Australia’s spy chief has revealed an espionage threat was busted at a top research institution, with the academic enlisted by a Chinese ‘spy master’.

ASIO Director-General Mike Burgess called out China’s “ruthless business model” of using espionage to gain a global advantage at the Five Eyes summit in California.

He also accused China of intellectual property theft at an “unprecedented” scale in a rare, joined public lashing of the state at a summit with leading Western intelligence organisations.

Addressing media, Mr Burgess said although “all nations spy”, China’s efforts went “well beyond traditional espionage” and posed a threat not only to Australia’s onshore security, but also to global security.

“The Chinese government is engaged in the most sustained, scaled, and sophisticated theft of intellectual property and expertise in human history,” he told reporters.
“It’s unacceptable. It’s unprecedented.”

Mr Burgess said the fact the Five Eyes members – intelligence bosses from Australia, the United States, New Zealand, Canada, and the United Kingdom – brought their usually-secret meeting to the public reflected the nature of China’s threat.

He added that just last month ASIO removed a Chinese national from Australia after foiling a spy plot to infiltrate a prestigious Australian research institution.

“The plot involved a visiting professor, a genuine academic who had also been recruited by Chinese intelligence,” he said.

“Their spymaster gave them money and a shopping list of intelligence requirements and sent them to Australia.”

The academic even allegedly set his PhD students “research assignments in line with his intelligence requirements”, one of them about Mr Burgess himself.

“As an engineer, I was flattered somewhat that one of the topics researched was me. But if they were looking for the next Mark Zuckerberg, they picked the wrong geek.”

He said the spying plot was disrupted and the academic removed from Australia before any harm could be done.

His US counterpart, FBI director Chrisopher Wray echoed Mr Burgess’ concerns and launched a scathing critique of China ahead of the summit, telling reporters economic espionage had become a “central component of its national strategy”.

Mr Wray said the number of investigations in the States related to IP theft from China had increased “1300 per cent” in the past several years, and a new case was opened every 12 hours.

“There is no greater threat to innovation than the Chinese government and it is a measure of how seriously the five of us in our services take that threat,” he said.

“The Chinese government is absolutely the biggest threat we face.”

The UK, Canadian and New Zealand intelligence chiefs expressed similar concerns about China at the summit held in public at Silicon Valley for the very first time.

Mr Burgess pointed to another instance of attempted IP theft against an Australian motion detector manufacturer that fell prey to a corrupt USB that was used to extract sensitive information from a laptop in order to mass-produce duplicate products in China.

He said the unnamed Australian company realised something was wrong when customers started to return “broken” products to its factory – and they realised the products weren’t even theirs, but “exact knock-offs”.

The problem was traced back to an international conference, where someone had offered a USB to share information with one of the Australian employees.

“That USB downloaded malware onto that laptop, which later on, when they were connected back to their corporate network, was used to steal their intellectual property,” Mr Burgess said.

“That intellectual property was passed from the intelligence services to state-owned enterprise that mass produced the goods and sold them on the market that undercut them.”

Mr Wray pointed to a US wind turbine company that had to slash “hundreds, maybe even thousands” of jobs after spy stole its IP. He said American artificial intelligence was also a particular target for Chinese theft.

Mr Burgess concluded his address saying that though espionage happened “every day” in Australia and in the Five Eyes countries, they will “meet and defeat this threat” because of the powerful intelligence partnership.

He said the discussions will “raise awareness” of the threat and improve the defences.

“Simple steps can make a difference. We cannot think we’re helpless and that resistenace is futile,” he said.

“The threats facing the tech sector are serious but not insurmountable. Our adversaries are sophisticated but not unstoppable.”

It remains to be seen whether the ASIO boss calling out China’s alleged spying does harm to Australia’s efforts to mend our fractured diplomatic ties with the state.

Prime Minister Anthony Albanese confirmed last month he would accept President Xi Jinping’s invitation to travel to China “before the end of the year”, making him the first Australian prime minister to do so since 2016.

The Chinese government has defended itself from the spying allegations, arguing it has “always attached great importance and been actively committed to intellectual property protection”, Sky News reports.

A spokesman for the Chinese embassy in Washington Liu Pengyu said his country firmly opposed the “groundless accusations and smears” towards China and hoped “the relevant parties can view China’s development objectively and fairly”.

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