A report by the Senate Homeland Security Committee claims that the Federal Reserve has faced the threat of Chinese information theft for a decade, citing alleged cases of forced detainment, unapproved data transfers and more.

According to a report prepared by Republican staff of the Senate Homeland Security Committee, China has been engaging in various forms of information theft against the US Federal Reserve.

Through overseas talent programs, China targets the science and technology sectors by providing «monetary benefits and other incentives to lure experts into providing property information or research», the report said citing a separate investigation by another committee. One of the most prominent recruitment schemes is called the «Thousand Talents Program». 

«Although the Subcommittee’s 2019 talent plan investigation focused on America’s science and technology sectors, this investigation reveals that China has also targeted the Federal Reserve to undermine American economic and monetary policy since at least 2013,» the report stated.

Detainment, Data Transfers

The report cited case studies of five individuals, including four continuing Fed employees, with various links to key Chinese entities including state media Xinhua News Agency, universities affiliated with the aforementioned talent programs and the People’s Bank of China (PBOC).

In one case, Chinese officials allegedly detained a Fed employee by force on four separate occasions during a 2019 trip to Shanghai. In addition to threatening the individual’s family unless provided with economic information and assistance, phones and computers were tapped, Fed employee contact information was copied and a letter was signed by coercion to not discuss the interactions. 

The report also alleges multiple cases of unapproved data transfers including to a Chinese university with links to the PBOC.

Fed Response

In response, Fed chair Jerome Powell said he had «strong concerns about assertions and implications in the report,» in a letter to Rob Portman, Senator and the ranking Republican on the Homeland Security Committee.

«We would be concerned about any supportable allegation of wrongdoing, whatever the source. In contrast, we are deeply troubled by what we believe to be the report's unfair, unsubstantiated, and unverified insinuations about particular individual staff members,» Powell wrote.

«Because we understand that some actors aim to exploit any vulnerabilities, our processes, controls and technology are robust and updated regularly. We respectfully reject any suggestions to the contrary.»