The Guardian | July 22, 2009
By Kate Connolly in Berlin

Germany is under attack from an increasing number of state-backed Chinese spying operations that are costing the German economy tens of billions of euros a year, a leading intelligence agent said.

Walter Opfermann, an espionage protection expert in the office for counter-intelligence for the state of Baden-Württemberg, said that China was using an array of "polished methods" from old-fashioned spies to phone-tapping, and increasingly the internet, to steal industrial secrets.

He said methods had become "extremely sophisticated" to the extent that China, which employs a million intelligence agents, was now capable of "sabotaging whole chunks of infrastructure" such as Germany's power grid. "This poses a danger not just for Germany but for critical infrastructure worldwide," he said.

Russia, he said, was also "top of the list" of states using internet spying techniques to garner vital German know-how which "helps save billions on their own economic research and development". He said while Russia only had "hundreds of thousands of agents", compared to China's million, it had "years more experience".

Opfermann estimated that German companies were losing around €50bn (£43bn) and 30,000 jobs to industrial espionage every year.

"China wants to be the world's leading economic power by 2020," Opfermann said. "For that they need a speedy and intensive transfer of high-level technological information which is available in developed industrial lands, if you can get your hands on it".

The areas most under attack include car manufacturing, renewable energies, chemistry, communication, optics, x-ray technology, machinery, materials research and armaments. Information being gathered was not just related to research and development but also management techniques and marketing strategies.

Opfermann said internet espionage was the biggest growth field, citing the "thick fog of Trojan email attacks" taking place against thousands of firms on a regular basis and the methods employed to cover up where the emails had come from.

But he said "old-fashioned" methods were also rife, such as phone-tapping, stealing laptops during business trips or Chinese companies who regularly sent spies to infiltrate companies.

"I cannot name names but we've dealt with several cases of Chinese citizens on work experience in German companies, who stole highly sensitive information from them," he said.

In one case, the police raided the house of a Chinese woman suspected of stealing company secrets from a German business where she was working, and discovered 170 CDs containing highly sensitive product details.

In a separate case a highly qualified Chinese mechanical engineer employed by a company in the Lake Constance region was discovered to have passed on information for a machine it was developing to the company's Chinese competitor, who constructed an exact copy.

"As is often the case the man disappeared and went back to China – so often the attacker is way ahead of the game and it's also hard to find out who they've been working for."

Opfermann said although the problem was "huge and growing", it was not being discussed, "because companies don't want to admit their weaknesses and lose customers and they don't want to ruin business opportunities with China. As a result we're only seeing the tip of the iceberg."

Two years ago the consultancy firm Corporate Trust estimated that around 20% of German companies – mainly small and middle-sized businesses – had been the victims of industrial espionage.The findings chime with fears across the industrial world about the threat of cyber crime and the corresponding increase in efforts being put in place to fight it.

In Britain last month the GCHQ, the government's electronic spy centre, which estimates that the UK loses GBP 1bn a year to e-fraud, set up operations to deal with the growing threats. The Pentagon also announced it is to create a new "cyber command" and in May President Obama said he would establish a White House role to oversee cyber defence, saying the nation's digital networks had to be recognised as a "strategic national asset".