Was the Fed infiltrated by China? Takeaways from the Senate Homeland Security Committee's investigation -- China Boss update 7.29.22
Update
What happened.
A new report from the US Senate Committee on Homeland Security and Senator Rob Portman of Ohio “detailed what Senate investigators called ‘long-running and brazen actions by Chinese officials and certain Federal Reserve employees’ to replicate the playbook China has used to infiltrate the science and technology sectors,” Politico last week reported. In the 48-page report “China's Threat to the Fed: Chinese Influence and Information Theft at U.S. Federal Reserve Banks”, Sen. Portman "calls on Congress to enact bipartisan legislation that would enhance security around federally funded research, among other measures," news staff wrote.
Politico:
“This investigation makes clear that China’s malign efforts at influence and information theft are not limited to science and technology fields — American economic and monetary policy is also … being targeted by the Chinese government,” Portman said in a statement.
Fed Chairman Jerome Powell responded with “strong concerns about [the] assertions and implications” of statements made in the report.
Politico:
“We are confident that Federal Reserve staff understand their obligations and are committed to maintaining both the confidentiality of sensitive information and the integrity of our workforce,” Powell wrote in a letter Monday. “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.”
Why it matters.
Powell “defended the Fed’s culture of collaborating with scholars around the world ‘with the aim of deepening and broadening our understanding of critical issues,’” but the senate’s report included several “incidents” where “recommendations from the FBI about how to combat China’s campaign,” were ignored until “after the Committee initiated its inquiry.”
Although news of the report’s release last week may have been muted by the commotion over Speaker Nancy Pelosi’s scheduled trip to Taiwan, China Boss thought it explosive enough to warrant a closer read of the senate’s query into how US monetary policy came to be targeted by Beijing.
Here are 5 key takeaways:
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