A former GE engineer has been charged with stealing trade secrets about its electricity-generating turbines for the Chinese government while working at the manufacturer’s troubled power division.
Xiaoqing Zheng, 56, of Niskayuna, N.Y., faces six counts of economic espionage and five counts of trade-secrets theft in an indictment unsealed Tuesday in U.S. District Court in Albany, N.Y.
Prosecutors said Zheng took advantage of his access to General Electric files to send design models, engineering drawings, and material specifications for gas and steam turbine components to his Chinese partner, 47-year-old Zhaoxi Zhang of Liaoni, who faces two counts of trade-secret theft along with other charges.
The charges underscore U.S. concerns about Chinese intellectual property theft that are at the heart of a trade battle between Washington and Beijing. The Trump administration has imposed tariffs on $250 billion of Chinese imports and threatened duties on the remainder unless President Xi Jinping’s government signs off on an agreement to halt forced technology transfers and allow American companies broader access.
“The indictment alleges a textbook example of the Chinese government’s strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories,” John Demers, assistant attorney general for national security, said in a statement. “We will not stand idly by while the world’s second-largest economy engages in state-sponsored theft.”
In China, authorities said, Zhang used the information sent by his colleague in the U.S. to further their joint interests in two companies — Liaoning Tianyi Aviation Technology Co. and Nanjing Tianyi Avi Tech Co. — that develop and build parts for turbines. Both firms received financial support from Xi’s government, federal prosecutors said.
The data, worth millions of dollars, was taken while GE struggled with a downturn in global power markets that crimped its cash flow after a $10 billion acquisition. Drooping sales forced the company founded by Thomas Edison in the late 19th century to cut its dividend to a penny and prompted the departure of two CEOs in a little more than a year.
Orders in the business fell 23% last year, while sales dropped 22% to $27.3 billion.
Zheng, who holds a degree from Massachusetts Institute of Technology, began working for GE Power & Water in 2008. Nine years later, the company discovered that he had saved a large number of encrypted files on his work computer and installed monitoring software to track what he was doing, prosecutors said.
The company’s tracking eventually revealed that Zheng had hidden the encrypted files in the binary code of a separate file — a digital photograph of a sunset — which he emailed from his GE account to his personal Hotmail account, authorities said. Other stolen information sent to Zhang, the nephew of Zheng’s wife, was hidden in photos of turbine blades and bamboo, according to the indictment.
