The Spy Hunter #73
South Korea participates in China's Thousand Talents Plan. The FBI investigates venture capital firm over Chinese ties. Iranian solar energy espionage.
October 1, 2024
Welcome to The Spy Hunter newsletter!
In this week’s edition:
A South Korean investigation reveals experts’ participation in China’s Thousand Talents Plan, placing Korean tech secrets and IP at risk.
The FBI opens an investigation into a Chinese private equity-backed venture capital firm that invested in 360 U.S. startups.
A naturalized U.S. citizen is indicted for spying for Iran and providing sensitive information about the country’s solar energy industry and critical infrastructure.
🔎Economic Espionage Case of the Week
Case #1: South Korean participation in Thousand Talents Plan
What happened?
A South Korean investigation has revealed that at least 13 South Korean professors and researchers have participated in China’s Thousand Talents Plan since 2011. Many of the South Korean experts worked in critical fields such as quantum computing, AI, and semiconductors, and moved from prestigious institutions like Seoul National University and KAIST to Chinese universities. Participants were offered substantial financial support, luxury housing, and research funding as part of the program. The Thousand Talents Plan has been criticized by Western countries as a vehicle for illicit technology transfers and economic espionage.
Why does it matter?
While countries like the U.S., Japan, and Australia have sought to prevent China from recruiting their top academic experts, South Korea has not yet addressed the geopolitical risks posed by China's talent acquisition programs, including the Thousand Talents Plan, at a government level. As the table below shows, the participants’ fields of study are all in strategically important industries. Since many South Korean universities and companies collaborate with Western institutions in these same sectors, this issue threatens not only to South Korea's competitiveness but also the long-term economic resilience of its allies.
Case #2: FBI investigates venture capital ties to China
What happened?
The FBI is investigating whether Hone Capital, a U.S.-based venture capital firm backed by Chinese private equity, allowed Chinese authorities to access sensitive information from U.S. tech start-ups. Hone Capital, which received $115 million from China Science & Merchants Investment Management Group (CSC), invested in 360 start-ups between 2015 and 2018, some of which had ties to the U.S. government. The investigation focuses on whether Hone’s Chinese parent company accessed intellectual property or trade secrets from these firms. Legal disputes have also emerged between Hone and former executives, who allege they were pressured to invest in technologies with critical intellectual property. Hone denies any wrongdoing.
Why does it matter?
Chinese investment in key U.S. sectors has long been a concern for U.S. law enforcement and counterintelligence agencies, but the allegations against Hone Capital are particularly significant due to the broad scope of potentially affected businesses. It is crucial for partners of the 360 companies to closely monitor the investigation. The findings could expose serious security vulnerabilities that may have compromised the trade secrets of some of the most innovative tech firms in the U.S.
Case #3: Iranian spy targeted US energy sector
What happened?
Abouzar Rahmati, a former Federal Aviation Administration (FAA) contractor and naturalized U.S. citizen, has been indicted for acting as an agent of the Iranian government. From 2017 to 2024, Rahmati conspired with Iranian officials to obtain sensitive non-public information on the U.S. solar energy industry and FAA infrastructure. After being employed by a contractor supporting the FAA, Rahmati passed sensitive documents related to the FAA’s National Airspace System to Iranian intelligence. He also provided additional information on solar panels, U.S. airports, and air traffic control towers to his brother, a co-conspirator, for transmission to Iranian officials.
Why does it matter?
Iran's espionage targeting U.S. critical infrastructure presents significant economic and national security risks. While Iran's interest in solar energy may stem from a desire to reduce its reliance on fossil fuels by gaining insights into alternative energy technologies, it is more likely that Iran seeks this information to enhance its capabilities in targeting critical energy infrastructure. In the event of a conflict, this knowledge could be used to conduct cyberattacks or other forms of sabotage against U.S. energy systems.
🌏Around the region
Japan
Shigeru Ishiba, a veteran MP, has won the race to lead Japan's ruling Liberal Democratic Party (LDP) and will be installed as the country's new prime minister.
Ishiba faces numerous challenges, including public discontent over economic issues and regional security threats from China and North Korea.
Known for his moderate stances, such as support for renewable energy and progressive social reforms, Ishiba aims to rebuild trust in the LDP after months of infighting. His relatively liberal views on Japan’s historical record has raised hopes in South Korea for continued improvements in relations.
📖Best reads of the week
Changing South Korea’s Espionage Law is Good for Business - Korea Economic Institute of America
But more importantly, South Korea must acknowledge the role of foreign governments—especially China—in orchestrating these espionage campaigns. The current approach, which focuses on punishing individuals who steal technology, is akin to targeting low-level criminals while ignoring the masterminds behind the operation.
📣Upcoming Events
2 October. 8th U.S.-ROK Joint Public-Private Economic Forum - CSIS 9:00 AM ET [online and in person]
The forum on US-ROK economic cooperation will include keynote addresses from Under Secretary Jose W. Fernandez and Vice Minister Kang Insun on the importance of the Republic of Korea-U.S. business relationship and the strength of our trade and investment ties.
🗣️Job Opportunities
Associate Analyst – Americas (North America) - Sibylline (London, UK)
Political Dynamics Consultant(Remote) - Centrik Global Consulting (New York, NY)
Global Intelligence Associate Director - Accenture (various)
Insider Threat Analyst - GSK (US-based, remote)
📰In Other News
Economic Espionage
FBI’s Ryan Young Calls on US Companies to Stay Ahead of Economic Espionage Threats - GovCon Wire
Georgia Tech Cut Ties with China, Now Hold People Accountable - RealClearEducation
Virginia Urged to Halt Use of Chinese Drones Due to Espionage Concerns - Devdiscourse
Geopolitical risk
Asia-Pacific CEOs confident in the region’s economic outlook but a lack of focus on geopolitical risk could disrupt growth plans - EY
How Geopolitics Changes the Procurement Equation - BCG
Economic Security
South Korea's Growing Reliance on China for Semiconductor Raw Materials Detailed in New Report - BusinessKorea
Mining hasn’t evolved in decades. The U.S. must reinvent it as China tightens its grip on critical minerals - Fortune
What the next administration should do to ensure US economic and national security - Atlantic Council
Technology
Huawei laptop reveals China’s progress towards tech self-sufficiency - Financial Times
Biden’s High-Wire Balancing Act on Chinese Tech - Foreign Policy
US-China relations
Washington’s Playbook for China Must Change - Foreign Policy
Beyond Geopolitics: The Ideological and Ethical Battleground of US-China Relations - Australian Institute of International Affairs
Pan-Asia news
Developing ASEAN’s Semiconductor Industry: Insights from Taiwan and South Korea - Jakarta Globe
China’s military in ‘competition for partnerships’ with US in Southeast Asia - SCMP
EU betting on India and Vietnam for chips - Politico
🛜Around the Web
Thank you for reading!
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The Spy Hunter is the personal opinion of the author and is not legal advice. Any individual or organization mentioned is presumed innocent until proven guilty. Articles or other media featured on The Spy Hunter should not be taken as an endorsement by the author.
Cover image by DALL-E