The FBI ranks China as one of the greatest potential espionage threats over the next decade. What's the nature of that threat? What are China's goals? Former FBI counterintelligence experts Edward Appel and T. Van Magers, author Dan Stober, former U.S. Ambassador to China James Lilley, and criminal defense attorney Brian Sun discuss China's threat and whether the U.S. counterintelligence community can defend America's interests.

FBI Special Agent, 1973-1997

China is trying to build its military power. So, it benefits when it can basically steal the plans to weapon systems to improve their own weapon systems based on things they find out. They actually want to acquire weapons that other countries have. …

China still thinks of itself as a third world country in many respects. But they basically manufacture a great deal of what we use here. And that's their goal. They want to be the Japan of this era. They want to be able to dominate world manufacturing. So a lot of their espionage or a lot of their intelligence work is focused on that economic advantage that they might gain.

And there is very little distinction, even today, in China, between the government and its interests and Chinese businesses and their interests. There's a great deal of information sharing. And there is a great deal of collection that's based on making Chinese business competitive and, in fact, dominant in some of the areas where they want to be dominant. …

Speaking as someone on the inside who's seen this for a lot of years … have we been winning this game of chess, whatever it is, with the Chinese? Or are they playing a different game, or do they understand things we don't understand?

Well, I think it's very hard to say whether you win or lose. We're always talking about the current espionage case and trying to see these things through the light that that case sheds on a counterintelligence issue. And, frankly, that's not a very clear way to see the whole picture. However, I do think that to some extent we have lost the counterintelligence war against the Chinese intelligence services, partly because we haven't had major counterespionage successes.

There are really two ways you want to play this game. The first way is to know what the other people's intelligence service is doing. Who are their sources? And to either neutralize those sources, in some cases, arrest them. Or control the information that they're reporting back. You want to know more than the other side knows. Of course, it's very hard to know exactly what the other side knows.

The other aspect of it is to simply uphold the law, and to arrest people, particularly Americans who are stealing American secrets, classified American information, to put them in jail and to bring them to justice for committing espionage. I don't think we've done a good job in that particular respect with regard to the Chinese intelligence services. I think there are quite a few cases in which the Chinese have succeeded in collecting classified information from U.S. government sources and, for whatever reason, we haven't brought those people to justice and put them in jail.

So, on an absolute scale, if you would say, "Show me the numbers. How many times did you put a person in jail for this? I think it's an incontrovertible fact that we don't have many numbers. We didn't really do a very good job of putting those people in jail. …

[But are we] having some success in the China program?

I think the bottom line is that we've got limited success in the China program. It's a shame that more of the successes can't come out in public, and they shouldn't. But they are limited. They are limited in numbers.

I guess the thing I'm afraid of is, when you look at a nation that's that large, that has that large of a presence in the United States, and that has, basically, blood in its eye as far as modernization and military and market success, competitiveness, if you will, that the United States has never expended very many resources on the People's Republic of China. We've never thought it represented all that big of a threat. And as a consequence, we've never had quantitatively as much success as we have against other foreign intelligence services that were operating against the U.S.

So the recent statements by Mueller and others to say that China is foremost in the future,[and] that counterintelligence, counterespionage is now number two priority, what does that say?

It says that there's a recognition that this is important now. And, frankly, I think this has come over the last few years from success.

Not failure.

Not failure. Right. If you failed, then their secret services would be succeeding without you knowing. Once you realize what their secret services are doing, that's when they become a higher priority. That's when you beef up your operations. That's when you improve your operations.

And I think it's clear from my view of public statements, that in the last few years the U.S. has come to an increasing recognition of the potential danger posed by the intelligence services of China here in the U.S., and the necessity to do good counterintelligence operations whether or not the other side is committing espionage. I think you have to know what they're doing. You can't judge if what they're doing [is] threatening or not unless you know what they're doing. …

Are we playing a game of checkers, while they're playing a game of chess?

There are those that would say that because the Chinese are renowned for their thoughtful application of principles. And I'll give you a current example that's kind of scary to me. The Chinese command and the military have actually written books saying that the great equalizer is that the U.S. is so dependent on its computers that we can even the score by basically using the Internet against the United States. That it is the great equalizer in a conflict.

Obviously, we worry about nuclear weapons. But, I think we're in a new era now where we have a lot of other things to worry about. How many manufacturing jobs move to China? How is it that they can produce something identical to our products whether they be CDs and movies, or whether they be automobiles or aircraft. I think we have to decide, what is it we're going to do from a counterintelligence perspective to protect our economic interests, to protect our national security interests. And I think that we simply can't let them win this game this easily. They've been winning, at least in the public media. And I think we have to make sure that they don't win it. …

I think a foreign intelligence service working against the United States has a decided advantage. We have a free country. We think information is free. We don't restrict our citizens very much, even those with highly classified access. So, I think, we have to be very careful how we do this. But, I think, we have to be very good at penetrating that foreign intelligence service in order to find out who their agents are here. And, I think, we have to do a better job of security within our agencies, and within really business in America to protect the things that are essential to us, our intellectual property, our research and design and things like that. We're not good at that as a society. And that's what we have to improve.

FBI Special Agent, 1969-2002

I think at one time the FBI had the best [counterintelligence] program in the world. … And in the aftermath of Chinese campaign contributions, Wen Ho Lee, [the Parlor Maid] case, I'm concerned that we may be sowing the ground with enough salt that nothing will ever grow there again. Never say never, but it's going to be much more difficult for those who follow this, than it was for me in 1972, going in basically unplowed fields, and trying to be successful.

And the implications of that?

Well, if as some people suggest, China is going to be the successor to the Soviet Union as the major geopolitical opponent -- perhaps [opponent] is too strong a word, or opposition, I don't know, maybe that's the same word -- if it's going to be U.S. versus China in the world by 2050 as some people suggest, then we will have lost a lot of our resources to be able to track their activities. …

Author, A Convenient Spy: Wen Ho Lee and the Politics of Nuclear Espionage

China has a large espionage program against the United States. Of course it does. Why wouldn't it? As a country, that's what their intelligence service is supposed to do.

But for as long as I've been an adult, I've always heard that the Chinese dragon is about to wake up and take over the world and they're going to do this with nuclear weapons. And to this day, they don't have advanced nuclear weapons. They still have old lumbering missiles with one warhead on the top and it seems to be enough.

So how much does all this really mean? It's hard to say. It's a wonderful world and it surfaces in sexy ways, but does it change your daily life? Probably not. Probably if they're stealing commercial secrets, the loss of jobs is more important than any of these nuclear weapon secrets. …

U.S. Ambassador to China, 1989-1991

China is not going to be our inevitable enemy in 2050. It can be our partner. I mean I don't buy this business of them being an enemy in the future. They're going to be a powerful nation. They could be. They also could be a split nation, [with] very, very serious problems. And I think they're struggling with this right now.

I mean the domestic concerns are number one on their list of things to do. The number one priority is their domestic economic instability. Sure, they've got very high foreign exchange reserves. They've got big exports. They're expanding at nine percent. All these things look good. Visit Hunan countryside. Spend a little time in western China. It's very, very different. It's very backward and very, very poor. You have a country torn by these great disparities of wealth. It's with the leadership, Hu Jintao, Wen Jiabao, people like that spend an awful lot time trying to take care of this very dangerous problem because it's all laced with corruption.

I think that China is going to try to move ahead. What disturbs you is their acquisitions from Russia are pretty formidable, some of them, and their dissembling on the their military budget. That's a little bit disturbing. But, I think you're making some progress with them. We know an awful lot about the way China works, the way we worked on, let's say, joint operations against the Soviet Union, which were quite successful, Afghanistan, Northwest China. We work with them very closely. We talk with their people all the time.

So what our FBI guys and our others who advocate strong Chinese counterintelligence from the FBI [are doing is] overstating their problems --

It'd be hard to say. But what you need to get with the Chinese is the high-level penetration. That pays off. That pays off when you have access. When you have access, you'll get the guy that wants to compromise, and change sides, and that sort of thing.

And how do you get that access?

We have it all the time. We deal with them all the time. … We have a good sense of the way they operate the provinces, how they recruit, how they train, how they motivate, how they handle people. …

Defense lawyer for J.J. Smith

There are some who would opine, and I actually share this viewpoint to some extent, that the so-called "threat," and I put the word threat in quotes, is really more of an economic nature. China, being one of the most populated and energetic nations on the planet, particularly in the business sector, probably poses more of an economic threat from a competition standpoint, from a balance of trade type notion, I think, to the United States than from a national security standpoint. There are others, of course, who don't share that viewpoint. They still view China as a communist power that has nuclear capability and could therefore be a physical threat to the U.S. And of course they have nuclear weapons, some of which are capable of probably inter-continental striking capability.

But at the end of the day, many people I think -- and Chinese Americans as well -- view China as a business and economic partner, that we can benefit a lot from trade with them and they from us. And that we are going to be in serious competition with the Chinese in a number of economic areas, in trade in terms of goods and services. And that is where we as a country ought to be paying attention to them. Not so much as a country that's trying to infiltrate our political system and try to co-opt our politicians because I think that concept, that sort of specter which pervaded the campaign finance situation is total nonsense. The Chinese don't have that means, they don't have the resources to do it, nor would they care to want to do that. All they care about is the same [thing] we care about -- that you have an administration friendly to China in terms of business and trade and economic issues, and hopefully one that isn't too different in perspective on worldwide security issues.