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China targets the Fed to gain influence, prosecute senators and elicit Powell's rebuke

“This study reveals that China’s malicious efforts to combat influence and information theft are not limited to science and technology,” Portman said in a statement. “US economic and monetary policy … China It is the target of the government. “

“The Chinese government uses all the tools at its disposal to break in and steal valuable information,” he added. “We cannot allow US taxpayers to unknowingly continue to fund China’s military and economic rise, so our report is powerful in strengthening and protecting the Federal Reserve. I am making a good recommendation. “

In a letter to Portman, Federal Reserve Chairman Jerome Powell said in a report that he “has strong concerns about claims and implications,” and “what the Federal Reserve does is All serve the public mission to US homes, businesses and communities. ” “

“We are confident that Federal Reserve staff understand their obligations and are committed to maintaining both the confidentiality of sensitive information and the integrity of our workforce.” Powell wrote in a letter on Monday. “Our processes, controls, and technology are robust and updated regularly because we understand that some actors are intended to exploit the vulnerability. Opposition suggestions are in honor of us. I refuse. “

The report states that China’s U.S. authorities will become the world’s dominant economic and military superpower while maintaining the diplomatic relations necessary to cooperate in areas such as climate change and global public health issues. You will arrive when you are working on a way to resist the effort.

It was also announced that the Fed will play a more important role in US economic policymaking than any other government agency, trying to curb the worst inflation in 40 years while avoiding the world’s largest economic recession. rice field.

A spokesman for the Chinese embassy in Washington said the report’s warning was “full of Cold War zero-sum thinking and ideological prejudice.”

“China-US cooperation in economics, finance and other areas has been open and has played an important role in enhancing mutual understanding and mutual trust between the two countries,” spokesman Liu Pengyu said. “The United States should remove colored glasses and stop disrupting local and non-governmental exchanges between the two countries.”

According to the report, the Fed’s own defense investigators discovered “alert” actions or connections by more than 12 employees across the Fed system as part of an investigation initiated in 2015. Employees had similar travel patterns and professional backgrounds and had close relationships with Chinese government agencies and programs, including the Central Bank of China, and known members of China’s recruitment program.

China is using a number of tactics to target federal employees, the report said.

“But the motive is the same. China has access to sensitive economic and monetary policy information,” the report said.

In one case in 2019, Chinese officials detained federal employees four times separately during their trip to Shanghai, threatening their families unless they provided financial information and assistance, according to the report.

The employee’s phone was reportedly eavesdropped, and Chinese authorities copied contact information from other Fed authorities from the employee’s WeChat account. The employee notified the Fed who contacted the FBI.

Senior Fed economists at the regional Fed bank were also closely associated with members of the recruitment program and were in direct contact with China’s Xinhua News Agency, which the United States has designated as a foreign agent and China’s main advertising sector. Turned out. We will share articles, provide support for media questions, and invite officials to visit Washington and the city where his Fed is home, “the report said.

According to the report, another Fed senior economist with access to sensitive information attempted to transfer large amounts of data to external sites at least twice. In 2015, employees also received an email from a senior Chinese government official requesting private insight into the views of the three Fed governors on interest rate hikes. Employees shared the view of the president of his bank, a move that Fed officials said was “inappropriate and concerned.”

Powell said in a letter to Portman that the Fed has taken allegations of violations of its information security policy seriously and is concerned about “backing allegations of fraud.”

“In contrast, we are deeply plagued by our belief that the report on a particular individual staff member is an unfair, unfounded, unverified hint.” He added.

He also defended the Fed’s culture of working with scholars around the world “to deepen and expand understanding of critical issues.”

However, even after receiving recommendations from the FBI on how to investigate the above cases and fight China’s campaign, the report said the FRB “to explain the threat from China until the Commission began investigating. We did not take steps to update the policy. “

The Federal Reserve has since renewed its policy of banning employees from accepting compensation from certain restricted countries, including China, but the report discloses membership in recruitment plans for employees. He said the policy was inadequate because he did not require him to do so.

Therefore, according to the report, some employees who are known to have a relationship with such programs still maintain access to sensitive information.

The report states that the federal government needs to develop a comprehensive plan to protect US intellectual property and sensitive information and strengthen relations with law enforcement and intelligence agencies.

“Timely and robust sharing of information, including sensitive information products, is necessary between law enforcement agencies and intelligence agencies and the Federal Reserve to ensure that threat information is accessible and viable.” The report states.