Asia

Home page

Asia

Fed not adequately prepared to thwart Chinese information gathering

26 July 2022 16:10 (UTC +04:00)

The Federal Reserve does not have adequate systems to counter a "malign" effort by China to gather inside information on the U.S. economy and monetary policy, according to a report that was prepared by Republican staff of the Senate Homeland Security Committee, and promptly rejected by the Fed as "unfair, unsubstantiated, and unverified," APA reports citing Reuters.

The report, which was released on Tuesday, relies heavily on information provided by the U.S. central bank itself, dating back to a 2015 internal probe of what came to be known as the "P-Network," a group of 13 people at eight regional Fed banks whose patterns of "foreign travel, emails, details in curricula vitae, and academic backgrounds" raised concerns.

The Fed's Washington-based Board of Governors and 12 quasi-independent regional banks employ thousands of economists, including many from other countries, China among them. That collaborative approach, the committee report agreed, enhances the Fed's ability to understand the economy and make policy.

The incidents cited in the document, rather than intellectual collaboration, pointed to "a sustained effort by China, over more than a decade, to gain influence over the Federal Reserve," according to the report.

It is not clear what came of it. The committee report provided detailed case studies of five individuals, four of whom continue as Fed employees, and said that, despite their connections with Chinese officials and universities, the Fed found no instances where information had been shared in violation of policies.

In a letter to outgoing Sen. Rob Portman, the ranking Republican on the Homeland Security Committee, Fed Chair Jerome Powell said he had "strong concerns about assertions and implications in the report," and detailed the background checks Fed staff undergo, and the technology used to prevent security breaches.