China Says It Caught Foreign Consultant Spying for UK’s MI6

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(Bloomberg) -- China detained the head of an overseas consulting firm for allegedly spying on the Asian nation for the British government, putting renewed focus on an industry targeted by Beijing’s national security crackdown.

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China’s spy agency said Monday that the UK’s MI6 intelligence service employed the consultant from a “third country” to carry out espionage activities. The alleged spy, surnamed Huang, provided the UK with state secrets and intelligence, according to the Ministry of State Security’s official WeChat account.

The MSS’s statement didn’t identify any firms or Huang’s nationality. The UK government declined to comment.

The investigation underscores Beijing’s continued scrutiny of the consulting sector, which over the past year has been subject to an anti-espionage crackdown and frequently accused by the MSS of leaking classified information. Turmoil in a sector employed by money managers to navigate Chinese markets has fueled concern among some investors that President Xi Jinping’s fixation on security will hamper his push to attract foreign capital and revive economic growth.

It’s the latest tit-for-tat development over spying between the UK and China, after British police arrested two men last year in connection with alleged spying for China. Prime Minister Rishi Sunak has previously raised with Chinese premier Li Qiang his concerns about interference from Beijing, and there is a hawkish wing of the UK’s ruling Conservative Party that regularly warns of the threat posed by China.

The Chinese agency said MI6 approached Huang in 2015 for intelligence cooperation, directing the consultant to travel to China multiple times, collect intelligence and identify potential assets. The UK spying agency trained and equipped the person to carry out espionage, the MSS said.

This is the first time the MSS alleged British spying on its WeChat account since it began posting in August. The ministry has previously provided details on alleged spies for US authorities.

Beijing has ratcheted up efforts to crack down on spying and adopted a new counter-espionage law that came into effect last year. That legislation expands the list of activities that could be considered spying, intensifying the risks for foreign firms.

Consulting companies have been in the spotlight. In April, American consultancy Bain & Co. said Chinese authorities questioned staff at its Shanghai office. A month later, security officials visited and searched expert-research company Capvision’s office in Shanghai, accusing the company of abetting espionage efforts by foreign entities.

The Chinese authorities in August fined US due diligence firm Mintz Group for illegal data collection, months after officials raided its offices in Beijing and detained five of its Chinese employees.

China’s powerful spy agency is usually secretive about its work but has taken on a more public profile recently, including launching a comic series adapted from real-life espionage cases on Sunday.

The MSS said it has arranged for consular visits after enforcing criminal measures on Huang.

--With assistance from Colum Murphy, Joe Mayes and Alex Morales.

(Updates to say UK declined to comment in third paragraph.)

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