China targets the Fed
POLITICOJul 26, 2022
Facts
- Ohio Republican Sen. Rob Portman published a report on Tues. alleging that China has for more than a decade targeted economists at the US central bank, the Federal Reserve, since at least 2013.
- An investigation by Republican staff members on the Senate Committee on Homeland Security and Governmental Affairs found that Fed employees were offered contracts with Chinese talent-recruitment programs.
- These programs would allegedly offer cash payments in return for insight into monetary policy and access to internal data. Portman has stated that he urges the Fed "to do more" and that "the risk is clear."
- The report concluded that the Fed has failed to combat the threat and doesn't have sufficient expertise in counterintelligence.
- Fed Chair Jerome Powell responded to the report by stating that he has "strong concerns about assertions and implications," and assuring Sen. Portman that Fed staff with access to confidential information undergo "comprehensive" background checks.
- Chinese Foreign Ministry spokesman Zhao Lijian rejected these claims at a regular news briefing in Beijing, arguing that the allegations were a "political lie" by those who "harbor ill intentions" and have "persecution mania."
Spin
Anti-China narrative
China's attempts to target and influence key areas of the US are no surprise and the scale of industrial espionage shows that Beijing maintains major capabilities in this arena. These latest attempts to influence the fields of economics and monetary policy should be worrying for politicians and policymakers in the US.
Pro-China narrative
The allegations of "espionage" come just as China and Japan, the world's largest holders of US debt, have dramatically reduced their holdings of US Treasury Bonds as the US faces sky-rocketing inflation and deteriorating economic conditions. Even the US public at large thinks that government policies are hurting its economy, so why wouldn't its foreign debt holders be concerned?
Cynical narrative
Whilst there are clear security issues with the Fed, the report by no means produces certainty. Rejected by both Chinese state media as well as the head of the Federal Reserve itself, we cannot simply take the report's conclusions as infallible.
