Blog: Report: China working to undermine U.S. Federal Reserve Banks – Financial Regulation News – Financial Regulation News

A new report released Tuesday has found that China has worked to target, influence, and undermine the U.S. Federal Reserve.

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The report, from U.S. Sen. Rob Portman (R-OH), ranking member of the Senate Homeland Security and Governmental Affairs Committee, is based on information from the Federal Reserve’s counterintelligence analysis and FBI recommendations on how the agency should change its policies and procedures. The Federal Reserve, the report said, has been the target of an extended and effective Chinese influence and information theft campaign.

Since 2013, the report said, the Chinese government has utilized talent recruitment programs, like the Thousand Talents Plan, to recruit U.S.-based economists to provide the Chinese government with knowledge and intellectual capital in exchange for money and other benefits.

“This investigation makes clear that China’s malign efforts at influence and information theft are not limited to science and technology fields — American economic and monetary policy is also being targeted by the Chinese government,” Portman said. “As our investigation reveals, the Chinese government is using every tool at its disposal to infiltrate and steal valuable information. We cannot let the American taxpayer continue to unwittingly fund China’s military and economic rise, which is why our report makes strong recommendations to enhance and protect our Federal Reserve.”

Portman said the report indicates the federal government cannot make any American taxpayer-funded investment into science, technology, or economic policy without including safeguards and security protections.

The report detailed five previously unreleased case studies that showcased how the Chinese government has attempted to gain access to sensitive materials, including a case where one Federal Reserve employee was forcibly detained by Chinese officials and another case where a Federal Reserve employee switched his communications to unmonitored channels and changed their email name when confronted with their suspicious activities.

The report found that the Federal Reserve has been unable to counter China’s campaign due to a lack of sufficient counterintelligence expertise and that the Federal Reserve lack the policies and procedures sufficient to prevent China’s information collection attempts.

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