A Detective in China: A Memoir of Sleuthing Out Trade Cheating
I first realized we were going to China while sitting at a bus stop outside the Commerce Department. It was late on a sunny spring afternoon in 1990. The Washington Monument rose high above as snarled rush-hour traffic inched along Constitution Avenue. I was reading Life and Death in Shanghai, by Nien Cheng. Not really a beginner in Chinese but still struggling, I had an English copy and a Chinese version of the book balanced on both knees, comparing their otherwise identical passages about her arrest in 1966 at the start of Mao's manic Cultural Revolution.
There was a movement to my left. A man in a nicely tailored three-piece suit was staring—first at the books, then at me, then again at the books. His eyes were narrowed, jaw off-center. He was built like an athlete and reminded me vaguely of the tennis player Arthur Ashe. Possessing my attention, he wasted no time with introductions. Obviously, he was used to getting his way. “Excuse me,” he asked. ”Can you read that book?”
“Um, yeah,”I said, not sure who he was, but guessing he worked on an upper floor of the gray limestone Commerce Department looming over us.
A quiz followed. How much Chinese I did I understand? And Korean, too? I rattled off quick answers to his rapid-fire questions. Chinese at Cal Berkeley and Harvard. More language study in Taiwan. Army tours in Korea and at Fort Meade. And on and on, until my bus came along. At the last moment, he extracted a business card from his waistcoat. “Call me on Monday, will you? Tell your boss or don’t tell him—up to you. We’re screaming for Chinese linguists.”
The card said that he was an official in the U.S. and Foreign Commercial Service—the part of Commerce that staffs the trade sections of American embassies and consulates to promote U.S. exports.At the time, I was the China analyst for the department’s polar opposite, the Office of Export Enforcement, the Commerce cops who enforce America’s export laws. Intrigued at the possibility of working in China, I took the meeting.
A year later, I was processing out of the Washington, D.C. headquarters and on my way to the American Embassy in Beijing, headed for a fast education in a U.S.-China relationship that was volatile even then. My seemingly impossible role would be to promote U.S. high technology exports to China while keeping them out of the hands of the People's Liberation Army.
The American Money Behind Blacklisted Chinese AI Companies
Given that the PLA was (and remains) the armed wing of the ruling Chinese Communist Party, and that Beijing had long followed a policy now known as “military-civil fusion,” the idea of a junior diplomat separating one from the other seemed beyond merely difficult.
Memories of that journey came back on Thursday when I read a piece by two influential U.S. Senators about China’s use of shell companies to bribe “corrupt officials abroad, greasing their palms in order to sign sweetheart deals with PRC officials and state-affiliated entities.” Mark Warner, D-Va., chairman of the Senate Intelligence Committee, and Mike Rounds, a Republican member of the Foreign Relations Committee, said the shell companies are “key tools in both the CCP’s corrupt and tightening grip on the country and its expansionist efforts abroad, all aimed at increasing the influence of the People’s Republic of China and eroding American power and American interests.”
From past experience and my studies of Chinese Communist espionage, I knew that to be true.
Bad Panda
Two years before we left for China, the bloody Tiananmen clash of June 4, 1989, unfolded in Beijing. My three-year-old daughter Esther and I were transiting Chicago O’Hare airport when the battle images from the Square first flashed across the world’s screens. Some of the passengers ignored it, some were interested, but in one corner, a group of Chinese wept.
At the time, I was working as Export Enforcement’s China analyst. Our slogan: “Export Now—Legally!”—and we did, approving the sale of almost everything to China (including, by the way, items that could help its military counter Moscow).
But in the months that followed the June Fourth, 1989 Tian’anmen massacre, Washington did a U-turn, switching from decent relations to mutual outrage with China. Henceforth there would be no assistance, either intentional or accidental, to the People’s Liberation Army. “Dual-use” technology, things that can make both bubble gum and bombs, prosthetic devices or missile nose cones, could no longer be sold to any organization or person with military ties. Machine tools, computers, certain software, semiconductor gear, communications equipment, and lots of other things suddenly required official U.S. approval. Occasionally, Washington demanded that the proposed buyer in China be checked by someone from our embassy to determine if the end-user was military or civilian.
I don’t know if the three-piece-suit man had this in mind when he first handed me his card at the D.C. bus stop, but that was to be my fate for four years in China, beginning in June 1991: To promote American exports, but also to help “control” them by making overt but less than friendly visits to selected Chinese companies and writing cables back to Washington describing what I saw.
The month before we departed for Beijing, our family’s newly minted diplomatic passports were sent to the Chinese embassy for visas. Their commercial section responded with an invitation to come by for dinner—alone. Go ahead, said my boss, the late Bob Rice, a legendary Commerce Department Special Agent. Take a notebook. Write down what they say. We’ll file a report with security. No big deal.
Back then the Chinese embassy was situated in two converted 1920s-era apartment buildings overlooking a sliver of Rock Creek Park in northwest Washington. Across the street, demonstrators gathered nearly daily to protest the Tiananmen massacre.
I was received with smiles and presented with a scrumptious dinner by the Chinese Commercial Counselor, a man in his 60s who spoke perfect English, and his assistant who spoke none. (Rather hard to promote Chinese exports to Americans if you don’t speak English, I thought. A party commissar?)
The dinner went well, over a polite conversation about the friendship between the Chinese and American peoples, the value of trade, trust, and mutual benefits. When dessert was served the assistant, a harder looking man, asked other questions: Why are you being assigned to China? Are you to perform enforcement duties? Will you do investigations on Chinese soil? I explained that, in the Commerce Department, promoting exports abroad was career advancement, a faster track, compared with investigating them. The Commercial Counselor smiled. His assistant scowled, returning to silence.
Greeting the Dragon
When we arrived in Beijing, the airport was adjacent to the same aging VIP terminal where Richard Nixon shook hands with Zhou Enlai in 1972, and the world watched itself change on live television. Our ride into town was dark, on a moonless night, along a narrow road that brought us into an equally dark city. It was a marked contrast to the bright and prosperous China visitors see today.
We were lucky to immediately settle into a “diplomatic apartment” in Beijing’s East District. It was equipped with heavy Ethan Allen furniture that appeared to be on its third family. In the kitchen, we found a small selection of loaned utensils and dishes to use before our own stuff arrived from the States. In the refrigerator were two liters of local milk in 200-milliliter tetra packs shaped like pyramids. Our neighbors turned out to be Pakistani, Serbian, Canadian, and North Korean—the last, naturally, did not speak to us and certainly wouldn't invite us in for tea. They were rumored to have little furniture other than beds.
That year, Esther was five, Matthew only two. The morning after our arrival, my then-spouse Sherriand Esther slept in but Matthew and I awoke early. I dressed him and we quietly snuck out for a walk. Everything in the compound was new, and some of it unfinished. The basketball court was still a jumble of construction. It was a weekday and diplomats from everywhere were on their way to work in cars with unique black and white license plates that screamed foreign diplomat, further graced with a number that identified the country of origin: 222, USSR; 223, U.K. 224, U.S. (The District of Columbia issues its own versions.)
We were hungry as well as curious, so we ventured forth. First we had to pass through the chuandashi, or “passing along room” for the diplomatic compound, manned by three fit men in plain clothes lounging about and equipped with several telephones and a set of closed-circuit television monitors. Where to eat? I asked. Hop on the 110 bus, they said in working class Beijing Mandarin. Then, excitedly, Laile, kuai, kuai, it’s here, hurry up!
Taking a short jog to the street with an openly amused two-year-old bouncing on my hip, I raised my arm to signal the driver. His bus sputtered to a stop and sat in silence, engine off, as we walked up the steps. Other passengers pointed us to the middle door, where a uniformed woman attendant sat dispensing tickets. The driver hit the electric starter, and the bus lurched forward. Below our feet, the pavement was visible through gaps in the wooden floorboards.
Ni hao, duoshao qian? Hi, how much? I was happy to be in China, on this bus, speaking Chinese, carrying a blond, curly-headed boy whom everyone was watching, some with smiling faces.
Liang jiao, the attendant replied. Twenty Chinese cents—about three cents U.S. I handed her a one yuan note and she wearily returned eight jiao and a paper ticket without comment. Oops, I’m a rich foreigner already. Good thing I didn’t give her a fiver.
We headed south on Xindong Road, a main corridor in that part of town. About three blocks before the foreign embassies district, the bus turned right, and we hopped off. Two women smiled and waved at Matthew from the bus window, and in response, he laughed and waved back.
It was 6:00 am. Vendors lined the street, selling thin and crispy jianbing pancakes with a fried egg in the middle; youtiao, the Chinese straight-stick donut; and hunduntang, wonton soup topped with tiny shrimp floating in a salty broth. I looked around, wondering if anyone had soymilk, as you would find in Taiwan, but saw none. Maybe Matthew would like a pancake, I thought. We walked up to the nearest stall. A thousand people were visible around us, but no other foreigners.
Hot pepper sauce? The man kept his eyes low to the griddle. Just a little on one half, not for the child, thanks. He looked around, and then glanced up, smiling. Your baby is so cute. Did you have yellow hair like that?
Indeed I did.. Nearby on the sidewalk were several street barbers in white coats. Suddenly a young and fit bicyclist with short hair stopped and sat down for a haircut. With a flourish, the barber brought a white sheet across his chest and began chatting and cutting. He didn’t really need a haircut, I thought, and was trying hard not to look in our direction. Day one in the spy-vs-spy world?Matthew and I ate the pancake, wrapped in white paper, and he laughed, making a game out of feeding me.
“You want one more?” the vendor asked. I was full.
“I haven’t seen you here before,” he went on. “Just arrived? What country are you from?”
I hesitated for a moment, but it wouldn’t do for a newly minted diplomat to tell a lie until at least a week into the job. “I’m from the U.S.”
The pancake vendor smiled, looked about for a moment, returned his gaze to the griddle, put his hand up to his mouth as if to yawn, and quietly said, Meiguo hao. “America is good.”
Mistakes Were Made
Now, over a quarter of a century later, many Chinese look askance at America, or at best with mixed feelings. In between, stuff happened: the accidental 1999 American bombing of Beijing’s embassy in Belgrade; the Chinese economy going from strength to strength; elevated tensions over Taiwan and the South China Sea and, most importantly, the rise of a new kind of leader in Beijing who is encouraging an angry nationalism, notably against America, not helped by Donald Trump’s constant harrangues.
But back in 1991 a lot of ordinary Beijingers were still angry at their own government for thousands of deaths in Tiananmen Square, where students had built and rallied around a paper maché Goddess of Liberty. One day, I was talking with some workers repairing a wall inside the embassy. They made a laughing show of arranging bricks on top of some newspapers featuring a photo of several of the country’s senior leaders, and hammering them to bits.
We settled in. One Sunday after our car arrived, we took a drive to an open-air market near the massive Russian embassy complex. After walking around for an hour, trying street food, and buying some household stuff, we returned to our car for the trip home. As we buckled the kids into their seats, a fit, Mao-suited man with a buzzsaw haircut who looked like he'd been through a few wars walked up.
In a menacing tone, he whispered, “You must take me to the American embassy!”
“Where?”
“The American Embassy! I have vital secrets for you. Take me there now!”
Sherri’s reaction was quick, clear and fully logical.
“I'm getting into the car and locking it! Get rid of him!”
Listen to the woman, as they say. I proceeded to do so. “You must want to talk about American exports to China. Here is my card. Please call me on Monday morning.” We drove away as fast as possible, shaken but later joking that we hoped the cameras recording this scene captured our good sides.
My boss, the commercial counselor, was a Harvard Law graduate who spoke and read Chinese like an educated native. Among their children was Clara, a girl Esther’s age, who was attending a Chinese kindergarten. We decided to try that too, and Esther eventually adjusted and acquired a Beijing accent, albeit not before trying one day to escape and flee homeward. But three months later she surprised us by breaking into an animated and fluent conversation at a banquet. Her new friend was the director of a geological institute I had been sent to check because they wanted to buy controlled American technology—computer-aided design engineering workstations. The dinner was in celebration of the U.S. government’s approval of the sale.
If every end-use check was in Beijing, like the one at the geological institute, work and life might have been easier. But Washington wanted them done all over China. From Shenyang in the north to Nanning in the south, from Shanghai in the east to Kashgar in the west, I visited Chinese end-users that Washington found suspicious. By the time our third child, Elliot, was born in 1992, I had visited two-dozen Chinese cities, many of them more than once.
All of the visits, of course, had to be arranged with my minders at the Chinese Ministry of Foreign Trade. Their job was, at times, to keep me from discovering the full story about this institute or that factory, but primarily to painstakingly make a case to allow a high-tech sale to go forward. Mine was to discover everything and if necessary to get around them. Each of us had varying degrees of success in achieving these goals, and I felt that we understood our roles completely.
Rubber Meets Silk Road
The most memorable check was the hardest. An institute suspected of affiliations with the People's Liberation Army had put in an application to buy some sophisticated electronic equipment that could be put to military use. It would require a visit to the place. I asked my minders if one of the embassy’s military attachés could join me. After a week of consultations with “the relevant offices,” his trip was approved.
Dennis Blasko (who would later go on to write a fine book on the PLA) and I took a train to a city in Henan Province and were met with the usual reception committee: the institute director, several of his staff, and a representative of the local government’s foreign affairs office. A tour of the institute was followed by a briefing on their “thoroughly civilian” customer base and mission. Then it was time for our questions.
I asked to see records to validate the institute’s claim that all its customers were civilian organizations. They didn’t like the question.It would be an unwarranted intrusion on the institute’s proprietary information, our minders exclaimed. I stuck to my request: you can refuse, I said, that is your right. But then I’ll have to write a telegram back to Washington saying that I could not view customer records. And that will likely mean no export license approval. It would not advance the bilateral relationship or China’s modernization. All right, they grumbled, we will discuss it in private.
Ten minutes later, we were summoned back. Yes, we can bring you the records, they now said.
“Oh, sorry,” I answered. “Maybe I didn’t make myself clear. I actually need to go to your records room to see them there.”
Now they were really upset. We repeated the same points: intrusion versus openness, protecting proprietary information versus trust. None of them raised their voices, much less harangued us about Meiguo ba quan zhuyi, American hegemonism, but we came close to a fight. The institute director stayed silent, chain-smoking, alternating between staring at me and looking out the window as if he wished to be somewhere else.
After almost an hour, our friends on the Chinese side relented and I was taken to the records room. The institute director placed his hand on a file cabinet and invited me to examine them to my heart’s content. I thanked him, walked to an adjacent book cabinet, and opened it instead. A pile of books tumbled into my arms. On top of them was a volume entitled (in Chinese) Military Specifications for Electronic Circuits. It was labelled SECRET.
The director calmly walked over to me, took the book from my arms, and said, “Your visit is now finished.”
Bottoms Up!
But there was still a dinner scheduled for 6:00 p.m., and it would’ve been bad form for either side to cancel it. In spite of being in the north of China, the table was laden with a mixture of specialties from all over: Shuizhu yu fish simmered in hot peppers, Sichuan dandan noodles with a rich and spicy peanut sauce, Chairman Mao’s Favorite Pork, sautéed broccoli with garlic, and fresh fruit.
And there were the customary bottles of fiery Maotai liquor on the table. I thought about claiming to be a teetotaler, to avoid drinking the noxious jet fuel that so many find appealing, but the Chinese insisted that we play a drinking game. I looked at Dennis, a West Point man. He smiled, shrugged, and then announced to our hosts: Wo ti ta he, daibiao Meifang—I’ll drink for him and represent the American side. Laughter and applause followed, all the tumbling books and violated proprietary information seemingly forgotten.
Late that evening we boarded our train and bunked in a “soft sleeper” compartment for the journey back to Beijing. As we stretched out for the night, I called across the compartment and asked Dennis how he was feeling. He sighed, gently gripped his forehead, and said “I think I want to go back to the infantry.”
That export didn’t happen. A lot of questionable others slipped through, I’m sure. Undoubtedly, Beijing’s wool was pulled over my eyes numerous times—it’s not so hard to fudge the documents— but plenty of legitimate business moved forward, too. Those were better times. But friendship, trade, trust, and mutual benefit still count today. So do other realities: Chinese leaders and people feel emboldened and wish to see the back of American forces in Asia. Many are convinced that the U.S.-led, liberal international order is no longer worth supporting.
Even in better days, both sides did their best to spy the living daylights out of each other, and probably always will. In spite of those efforts to ascertain capability and intent, mutual misunderstandings persist. The unstable U.S.-China bilateral relationship and conflicting national interests seem destined to continue.
Biden’s Turn
On Thursday, in his first foreign policy address, President Biden called China America’s “most serious competitor” and vowed to “push back” on its “attack on human rights, intellectual property and global governance.” During the campaign, he had called Xi Jinping a “thug” for his vicious repression of China’s Uyghur minority. The remarks signal a tough new line on Beijing, although the president indicated he would confer with Washington’s allies before plunging ahead with punitive measures.
Meanwhile, as officials in Washington and Beijing regulate and promote research in advanced and deadly technology, the tension can almost be cut with a knife.
To avoid fatal miscalculation in these less stable times, how can each side see the other more clearly, discarding romantic illusion, hubris, distorted bias, and plain old bigotry? After decades of working in, visiting and writing about China, I can say the answers still seem elusive. The more we focus on hard facts, historical precedent, and a sober, ethical consideration of national interest, however, the closer we may come to workable solutions.
Co-published with SpyTalk, where Jeff Stein leads an all-star team of veteran investigative reporters, writers, and subject-matter experts who will take you behind the scenes of the national security state. Subscribe to get full access to the newsletter and website.
Get our top stories in your inbox every day. Sign up now!
Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.
