School of War - Ep 270: David Shedd on China’s Spies

Episode Date: January 30, 2026

David Shedd, former Acting Director of the Defense Intelligence Agency and author of The Great Heist: China’s Epic Campaign to Steal America’s Secrets, joins the show to discuss Chinese spy craft. ▪️ Times 02:05 Early days 06:49 CIA 09:28 Sandinistas and revolutionaries  15:14 IC preparation  18:35 A great awakening 26:11 Industrial espionage  30:50 National Intelligence Estimate 34:11 The MSS 44:19 The culture of the 18th Bureau  50:17 Battlefield consequences  55:20 Counterarguments Follow along on Instagram, X @schoolofwarpod, and YouTube @SchoolofWarPodcast Find more content on our School of War Substack

We've spent many episodes of School of War focused on the PLA, that's China's People's Liberation Army. But today's a real treat. We're going to shift gears and talk about the MSS. That's China's Ministry of State Security. It's spies, domestic and foreign. And we're going to focus in on the 18th Bureau of the MSS, the mysterious entity which handles all espionage directed at the United States. It's a fascinating and also, as you might imagine, quite unsettling conversation. Let's get into it. It is for safety for war.

December 7, 1941, a date which will live in it. A bloody experience of Vietnam is to end in a state. We continue to face the rain situation in France. There's no fight on the beaches. There's no fight on the landing ground. He'll fight in the fields and in the streets, which you'll never have no rest. Hi, I'm Aaron McLean. Thanks for joining School of War. I am delighted to welcome to the show today.

David Shed, he is the author of The Great Heist, China's epic campaign to steal America's secrets. He had a long career in government in our intelligence community in particular, towards the end of which he was the acting director and also the deputy director of the defense intelligence agency, the DIA. He served in the CIA, other agents. He's had service abroad. It's going to be really interesting conversation. David, thank you so much for joining School of War. Thank you, Aaron. Delighted to be here and able to speak to your audience.

David, how does a nice young American boy grow up to join and spend most of his professional life in our intelligence community? I trace it back to growing up overseas as a son of missionaries, born in Bolivia, raised in Chile for the most part in finishing my high school years in Uruguay. in 1976, that something was injected into my DNA of really being interested in world events. I lived under Salvador Allende, obviously under my parents' roof, as an 11, 12, 13-year-old. And I saw communism firsthand, socialism, communism in terms of early 1973. And I was just fascinated by the fact that Richard Nixon and Henry Kissinger might be interested in the longest, skinniest country in the world so, so far away. And I was that young lad who elbowed his way up to the front of a parade line for the first visit that Fidel Castro took after the Bay of Pigs. So a full decade later came off island.

And where did he go? He went to Chile to make his pronouncements. in terms of having another communist country in the Western Hemisphere join the fold. And so I was fascinated by that. If you fast forward to my college days from 77 to 81, my wife of today, then my girlfriend, we sat in the lounge watching the Iranian hostage taking in the embassy in Tehran and the countdown. And I really felt called, in a sense, to join the U.S. government and foreign policy.

So I did both the Foreign Service exam and was going to go the State Department route. In a very practical way, CIA offered me a job before State Department did. That's quite simple, and I never looked back. And then that was then by 1982 that I joined CIA and was there until 2015, obviously in different positions, but as a CIA officer. So we'll come back to that in just a second, but just to go back to Chile because it's kind of a fascinating episode, you know, I take the sort of conventional view that if I were reviewing a textbook in an American undergraduate course focused on that period, it would say something like the peace-loving Democratic people of Chile were doing their thing when, you know, Pinochet and his American backers

brutally imposed right-wing rule. Now, that's not to comment one way or the other on Pinochet, and maybe you would want to, but I'm curious if you could give a little bit more texture, or just fill in the blank about what was communism or socialism like under Aende? Well, the popular unity of the Unidad Populades, it was known, was an amalgamation from probably five to six organizations, Marxist organizations, some more extreme than others, so that it almost looked like a junta of different groups in terms of governance.

What started to happen very early on within six months after the election of September 1970, well, sort of the springtime of 71, we started seeing empty shelves. We saw a lot of riots. There was a lot of conflict. There were land takeovers in the area that I lived in. And my parents about 500 kilometers south of Santiago. And so I'm seeing all this upheaval, and I'm not seeing this, this, leadership that was going to bring the proletariat around. The proletariat was suffering, actually,

very soon after they came to power. There were no jobs. There was conflict. Like I said, empty store shelves. Socialism simply doesn't work. And so three years, three and a half years later, Pinochet comes into power, and he sets a course correction economically, enabled by the Chicago boys, Milton Friedman and the likes. And Chile went on to be and is a prosperous country in many, many ways. There's income disparities like there is in so many Latin American countries, but it's a prosperous country as a result of those years under Pinochet and then restoring democracy as we now know it there. It's a vibrant democracy of 18 million people. So back to the 1980s, you joined the CIA. You're a CIA officer. I don't know how much you can speak

about these years. It was some time ago. the climactic phase of the Cold War, what does young new CIA officer David Shedd get up to? I was recruited to or enabled myself to go into the Central America region. There was a lot of conflict as anyone that knows the history of the 1980s, first in El Salvador, where I served and then subsequently Costa Rica with really a focus on Nicaragua and the Sandinista regime at that time. And of course, you have Ortega and his wife there today in terms of really running the country into the ground, as we well know. And so my first encounter was really living out in an intelligent support to policymakers as it pertained to pushing back on Soviet, in the Western Hemisphere, that drive to consolidate powers in places like El-Sahs.

Salvador with the FMLN, the FADAMU MART types. And then in Colombia, you had insurgencies going on and all of that, a lot of friction, driven in many ways by Russia or the Soviet Union's proxy in the hemisphere, Cuba. And so what I was seeing was Cubans all around the region, fermenting this kind of violence in that. I was on the operational side of CIA. So I was what's known as the Directorate of Operations. So I was a trained case officer in terms of handling human agents.

And in this case, really, much of it being be classified by now, the covert action elements associated with that to push back on the Soviet reach through like the Cubans and the Nicaraguan's in the region that we were seen. Sorry, this is not what I had planned to talk about today. We're going to talk about China. And I promise we will get to the book, but this is too interesting to accelerate through it too quickly. I mean, it's funny, the description you just gave of the region, I feel like one could give at least a very similar description today. I mean, you yourself point out things are not all that different in Nicaragua than they once were.

Cuba is very much still there. Foreign interference, still very much a concern, though not necessarily communist interference anymore, at least from Russia, obviously from China. We had Elliott Abrams actually on the show just a few weeks ago to talk about Venezuela. So I feel like I'm getting the Nicaragua story from both. both ends here, David. Right. Did you have, what was your view on, on, on, on that whole episode with the Sandinistas from where you sat?

Well, it's funny that you bring up Elliot's name. I was honored to be his note taker when he was assistant secretary. I was, as I like to say, in the, in the government parliance, a GS minus three, you know, level as a junior officer. And I was in those meetings with John Negroponte as ambassador, our US ambassador to Honduras, where we had that very large press. in fact, the largest presence in the world of intelligence and diplomatic and military presence in terms of supporting the anti-Sandinistas, really better known as the Contra.

I was on the so-called southern front in terms of pushing back from the forces that were pushing against Managua and the Sandinista regime. And what we saw was when Somosa was overthrown was all these promises that are so often the extremists left make that they don't keep. They say, well, we'll rule together. We'll do jointness in terms of taking everybody into account, and pretty soon the purges began. And that's what it occurred in Nicaragua when it was clearly headed toward and then consolidated around the Marxist regime that it was certainly by 1982, 1983. And then, you know, the rest is history in terms of pushing back on that. And that's what I was seeing. firsthand through diplomatic channels, intelligence channels, and U.S. military support channels

that were being provided to the Hondurans in particular, and then in El Salvador, in which we came very close to losing El Salvador to the Marxist insurgencies known as the Farabondo-Marti Revolutionary Front. And so I was really honored to be a part of combating what I've called, Aaron, the proxy wars of the Soviet Union. in various places around the globe. Simultaneously, of course, in Afghanistan, the Soviets had occupied Afghanistan after the famous Breshnifkis to President Carter

and said, you know, nothing will happen in Afghanistan. And, of course, we know they invaded it shortly thereafter. Then in Angola and in Yemen and other places that I had no direct involvement on, this was really what I call a panoply of proxy wars going on in the 1980s, which contributed to the eventual fall of the Soviet Union, which began on November 9th, 1989 with the collapse of the Berlin Wall and isn't really consummated in terms of the breakup of the Soviet Union until December 1991. And those were the best years of my life in my career,

because that's in large measure why I had joined CIA in terms of fighting the global reach of of Soviet communism, Marxism, around the globe. This was implicit in my question about Pinochet, but I'll just make it explicit now, because I'm just curious your response to this. Again, your account of this period is just, I think, very different from what in our educational system, certainly in our universities, most Americans would hear about this period, which again, would run something like, you know, there were local politics. The left-wing regimes were functions of democratic will, American overbearing policy put in

place at times brutal responses to these things, et cetera. And again, without needing to sort of in needric fashion, reject the notion that there was no right-wing brutality or misbehavior or criminality even, because obviously there was. What is your response? Your frame is so different from, I think, the common frame. What is your analysis of that, the common frame, and what is your response to it? My reaction to that is, let's have an honest, candid and critical thinking application to what actually was taking place. The communists were enabled by outside interference as they have been all throughout Latin America, wherever they exist. We can talk and touch on Venezuela, but you covered that with Elliot. The fact is the Cubans were as much involved in there. This is

not an indigenous movement alone. And whether it was Che Guevada in Bolivia or the Argentine that was in Bolivia that we know as one of the torchbearers of carrying on the revolution out of the Sierra Madre of Cuba from 1959 in terms of going into Bolivia. And so in Chile, that would be my first observation. There was already outside interference that was supporting it. Secondly, the promises that they made were simply not being kept whatsoever in terms of the social contract with the people. in terms of the election of Salvador Allende Gosen as president.

And thirdly, there is a vital and an important recognition that we have our interests that we need to look after. And I think as we see President Trump and certainly carried out in many ways through the enablement of Secretary Rubio at the Department of State or in his national security advisor or any one of the other hats that he wears, I see that in the Western Hemisphere, there is a clear pushback on the foreign presence and interference that we've seen, which is probably a good place also to talk about the Chinese influence throughout the region. Don't forget, National Archivist for Secretary Rubio. That's an important one of my favorite running internet jokes.

Yeah, and they may be looking for them to coach one of the teams that now in the NFL is looking for. So you never know. All right. One last question about history, and then I promise we'll start moving forward. But it's kind of fascinating. The work you're describing you're doing, if my timeline is correct, you're doing this in the 80s while you're still in your 20s. You're out there, you know, organizing resistance to communist governments. There's a military dimension to all of this.

What is what kind of preparation does a young CIA officer get for this kind of extremely complicated work, which has both no doubt technical elements, but also requires real human judgment? Like how do you how does how does the IC prepare its operations officers for this kind of thing? So it really begins with a can I use the word profile? You're profiled in terms of personality and sort of innate qualities or innate gifts and and sort of what really makes you tick. So if I used to tongue in cheek say of my national agency national security agency NSA colleagues that I knew an NSA are in the room because they were looking at someone else's shoelaces.

I mean, so it's not to sort of think you go off as a case officer in terms of the personality. So there's initially who is, and you go through batteries of tests and all that. But then you really go on to have extensive training, a couple dozen weeks of training. It's known as the farm where you go. And you actually go to spy school, you know, clandestine training. and you have countless hours of running exercises of all types. We work closely with our FBI colleagues and others to prepare you for that. And then for those that are going into either an outright war zone or something where physical violence could be a part of it,

there's additional training because of the environment that you're going to find yourself in. And so in many ways, whether in your marine background or in special, forces in that. There's unique training associated with the areas that you're going to be sent. And not last and not least at all is the whole issue of your language and cultural capabilities. Having grown up in Latin America, it was befitting for me to really fit in very well with the environment as well in terms of the preparation. But obviously, if you had no Spanish, you would have to have Spanish. I mean, that's the language franca of whatever operation. environment that you're in in the case of Central America. And so that would be additional

preparation, but I didn't require that. So I went to the field pretty quickly after the training was completed. And there was a preamble to all of this in which you do what are known as interim assignments. And you basically are a floater. And so you work in different area divisions, geographic divisions, and so you get a sense of what Middle East operations are or Africa operations, because there is a regional flavor at times to uniqueness of those operations, and China and Asia would be a different one than, say, going to Central America, right, for obvious reasons. So it kind of depended where you were going to go, and you would get the smattering of this for about a year before you went to the field and finished your training, year to 18 months.

as promised, we'll move forward. You and President Reagan win the Cold War. Thank you. You continue your rise through the ranks of the IC. You're on the NSC. 9-11 happens. You have some very senior roles in the intelligence community after that. And we can linger on the post-9-11 stuff and fighting radical Islam and all that if you like. But I guess the question I really want to ask you is, when do you start noticing and paying attention to the People's Republic of China. So I finished my assignment in Mexico after five years in 1993 and came back to what, not disparagingly, but lovingly would say came back to headquarters. No one ever wanted to come back to headquarters.

No one ever likes headquarters, but actually serves a useful purpose. No, in all seriousness, I started getting assignments in headquarters that pre-positioned me for for going to the White House in the National Security Council staff in February of 2001. So about seven months before 9-11. But doing that decade that I call the decade, and many call it, the decade of the peace dividend, the Soviet Union has collapsed. It's a hiatus in terms of being a single power. But of course, emerging from those ashes is the rise of increasingly the,

the signatures of extremism, radical extremism from both the Sunni and the Shia side of things. You're starting to see terrorist attacks and you have the East Africa bombings in 98 and that sort of thing. And then you had the wars in the Balkans in terms of hitting Belgrade and the support there. And these are the Clinton years in terms of those eight years. So in that, as I'm moving forward there, I'm starting to see. the signatures of the manifestation of a speech that Deng Xiaoping as the Chinese Communist Party leader at the time in 1984. So five years, just to put everyone on the calendar here, this is five years to that June in 1989 that Tiananmen occurs, the massacres at Tiananmen.

Deng Xiaoping gives this speech in the spring of 1984 in which it's seminal in the sense that he articulates with great clarity that China is going to pursue coming out of the cultural revolution and the great famine and all the left behind that China suffered under Mao Situ. This speech articulated that China would now blend or would combine controlled socialism with managed capitalism. That's the first sign that I can identify, and the book talks about this, where they were going to start to collect information from the West in order to modernize China, to bring it into what I termed to be the modern day great leap forward, a term that the Chinese often use, coming out of a century of humiliation, in other words, where all the terms and

agreements of the international order were established by the United States in particular in the West more generally, that would control keeping China down, keeping them suppressed from being all that China could be as the Middle Kingdom and rising to the kind of power that we now see them in the state under Xi Jinping since 2013. And so you have, that's the kickoff. You start seeing the manifestation of this, Aaron, and I start seeing this in the 1990s, and it's in the book where we start to see that it's really going to be about commercial espionage, industrial scale espionage around trade secrets, manufacturing secrets, intellectual property, the know-how associated with innovation, early vestiges of it that you don't really see flourish

until really the late 2008-10 period and then certainly the previous decade and into the first five to six years. of this decade. And what's it manifesting it? It's with piracy. It's really low-tech, by and large. It's the stuff that's showing up out on the sidewalks and all of that. There is no interest in the CCP stopping it, but it's stealing low-level, low-tech intellectual property that you would have around, if for the audience would know, Betamax and other types of videos that were being made. They steal, as someone said to me, they would have stolen the buttons off your shirt if they could make money off of it. So those are the early stages. And I'm going, there is something different about where China is headed.

But then 9-11 happens. And of course, the distraction for many good reasons, really in the focus of the Bush 43 administration for the first eight years. And then of the Obama-Biden eight years was really about this global war on terror. you know, al-Qaeda, going after them, the two wars, Afghanistan, Iraq after March of 2003. China simply wasn't in our sights. And it's a big, big miss in terms of them using that period of time to reach the ascendancy. Just to give a point of reference, when China joined the World Trade Organization in December of 2001, and that was a bipartisan objective in terms of our body policy.

in terms of driving that. The GDP for China was $1.3 billion, $1.3 billion, sorry, trillion dollars. Today is somewhere on the order of 20. So the meteoric rise of $20 trillion later is really part of what the great heist is all about, but it is that they joined the international community and trade and finance and all of that through the World Trade Organization in order to get access to markets, not to play by the rules, and certainly not to democratize. And that's where my great awakening starts to, something's not right here. So I'm always hesitant to engage in easy condemnation of decisions taken, you know,

decades ago, which at the time sort of had the character of 80, 20, 70, 30 decisions, which, as you point out the WTO move was broadly based, was bipartisan, there was opposition, there's opposition in the labor movement, there was some national security opposition sort of scattered. To the extent that I have a desire to go back and condemn is that, you know, I have some friends. You're a little bit older than me who were working by that point, who were, who were amongst those isolated pockets of national security people saying, we're not sure this is a great idea. It is striking to go back to the period. I mean, you can go back to remarks of Clinton, but again, there's plenty of Republicans. you could say this about too, the sneering way in which the proponents of including China

into the WTO condemned opposition to it, as though this were so obviously the path to the future and everyone else was some version of a Luddite or something. I'm curious, you know, as somebody who was able to see all of the behind-the-scenes information or much of it at the time. So you talk about the sort of low-level industrial espionage, you know, not not super high tech, not really stuff that's of national security significance. Nevertheless, to what extent was it apparent that this was a function of national policy in the way that here in 2026, and as your book does a great job of, frankly, demonstrating, clearly this vast amount of high-level

espionage, industrial espionage, is a function of Chinese national policy. To what extent was it obvious then that the Chinese government just didn't look at economic matters in the way that a democracy like the United States does? Well, first we have to understand, and I go back to that term of the century of humiliation. The justification, and in many ways the rationale then that comes from that is that if you ask the average Chinese citizen today involved in industry, and certainly if you were to ask one of the 80 million or so CCP members, 80 million out of 1.4 billion, just to sort of give you a juxtaposition in terms of population and the size of the party. Is it wrong in terms of they're taking our intellectual property or doing this kind of

economic advancement? To a person, I would venture to guess, they would say, we're not doing anything wrong. We're just doing, we're leveling the playing field that was always really stacked against us to mix metaphors. In other words, we're doing what we need to do. That was obvious in the 1990s in terms of their objectives. So for those who thought there was this panacea that somehow the international order would come to them in terms of providing the guardrails around their integration into the world community,

really didn't look hard enough. And the book brings this out from people who were living there that were observing, that there was no interest in ever playing by the rules from the people that they talked to and in that regard. So there was, you know, our foreign policy has always had a, how best to describe this, Aaron, a glass half full view of the world. It wants to think the best of when, in fact, the facts belied that in terms of the 1990s. There was no indication that they would play by the rules.

And secondly, the idea that the idea. that the centrality of the CCP would ever give up their power or somehow allow it to be diluted even was a fiction as well. And now that we see technology in tracking virtually every Chinese citizen in real time and placing them in places that they're not actually at in all the rest in terms of leveraging technology and AI, you see that clearly it's being used for very, very nefarious reasons in China. But there was this much hoped for. When Brent Scowcroft went soon after Tiananmen Square and sits there and kind of does the big handshake on, let's move forward from this, Tiananmen was not discussed anymore. It was as though it really did not happen.

The Democratic movement was so both destroyed and demoralized at the same time. in terms of Kenaman, that the 1990s really were all about getting them into the World Trade Organization, notwithstanding the facts on the ground. That's what's so interesting. There were no reforms going on to the party, a party that by and large is a very conservative party, even as we see sort of the cleansing on the People's Liberation Front leadership today by Xi himself for fear that he might actually be getting challenged from within the PLA, which is, of course, that along with the Ministry of State Security, their CIA, FBI, NSA, cybersecurity, and all the rest, all in one. Those are the two power elements, but principally the PLA is the vanguard of the revolution

from 1949 forward. And so Xi is even concerned in this one-party state, but those are internal machinations. Just one more question on the turn of the century, just to sort of sum up what we just discussed at a very high level with more specificity. I mean, you were there for the first year of the Bush presidency. Maybe you have some knowledge, too, the last couple years of the Clinton presidency. Was there a meeting at which the president was told, you know, Mr. President, these guys are stealing everything that's not bolted down, to quote Senator Tom Cotton, who blurbs your book, as I noticed. They can't steal that much right now because they're not that sophisticated and widespread, but, the behavior that we see is not super encouraging. And, you know, it's quite the bold premise

that economic access to greater economic opportunity is just going to change their behavior. What do you think, Mr. President? Does that give you any pause? Was that ever presented at a high level or was it just suppressed? Well, it's interesting because intelligence community, when it comes to long-term focused analysis, has a product that's known as the National Intelligence estimate. They're famous in terms of projecting where the Soviet Union stood in terms of capabilities, and they can be on any sub-topic. It could be the ICBM program within the country, and where that's headed. It could be the economic capabilities of the Soviet Union in that era. There was at least one national intelligence estimate that I recall pushing back pretty hard on the evidence that

the intelligence community had at its disposal that, in fact, China would open democratically as a result of being brought into the WTO. I don't have any recollection that it pushed back on they will play and abide by the international rules, but it was a clear debate in the early 2000s within the NSC context of the national security context conversations on whether this was something that we could bank on in terms of having them join the WTO because it would lead to greater democratic opening or an opening toward democracy in China. And the intelligence community was clearly saying that is not a given by any stretch of the imagination because the behavior until 2000 from 1949 was all about consolidating power of the CCP.

So why all of a sudden would external exogenous forces like being in an international organization like the WTO? And it went something like this, Aaron. If you give people economic freedom to make choices, to go and make their decisions based on economic value propositions. I'll buy this car as opposed to that car, this loaf of bread instead of no bread at all. They will also then speak up

and they will drive the change for political voices in the main square. Well, the CCP wasn't about to let that happen. And that's the difference, that's the difference that I saw in terms of the policy debate. One of the most interesting parts of your book, to me, was were the parts where you linger on the MSS, the Ministry of State Security, which you made reference to a couple minutes ago, as this parallel power center in China to the PLA. We've talked about the PLA a lot on School of War over the years, had a lot of experts on its structure and evolution.

Come join us. I think you're the first person we've ever really been able to talk to about its twin, the Chinese intelligence community. and I'm sort of a treat to, I can ask the former head of the DIA, what is the order of battle of the MSS, as it were, in summary fashion, such that, you know, emphasizing the relevant bits for listeners and for your subjects? What is the MSS? Where does it come from? What is its organizational culture? You can make reference to RIC for comparison's sake. I'm totally fascinated to just learn about this organization. There's a reason that chapter refers to it as the labyrinth, because it's a very difficult, obviously, without. the vantage point of having a lot of open source information about the Ministry of State Security. My co-author, Andrew Badger and I were able to pull on certain strings in terms of what is out there and then subject matter experts on the MSS.

And I've concluded that it's this longstanding organization that until really the ascendancy of Xi Jinping in 2012, 2013, when he really consolidates power, after Huzintao and Zhang Jamin and that period of time of where the MSS, this Ministry of State Security and its 18 bureaus were kind of backwater, kind of the third-string team, not very good at human operations, clumsy and technical ops in terms of cyber operations and all of that. Ging has changed that dramatically. And so it really comes unto its own to a first-rate service now of about an estimated 300,000, more than doubling in size under G.

So this is, and to give people context, 18 elements of the U.S. intelligence community, including the Office of the Director of National Intelligence, is 80, 90,000 thereabouts. So three times as large. Now, and then by the way, that I see would include, the FBI in those numbers. So, I mean, their domestic security, their foreign service, or foreign security and intelligence service piece is 300,000 strong. The 18th Bureau, which is the one that focuses on the United States, from everything we could determine through our research and then interviews and subject matter experts on the MSS that we could find is completely unfeathered,

unfettered by any rules or regulations in their operations. Now, they may make decisions that say that's too risky to take, but I'm talking about legal boundaries of what they can do, how they leverage companies to get access to U.S. companies or directly go after U.S. firms or their cyber security. So when you talk about cyber and you talk and there's been much in the news on the typhoon attacks. So Salt Typhoon, which really focuses on telecommunication, and then also Voltaifoon, which has gotten into our infrastructure with kill switches in it. Those, that's Bureau 18 when it comes to the United States execution of it. Now, Salt Typhoon is in 80 countries. So that's, it's been signatures of that same cyber attack into the telecommunications for your metadata, for all the

T-com capabilities in terms of the switches and all that has been identified in no less than 80 countries today. This is a mega-mega campaign by the Chinese undertaken by the MSS. So again, their capabilities have not only in numbers of personnel, but in their sort of level of proficiency and capability and frankly expertise. I mean, I've got to give credit where credits do. They work operations far more like a first-rate, first-world intelligence operational capability now around the globe than ever before. And so when you talk about the size and the mega embassy that has just been approved

in the UK, I fully expect the MSS will have the corner offices in that embassy. I mean, in that chancery in London, for those who haven't been following the story, it was just approved by His Majesty's Kingdom and in terms of allowing this mega embassy to go forward, which happens to have all these basement areas next to cyber-to-fiber-connected places and all that, in terms of the cables and all that. So fully expect the Chinese to be able to execute in a way with largely unconstrained in the future, out of that chancery. So just so I understand, so you have these 18 bureaus and the 18th focuses on the United States,

I mean, how does that work in terms of different kinds of functions or work? So obviously in RIC we have these different entities, CIA, DIA, NSA, etc., that have their core competencies and activities, and then presumably they have their own regional sections and ways of deploying and doing their work. does the 18th Bureau of the MSS that, so all cyber directed at America, runs through them. There's not like a Chinese NSA that has an America section. It's just help me, I'm just trying to actually understand how the workflow goes. Well, for starters, they don't want to have fractricide in terms of that.

So everything does go through the 18th Bureau. If the PLA SIGAN capabilities or cyber capabilities of the SIGAN unit of the PLA, is doing an operation on a particular U.S. base or something in Asia, they say out of Pacific Command in terms of its focus. It would still have to go through the 18th Bureau. The second thing that's so materially different is it's self-contained. In other words, I grew up in a professional environment in where I would tap the technical expertise in another directorate.

And when I needed it, it was crossed over into my operation in order to be successful if I needed some technical capabilities for fake personas or all of that. I didn't own any of that. That was done by a technical service that would provide it to it. The 18th Bureau is self-contained in the sense that it can run front operations. It can run non-official cover operations with fronts. It has its own budget for conducting operations into venture capital startups in the United States. Now, they may go and tap Schengen Capital as an example for investments in Silicon Valley, but that's a run Bureau 18 operation from the start.

And because, and this is very important for your audience if they don't realize this. In 2017, the CCP passed a law. Now, big question marks when they say they passed a law. The CCP passed an edict. Okay, let's be clear. There is no legislative process that had debate over this. It passes the national intelligence law in 2017, which requires under Article 7 of that law that every Chinese citizen and every Chinese business entity must cooperate, collaborate, cooperate,

with the CCP when called upon. So to be clear, it doesn't mean every Chinese citizen today is a spy or every Chinese citizen that's a student in the United States is a spy. But when called upon to support the CCP, they must do so. It's not can, should, maybe, perhaps, it must support. So when you think of that construct in Bureau 18, they literally can call upon the parent company of ticker, TikTok, at least now at 20% or 19.9% of ownership on those algorithms and said, no, you think

you're independent. You think you have a deal with 80% of the rest own in the United States. Those algorithms actually belong to us. They belong to the state. And so we're going to continue to collect that data on 170 million TikTok users in the United States and 1.6, 1.7 billion users around the globe for TikTok. So they're collecting that data on orders of the CCP. Every element of the MSS operations has their co-joined with CCP members, many of them being in the MSS themselves, in that they're in every enterprise of the Chinese

industrial base. And every Saturday morning, so the rules go, I don't know if they actually execute this perfectly, every Saturday morning, they do a recap of that week in that industry and in that company, in that factory, wherever it is, those CCP members do a report on the production related to support of the state. So this is an all-encompassing, all-of-society approach to intelligence. It's not carved out like ours is. I keep demanding that Cullen provide me that report for our support of the state on School of War every Saturday morning, but he's been falling behind, and Colin, you know, there's going to be consequences. You know, we had a real interesting conversation a few minutes ago about the culture of the agency in our IC and sort of your own story

was an example of the kind of young man that's attracted to this sort of work, the kind of preparation he or she gets and the kind of work they do. How does one become an operator or an agent officer perhaps, in the 18th Bureau of the MSS. How are they recruiting? How do they find people? Is everyone speak English in the 18th Bureau? Do they have English language schools? You know, I have this, I guess, preconceived notion that we in the United States have a more

diverse pool of potential recruits to draw on for the IEC and that they have a less diverse pool in China. Maybe that's maybe that lacks nuance. I don't know. What's the culture of that place? The culture to the best that we can really understand it. And there's a great story on GE Aviation in the book of a case officer who's drawn eventually to Brussels, where the FBI has turned an individual from GE Aviation to become a double agent and actually lure the case officer.

And we learned, the FBI learned a lot about that culture that you're asking about. loyalty is the first test. That becomes, so anybody joining the MSS must have either direct or indirect party credentials of loyalty to the CCP. And there is a great Chinese word called Guangchi. And the Guanxi is really, so, Aaron, now I know you and I need a favor. I need you to air this podcast to this particular audience. You do that. I owe you.

And in fact, not only do I owe you, I must deliver to you because I've asked this favor of you that, assuming you carry it out. There is this kind of the MSS culture is a reflection of that Guanchi culture of indebtedness, one for getting the job to begin with, of which they might even paid for it in terms of of joining. They've paid somebody off in order to even be considered for the MSS. Many of them come up through very powerful MSS provincial bureaus. Shanghai Bureau is one of the most powerful ones, as an example. It's kind of where the political class comes. It's the industrial class comes out of Shanghai. So they would stand a better chance of being viewed as MSS federal as opposed to

MSS provincial, how's that for a characterization? And then there's increasingly they have tapped into people with master's and PhDs in sciences and then the in in the areas of cyber capabilities and all of that. So they're going after technical experts. And as they've built this, I mean, these are individuals and the book brings this out. The Great Heist talks about these front companies that are set up by MSS officers. Now, human beings, being human beings, of course, there are individuals in the MSS, including the Bureau 18, that will feel that they were undercompensated, under-recognized,

and we would call that a vulnerability if I were trying to recruit someone like that, right? I'm here to make you feel a lot better about yourself when the organization doesn't, in this case. Of course, finding them is a much bigger issue. But now the Chinese have 22.5 million Office of Personnel and Management Records from 2015, including my own, that had a clearance, has a clearance, actually, and was able, thinking that OPM would protect that data, think of the polygraphs, everything associated with your security dossier. They have that, imagine that rich targeting information. Now, I'm not talking kinetic.

I'm talking about vulnerabilities to get some. someone to come and assist and report on the kinds of things that the Chinese are looking for. And so it's a distinct world. And I talked about this rising of the MSS now into a first-class service. They're far more given to foreign language training. Their sophistication is much greater. A good number of them has studied abroad, including in the United States. So they've picked up the cosmopolitan culture.

They're no longer the, oh, those barbarians, as they might see us, they're actually, they feel pretty good talking about, you know, who's going to win the Super Bowl? I mean, things, they're much more attuned to living abroad and really fitting in. And they're not viewed as sort of clumsy in the way that I would have seen them when I first my first MSS officer professionally would have been in the mid-1990s. And I thought, this guy's a total clutz. He doesn't even know where that Washington does enough but Los Angeles. It was an interesting geographic conversation.

He didn't know the difference. That I don't think would happen today, certainly not with the vast majority of the ones that are allowed to travel from the MSS. And that's not everyone, by the way, as well. In the time we have left, I mean, we could talk for hours about the culture of the MSS and maybe you'll be willing to come back sometimes so we can continue to pull on that thread because I think it's really interesting. But I do want to just get some of the flavor of the nature of the industrial espionage that China is engaged in just to focus people's minds on the nature and severity of the threat. Just to pick something, you talk about it a bit in the book, but it's, you know, it's an ongoing theme of the School of War, which is the state of the battlefield today and the role of the precision strike

complex and precision targeting in the American way of war. Obviously, other countries, including China, have tried to slash arguably in some cases have caught up to it in terms of their own sophistication. What role has, and that obviously all that continues to evolve with AI, the use of AI and targeting, etc, etc. This is something that's in constant motion. Help us understand the Chinese effort over the years to take technology that we or our allies have developed and match us and then use it as a way of matching us on the battlefield. Yeah. It sort of starts with the fact that former FBI director Chris Ray talked about approximately upwards of $600 billion per year. an intellectual property that is stolen out of the industrial base in the United States.

And that's the U.S. alone. And it's probably understated because a lot goes unreported in those areas, why competitors don't want the other one to know, you know, that they've been hacked or that there's been an insider threat and that sort of thing. Made in China, 2025 is the framework for answering your question. It was kicked off by Xi Jinping in 2015. He has since about two months ago extended it to 2030. So it now ought to be made in China 2030, but it's really a hyper extension of 2015.

And where 10 very critical areas from biotech to EV markets to stealth technology to microchips and all that are sort of their national. intelligence collection framework, the requirements framework that the intelligence community in the U.S. would get from a policymaker. Who's the execution arm on that? It's the MSS. And so what they've done is they go after all the blue chip companies. So when you think of the military industrial base that we have ranging from Lockheed Martin to Northrop Grumman and Raytheon or formerly Raytheon. And On and on, you just go through that.

Those are prime targets of it in terms of getting in there. And the cover of the book really has the F-35 and the stealth technology, which is in Mating China 2025 as one of the priority collection objectives and getting ahead of us on it, is then matched by the digital twin version of it of the FC31. And it looks identical. Shep Grumman spent upwards of $100 million simply once they saw the heist of the software of that aircraft on the stealth aspects of it, spent over $100 million in course correction. So a cost to the American people ultimately, because that's how it's paid for, in terms of

that aircraft, was lost to the Chinese that required that remediation. And that's what was caught on just the F-35. You could go on in terms of hypersonics. In August of 2021, they launched their hypersonics test. It landed within the football field. And in terms of having gone around the globe, you know, multiple mocks in speed, Mach 5, Mach 6, of which our countervailing capabilities

are certainly tested and potentially. at risk and therefore really are just another example. But then there's even more ordinary things. It's like the Microsoft team that Secretary Hexeth cut off having Chinese citizens in the cloud computing. And you're thinking, who in their right mind thought that that was a good idea? I mean, talk about, let's say, I know the thief is standing on the corner waiting to break into my place. I'll just bring them in, but I'll trust them. Everything will be okay once he's in my house.

What, it's inconceivable, or as you read in the book about Los Alamos, 170 scientists thereabouts, Chinese citizens in the cradle of the Manhattan Project. Here's where I get kind of excited, because I just can't understand. As one person said to me, it's bad enough that the Chinese have and continue to do this to us. Why are we letting them do this to us? We have them in our national labs. We have them in academia, in the advanced sciences. I'm going up tomorrow to MIT and Draper Laboratory precisely to have this kind of, let's have this conversation, why you're a target.

And I may find some unfriendly people in the audience, but so. be it. It needs to be told, but we're doing this in part to ourselves as well. They're good, but we actually enable it. I think maybe those are just some examples for you, Aaron, of how we have contributed to enabling this, as Lenin said, the news by which we will hang ourselves on. What are the unfriendly people in the audience say? They say these nice Chinese students, they have nothing to do with the MSS. You're acting, you're speaking like, xenophob, David. Like, what are they, what are the counter arguments? Well, it actually started with the bidding process for the manuscript of the book. And two of them, out of five, really said,

so why are you going after the Chinese? I said, I'm not going after the Chinese. My father was named after one of the great missionaries to China, Hudson Taylor, and I love the Chinese people. Every Chinese person, I have no issues with that. I do have an issue with the CCP and stealing us blind. And so I countered it, and we sort of agreed to disagree. And reading the manuscript, it's not xenophobic. It's not anything about that. The audience is sometimes, look, this is your rationale to once again push back on China, that China really wants to have a peaceful resolution. They use all the great Marxist terms, by the way. This is peaceful resolution to wherever conflict is, and just short of saying, let's do kumbaya and we'll just be fine. Meanwhile,

of course, we see them on the first island chain, you know, cutting into access to it and all the rest. And so it's not quite peaceable if you ask Pacific Command. If you ask Taiwan, it's not peaceable. And so the idea or a Hong Kong citizen today, they have violated virtually everything under the master security law that they have that came in from Beijing imposed on Hong Kong, asked Jimmy Lai, see how freedom really works in China. And so that's my answer to it. Yeah, you referenced the first island chain. We had a fascinating conversation last year here on the show with Cleo Pascal about the Central Pacific and Chinese, I don't know exactly what the word is I want here, interventionism, expansionism, infiltration maybe is the best one.

Yeah. of old Japanese imperial infrastructure on atolls and islands that are, you know, on some level, under our umbrella of sovereignty, they're part of federations, which have a formal relationship with the United States because we quite reasonably, having fought our way through that terrain in 1943, early 44, thought, well, gosh, we don't really want to have to do that again. And so we kind of sort of kept it a little bit. But the Chinese are there. And they're the ones rebuilding the airfields. And they're the ones forming relationships with the local politicians. He run Solomon's Islands. They run the Solomon Islands. So, yeah, they're playing hardball. They've declared economic war on us a long time ago. That's the bottom line.

Very last question for you, because we've run a bit over here, and I'm grateful for your time. It's just been really interesting. But just because I have you, and because it's in the news, there's a great deal of attention, controversy, debate over the demise of General Zhang. I guess it's a PLA question, not an MSS question, but this is, of course, the, this was he the vice chairman of the military commission? I may get the exact title wrong, who has obviously fallen a foul of Xi Jinping. That much is clear.

A lot else isn't clear. The Chinese, there was a report in the Wall Street Journal. that he was leaking nuclear information to us. There's a bit of debate over whether or not that's actually true or whether it's the Chinese who want us to think it's true. David, what's your take on all of this? Well, it's the Central Military Commission, and he is now the fifth member of that commission

to fall under, under Xi. The big surprise with General Zhang, arguably the number two most powerful person in China in terms of his leadership of the PLA, is that this was the equivalent of a boyhood friend, the fathers were princelings, Xi's and John's father in the 1940s in the Long March and all of that. So this is really quite cataclysmic in terms of his purging. And it's a purging.

It's a Chinese purging. What happens is about two weeks ago, and I think we'll find the little strands of social media postings that started questioning him in terms of his motivations and all that. A couple of observations just very quickly. The first is, could this be that there was, in fact, the satisfaction with G? Heading seven months from now to their next party Congress in G's power being questioned. And what's real or what's Memorex? I know that dates people on this call, but is it just... That's even day three.

That's fascinating. Yeah. Is it in G's mind, or is this the reality that there was reason to be concerned that there could be an internal coup or certainly a movement of foot to undermine the total and complete authority of G that he has consolidated over the last 13 years or thereabouts? The second explanation, but they're not mutually exclusive, is that the, Taiwan, 27, I won't call it a plan, but certainly aspirationally, the intentions of taking Taiwan or the reunification of Taiwan by Xi was called into question whether PLA capabilities,

absence of, or questioning the timing of it, and that sort of thing. They're not mutually exclusive with the first one in terms of questioning the power of Xi. And so this is very interesting. The one fallout that I would say to you and to your audience is, as I'm looking at this, what they have, what Xi has managed to do, though, with the purges is literally clean out all the top leadership of the PLA by way of experience, by way of longevity, by way of even the modernization that's been underway that you alluded to in terms of the technologies that they steal from us and apply to it. So there's a lot of questions about this along with the purges that he had done in the rocket forces over the, over the period of the last 10 years. And it's always fighting corruption

and now this total nonsense baloney about the nuclear stuff. I don't believe any of that. What it is, though, is an extraordinarily humiliating ouster. Because when you accuse, you're number two in the nation of being at least loose with secrets, not to mention actually espionage, you're kind of saying you belong at the bottom of Dante's hell. It's a humiliation. It's the Hu Jintao walked out of the party Congress. It's like, I am finished with you forever. And that, to me, is very telling of someone who was handpicked by Xi and with a family tie-in of 70 years. I mean, this is not, this is extraordinary. And I'm watching it very carefully. So I, I keep my own little chart here, you know, with who's on and who's off. There's one left.

He's another, Zhang. He's Zhang Jingmin. Zhang Jingmin ought to be very worried right now. He's the last man standing that hasn't been purged in the commission. Man, that would be a good SNL sketch. At least I would like it. Yeah, it would be pretty good, right? All right. If you liked this conversation, David's book is called The Great Heist, China's Epic Campaign to Steal America's Secrets. That's co-authored with Andrew Badger. David Shed, it's been genuinely fascinated. I'm really, really grateful to you for coming on the show. Thank you for having me. Delighted to have been here.