China Targeted Fed To Build Informant Network and Access Data, Probe Finds

China tried to build a network of informants inside the Federal Reserve system, at one point threatening to imprison a Fed economist during a trip to Shanghai unless he agreed to provide nonpublic economic data, a congressional investigation found. From a report: The investigation by Republican staff members of the Senate's Committee on Homeland Security and Governmental Affairs found that over a decade Fed employees were offered contracts with Chinese talent recruitment programs, which often include cash payments, and asked to provide information on the U.S. economy, interest rate changes and policies, according to a report of the findings released on Tuesday. In the case of the economist, the report said, Chinese officials in 2019 detained and tried to coerce him to share data and information on U.S. government policies, including on tariffs while the U.S. and China were in the midst of a trade war. The report doesn't say whether any sensitive information was compromised. Access to such information could provide valuable insights given the Fed's extensive analysis of U.S. economic activity, its oversight of the U.S. financial system, and the setting of interest-rate policy. The Republican-led investigation said the Fed failed to mount an adequate response. The report's findings show "a sustained effort by China, over more than a decade, to gain influence over the Federal Reserve and a failure by the Federal Reserve to combat this threat effectively." Fed Chairman Jerome Powell strongly disputed the report's findings and called its characterizations of some employees unfair. "Because we understand that some actors aim to exploit any vulnerabilities, our processes, controls, and technology are robust and updated regularly. We respectfully reject any suggestions to the contrary," he wrote in a letter to Sen. Rob Portman of Ohio, the committee's top Republican.

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