does not appear to be a direct connection, they say the cases underscore a continuing effort to procure high technology from the US to serve a fertile market in China for the sale of trade secrets.

In the most recent indictment, on Friday, Jiang Qingchang, the president of EHI Group USA Inc/Araj Electronics in Cupertino, California, was accused of illegally exporting technology with military applications. In the two other cases, the technology appears principally to have commercial, not military uses.

"There is very aggressive economic espionage and reverse engineering by Chinese commercial enterprises exploiting the diaspora of Chinese," said James Mulvenon, a political scientist at Rand, who has closely studied technology procurement by business and military interests.

China experts say the issue was intensified by the indictment of Jiang, 51, also know as Frank Jiang. According to court documents, Jiang is accused of exporting microwave amplifiers, which have commercial applications but can also be used for military communications like tracking missiles.

Last spring, according to the documents, Jiang bought nine microwave amplifiers and sought to export them to a company known as the Hebei Far-East Harris Co. According to an affidavit, that company has the same address as the 54th Research Institute. The secretary of commerce has deemed that "end users" at the 54th Research Institute -- known as the ministry of Communication, Telemetry and Telecontrol -- "present an unacceptable risk of diversion to developing weapons of mass destruction or the missiles used to deliver those weapons."

The indictment comes a little more than a month after the US attorney for the Northern District of California indicted Fei Ye, who is a US citizen, and Ming Zhong, a permanent resident. The two men were arrested at San Francisco International Airport and, according to the indictment, were in possession of trade secrets stolen from four Silicon Valley companies: Sun Microsystems, Transmeta Corp, NEC Electronics Corp and Trident.

The indictment contends that the trade secrets were obtained in connection with an effort to promote a Chinese venture, Supervision Inc, that sought to produce and sell microprocessors in China. According to the indictment, the defendants told potential recruits, including engineers, that Supervision was financed by the City of Hangzhou. The defendants also said they were working with a professor from Zhejiang University, a major university in China, according to court papers.

In the third indictment since the fall, the US attorney in October charged Shan Yan Ming, 32, a citizen of China, with unauthorized access to the computers of 3DGeo Development Inc, a company in Mountain View, California, that makes software for the oil industry. According to the government, Shan is an employee of the DaQing Oil Field, a division of a company called PetroChina.

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