Chinese Spying a Threat, Panel Says

Spying by China in the United States is the biggest threat to keeping American technology secrets, a bipartisan government panel concluded in a report released yesterday.

The U.S.-China Economic and Security Review Commission also said that advances by the Chinese military are catching U.S. intelligence officials by surprise and that the Defense Department may be inadvertently outsourcing the manufacturing of key weapons and military equipment to factories in China.

The report, the panel’s fifth, noted that China appears to be reversing its move toward free markets by setting up state-owned enterprises to maintain control over 12 key industries, including oil, telecommunications, shipping, automobiles, steel and information technology.

The commission also urged Congress to work with China to reduce its pollution, which is responsible for significant amounts of smog over the western United States, according to new studies quoted by the report. China is scheduled to build 562 coal-fired plants over the next five years and may have already replaced the United States as the largest greenhouse-gas producer in the world, the report said.

The panel, which was created by Congress in 2001 and has six members appointed by Democrats and six by Republicans, has been criticized for taking a hawkish stance on China in its annual reports. In the one released yesterday, it made 42 recommendations to Congress, and several of them raised questions about whether the Defense Department has been lax in overseeing the production of sensitive military technologies and gathering intelligence on the Chinese military.

The Pentagon is increasingly buying planes, weapons and military vehicles from private contractors that outsource the manufacturing to plants in China and elsewhere in Asia, the report said. But when questioned by the commission, defense officials admitted that they do not have the ability to track where the components of military equipment are made.

By David Cho and Ariana Eunjung Cha