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US charges former GE engineer, Chinese businessman of economic espionage

WASHINGTON, April 23 (KUNA) -- The office of US Attorney General on Tuesday charged Xiaoqing Zheng, 56, of Niskayuna, New York, and Zhaoxi Zhang, 47, of Liaoning Province, China, with economic espionage and conspiring to steal General Electric's (GE's) trade secrets.
The indictment relates to turbine technologies, knowing and intending that those stolen trade secrets would be used to benefit the People's Republic of China, according to a press release by the US Department of Justice. Zheng, while employed at GE Power and Water in Schenectady, New York, as an engineer specializing in sealing technology, exploited his access to GE's files by stealing multiple electronic files, including proprietary files involving design models, engineering drawings, configuration files, and material specifications having to do with various components and testing systems associated with GE gas and steam turbines.
Zheng e-mailed and transferred many of the stolen GE files to his business partner, Chinese businessman Zhaoxi Zhang, who was located in China, according to the 14-count indictment.
Zheng and Zhang used the stolen GE trade secrets to advance their own business interests in two Chinese companies - Liaoning Tianyi Aviation Technology Co., Ltd. (LTAT) and Nanjing Tianyi Avi Tech Co. Ltd. (NTAT), companies which research, develop, and manufacture parts for turbines.
The indictment also alleges that Zheng and Zhang conspired to commit economic espionage, as the thefts of GE's trade secrets surrounding various turbine technologies were done knowing and intending that the thefts would benefit China and one or more foreign instrumentalities, including LTAT, NTAT, Shenyang Aerospace University, Shenyang Aeroengine Research Institute, and Huaihai Institute of Technology.
The defendants, through LTAT and NTAT, received financial and other support from the Chinese government and coordinated with Chinese government officials to enter into research agreements with Chinese state-owned institutions to develop turbine technologies.
"The indictment alleges a textbook example of the Chinese government's strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories, enabling Chinese companies to replace the American company first in the Chinese market and later worldwide," said Assistant Attorney General for National Security John C. Demers.
"We will not stand idly by while the world's second-largest economy engages in state-sponsored theft. As part of the Attorney General's China Initiative, we will partner with the private sector to hold responsible those who violate our laws, and we urge China's leaders to join responsible nations and to act with honesty and integrity when competing in the global marketplace," Demers added.
"As alleged, the thefts of trade secrets to benefit the People's Republic of China are serious crimes against the victimized company and our country," said US Attorney Grant C. Jaquith for the Northern District of New York.
"Both fair competition and incentivized innovation require that American companies be able to rely on the secrecy of technological advances forged through their talent and tenacity. "When technology is taken through treachery, we will continue to work with the National Security Division and the FBI to prosecute the perpetrators," Jaquith pointed out.
"American businesses spend many hours and large amounts of money developing unique technology. When such technology is stolen it can be devastating to U.S. businesses and can result in American workers losing jobs," said Assistant Director John Brown of the FBI's Counterintelligence Division.
"China continues to support behavior that violates the rule of law. This case demonstrates the FBI will continue to pursue China's efforts to steal American technology," Brown noted.
"Economic espionage and the theft of trade secrets have a profound impact on our companies and communities," said Special Agent in Charge James N. Hendricks of the FBI's Albany Field Office.
"We view this as a grave threat to our economic and national security and the FBI will work tirelessly to prevent the loss of American technology and American jobs," Hendricks added. (end) rsr.gb