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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

- - -

UNITED STATES OF AMERICA,

Plaintiff,

vs.

YANJUN XU, also known as XU

YANJUN, also known as QU HUI,

also known as ZHANG HUI,

Defendant.

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CASE NO. 1:18-cr-0043

IN-PERSON TRIAL

PROCEEDINGS

19th of October, 2021

9:25 A.M.

DAY 2

- - -

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE TIMOTHY S. BLACK, JUDGE

- - -

APPEARANCES:

For the Plaintiff:

Timothy S. Mangan, Esq.

Emily N. Glatfelter, Esq.

Assistant United States Attorneys

221 East Fourth Street, Suite 400

Cincinnati, Ohio 45202

and

Matthew John McKenzie, Esq.

United States Department of Justice

National Security Division

950 Pennsylvania Avenue NW

Washington, D.C. 20530

and

Jacqueline K. Prim

Special Assistant, Paralegal

United States Department of Justice

National Security Division

950 Pennsylvania Avenue NW

Washington, D.C. 20530

For the Defendant:

Ralph William Kohnen, Esq.

Jeanne Marie Cors, Esq.

Sanna-Rae Taylor, Esq.

Courtney Lynch, Esq.

Taft Stettinius and Hollister

425 East Walnut Street, Suite 1800

Cincinnati, Ohio 45202

and

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Robert K. McBride, Esq.

Amanda Johnson, Esq.

Taft Stettinius and Hollister

50 East RiverCenter Boulevard

Suite 850

Covington, Kentucky 41011

and

Florian Miedel, Esq.

Miedel & Mysliwiec, LLP

80 Broad Street, Suite 1900

New York, New York 10004.

For the WCPO-TV: Darren W. Ford, Esq.

Graydon Head & Ritchey LLP.

312 Walnut Street.

Suite 1800.

Cincinnati, Ohio 45202

Also present: Mae Harmon, Interpreter

Yanjun Xu, Defendant

Law Clerk: Cristina V. Frankian, Esq.

Courtroom Deputy: Rebecca Santoro

Stenographer: Julie Hohenstein, RPR, RMR, CRR

United States District Court

200 West Second Street

Dayton, Ohio 45402

Proceedings reported by mechanical stenography,

transcript produced by computer.

*** *** *** ***

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INDEX

WITNESSES DIRECT CROSS REDIRECT RECROSS

JAMES MULVENON,

Ph.D., 73 120

INDEX OF EXHIBITS

MARKED/ADMITTED

EXHIBITS IDENTIFICATION

Government's Exhibit 10 was marked 83

Government's Exhibit 10 admitted 85

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P-R-O-C-E-E-D-I-N-G-S 10:25 A.M.

COURTROOM DEPUTY: All rise. This United States

District Court for the Southern District of Ohio is now in

session. The Honorable Timothy S. Black, District Judge

presiding.

THE COURT: Please be seated. It's 10:25. We're

here in the open courtroom in the criminal case, United

States versus Xu.

The Government team is present in full, correct,

Mr. Mangan?

MR. MANGAN: Yes, Your Honor.

THE COURT: Mr. Kohnen, the Defense team and the

Defendant and the interpreter are here, and you're all here;

correct?

MR. KOHNEN: Yes, Judge Black.

THE COURT: Very well. I'm Judge Timothy S. Black

presiding in this matter. I'd like to address the issue of

public access in light of the Motion of Scripps Media, et

al., to intervene. If Mr. Ford would please approach the

podium?

Good morning.

MR. FORD: Good morning, Your Honor.

THE COURT: I have your motion and read it; came in

late last night. I want to make a statement to you and to

everyone, and then if you need to be heard further, you're

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welcome to be.

The suggestion that this Court is trying to be

anything other than transparent or to accommodate the needs

of the public among others is just flat out wrong.

We are in unprecedented times. We're in the midst

of a global pandemic. This is the first Jury trial in --

during the pandemic I've presided at. It's the first high

profile trial mid-pandemic.

We needed to accommodate, first and foremost, the

impanelment of the Jury, which included ensuring the safety

of everyone involved.

Accommodating public access is not lost on us.

We've been working for weeks to find a way to ensure that

members of the public can have access to the proceedings but

that has been challenging due to a number of factors beyond

the global pandemic, including technology limits and COVID

safety protocols.

Among those protocols is social distancing. When

everyone is socially distanced, we can only fit 15 Jurors in

the courtroom, and they take up the entire gallery.

The plan was always to select the Jury and then

tweak the protocols as able. We did this this morning by

asking if the Jurors were comfortable not being socially

distanced; and to our delight, they've all said that they

would like to be in the Jury box next to each other. They

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wanted the Plexiglass down, and I would not have known that

until we picked the Jury.

That opens up going forward the gallery. I believe

many of the issues you raised are mooted by that

development, which we would not have had until today at this

moment.

Constitution Right of access is not absolute.

Court's are obligated to take every reasonable measure to

accommodate public attendance at criminal trials.

Any partial closure must be narrowly tailored, the

Court must consider reasonable alternatives, and the trial

court must make findings adequate to support the partial

closing.

In an opinion published on September 30 in Case

Number 1:21-CV-597, I spoke to the pandemic. Quote, since

the start of August, our region has seen 448,599 new

hospitalization admissions of patients with confirmed

COVID-19. The case rate this month is roughly double what

it was during the first six months of the pandemic.

In Hamilton County alone this week, as of 9-30,

there were 2,304 new confirmed cases of COVID with 172 new

hospital admissions and ten deaths. These deaths are

preventible if we follow safety protocols.

And that is what has driven the Court from day one.

Voir dire's behind us. We won't argue about that. I don't

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want to argue about how we did this going forward.

In all Jury cases typically we put on the docket a

sealed transcript of the voir dire proceedings and a

redacted copy publicly if there's anything that we have to

redact. We intend to do that in this case, and I don't

want to talk about it more unless we need to. That's behind

us.

Going forward, because the Jury is willing to sit

in the Jury box next to each other, the gallery is open. I

think that accommodates your press representatives. I don't

know how many more there are going to be, and I don't know

how many members of the public are going to want to sit in

the gallery; and they really should be socially distanced.

But given where we are, and if you are able to

acknowledge that I actually am in favor of public access --

I know the law. We worked really, really hard; and for

somebody to come in and yell in the courtroom strikes me as

unprofessional at best; but I think the issues are largely

moot.

I cannot provide a video transcript --

transmission. We tried that. We'll keep working on it. We

looked at it. It's not going to work for us. There's no

cameras in the courthouse. We'll have to build something,

among other things.

We've looked at other courtrooms. They're not

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available. For the last month and a half the day our trial

was scheduled to start, there were four or five other Jury

trials to start, and there are a whole host of reasons that

this courtroom works well for the parties and the staff, so

my proposal is that we open the gallery to the public and

the press, continue to present an audio feed -- which the

Courts have recognized as a restriction that in the proper

context is acceptable -- and I'm ready to proceed, and my

Jurors have been here since 9:30 -- or 9:15, and I want to

get on with it.

So at least as to presence in the courtroom, I

think we're moot. Do you wish to be heard briefly?

MR. FORD: Your Honor, given the modification of

what I understand is the order that you issued yesterday,

the suggestion would be audio access only. With the opening

of the gallery, that would moot our request to have access

to the courtroom and resolve the issue.

THE COURT: So may we proceed?

MR. FORD: Your Honor, that, that -- that's within

your discretion, Your Honor.

THE COURT: I'm sorry?

MR. FORD: I said that's within your discretion,

Your Honor.

THE COURT: I know that. Have you been heard, and

are you comfortable with the development that opens the

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access to the courtroom?

MR. FORD: Your Honor, on behalf of WCPO, Paula

Murphy, and the Cincinnati Enquirer, we've lodged our

objection, and it's been satisfactorily resolved. No

further business before the Court.

THE COURT: Your motion is moot?

MR. FORD: I would agree with that, Your Honor.

THE COURT: You would what it?

MR. FORD: I agree, Your Honor. That due to the

modification, that the motion is no longer necessary to be

heard.

THE COURT: There's to be no recording in the

courtroom by anyone, understood?

MR. FORD: Yes, Your Honor.

THE COURT: Masks at all times, understood?

MR. FORD: Yes, Your Honor.

THE COURT: And socially distanced as best one can;

and if somebody is uncomfortable with not being sufficiently

socially distanced, they probably shouldn't come in the

courtroom.

MR. FORD: Understood, Your Honor.

THE COURT: It's been my honor and great privilege

to see you.

MR. FORD: Thank you, Your Honor.

THE COURT: I don't get a chance to say it often.

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You're free to go or stay.

MR. FORD: Thank you, Your Honor.

THE COURT: I believe the next step is to get the

Jurors and proceed to opening statements. Are we ready to

do that or are there matters that need to be brought to my

attention before we proceed in that way?

MS. GLATFELTER: Your Honor, we're ready. May I

ask the Court's permission to approach and just check my

computer and make sure we're all ready to go?

THE COURT: Yes.

MS. GLATFELTER: Thank you.

THE COURT: But you're ready otherwise? You can

approach now while we watch or --

MS. GLATFELTER: Just while the Jury's coming in, I

can make sure.

THE COURT: All right. Is the Defense ready to

proceed?

MR. KOHNEN: Yes, Your Honor.

THE COURT: Very well. Ms. Santoro, will you call

for the Jury, please? Ms. Glatfelter, you can approach.

Ms. Glatfelter, have you completed your test? Do you want

us to pop something up?

MS. GLATFELTER: I think it's ready to go. I see

the blank screen, and that's the screen I have up. Thank

you, Your Honor.

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THE COURT: Very well. On the record, as we

proceed, when one of the lawyers appears -- approaches to

speak, as a first matter, will you state your name to assist

the court reporter. You can do it how you choose.

Are you comfortable wearing a mask during opening,

Ms. Glatfelter, or do you want to take it off?

MS. GLATFELTER: I'm comfortable either way. I

think Mr. Kohnen and I should be consistent and so --

THE COURT: I just assume you both wore it or both

remove it. You guys want to vote or do you want me to

decide?

MS. GLATFELTER: It doesn't matter to me.

MR. KOHNEN: My vote is to allow me to give the

opening without a mask on, Your Honor.

THE COURT: Are you good with that, Ms. Glatfelter?

MS. GLATFELTER: I am. Thank you, Your Honor. I

just want to make sure the Jurors are comfortable. They've

sacrificed by sitting together, and we removed the

Plexiglass.

THE COURT: Very well. I'm going to tell them,

I've given people at the podium permission to lower their

mask unless there's an objection from the Jury.

COURTROOM DEPUTY: All rise for the Jury.

(Jury entered the courtroom.)

THE COURT: Jurors can be seated as they join us.

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All 15 Jurors have joined us. You may all be seated. Good

morning to the 15 members of the Jury. I know you were here

on time, by 9:15, and I want to apologize for keeping you

waiting. If you want to be upset with anybody, be upset

with me.

As you know, we're ready to go. We're going to

start with opening statements. Opening statements are not

evidence. They're supposed to be a road map from each side

as to what they expect the evidence will be. It's not

evidence. It's designed to assist you.

The Government goes first; followed by the Defense.

We'll see how the day progresses, because after that we're

going to start to hear evidence from witnesses, and that's

going to happen today.

So thank you for being here and making the

commitment to be here throughout and to follow the

instructions I have already given you.

I am inclined to tell the lawyers who make opening

statement from the podium that they can take their mask.

Does that make any of you uncomfortable? If it does, tell

me. You've already made significant concessions by agreeing

to sit in the Jury box together.

(No Juror raised their hand.)

THE COURT: I see no hands. We will proceed to

opening statement. On behalf of the Government?

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MS. GLATFELTER: Thank you, Your Honor. Emily

Glatfelter. May I approach?

THE COURT: Yes. Thank you.

OPENING STATEMENT BY COUNSEL FOR THE PLAINTIFF:

MS. GLATFELTER: May it please the Court, opposing

counsel, ladies and gentlemen of the Jury, good morning.

The Defendant got caught. The evidence will show the

Defendant, Xu Yanjun, is a foreign intelligence officer.

He's a spy for the Chinese Government who conspired to and

attempted to steal secret information about jet engines for

himself, his agency, and the Chinese Government.

From roughly 2013 to 2018, the Defendant worked

toward that goal, and you're here today because he got

caught doing it.

In March 2018, the Defendant flew around

8,000 miles from China to Europe to clandestinely meet with

an engineer who worked for one of the top jet engine

manufacturers in the world.

Only Mr. Xu was not meeting the engineer using his

identity. He was using an alias, a cover, which you will

hear is a common tactic used by intelligence officers around

the world.

To conceal his true identity and employment with

the MSS -- the Chinese intelligence agency where he

worked -- the Defendant used the alias Qu Hui; and the cover

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was that he worked for JAST -- and you'll see that name on

the screen -- the Jiangsu Science and Technology

Association.

THE COURT: Are we putting something up on the

screen?

MS. GLATFELTER: Yes, Your Honor. One moment, Your

Honor. One moment, Your Honor.

THE COURT: The technology issue is on us. Give us

just a moment. We'll get better as this goes.

MS. GLATFELTER: Your Honor, if I may, may I ask

the assistance of Ms. Prim, who works for our office, and

she also has the PowerPoint on her screen?

THE COURT: Very well.

MS. GLATFELTER: Thank you, Your Honor. Yes, and,

Ms. Prim, if you can go to the second slide? Thank you.

And thank you, Your Honor, for bringing that to my

attention. It looked like it was up in front of the Jury.

THE COURT: It's on us. I apologize.

(A document was shown on the screen.)

MS. GLATFELTER: Okay. To conceal his true

identity and employment with MSS, the Chinese intelligence

agency where he worked, Mr. Xu was using the alias Qu Hui --

and you'll see that up on your screen -- and he was using

the cover Jiangsu Science and Technology Association, JAST.

In fact, the Defendant had previously given a

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business card with this name and cover to the engineer when

they met previously.

(A document was shown on the screen.)

MS. GLATFELTER: And you'll see that up on your

screen. The Defendant was eager to meet with the engineer

because the engineer was bringing a hard drive full of

information that the Defendant had requested.

You see before the meeting, the Defendant had given

the engineer specific instructions about what to do, and

what to bring to their covert meeting.

He told the engineer, collect systems specification

and design process, and gave the engineer a list of the

company information that he wanted.

He directed the engineer to create a file

directory -- which is a 60-page list -- of all of the data

and the files on the engineer's company computer, and he

told the engineer to dump his files on an external hard

drive; and he instructed him to keep downloading more data

from his company computer and bring it with him to the

meeting, and you'll see those messages.

When the Defendant and another MSS agent arrived at

the pre-arranged meeting location in Belgium, they were

arrested; and law enforcement recovered from them multiple

phones, electronic storage devices, computer equipment,

thousands of dollars of U.S. cash wrapped in brown

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envelopes, personal photographs of the engineer's family,

and a passport with the Defendant's true identity, Xu

Yanjun, even though he was posing as Qu Hui when he met with

the engineer.

This is one of the numerous meetings and events

you'll hear about during the course of this trial where the

Defendant was furthering the goal and the objective of

stealing secret information from aviation companies --

global leaders in the aviation industry.

This case is not only about what the Defendant and

the conspirators agreed to, and what they attempted to do;

but how they did it, the deception, the lies, the trade

craft that they used to accomplish the objective over a

period of years because those things helped tell the story

about who the Defendant really is, what he was trying to

accomplish, and for whom he was doing that.

This is my opportunity to give you a road map of

how the United States will prove the Defendant committed the

crimes with which he is charged and to explain some of the

evidence you'll hear over the next few weeks. So I want to

take a step back for a moment and give you an overview of

what you will hear.

Now, first, you'll learn that this Defendant along

with others -- called co-conspirators -- worked on behalf of

Chinese Government and agreed to steal and attempted to

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steal trade secrets from the aviation industry, and you'll

learn that was from a larger pattern directed from the very

top of the Chinese Government.

You will hear from Dr. James Mulvenon. He's an

opinion leader in Chinese industrial espionage, and he will

explain to you that the People's Republic of China -- or the

PRC, which is the official name of the Chinese Government --

is very different from ours.

One of the biggest differences is that the Chinese

Government owns, operates, and directs many Chinese

companies. Relevant here are companies in the aviation

industry. The Chinese Government owns and controls these

companies.

Now, I don't mean that the Chinese Government

regulates those companies like our Federal administration --

or Federal Aviation Administration, the FAA, regulates GE

Aviation and Boeing.

What I mean is that the Chinese Government actually

owns the equivalent of GE Aviation and Boeing in China.

Two of the companies that you'll hear during the

course of this trial -- Ms. Prim, if you can go to slide 5?

(A document was shown on the screen.)

MS. GLATFELTER: Thank you -- are AVIC, the

Aviation Industries of China, which produces military and

civilian aircraft; and COMAC, the Commercial Aircraft

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Corporation of China, which is part of AVIC, and it works

for -- works on producing commercial aircrafts to compete

with Boeing and Airbus.

These companies, AVIC and COMAC, collaborate with

NUAA.

If you can go to next slide, Ms. Prim?

(A document was shown on the screen.)

MS. GLATFELTER: NUAA -- which you'll see the

acronym on your screen -- is the Nanjing University of

Aeronautics and Astronautics -- I'm sorry -- Aeronautics

and Astronautics.

The evidence will show that NUAA works closely with

members of the MSS -- like the Defendant -- and members of

AVIC and COMAC.

The evidence will show that through these entities,

China is attempting to build its own jet engines. You will

learn from Rizwan Ramakwadala, who works for U.S. Defense

Security Administration, and he'll tell you that China's

indeed attempting to build an aircraft engine modelled after

the very one by GE Aviation, the most successful commercial

gas turbine engine in the world.

And he'll tell you that the United States protects

certain products and technology from being exported from

this country; and that to export certain products and

technology, you need a license.

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Part of his job is to review those licenses and

determine whether the export would be a threat to our

national security. His job requires him to understand both

the technical side of the industry, and the U.S. domestic

market and international market.

In other words, he must know and he must understand

who makes the best jet engines, and what makes those engines

the best, and who is trying to build those jet engines

around the world.

He'll tell you that through reviewing multiple

requests from the Chinese companies like AVIC, trying to

export U.S. technology, from reading statements by Chinese

companies and the Chinese Government, and even through

visiting one of these aircraft companies in China, he knows

that the leading aviation company in China wants to build an

engine using the type of fan blade and the type of materials

used by GE Aviation; but they haven't been able to do it.

They haven't figured it out despite years and years of

trying.

The bottom line is that China needs additional

information to advance in this industry, and the Chinese

Government dedicates significant amounts of resources to

meet this goal, to collect scientific and industrial

information to try to catch up to what GE Aviation and

companies like GE have spent millions of dollars over many

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years developing.

And while the Chinese Government collects a lot of

publicly available information, some of the information that

they need to advance is hard to obtain and that's because

global aviation companies protect the technology -- such as

trade secret information -- that makes them successful,

that makes -- that gives them a competitive edge in the

market.

The evidence will show, for example, that GE

Aviation uses physical security and cyber security measures

to protect their technology.

Physical security means things like controlling the

access to buildings on their campus, and cyber security

means using measures like controlling access to computers

and electronic information through passwords and things

called dual factor authentication.

And because this technology, this aviation

technology that China needs is so closely guarded, the

evidence will show that the PRC has relied on intelligence

agencies to use traditional espionage tactics.

That is, spies pretending to be someone they're not

to get information and through cyber espionage, like

hacking, to steal what they cannot develop themselves.

If we can move to the next slide, please.

(A document was shown on the screen.)

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MS. GLATFELTER: The MSS, or the Ministry of State

Security, is China's primary external intelligence agency,

and you can think of the MSS like the C.I.A., but the PRC

has made the mission of the MSS. Their mission is to obtain

foreign technology from the most advanced countries in the

world, and they do that for the benefit of their own Chinese

companies.

The MSS functions like this. The evidence will

show that AVIC reports up to the chain -- up the chain to

PRC Government what types of information they need. Those

requirements get passed to the MSS, and the MSS goes out and

tries to get it.

Essentially they give the MSS shopping lists of

information they need, and you will see some of these lists

during the course of this trial.

Now, how does the MSS function internally? Well,

during the trial the evidence will show that the MSS is

comprised of various Bureaus. Each one has a different

function. One of those Bureaus is the Sixth Bureau, and

that's the very same Bureau you will learn that the

Defendant worked for.

Now, the PRC is divided into 23 provinces, and you

can think of provinces like states, and each state has a

branch of the MSS.

Jiangsu is one of the provinces that I just

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mentioned, and its branch of the MSS is called the Jiangsu

State Security Division or the JSSD.

The Sixth Division is where the Defendant worked,

and he didn't just work there. He was the Deputy Division

Director of the Sixth Bureau.

The evidence will show that the Defendant and his

conspirators attempted to obtain secret information and

secret technology in two ways.

First, by recruiting, by developing, and by

manipulating human sources to steal the technology for them;

and they also used Internet intrusions, sometimes with the

human sources that they've recruited.

In terms of acquiring technology through human

sources, the evidence will show that the Defendant and his

MSS agents used the same techniques, trade craft, used by

intelligence officers around the world.

These tactics include, for example, using multiple

aliases and cover. And what I mean by cover is acting like

you work somewhere else.

The Defendant, Xu Yanjun, has two aliases you'll

hear about during the trial -- Qu Hui and Zhang Hui.

And if we can show the next slide?

(A document was shown on the screen.)

MS. GLATFELTER: And on the this slide you'll see

the spelling of the different names. Xu Yanjun, which is

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the Defendant's true identity the evidence will show, and

these are the various aliases he used -- Qu Hui and Zhang

Hui.

Along with these aliases he used a web of E-Mail

addresses and social media accounts he used to contact

engineers with these aliases; and the Defendant and his

co-conspirators would use these aliases and covers and their

associates at NUAA -- that's state university I was talking

about before -- to lure engineers to China for so-called

exchanges. Now, exchanges are kind of like presentations,

and they would typically occur at NUAA.

The Defendant and his conspirators would target

Chinese engineers who worked at global aviation companies

and invite them to speak at NUAA, and this would occur

during a trip to China.

They would offer to pay for the airfare and the

expenses of the engineer, and while some members of NUAA may

attend the presentations or the exchanges, so would

scientists from AVIC and COMAC and MSS agents.

Jim Olson is the former Chief of the

Counterintelligence of the C.I.A. He served more than

30 years in clandestine operations overseas. He is

currently a professor and teaches courses on intelligence

and counterintelligence, and he will tell you that these

tactics are classic techniques used by intelligence

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officers.

Mr. Olson will tell you that from a perspective of

an intelligence agency like the MSS, the function of these

exchanges is to wine and dine the aviation engineers.

While these exchanges appear legitimate on the

surface, the purpose of the wining and dining of the

aviation engineers is to spot and assess potential new

recruits for the MSS and determine if in the future they

will provide secret information.

One aspect is determining if the engineers would

accept money in exchange for the information. After the

exchange, if the Defendant and his colleagues assessed that

the engineer would do that or is a viable target, they would

recruit the engineer and task that engineer to provide

secret information or perform certain acts for them in the

future.

Now, in terms of Internet intrusions, you'll hear

how the Defendant coordinated an Internet intrusion with

other MSS operatives by using human sources. That is, by

co-opted employees or co-opted insiders inside the company

that they recruited, and they used those insiders to plant

Malware on a company computer.

For example, you'll hear about GE Aviation, and how

the Defendant tried to obtain trade secrets from GE Aviation

by exploiting one of its engineers.

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GE Aviation derives a competitive advantage from

its aircraft engines, specifically the fan blade system made

from composite materials.

In fact, GE Aviation is the only company in the

world to use that combination -- to successfully use a

composite material for both a jet engine fan blade and the

composite materials that surround the fan blade.

This technology gives GE Aviation a competitive

edge because they can produce lighter engines, which

translates into better fuel economy; and they can produce

larger engines, which translates into larger planes to carry

more cargo or people.

And during trial, you'll hear from a GE Aviation

engineer who specializes in composite materials used in the

fan blade encasement system.

The GE engineer took a trip to China in 2017. One

of the Defendant's associates, Chen Feng, invited the GE

engineer for an exchange; and that is to present at NUAA

during the trip.

The engineer agreed to do that, but the engineer

didn't know Chen Feng. He'd never met him nor did he have

any contact at NUAA or know anyone at the university.

In preparation for his presentation, the GE

engineer downloaded what's called export controlled

material. That is, information that can't be taken out of

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the country without a license.

During the trip he gave a presentation about the

composite materials and the fan blade encasements at NUAA,

but he did not share the export controlled material.

During the trip, the GE engineer met the Defendant

at tea, at lunch, at dinner, and the Defendant when he met

him used the alias Qu Hui -- that's the middle one on your

screen -- and that is when he gave the engineer his business

card -- the one I showed you earlier -- with that name, and

the engineer saved it, and he provided it to the F.B.I.

That's how we have it on the screen.

Mr. Qu Hui, or the Defendant posing as Qu Hui, gave

the employee approximately $3,000 in cash after the

presentation; and after the trip, the Defendant, still using

that same alias, contacted the engineer. He thanked him,

and he asked him to keep in touch.

A few months later, the F.B.I. confronted the GE

engineer who took the trip, and he began to cooperate with

the F.B.I.

Beginning in late 2017, at the F.B.I.'s direction,

the engineer reconnected with the Defendant, whom he still

only knew by the alias Qu Hui. And sure enough, the

Defendant responded, and he encouraged the GE engineer to

travel to China for another exchange that his agency would

pay for.

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When the GE engineer said he couldn't return to

China, the Defendant proposed meeting in Europe, and the

Defendant began tasking -- that is, asking -- the GE

engineer for specific information, and that's the

information that I mentioned at the beginning of my opening

statement.

Between January and April of 2019, Mr. Xu Yanjun,

the Defendant, sent the engineer messages over a Chinese

social media platform called WeChat. He asked him to

collect certain information. He told him to dump his files

on an external hard drive. He told him to download more

data before they met, and you'll see those messages.

The Defendant also sent the GE engineer E-Mails;

and in those E-Mails, he sent the engineer a shopping list

of what he wanted. He asked him -- that's when he asked him

-- or over that platform is how he asked him to create the

file directory. He sent him instructions on how to

manipulate his computer to create a file directory of every

single file on his computer and send it to him.

You'll see those E-Mails. And the Defendant also

called the GE engineer about the meeting, and you'll see a

transcript of that phone call.

As I told you a few minutes ago, when the Defendant

showed up to meet the GE engineer and receive the contents

of the company computer, he was arrested; and after he and

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another MSS operative named Xu Heng were arrested, one of

the phones that law enforcement recovered from them was

wiped. That means it was deleted remotely after it was in

the custody of law enforcement.

Mr. Olson will tell you that from an intelligence

perspective, the Defendant was eager to meet with the GE

engineer because he thought he had hooked him. He thought

he had a new recruit for the MSS.

He will tell you that the clandestine

communications, the secret meeting place, the Defendant's

tasking of the engineer, the large amount of cash in those

paper envelopes presumably for the engineer, the wiping of

the phone afterward, are all hallmarks of trade craft and

symbolic of the recruitment cycle that intelligence officers

routinely use with human sources around the world.

Now, in addition to the Defendant's attempt to

obtain trade secret information from GE Aviation, you'll

hear about his interactions with another engineer. This

time from Honeywell Aerospace; and from the events

surrounding Honeywell, you'll understand how the Defendant

and his co-conspirators plan to recruit and exploit this

particular engineer in the future.

Arthur Gao was an engineer at Honeywell Aerospace.

For simplicity, I'll refer to him as the Honeywell engineer.

Honeywell is headquartered in the United States like GE

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Aviation, and it manufactures aircraft engines and avionics.

The Honeywell engineer traveled to China for these

exchanges. Several members of the MSS were involved in his

recruitment, including the Defendant. During this process,

the Honeywell engineer also received payments of money from

MSS.

The Defendant and a co-conspirator persuaded the

Honeywell engineer to travel to China again in October of

2017 for another exchange. To put this in context, this

trip occurred several months after the GE Aviation engineer

returned from China.

Some of the information the Honeywell engineer

provided in his presentation to the Defendant was export

controlled. The Honeywell engineer didn't have a license to

export it and shouldn't have taken it out of the country.

He acknowledged that this was wrong, and he's pled guilty.

He's accepted responsibility for his conduct, and he will

testify.

One of the important pieces of the evidence,

though, with respect to Honeywell is what was going on

behind the scenes in China when the Honeywell engineer was

there but had left the room.

You see, during that trip, the Defendant recorded

one of his meetings, and that recording was stored on his

iPhone, which was backed up to his iCloud, and it was

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recovered by the F.B.I. You'll see a transcript of that

recording.

After the Honeywell's engineers' presentation when

he left the room, the Defendant and his co-conspirators

discussed the recruitment of him, and how best to use him in

the future. They debate several options. Acknowledging

that because security is tight at Honeywell, using him to

provide information directly could be difficult.

The scientists at the meeting give the Defendant a

list of information -- that shopping list -- that they

wanted. After the meeting, the recording captures the

Defendant calling another MSS agent.

During the call, the Defendant chides the other MSS

member for using an alias with the Honeywell engineer that

didn't make sense. You'll see a transcript of that call,

and you'll see a transcript of the meeting.

Now, during trial, you'll hear evidence of other

deceptive techniques and tactics used by the Defendant and

his conspirators when engineers came for these exchanges.

Not only were the Defendant and his co-conspirators using

these exchanges to spot, to assess, to recruit potential

assets, but they were exploiting them.

Unbeknownst to these engineers, they were

downloading and copying the devices in their rooms while the

engineers were being entertained away from their rooms.

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The Defendant's electronic calendar documented many

of these meetings with engineers that were brought to China

for the exchanges, and the Defendant kept specific notes

about these exchanges, about who came over, where they were

entertained, and when.

These notes are more like a diary than a calendar,

but these notes include important details about these

tactics; and these notes indicate that the MSS hacking or

Internet Intrusion Division, the Eighth Division of the MSS,

would commit these computer intrusions while engineers were

away from their room.

The MSS also used a computer intrusion, or a hack,

to acquire secret information from an aviation company, and

the evidence will show the Defendant coordinated that

attack.

During the trial, you will hear evidence about a

computer intrusion involving the Safran Company. The Safran

incident gives you a window into the Defendant's intent, the

tactics and techniques behind the scenes. It also shows you

how the Defendant used human sources the MSS had recruited

to perpetrate a cyber attack on an aviation company.

Now, Safran is an international company that

manufactures aircraft engines, rocket engines, and aerospace

components. Safran is located in Paris, France; and it has

a joint venture with GE Aviation.

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In 2013 and 2014, a few years ago before the GE

engineer's trip to China, the Defendant coordinated an

Internet intrusion of Safran, which was accomplished by

planting Malware, or a computer virus, on a Safran

employee's computer. The hacking targeted data and

information related to turbo fan engines used in commercial

jetliners.

To infiltrate Safran, the Defendant used co-opted

Safran employees that he had recruited to plant a computer

virus on the laptop of a Safran employee who was visiting

China.

The Defendant and the co-optees referred to the

visiting employee as the Frenchman. The evidence will show

that the Defendant also tried to conceal his activities

related to the hacking afterward.

In fact, he ordered that evidence of the attack be

destroyed. The Defendant's own communications provided

chronology of the hacking into Safran and show his personal

involvement.

For example, on November -- in November of 2013,

the Defendant contacted one of the co-opted employees and

asked when the Frenchman would arrive, and if they could

meet -- make arrangements to meet him under the name of

NUAA?

Later, the Defendant contacted the co-opted

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employee and stated, I'll bring the horse to you tonight,

referring to the Malware -- what's also known as a Trojan

horse.

The Defendant asked, can you take the Frenchman out

for dinner tonight? I'll pretend to bump into you at the

restaurant and say hello.

Between November and December 2013, the Defendant

contacted the co-opted employee several times and asked if

the horse had been planted?

On January 25 of 2014, the employee told the

Defendant that the horse has been planted this morning.

That very next day, the Defendant directed the employee to

destroy the horse, and the Defendant continued to manage the

intrusion into the incident asking his agents who worked for

Safran about updates with the company. On one occasion, the

Defendant asked, do they think China is hacking them?

Besides seeing the Defendant's own communications

that I just mentioned, you'll hear from the French employee

himself whose laptop was compromised, and you'll hear from

Adam James, who is a forensic analyst with the F.B.I., and

he analyzed the Frenchman's computer.

James will tell you that forensic analysis of the

laptop shows that on January 25, 2014, that same day that

the co-opted employee told the Defendant the horse was

planted, that a USB drive was plugged into the laptop, and

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the laptop became infected with Malware.

During trial you'll hear also how after the attack

on Safran, the Defendant continued his mission of obtaining

trade secret information from global aviation companies, not

only did he try to recruit engineers, but he went after IT

employees at aviation companies.

For example, roughly one year after the Safran

incident, Defendant Xu tried to recruit an IT manager from

Boeing for an exchange involving Internet security. Boeing

is a U.S. based aerospace company that manufactures

aircrafts.

Significantly during the Defendant's communication

with these IT employees -- which was recovered from one of

the Defendant's E-Mail accounts -- the Defendant used the

same alias that he had used with the GE Aviation engineer,

Qu Hui from JAST. That was the same alias that was on a

business card he had handed to the GE Aviation engineer in

China.

Now, this is an overview of some of the evidence

you'll hear during the next few weeks, but let me touch

briefly on the charges.

At the end of the trial before you deliberate,

Judge Black will provide you detailed instructions on the

law, and you should follow those instructions. For now I

want to mention a few legal concepts to keep in mind as you

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listen to the evidence.

You've heard me talk about the Defendant and some

of the other MSS operatives, or government officials, that

he worked with to steal trade secrets. While there will be

some evidence of different people and their roles in the

offenses of the trial, the evidence is going to focus on the

Defendant because he is the one on trial.

However, when two or more people agree, and they

work together to commit a crime, it's called a conspiracy;

and here a Federal Grand Jury has charged the Defendant with

two types of conspiracies. A Conspiracy to Commit Economic

Espionage; and, two, a Conspiracy to Commit Trade Secret

Theft.

The first Conspiracy to Commit Economic Espionage,

essentially the United States has to prove beyond a

reasonable doubt that the Defendant knowingly agreed to

steal or obtain through deception information that he

believed was trade secret, and that he did so for the

benefit of a foreign instrumentality or a foreign

government. In the context of the conspiracy the crime is

the agreement.

The second type of conspiracy is a Conspiracy to

Commit Trade Secret Theft similar to economic espionage.

The primary difference is that the intent to benefit a

foreign government is not a part of the second conspiracy.

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A Federal Grand Jury has also charged the Defendant

with Attempting to Commit Economic Espionage and Attempting

to Steal Trade Secret Information from GE Aviation.

Attempts involve the intent to commit a crime, and

then some action that counts as a substantial step toward

achieving that goal or committing that crime.

Essentially the Defendant attempting to steal

information he believed was trade secret and taking a step

toward that goal.

Now, based on what I've just said, the Government's

going to present a lot of different evidence in this case,

and we will do our best to streamline and make this trial as

efficient as possible.

During the trial, you're going to hear from three

groups of witnesses. You're going to hear from opinion

witnesses, like Dr. Mulvenon, Mr. Olson, and Rizwan

Ramakwadala, who have developed specialized knowledge in a

particular area, and they're going to share that knowledge

with you.

You're also going to hear from people who

interacted with and communicated with the Defendant, and

you're going to hear from law enforcement personnel who were

involved in the investigation.

In addition to the human witnesses, you're going to

see the Defendant's own words through digital evidence, such

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as documents, calendar entries, recordings, messages, and

E-Mails. This is some of the most important evidence in the

case.

Why? Because these are the Defendant's statements.

They are his documents. They explain who he is, and they're

a window into what he was thinking at the time he sent the

message or made the document.

These statements come from several sources. They

come from various E-Mail accounts that were used by the

Defendant sometimes under his name or alias, and they also

come from the contents of phones that were used by the

Defendant, either because the F.B.I. received the actual

phone when the Defendant was arrested in Belgium or because

the -- because the F.B.I. received a digital copy of that

phone because the Defendant had backed up that phone to an

iCloud account; and when law enforcement obtained the iCloud

account, there was the backup of that phone in the iCloud

account.

You'll see at the end of this trial or by the end

of this trial how he used these numerous accounts in

conjunction with different aliases to communicate with

engineers he was trying to recruit.

Now, fair warning here, there are a lot of

different accounts, and they're tied to the various aliases

or connected to each other, and we are going to spend a fair

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amount of time on these accounts because we want you to be

confident in the evidence and to understand how this

evidence comes together to prove these were all used by the

same person, the Defendant, in furtherance of his mission.

By the end of the trial, you'll see how this

digital evidence proves the Defendant is an MSS officer,

you'll understand what his mission was, and who he was

working for.

In the end, the evidence will prove beyond a

reasonable doubt that the Defendant committed all four of

the crimes with which he is charged.

He conspired and attempted to commit economic

espionage, and he conspired and attempted to commit trade

secret theft. That's why at the end of the case, we will

come before you and ask you to find him guilty on all four

counts.

For now, I want to thank you in advance for your

time and for your patience as we move through the evidence,

and I ask you to do three things during this trial.

First, follow the Court's instructions.

Second, listen to the evidence closely; and if it

helps you, take notes to remember the facts.

And, third, as you listen to the evidence, apply

your common sense. Thank you.

THE COURT: Thank you, Mrs. Glatfelter. The Jurors

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want to take a break before the Defendant's lawyer presents

his opening statement or are you okay to proceed? Raise

your hand if you're okay to proceed?

(All hands were raised by the Jurors.)

THE COURT: Very well. We're ready to proceed. It

will take us a moment to switch out the lawyers and stuff.

MR. KOHNEN: I'm ready, Your Honor.

THE COURT: Do you have an estimate of how long

you're going to be?

MR. KOHNEN: I'm thinking just about the same

amount of time as Ms. Glatfelter, maybe 45 minutes to an

hour.

THE COURT: And the Jury's okay with that? Nobody

wants a break or stop for lunch? All right. Let's proceed.

For the press, will you state your name?

OPENING STATEMENT BY COUNSEL FOR THE DEFENDANT:

MR. KOHNEN: May it please the Court, Your Honor,

ladies and gentlemen of the Jury, colleagues, opponents, my

name is, as you recall, is Ralph Kohnen. I'm an attorney

representing Mr. Xu.

Ladies and gentlemen, conventional wisdom and even

Judge Black has indicated that opening statements are

designed to kind of tell you what we believe the evidence

will show.

It's a little bit ironic when you remember that

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Defendants aren't required to show anything, but we will go

through the evidence as we understand it hopefully in a

fairly quick fashion and tell you what we think the evidence

will show and what it will not show.

Let's start with what it will not show. It will

not show that trade secrets -- as Judge Black will define

them for you -- ever surfaced in this case at all. No trade

secret information was revealed.

The evidence will not show that Mr. Xu, our client,

intended to steal trade secrets and that he never

specifically sought them.

The evidence will not show that Mr. Xu conspired

with anyone to steal trade secrets or to steal them for

anyone as the Government has alleged.

One of these co-conspirators allegedly is the

People's Republic of China. I'm not sure how the evidence

is going to show an individual conspiring with the

Government of over 1.4 million people.

Let's talk about what the evidence will show.

While, as I mentioned, we have no burden to prove anything,

the evidence is going to show a setup.

Now, I know what you're thinking. I've heard that

before. I've seen that on TV, but hear me out. Hear me

out. Let's talk about this alleged attempted theft of trade

secret information from GE Aviation because it's the main

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part of the Government's case; and it's in my mind, where

things should begin, and, frankly, where they should end.

I'll get to some of the details in a moment, but here's a

high level summary to begin with.

GE Aviation noticed that one of their engineers, a

fellow I'll call Zheng, had downloaded from their servers a

large amount of confidential information.

GE Aviation called the F.B.I. The Engineer Zheng

at that point was the obvious target of what became an

F.B.I./GE Aviation joint investigation.

Between GE personnel and the F.B.I., they

interviewed Zheng for more than five hours on November 1st

of 2017. The F.B.I. took his phone, they towed his car

away, and they told Zheng that his wife and his child could

not return home for dinner that evening because agents were

searching his house.

They let Zheng call his wife to tell her to stay

away from the house, but he wasn't allowed to tell her why,

and the agents insisted that he speak to her in English and

that he use one of the agent's phones and use it on the

speaker phone so that the agents could listen in.

The agents told Zheng eventually that he could

leave, but they advised against it. Where would he go? His

home is being searched. How would he get there? His car

has been towed away. How would he call someone to pick him

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up? They seized his phone.

The agents broke Zheng. They broke him. While he

never, even to this day, has admitted disclosing GE's trade

secrets, the agents convinced him he was in big trouble

nonetheless.

So now the joint investigation is underway.

Investigators learned that Zheng traveled to China five

months before on the date of June 1, 2017, and they learned

that he lectured at a university in the city of Nanjing.

They found the materials that he brought with him

to China on his computer, which they had seized from him. I

think actually General Electric Aviation people seized it

from him, but we'll see.

Among the materials on his computer was a 19-page

PowerPoint presentation which was analyzed very carefully,

but after a lot of hand wringing and three meetings at GE

Aviation on successive days between the F.B.I., GE Aviation

security, GE Aviation engineers, GE Aviation management,

Department of Justice lawyers, including Mr. Mangan and Ms.

Glatfelter, Agent Hull and other F.B.I. personnel, it turns

out that Zheng was telling the truth. Zheng never had

disclosed GE trade secrets. He didn't do so in the

presentation he shared at the Chinese university to graduate

students. These slides were on the PowerPoint. Excuse me a

moment. Sorry about that.

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So without a case or anything to go after Mr. Zheng

on, so begins the hunt for another target. GE and the

F.B.I. learned that three months before the trip, as Ms.

Glatfelter alluded to, Zheng had been contacted by someone

in China named Chen Feng. He was from the Nanjing

University of Aeronautics and Astronautics, NUAA, as you

heard, and they learned that Zheng had actually -- the GE

engineer had actually gone to China at this fellow Feng's

request and gave his presentation to university students on

a subject that involved technology and the technology used

to manufacture aircraft engine parts.

However, as I said, the F.B.I. and GE learned that

Zheng had not shared any GE trade secrets. He hadn't shared

them with the Chinese, and the computer that he used for his

presentation had not been compromised. So they turned their

attention to Chen Feng and our client Mr. Xu.

The F.B.I. made Mr. Xu and Mr. Feng their new

targets. They were the targets of the investigation because

at that point they believed, well, they must have asked for

trade secrets, but the evidence will show they had not.

So here's going backwards a moment. The chronology

in a little more detail. I want you to see if you can -- if

you sense a theme here.

Chen Feng reached out to Xu on March 2 of 2017, via

E-Mail. One of the things he said in that E-Mail is, and I

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quote, there is no restriction on the format of the

exchange, and the details can be agreed upon later.

Mr. Zheng from GE is interested in what the format

of the exchange would be. Format being his word as

translated.

Chen Feng replies: It's diversified. It can be

either lectures or internal discussions. Basically what

Chen Feng says is, it's up to you. Up to you, the person

who's responsible to protect his employer's trade secrets.

Chen Feng E-Mails Zheng again inquiring about:

Does he have any preliminary thinking on his exchange?

Zheng from GE replies: Could you please provide

some general information about previous exchanges.

Chen Feng replies in part: The university would

like to have you propose two or three specialized research

topics and send the information to me. We will then give

the feed -- give you feedback based on the scientific

research needs at the university.

Chen Feng follows up on an E-Mail to Zheng the next

day which includes this: There are no restrictions on the

format of the talk.

Chen Feng then follows up again very soon after and

says: In the meantime -- among other things -- in the

meantime, you can propose -- you can also propose contents

that you would like to do the exchange and in which you have

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expertise.

Zheng explains, GE Zheng: I am required to sign a

technical agreement with the company that I work for here.

I can only participate in a seminar or give a general

presentation. Please inform me your specific requirements.

Chen Feng from NUAA replies: We fully respect your

opinions and will only discuss general topics in the area of

engine materials that will not violate your company's

technical agreement requirements.

Zheng replies with the title of his presentation,

which he gave on June 1st of 2017. The evidence will also

show that the information covered in that presentation was

the subject of his Ph.D. doctoral thesis at the University

of Akron here in Ohio.

So at this point in the chronology, if you will, we

have Chen Feng from NUAA discussing with Zheng his

contemplated exchange. We have Zheng making it clear there

are work things he cannot share, and Chen Feng saying

essentially no problem.

Zheng gives the exchange on June 1st. Our client,

Mr. Xu, does not attend the presentation, but he is

introduced to Zheng later, or at some point during his trip

there as Department Head Xu while Zheng's is in Nanjing.

Things get a little fuzzy from here on out, though,

in the communication continuum because -- and not because

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the messages are hard -- the translated messages are hard to

follow, but it's because we don't know who all the people

acting as Xu are.

We know from information we received quite recently

from the Government that Xu's E-Mail address was used by

more than one person -- potentially many more than one

person -- and we know that this same E-Mail address was

sending and receiving messages from locations that were many

miles away from each other at essentially the same time.

This obviously is evidence of people sharing an E-Mail

address.

Nonetheless, the evidence continues. Mr. Zheng

sends message to Department Head Xu. He suggests that he

would like to do another -- this is on June 13, 12 days

after his presentation in Nanjing. He suggests that he

would like to do another presentation.

We have no idea who read this or if anyone did

because there was no response. In fact, there was a delay

of approximately five months between communication between

Zheng and the alleged Mr. Xu.

During that time on November 1st, is when the

F.B.I. confronted GE Zheng, and they interrogated him. The

scenario I portrayed for you a few minutes ago.

The F.B.I. meets with Zheng. Ultimately 20 days

later on November 21, 2017, Zheng agrees to cooperate, and

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he agrees to let F.B.I. agents dictate and control -- those

are the words of one of the agents -- dictate and control

the WeChat E-Mail messages that Zheng sends going forward.

So on that same day, the 21st day of November,

Agents Hull, Special Agent Hull and his colleague, Special

Agent Reigle, through Zheng in his WeChat function, message

Chen Feng and thank him for NUAA's hospitality.

Chen Feng responds: You're welcome. You're

welcome to come back and exchange and instruct again.

About three weeks later, Agents Hull and Reigle

through Mr. Zheng's WeChat message Chen Feng again. Explain

that he would like to travel to China. He says that the

visitation to NUAA was very impressive, and I wonder if

similar arrangements is feasible. That's the translation.

When I say he says at this point, obviously I mean they

say.

Again, Chen Feng responds, and he says that going

forward, Mr. Xu -- in the series Mr. Xu will handle

relationships with you.

Meanwhile, again, the agents through Zheng 's

WeChat function send a text or message to Chen Feng and ask:

Is there any particular material I need to prepare?

The response: You don't need to repair -- prepare

any lecture materials. Chen Feng apparently has lost a

little bit of interest.

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Now, what happens is the agents begin to offer to

share confidential GE technological information with this

person or through this person who they believe to be Mr. Xu.

Example, on January 8 of 2018, Agents Hull and

Reigle WeChat message Xu, and they say as if they were

Zheng: Is there any material you want me to prepare?

Again, on the 11th of -- three days later on

January 11, they say: Regarding the material, please let me

know as soon as possible so I can do some research and try

to -- try my best to meet the need for the exchange.

Whoever was occupying the keyboard and pretending

to be Mr. Xu at that point replies: As for now, there's

nothing you need to prepare on my end. Offer and an example

of acceptance.

Shortly after that on the 17th, again, they throw

out the bait. I am still very willing to contribute --

this is the agents pretending to be Zheng -- I am still

very willing to contribute if any related departments have

any needs in the near future. Right now in my situation is

convenient for me to gather relevant information.

No response by January 23. So the agents, again,

send a message to, to, to Xu. Says -- and this is a lie --

he thinks he may be laid off from GE Aviation, and he is,

quote, trying his best to collect as much information as

possible.

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Whoever Xu is on that day, the 23rd of January,

says: Okay. Try your best to collect, and we can talk by

then.

This goes on and on and on. At one point, not long

after this, on or about the end of January of 2018, there's

a Zheng through the agents -- the agents through Zheng talks

about what kind of information could be collected in

response to a question.

He says: Domestically there is more focus with our

folks on what's known as the system code.

So the agents respond: Regarding the system code,

can you be more specific?

Xu replies: Systems specifications, design

process, et cetera.

Two days later the agents through Zheng -- I think

on this occasion his E-Mail account -- actually send a

confidential GE Aviation document; and as if they were Zheng

they ask: Is something like this the system code you

mentioned?

What it was that they sent was something entitled

the GE 9X Fan Containment Case Design Consensus Review.

They got no response from Xu.

There was an offer of access to Mr. Zheng's

computer directory. We don't know if it was really his

computer directory. We don't know if things that were put

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in the computer directory -- it was a copy of the directory,

you understand, not the contents, but just a copy of the

directory. We don't know if things were added, if things

were deleted, et cetera, because by that time the F.B.I. --

presumably through GE -- had Mr. Zheng's computer for

months -- four months, three months, four months.

So here we are months leading up to Mr. Xu's arrest

in Belgium, which took place on April 2019, and the question

arises has this information been sought or has this

information been authored?

Mr. Xu never specifically in his E-Mails asked

Zheng for any trade secret information -- certainly not any

trade secret information that belongs to GE Aviation.

Rather as time went on, the F.B.I. agents through Mr. Zheng,

as I said, got to the point where they were actually

offering to disclose trade secret information.

Now, the scenario I just laid out for you -- and

I'm sorry it took so long -- is an example of an offer of

trade secret information; but you're going to have to figure

out how that equates to an attempt to steal trade secret

information when it's already been offered and perhaps

provided as with the fan blade containment system document.

Undeterred by the lackluster responses and the lack

of actual requests, the F.B.I., as you'll hear in great

detail, lured Mr. Xu to Belgium. They arrested him.

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They had him extradited -- had him ordered

extradited to the United States, and they flew him on a

private F.B.I. jet non-stop from Brussels to Lunken Airport,

just five or six miles that way (Indicating.) That was the

first time Mr. Xu ever set foot on U.S. soil.

Ms. Glatfelter alleged to -- or mentioned other

alleged recruiting efforts by Mr. Xu. Like Zheng, there

were others that GE was in contact with, and we freely admit

that he recruited people to come in and share technology.

I'll get to that in a minute.

But one of the people that Ms. Glatfelter meant was

a gentleman named Arthur Gao from Honeywell. I should have

listened more carefully, Ms. Glatfelter. I apologize. But

there's another person who I believe they're going to have

testify as well -- an IT manager from Boeing. They

presumably are going to testify about the invitations that

they also received from Mr. Xu for exchanges.

Neither Mr. Gao nor this other fellow -- nor anyone

else that we're aware of -- are going to testify that trade

secrets were ever shared.

Mr. Gao's case may be particularly interesting to

you because like Mr. Zheng, he never admitted to revealing

trade secrets. Although he did, as Ms. Glatfelter

indicated, plead guilty to another offense. The fellow from

Boeing admitted to nothing.

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So what we have is a series of trials within a

trial, and the prosecutors to their credit advised us some

time ago that that's what this was going to be.

I personally didn't understand it very well at

first, but now I do, because in somewhat, the Government is

going to present are a series of examples where Mr. Xu

recruited experts, including Gao, including others, and

they're going to do that to try to convince you that he was

seeking trade secrets.

But all of these cases will have the same basic

flavor, the same basic theme, and none of them explicitly

show the ask, the attempt.

As I mentioned during voir dire, there's a lot of

circumstantial evidence in this case. It's offered here and

not direct evidence.

The prosecution will also offer kind of a different

kind of trial within a trial, and that's the Safran evidence

that Ms. Glatfelter spoke about, and I'll speak about that a

little more in a minute; but the evidence is not going to

show any relationship to the hacking or computer intrusion

of this French company and this French engineer, any

relationship to Mr. Xu's recruiting and alleged cultivating

of people who share information, which is the gravamen --

the basis -- of his indictment.

This case is also about global politics, and a

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thing called The China Initiative. You'll gather from the

evidence that the case is very much about global politics.

It's about the U.S. versus China trade war, and a program

that was started a few years ago by the Department of

Justice called The China Initiative.

Here's how that came about roughly. The Chinese

people through their leader, Xi Jinping, have been

transparent and open about their ongoing efforts toward

technological development, technological advancement.

Their goal, to collect information for

technological advancement from outside their country for

their use, and, yes, that includes bringing back Chinese

nationals to China for the exchanges that Ms. Glatfelter

referenced.

But the evidence is going to show you that

exchanges have been around for many years. They are

primarily educational and professional collaborations and

sharing of research.

In fact, here's an interesting tidbit, the first

Chinese exchange students were welcomed to the United States

more than half a century ago. Exchanges or collaborations

or conferences like these take place all the time all over

the world and witnesses will testify about that.

China's goal -- getting back to that -- is so that

they can build on and improve their products and their

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processes. Now, this you'll hear makes U.S. multinational

companies like GE Aviation who operate in China and

others -- China and its manufacturers, like companies in

this country, want to advance; but many American companies

want to keep China right where it is.

These huge multinational companies are afraid that

Chinese companies will grow and compete with them. Thus

began DOJ's, the Department of Justice's, aggressively

investigating people of Chinese descent who our government

believe are sharing American ingenuity.

The F.B.I. and other agencies cast a wide

investigative net, and they've caught up a lot of innocent

people. Just like Mr. Xu.

And make no mistake, this case is definitely part

of the Department of Justice's China Initiative. Officials

at the highest level of the Department of Justice have

confirmed that.

By the way, as an aside, despite this fear that the

Department of Justice has about our technology going there,

you'll hear evidence that China spends vastly more money --

in fact, Ms. Glatfelter referenced this -- vastly more money

on technology development today than the United States does.

Think about that.

So these multinational companies like General

Electric Aviation, et cetera, they're doing a lot of

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business in China, and they go there, you'll hear, primarily

for three reasons.

One, cheap reliable dependable labor. Maybe you've

heard the expression, the peasants coming from the farms.

Two, a less restrictive environmental environment.

Less restrictive environmental laws and regulations. That's

pronounced lacks pollution controls.

Three, and very important and increasingly

important every day, to exploit. That is, get their foot in

the door of the fastest growing economy in the world.

China has become an economic superpower. It is a

people with a huge new appetite for goods and services, and

companies like GE Aviation, Honeywell, whoever else you'll

hear about, they want a piece of the action; but they don't

want to share their technology.

They just want to come in and exploit China and its

environment and its people so they can make their products

less expensively and keep China in its place.

Let me give you an example -- just an anecdotal

example of the growth of the Chinese economy. In 2020, just

last year, General Motors sold more cars in China than they

did in the United States. That's a growing market.

And another example of how to stay there: GE

Aviation -- the same company that's the alleged victim,

primary victim, I suppose, in this case -- now actually

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makes engines that power the commercial aviation corporation

of China's C919. That's a large commercial jet airliner.

They actually make the engine that goes on this big

airliner. This COMAC. You'll remember from the screen.

One of these nefarious companies.

GE Aviation wants its share of China's aviation

market. Aviation experts you'll hear tell, say that over,

over the next 20 years, 39 percent of the demand for large

jets will come from Asia.

China's fleet of large jets will grow by three

times. These are very, very expensive jets, and so General

Electric and the other multinational corporations operating

in China, they want to keep making and selling planes and

engines and things like that China needs.

China, as Xi said, their leader, wants to break

free, and they want to catch up and technologically they are

catching up.

In fact, you'll hear testimony during this trial

that China was already well on its way to developing these

poly composite jet engine containment units that have the

technology that the Government claims was a trade secret and

that Mr. Xu was allegedly trying to steal from GE. Imagine

that.

Also, General Electric has joint ventures in China

itself. They have a joint venture through an entity known

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as AVIC -- another of the nefarious companies you saw on

that list -- the Aviation Corporation of China, where

together they build in China avionic systems for these

aircraft.

You'll hear about other joint ventures that GE has

with China and its government companies. These institutions

I'm going to name -- most Mr. Glatfelter already named --

COMAC, Commercial Aircraft Corporation of China; AVIC,

Aviation Industry Corporation of China; JAST, Jiangsu

Association for Science and Technology; and, of course,

we've all heard now about Jiangsu University of Aeronautics

and Astronomics. That's the university that neither Ms.

Glatfelter nor I can pronounce very well.

Interesting fact about NUAA, they actually have

200,000 members of their university in the U.S. These,

ladies and gentlemen, are legitimate thriving, respected

corporations and institutions that just happen to be

controlled by the Chinese Government as all things in China

are; but China does, as Ms. Glatfelter mentioned, have a

vastly different culture.

As in all countries, when in China, you must obey

Chinese laws, respect for their laws and respect for their

customs -- which is frankly more important in that

society -- and you must play by their rules.

This applies to corporations as well as people. As

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one of the Government's witnesses had said, in China, you

have to pay-to-play. What he meant by that is American

companies, including American multinational aviation

companies, must be prepared to share at least some of their

technology if they're going to be present in China. At the

end of the day, that's all Chen Feng, this Mr. Xu, Mr. Xu

and Mr. Xu sought.

China -- you'll learn -- is a very, very different

culture. China is a surveillance state. They have no

concept of privacy, individual or commercial, like we do;

and they don't share the concept of free speech.

Chinese people have been monitored electronically

for decades, and they expect to be monitored wherever they

go. Chinese citizens are monitored from birth to death, and

their government is omnipresent.

They have a different concept of private property.

If you have something, it should be shared with the

collective. That's communism. And the use of aliases in

China is common as well. Who they are depends on who

they're communicating with. It's also common as we have

now heard for several people to access the same E-Mail

address.

Think about that American company whose website you

visit who has the friendly young face at the bottom right

pop up and say, hi. I'm Jane. How can I help you today?

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You really think that's Jane? It's probably some kid in his

basement in his PJs, but that's a different story.

Well, my point is this, folks, these are all things

that you will hear about and that you must consider in

deciding whether Mr. Xu -- what he did intentionally or

not -- or what he intentionally did do or intentionally did

not do -- let me start over. What he intentionally did or

what he didn't do. Thank you.

You have to understand him, and you have to

understand his culture in order to understand his

intentions, and we will offer you -- offer evidence to help

you understand that.

He is a product of his culture. He is very, very

different from us in many ways. Just as his country is very

different from our country, his culture is very different

from China's culture -- from our culture. Sorry.

During the case, the Government is going to scribe,

ascribe some -- they've already started -- some sinister

and nefarious meanings like intelligence or Intel,

espionage, spy craft, trade craft, aliases, cover names,

code names, language in code, et cetera, and they've already

called Mr. Xu a spy.

Be careful of those words because you are to look

objectively at the evidence. What something is called is

not relevant unless it is what it is.

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One of the allegedly dark and sinister

organizations that the Government's, Government witnesses

are going to discuss is this Ministry of State Security that

Ms. Glatfelter mentioned.

We will make sure that the MSS and Mr. Xu's work

are well described for you. We'll have an expert available

to help you understand that, if necessary.

But regarding the MSS, Ms. Glatfelter sort of had

it half right or half complete. One of her agents, Mr.

Reigle, has done a better job in describing the evidence as

something of a combination really of the American F.B.I. and

the American C.I.A. In other words, domestic security as

well as international activity.

Like those -- like the F.B.I., it's domestic

security. Like the C.I.A., foreign intelligence and

counterespionage; but what you should know by now -- and if

you don't, you'll learn from the evidence -- like the F.B.I.

and the C.I.A., the vast majority of the information which

the MSS gathers is not secret information at all.

It's public source information which analysts can

evaluate, synthesize with other publicly available

information to form this intelligence to help them find

answers to the questions they're seeking answers to.

Mr. Xu has had -- at least before he came here -- a

regular job with a company named Nanjing Loute Technology

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Information Center. The Government might dispute this, but

this is a government that's been around for 20 years, and it

focuses on aircraft simulation equipment and software.

Now, Mr. Xu also worked for the MSS, that's true,

as all people must do if asked. It's part of his duty of

service to the Motherland, and he was finding sources of

information which might be valuable to his country's schools

and businesses; and he was inviting people to come to China

and share information -- exchanges like I spoke about

before.

Interestingly, GE Aviation, itself is a partner in

one of these exchange since 2013 with AVIC. That's right.

The aviation industry -- the evil Aviation Industry

Corporation of China. GE is together with them on an

exchange program called the Global Civilian Aviation Talent

Program.

Ironically, it was developed to -- it was designed

to, quote, develop future engineering leaders, close quote,

in China aviation industry.

Folks, the evidence in this case will show that Mr.

Xu was anything but a spy. You'll learn very quickly that

virtually all of the evidence the prosecutors are offering

against him is what's known as open communication.

Government agents often call this open channel

communication, and open channels are not used by spies doing

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espionage. Would a spy communicate about stealing trade

secrets via WeChat and E-Mail? Would his fellow spies use

LinkedIn and Facebook?

You'll hear that the Government agents

investigating this case easily found and gathered literally

all of the evidence that you'll hear and see in this trial

because it wasn't hidden.

Ladies and gentlemen, this is not evidence of spy

craft or trade craft. It's evidence of a man doing his job

out in the open.

You'll see and hear testimony that confirms that

Mr. Xu is not a spy as well. One thing that comes to mind

is when he didn't show any interest or didn't -- agreed that

if something was prohibited by the guy's company, don't

bring it.

The witness, James Mulvenon, I think was mentioned.

He's interesting because if he's true to what he said in the

past, he's going to testify about non-traditional technology

transfers. That is, gathering non-trade secret material

that companies nonetheless don't want to let go.

That's what Mr. Xu was involved in, and that's

Mr. -- that will be Mr. Mulvenon's opinion. And really

that's the evidence. That's what the evidence will show GE

Aviation's complaining about through the F.B.I. and now

through these prosecutors in the courtroom. Xu was trying

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to collect non-trade secret information that GE Aviation

didn't want out there at all.

You'll learn through the cross-examination I'm sure

of a number of different witnesses in this trial that GE

Aviation doesn't want anything to be shared by anyone other

than them about certain products, so what they've done is

they've convinced the F.B.I. that some guy has either stolen

or is trying to steal their trade secrets when trade secrets

weren't involved at all.

As Judge Black will instruct you, a trade secret

must be not generally known and not readily ascertainable

through proper means.

There were no trade secrets involved in this case

and none were sought, but the Government's not going to let

it go at that.

Think about it. Everybody thought that Mr. Zheng

was dirty, and he wasn't. So you're going to hear more

evidence. There's going to be evidence that, if you're not

careful, is going to succeed in convincing you that Mr. Xu

is a bad guy. Please keep an open mind about that.

You're going to hear stuff like, he's a spy who

works for MSS. He's Chinese, and there's a trade war going

on with China, and he works for the Government so he must be

rotten. The Chinese are co-opting our technology through

talent programs and exchanges and the like, and that's bad.

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Finally, there's the Safran evidence that Mrs.

Glatfelter spoke about. Through this evidence, as I

mentioned before, you will see that the Safran matter is not

in any way connected to the complaints about Mr. Xu and his

recruiting and human intelligence work.

In fact, it's not mentioned anywhere in his

indictment. In fact, the Safran case was charged in Federal

Court --

MS. GLATFELTER: Your Honor, objection.

MR. KOHNEN: -- in United States --

THE COURT: Excuse me. There's an objection. I'll

see the lawyers at sidebar. See how that goes. On occasion

I have to chat with the lawyers outside your hearing, and I

would just as soon have one lawyer approach from each side

with the court reporter and my law clerk, and we will wait

for the court reporter to get over there.

(SIDEBAR CONFERENCE HELD.)

THE COURT: I know you wouldn't object unless you

had to.

MS. GLATFELTER: I apologize to Mr. Kohnen because

I hate objecting during opening, but this was a subject and

matters that have been decided by the Court.

I -- you know, you can't unring the bell; and

acting like some -- there's something wrong with the

indictment or that we have to answer an indictment from

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another, another jurisdiction is an improper matter for this

Jury, and so Mr. Kohnen knows that we can't respond to that,

and now this is out there before the Jury. It's unfair.

THE COURT: Your position?

MR. KOHNEN: Judge, your ruling on the 404(b)

Motion was that that evidence can be admitted. We accept

that, and so now we want to talk about that evidence, and we

want to talk about the fact that in our view, it's not

germane to the charge that has been -- the charges that have

been brought against our client.

THE COURT: So what are you proposing to say?

MR. KOHNEN: I'm going to say that he's not a

Defendant in the Safran case, which is a matter of public

record.

THE COURT: Okay. Okay. Just asking.

MR. KOHNEN: And I'm sorry. And I'm going to talk

about the charges, how they're separate, and I'm going to

talk about how he was indicted, I think, four or six years

ago -- I have to look at my notes -- and it has no

connection to the charges here.

Now, that's a matter of opinion, but it's going to

come out in the evidence, I believe.

MS. GLATFELTER: And I understand it's a matter of

public record, but that's not the standard for admission.

It has to be relevant, and I think there's a 403 prejudice

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matter here because the impression left with the Jury is

that someone can't be considered liable for a crime --

there's no such thing, in other words, as an unindicted

co-conspirator, so essentially what Mr. Xu is in that

indictment, he's mentioned, but he's not mentioned as a

Defendant. He's a Defendant here, and so what Mr. Kohnen is

doing is sort of a bait and switch alleging that he can't

possibly be involved in Safran because he hasn't been

indicted by a Grand Jury there.

That's an unfair inference and something that's not

proper before the Jury. I don't know how you instruct the

Jury. I mean, they can't consider the evidence of an

indictment from another jurisdiction involving other

people.

THE COURT: Right. I'm going to chat with my law

clerk outside your presence.

MR. MANGAN: Thank you.

(Discussion held between Judge Black and Ms. Frankian.)

THE COURT: May I see the lawyers, please? My

response is, is you can talk about it, but if you mislead

the Jury by suggesting something that's not appropriate,

like, if he were guilty, he would have been charged as a

Defendant in that case, I'm going to correct you in front of

the Jury.

MR. KOHNEN: Judge --

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THE COURT: So I think you need to move along

expeditiously and not mislead the Jury. I'm sorry. That's

my resolution.

MR. KOHNEN: Judge, just so you know, I'm with you

on that, and I agree. It occurred to me after we left

sidebar that the Government has a witness that's going to

testify -- my understanding is an F.B.I. agent -- that is

going to testify about all this.

THE COURT: I've ruled.

MR. KOHNEN: I know.

THE COURT: It's out there. I think you need to

move along, and if you mislead the Jury by implying

something that the evidence does not reflect, I'm going to

correct you in front of the Jury. You may proceed.

(SIDEBAR CONFERENCE CONCLUDED.)

THE COURT: There are circumstances when I have to

talk to the lawyers outside your presence. I find it rude

and apologize. They know I don't like it. There are times

it has to happen, and it had to happened here. I appreciate

your understanding. You may proceed, Mr. Kohnen.

MR. KOHNEN: Thank you, Your Honor. Ladies and

gentlemen of the Jury, I apologize for the continuance too.

I'll try to get back on track as quick as I can.

So here's the thing, you're going to hear evidence

about the Safran case. That's for sure. That was a case

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that was charged in the United States District Court in the

Southern District of California six years ago. Mr. Xu is

not a Defendant in that case.

There were totally different charges brought in

that indictment than you're dealing with today. That was a

computer hacking case. It wasn't a theft of trade secrets.

It wasn't an attempted theft of trade secrets. It wasn't an

alleged conspiracy to steal trade secrets.

Now, general -- interestingly, GE Aviation does

have a joint venture with a French company known as Safran

that operates in China, but the Safran charges make no

mention of that even. It involves a French victim. An

alleged offense perpetrated from China involving computer

servers in Northern California. There is no discussion of

the Southern District of Ohio, and there's no discussion of

co-opted employees.

Ladies and gentlemen, one thing that Mrs.

Glatfelter said that I completely agree with, and I hear

Judge Black say it all the time as well, and that is use

your common sense. Don't abandon your common sense because

after all the evidence is in, the evidence in this case is

going to show that this was a setup. That our client is an

unfortunate pawn in a trade war between the world's two

economic superpowers as a result of an investigation

initiated by one of the world's most powerful multinational

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corporations from Cincinnati.

It was a setup, and the Government will be unable

to prove its case beyond a reasonable doubt. They will be

unable to prove that our client intended to commit the

crimes he's been charged with, and they will fail in

meeting the elements of the offense, and thus their burden

of proof.

I, again, also want to thank you for your service.

Thank you for your time. Thank you for your patience, and

thank you for the work we all have ahead of us.

Your Honor, that concludes my remarks.

THE COURT: Thank you, Mr. Kohnen.

Ms. Frankian, will you approach, please?

(The Court confers with Ms. Frankian.)

THE COURT: I just want to the confirm with my

lawyer that it is lunchtime. You've done a good job

listening to opening statements. That's a credit to you.

After lunch, we'll start to present evidence. During the

lunch break -- we'll break from 12:30 -- quarter of two; is

that right?

MS. FRANKIAN: Yes, Judge.

THE COURT: Yes? I'm trying to break for an hour

and 15 minutes. During the break -- I think lunch is being

provided. During the break, same instructions. We have

fancy -- during the lunch break, take a break. Don't

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discuss the case among yourselves. Don't discuss the case

with anyone.

No forms of communication, including phone, E-Mail,

text, Facebook, Twitter, et cetera, about the case. If

anybody violates any of that or causing you angst, let me

know.

No independent research about the trial. Don't

listen to or watch any news reports. Can't check Google,

Facebook, Twitter to find information about any aspect of

the case.

And, finally, remember, it's especially important

that you keep an open mind. You haven't heard a lick of

evidence yet. Don't form or express an opinion on the case

until it's finally submitted to you after all the evidence

is in.

I want you to enjoy your lunch break, and out of

respect for you, we'll rise as you leave, and you are to go

to the ninth floor.

COURTROOM DEPUTY: All rise for the Jury.

THE COURT: You can lead them out, sir.

(The Jury exited the courtroom.)

THE COURT: The Jury has left the courtroom. The

door is closing with some assistance. Are you ready to

break for lunch? If you need to suggest something to me

about a corrective instruction, if any, you can do that

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before they come back, Ms. Glatfelter.

MS. GLATFELTER: Thank you, Your Honor.

THE COURT: Are there other matters I need to touch

base with you on before we go have lunch and take a break

from the Government's perspective?

MR. MANGAN: No, Your Honor.

THE COURT: Defense?

MR. KOHNEN: No, thank you. Judge.

THE COURT: Okay. No talking about the case --

strike that. Have a good lunch. We're in recess.

COURTROOM DEPUTY: The court is now in recess.

(Court was in recess at 12:25 p.m. and resumed at 1:54 p.m.)

COURTROOM DEPUTY: All rise. This court is back in

session pursuant to the recess.

THE COURT: Please be seated. We're back in the

courtroom on the record. Defense team is present, including

the Defendant. Government's team is present.

Is the Government ready to proceed?

MR. McKENZIE: Yes, Your Honor. At this time the

Government calls Dr. James Mulvenon. Well, if we can get

him in before the Jury.

THE COURT: Indeed. Is the Defense ready to

proceed?

MS. CORS: Yes, Your Honor.

THE COURT: Where is your witness?

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JAMES MULVENON, Ph.D. -- DIRECT 72

MR. McKENZIE: In the hall, Your Honor.

THE COURT: Let's bring the witness in while we

call for the Jury. If you would call for the Jury, please.

It will take a few minutes. Why don't we put the gentleman

behind Ms. Glatfelter for the time being.

COURTROOM DEPUTY: All rise for the Jury.

(The Jury entered the courtroom.)

THE COURT: You may all be seated. The 15 members

of the Jury have rejoined us in the courtroom. I hope you

had a decent break, and I apologize for the delay.

The Government's going to begin to present

evidence. Who does the Government call at this time?

MR. McKENZIE: Your Honor, the Government calls Dr.

James Mulvenon.

THE COURT: If that gentleman would approach,

attend to the witness stand, and if counsel would state his

name for the record, please?

MR. McKENZIE: Counsel's name is Matthew McKenzie.

THE COURT: Mr. McKenzie. Would you pause and

raise your right hand for the oath to tell the truth?

JAMES MULVENON, Ph.D., GOVERNMENT'S WITNESS, SWORN

THE WITNESS: Yes, sir.

THE COURT: Very well. You may be seated. And I'm

ultimately going to want you close to that expensive Federal

microphone.

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JAMES MULVENON, Ph.D. -- DIRECT 73

THE WITNESS: I'll get this little television out

of my way.

THE COURT: You may proceed, Counsel.

MR. McKENZIE: Your Honor, just for clarification,

may I remove my mask?

THE COURT: Yeah. The lawyers at the podium may

remove their masks. The Jury signed off on that. Go ahead.

DIRECT EXAMINATION

BY MR. McKENZIE:

Q Dr. Mulvenon, by whom are you employed?

A I'm currently employed by a company called SOS

International.

Q Please explain to the Jury the mission of SOS

International?

THE COURT: And before you do, would you state your

name for the record, please?

THE WITNESS: My name?

THE COURT: Would you state your name for the

record, please?

THE WITNESS: Yes, my name is James Mulvenon.

THE COURT: You may continue, counsel.

BY MR. McKENZIE:

Q What is the mission of SOS International?

A SOS International is a defense industrial company

based in Reston, Virginia that primarily performs contracts

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JAMES MULVENON, Ph.D. -- DIRECT 74

for the Department of Defense.

Q What is your title?

A I'm the Director of Intelligence Integration.

Q Please explain to the Jury some of your duties and

responsibilities in that role?

A So I'm primarily responsible for our relationships

with a variety of offices throughout the U.S. Government in

the Department of Defense, in the intelligence community,

and in Federal Law Enforcement, and I'm also responsible for

integrating the various intelligence-related capabilities

within the company itself across different business

divisions.

Q To be clear, are you yourself employed by the Federal

Government?

A I am not. I've never been employed by the Federal

Government.

Q Now, with respect to, to China, what, if any, duties

and responsibilities do you have with respect toward

intelligence -- gathering intelligence toward China?

A So because I'm a Chinese linguist and have spent my

career studying in China, it's not surprising that we have a

very large China-related business of which I'm the lead for

all of that in the company.

Q And what type of intelligence do you gather?

A So we, we are exclusively focused on what's called

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JAMES MULVENON, Ph.D. -- DIRECT 75

open source intelligence or publicly available information.

So this is not classified collection like you would think of

from an intelligence agency, but we collect whatever the

Chinese Government publishes, posts on-line, magazines,

newspapers, books, websites, and things like that that are

all publicly available.

Q I'd like to pivot and discuss your educational and

work history starting with your education. Directing your

attention to in or about 1991, did there come a time that

you earned a Bachelor's degree?

A I did. I earned a Bachelor's degree in China studies

from the University of Michigan in Ann Arbor.

Q What did the -- what did China studies entail at the

University of Michigan?

A Well, the core requirement was language study. So I

took three years of Chinese, but it was an inner

disciplinary major which meant that you could then take

China-related classes across many different departments as I

did. So I've primarily focused on political science, but

also anthropology, history, literature, things along those

lines.

Q While you were earning your undergraduate degree, were

you introduced to the Chinese Government, how it functions,

and how it makes decisions?

A Yes. Two of my professors in political science, Ken

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JAMES MULVENON, Ph.D. -- DIRECT 76

Lieberthal and Mike Oxenberg, were at the time the leading

scholars in the United States on how the Chinese Government

is structured and how it functions.

Q After earning your degree at the University of

Michigan, did you have the opportunity to study abroad in

China?

A I did. I studied at Fudan University, which is in

Shanghai in China.

Q What did you study?

A I studied Communist Party History in the Communist

Party History Department for about a year and a half.

Q In what language were those courses taught?

A They were taught entirely in Chinese.

Q Do you still speak Chinese?

A I do. Obviously as a manager, I spend more time

making sure that new millennials are doing their jobs, but I

do continue to do my own personal research exploiting

Chinese language materials.

Q Now, directing your attention to in or about 1994, did

there come a time that you sought and obtained a Master's

degree?

A After I came back from China, I entered the Master's

and Ph.D. program at the University of California Los

Angeles, UCLA; and in 1995, I believe, I earned my Master's

in political science.

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JAMES MULVENON, Ph.D. -- DIRECT 77

Q And after earning your Master's degree, did you go on

to complete the doctoral program you spoke about?

A I did. I completed my doctorate in August 1998.

Q What was the subject of your Ph.D.?

A It was on the Chinese Military's International

Business Empire, and I entitled it Soldiers of Fortunate.

Q I'm sorry. When I said Ph.D., I meant dissertation.

What is -- what is a dissertation?

A So a dissertation is the final long thesis that you

have to write in order to earn a Ph.D. degree in political

science, and the subject of that dissertation was the

Chinese Military's International Business Empire.

Q Did you later publish that dissertation in the form of

a book?

A I did.

Q Please share with the Jury some of the key takeaways

conclusions from that dissertation?

A Well, it was, it was -- you know, the fortunate thing

for me was the year that I finished the dissertation was the

year that the Chinese Government decided to pull the Chinese

military out of doing commercial business, so one of the

nice things was I was able to put an end date on it.

I was able to say they were in business from 1927 to

1998 and then it ended, which meant that by the time I got

the book out, if things had changed, you know, that

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JAMES MULVENON, Ph.D. -- DIRECT 78

obviously would have made the book irrelevant.

But I mainly talked about how the Chinese military's

privileged access to real estate and infrastructure and

ports and rail and everything else, which was normally for

military purposes, they then were able to commercialize all

of that in the early days of the Chinese economic

modernization and become a very powerful economic actor but

also a very corrupt actor in the system.

Q Now, I'd like to walk through your work history.

Directing your attention to in or around 1995, did there

come a time that you were employed by Rand Corporation?

A Yes, in 1995, while I was still in graduate school, I

joined the Rand Corporation there in Los Angeles. It was

based in Santa Monica on the ocean and was able to work

there as a research assistant while I was finishing my Ph.D.

Q Please explain to the Jury what the Rand Corporation

is?

A The Rand Corporation is a national security think tank

that was very famous during the Cold War for coming up with

many of the new ideas that we had, for instance, about

nuclear warfare.

Q And explain to the Jury your duties and

responsibilities while you were at Rand?

A I was a research assistant to the main China experts

who worked there, so I gathered their Chinese materials for

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JAMES MULVENON, Ph.D. -- DIRECT 79

them. I did translation and exploitation of Chinese

language materials, and then I was also able to publish my

own reports as well that I did -- that I did myself.

Q Did you remain a research assistant the entire time

you were at Rand or did you then gain additional positions

and move up the ladder, so to speak?

A I did. One of the reasons I finished my Ph.D. was

because in order to be hired as full-time staff at Rand

then, you had to have a Ph.D.; so in 1998, when I finished

my Ph.D., they then hired me on as full-time research staff.

Q And once you were a full-time member of the staff,

what were your duties and responsibilities?

A I ran research programs. I performed contracts for

U.S. Government sponsors, producing public reports that were

then available via Rand's website.

Q Did that all focus on China or predominantly focus on

China?

A Predominantly focused on China, Chinese defense

industries, Chinese Internet censorship, things along those

lines.

Q Directing your attention now to in or about 2004, did

there come a time that you started a new position with

Defense Group Incorporated?

A I did. In 20 -- October 2004, Defense Group

Incorporated asked me to start an intelligence organization

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JAMES MULVENON, Ph.D. -- DIRECT 80

within their company that we later called The Center

Intelligence Research Analysis, so I left Rand and assumed

that new position.

Q What is Defense Group Incorporated?

A Defense Group Incorporated is also a defense industry

company founded by a former Reagan era senior Pentagon

official Dr. Jim Wade, and it primarily focused on nuclear

weapons and nuclear weapons effects.

Q And what were your duties and responsibilities with

the intelligence center within Defense Group Incorporated?

A Well, I was the Vice President in charge of that

entire organization, and so everything from raising the

money on via contracts, interacting with government

customers, managing the research staff, performing quality

assurance on the publications.

Q Directing your attention to in or about 2007, did

there come a time that you began a new position within DGI

or were promoted?

A Yes. I became Senior Vice President for the

Intelligence Division.

Q And did you hold this position until you started your

current, current job at SOS?

A Right. So in, in March 2017, Dr. Wade, the owner of

Defense Group, passed away, and the board sold the company

to the company I currently work for, SOS International, so

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JAMES MULVENON, Ph.D. -- DIRECT 81

for all intents and purposes, my job has not changed. We're

in the same office. I'm with the same people. It's just

that we now have a different company name because of the

acquisition.

Q In addition to your dissertation, have you published

any, any books on China?

A Yes.

Q Well, what are the titles?

A So in 2013, with two senior officials from the U.S.

Government, I published a book entitled Chinese Industrial

Espionage.

Q And what was your involvement in drafting that book?

A I wrote about 40 percent of it. I wrote the chapters

on cyber espionage. I wrote the chapter on traditional

espionage involving Ministry of State Security intelligence

officers.

Q And what was the major conclusion of that book?

A The major thrust of that book was to really understand

this phenomena of non-traditional collectors. These were

the scientists and researchers and corporate personnel and

others that formed this new kind of collection in the United

States that was not like traditional intelligence operations

where you had a case officer managing agents and collecting

data; and we documented at a very high level of detail the

massive bureaucratic infrastructure within China that was

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JAMES MULVENON, Ph.D. -- DIRECT 82

set up to collect and process all of the information that

they were gathering in the United States.

Q In addition to your dissertation and the book that

you've just testified about, do you have any additional

publications, such as articles?

A Yes. Most relevant probably for this situation there

was a follow-on book in 2018, entitled China's Quest For

Foreign Technology Beyond Espionage, in which we documented

all of the new forms of Chinese science and technology

collection in the United States that had emerged since the

2013 book.

Q Have you ever testified before Congress?

A I have.

Q Which committees have you testified before?

A Well, there's a Congressionally mandated -- there are

two Congressionally mandated commissions on China. The

Congressional Executive Commission on China and the U.S.

China Economic and Security Review Commission, and I've

testified before both of those probably ten times; but I've

also testified in the -- on the Senate side in front of

Senate Foreign Relations, Senate Banking, and then on the

House side in front of the House Foreign Affairs Committee.

Q And when you were testifying before those committees

in the Senate and the House, what was the general topic on

which you were presenting testimony?

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JAMES MULVENON, Ph.D. -- DIRECT 83

A It was always China, and it generally involved illegal

tech transfer activities, Chinese Government investment in

the United States, Chinese export -- U.S. export control

issues with respect to China, so that tended to be the nexus

of what I was talking about.

Q Have you ever testified in Federal Court?

A I have, twice.

Q And each time you testified, were you qualified to

provide opinion testimony?

A I was.

Q Now, during the course of your studies, your

professional career, and your publications, had you become

familiar with the structure and decision making process of

the Chinese Government?

A I have.

MR. McKENZIE: Your Honor, may we please show the

witness and Counsel what has been marked as Government's 10

for identification?

THE COURT: Yes.

(Government's Exhibit 10 was marked for identification.)

(Government's Exhibit 10 was shown on the screen.)

BY MR. McKENZIE:

Q Dr. Mulvenon, I'm showing you what's been previously

marked as Government's Exhibit 10 for identification. Do

you recognize this?

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JAMES MULVENON, Ph.D. -- DIRECT 84

THE WITNESS: I've got nothing here, Your Honor

(Indicating.)

THE COURT: All right.

THE WITNESS: I can see it (Indicating) --

THE COURT: Give us a moment, and I actually want

to see it before the Jury does, if that's still possible.

THE WITNESS: No, that's fine. I can see it on the

clerk's too. Oh, here it is.

THE COURT: Just a moment. Somebody learned will

come fix this.

THE WITNESS: It's fixed.

THE COURT: Very well.

THE WITNESS: Yes, I can see it.

BY MR. McKENZIE:

Q What is this?

A This is a simplified chart of the structure of the

Chinese Government.

Q Did you help create this chart?

A I did.

Q Will this exhibit help the Jury understand your

testimony?

A It will, in order to understand some of the

complicated relationships between different organizations

that you're going to refer to, yes.

MR. McKENZIE: Your Honor, at this time I'd move to

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JAMES MULVENON, Ph.D. -- DIRECT 85

admit Government's Exhibit 10 into evidence.

THE COURT: Any objection?

MS. CORS: No, Your Honor.

THE COURT: It's admitted. You can publish it to

the Jury.

(Government's Exhibit 10 admitted.)

(Government's Exhibit 10 was shown on the screen for Jury.)

BY MR. McKENZIE:

Q Dr. Mulvenon, turning your attention to the top right

corner of the exhibit. What do the boxes in red signify?

A The boxes in red are Communist -- Chinese Communist

Party organizations.

Q What is the Chinese Communist Party?

A So the Chinese Communist Party is currently the single

party that rules China. It is the head of their

authoritarian government, and it is very similar in

structure and intent to other Communist Parties that you may

have heard of, like, the Communist Party that headed up the

Soviet Union during the Cold War.

Q You said that there is -- it was the single party.

Are there other parties in China?

A There are some very small minor parties that the

Communist Party has kept around for window dressing, but

there are no other political institutions in China that

challenge the single party rule of the Chinese Communist

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JAMES MULVENON, Ph.D. -- DIRECT 86

Party. It alone rules China.

THE COURT: Counsel, just a moment. Jurors, those

screens pull out and tilt if I want to do that. If you

break it -- all right. Looks like that may have helped.

Please proceed, Counsel.

BY MR. McKENZIE:

Q Is every single Chinese citizen a member of the

Chinese Party?

A No. There are a lot of party members, though. Almost

100 million out of a population of approximately

1.4 billion, so something, like, six or seven percent of the

population are Party members.

Q Are you familiar with the term Cadre as it relates to

the Chinese Communist Party?

A Absolutely. It's a very important term in Chinese.

It's Ganbu, and it generally means someone who is actively

working on behalf of the Party doing the Party's business.

Q How does the Chinese Communist Party relate to the

rest of what we're going to see on the chart -- meaning the

Government and the military?

A Well, Communist Parties like the Chinese Communist

Party adhere to some important principles. They primarily

came from Vladimir Lenin, and one of them is the Communist

Party must penetrate all of the other elements of society.

So the Chinese Communist Party penetrates all of the

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JAMES MULVENON, Ph.D. -- DIRECT 87

other boxes that you see on this screen. Most of them, you

know, if it's government organizations, the leaders of those

government organizations are also Party members. Senior

officers in the military are also Party members, and it is

often the case that the Party committee within those

organizations is the real power, not necessarily the person

who is identified as the head of that organization.

Q Before we get to the larger parts of the government, I

would like to start at the top of this exhibit where it says

Politburo Standing Committee.

Will you explain what that term is and how the

Politburo Standing Committee relates to the rest of this

chart?

A So the Politburo Standing Committee is the smallest

and most powerful organization within the Chinese Communist

Party. It's currently made up of seven people, and those

seven party members exercise top level authority and power

within the Chinese system.

Q Who is the, who is -- is there a singular head of the

Politburo?

A So while the Communist Party is supposed to be run

through so-called collective leadership, in essence, there

is always one person who is considered first among equals.

Currently that is a man names Xi Jinping; and the way

you know in the Chinese system that he is first among equals

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JAMES MULVENON, Ph.D. -- DIRECT 88

is he holds three critical positions.

He's the General Secretary of the Chinese Communist

Party, so he's the head of the Communist Party. He's the

Chairman of the Central Military Commission, who is also on

this chart, which means he's the head of the military; and

he's also the Head of State or President of the Chinese

Government of the People's Republic of China, so because he

holds those three positions, he is considered the paramount

leader within the system.

Q Quick detour on naming conventions in China. In the

west are family names, or our last name, come last, and then

we have a given name, or first name, is that the same in

China or is it somewhat different?

A No, it's, it's different. If you're speaking in a

Chinese context, the family surname comes first, and then

the given name, so when I say that his name is Xi Jinping

that means that his surname is Xi, and his given name is

Jinping.

Q Thank you. I'd like to turn your attention now to the

Politburo. What is Politburo, and how does it relate to the

Politburo Standing Committee?

A So those three top red boxes are kind of nested with

one another. So the Central Committee is a group of about

400 people that are the most senior Party leaders throughout

the system, and they vote to elect; and in this case, the

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JAMES MULVENON, Ph.D. -- DIRECT 89

Politburo, which is about 25 people of the most senior

people, and then that Politburo votes to elect the most

senior leaders for the Standing Committee.

So by definition, members of the Standing Committee

and members of the Politburo are also members of the Central

Committee. It just sort of next down to a smaller number of

people as you get to the top of the chart.

Q So what is the role of the Central Committee and then

the pyramid up to the Politburo Standing Committee, what is

their role in shaping policy and decisions in China?

A So the Central Committee is largely honorific. It

only meets a couple of times a year, and its main role is to

simply ratify decisions made by the higher elements and also

to hold these elections to be able to elect people to the

Politburo and the Politburo Standing Committee.

People on the Politburo, those 25 people, have

significant jobs. So they're not just members of the

Politburo. They tend to also be the Party's Secretary of

major cities like Shanghai or Beijing or things like that;

and then finally the Politburo Standing Committee are the

seven people in the current configuration who make the most

significant decisions across the entire system, so major

foreign policy decisions, major economic decisions, major

military decisions.

Q Directing your attention to the box below Central

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JAMES MULVENON, Ph.D. -- DIRECT 90

Committee that says Party Apparatus, what is the Party

Apparatus, and is it really that confined?

A So that was just meant to be a catch-all for the fact

that there are Party organizations at every level of system

in China, so at the national level in Beijing then down to

the provincial level, which is what China calls -- you know,

what we would call states. China calls provinces. All the

way down to the very lowest levels.

There are part organizations related to propaganda,

related to organization, related to ideology work, and so

all -- we sort of subsumed all of that entire national

organization into this one box called the Party Apparatus;

but the main intent was to say that those are those Party

Cadre that we were talking about that work throughout the

system as, as members and operational personnel of the

Communist Party.

Q Directing your attention to the left box in green.

Very briefly what is the Central Military Commission?

A So the Central Military Commission is the top military

leadership organization in China. You can think of it as

roughly analogous to the Joint Chiefs of Staff at the

Pentagon, and so these are the top commanders, the service

branch leads for the Air Force and Navy and Rocket Forces

and things like that, and this organization is lead by Xi

Jinping, who is a civilian, and they make all of the major

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JAMES MULVENON, Ph.D. -- DIRECT 91

military decisions for the entire Chinese military system.

Q And then turning your attention to the right box in

gray where it says State Council -- before I start that

question, what do the boxes in gray represent on this

chart?

A So the boxes in gray are, are government organizations

defined as sort of Executive Branch Government like we have

in the United States.

So I realize that can be somewhat confusing, because

I'm basically saying the Chinese Communist Party is the head

of the Chinese system; but if you think about government as,

you know, people who are running Ministries related to water

resources, and the people who are carrying out the daily

functions of government people, that's what those gray boxes

are.

Q Are Chinese Communist Party members present in --

throughout the Government?

A Yes. Almost every senior military officer and

government official in China is also a Party member. It is

extremely rare to have a government or military leader who

is not a Communist Party member.

Q Now, I'd like to turn your attention back to the State

Council and ask you to explain that term to the Jury?

A So the State Council is roughly analogous to President

Biden's cabinet, so it's made up of the heads of all of the

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JAMES MULVENON, Ph.D. -- DIRECT 92

major Ministries in China, and ministry's almost exactly the

same as the word department in our Federal Government.

So China has a Ministry of Education. We have a

Department of Education, and they perform the same function,

and then there's about a dozen or so so-called commissions

also in the State Council, but it is roughly a gigantic sort

of government cabinet; and it's headed by a man who is also

on the Politburo Standing Commission named Li Keqiang, who

is the premier or Prime Minister of China.

In other words, the number two person in the Standing

Committee is always the person who is responsible for

running the day-to-day operations of the Chinese

Government.

Q Right.

MR. McKENZIE: And I ask that we scroll down in the

exhibit so State Council can still be seen at the top.

Right there. Thank you very much.

BY MR. McKENZIE:

Q I'd like to direct your attention to the next row

where there are four different Ministries listed. Are these

the only Ministries in the Chinese Government?

A No. This is four out of about 25.

Q I'd like to start with the Ministry of Science and

Technology. Are you familiar with that Ministry?

A I am.

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JAMES MULVENON, Ph.D. -- DIRECT 93

Q Please describe to the Jury what the Ministry of

Science and Technology is?

A So there really isn't a good analogy in the American

system to this Ministry. It is a very large government

organization dedicated to developing strategies and plans

and programs and funding for major science and technology

initiatives that China wants to undertake in order --

primarily to achieve certain economic modernization and

military modernization goals.

Q You mentioned strategy and planning. Are you familiar

with the term Five-Year Plan?

A Five-Year Plans are very important in Communist and

Leninist systems. They -- you know, by definition,

Communist Parties love to plan, and the most important

planning unit within these types of systems is the so-called

Five-Year Plan.

We are currently in China in the -- on the 14th

Five-Year Plan, so they've been doing this for 70 years, and

that 14th Five-Year Plan actually started this year in 2021.

Q So explain to the Jury how a Five-Year Plan works,

from how it's developed to how it's implemented?

A So, first and foremost, what really matters is the

objectives that are set that they want to achieve by the end

of the five years, and so they set those objectives, and

then they develop planning requirements for all the programs

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JAMES MULVENON, Ph.D. -- DIRECT 94

and the things that they would need in order to achieve

those objectives by the end of the five-year period; and

then every one in the system is given their own smaller

pieces of this that they need to implement, and this becomes

basically the metrics for the entire system as to how

performance is judged.

Q And how is the Five-Year Plan communicated to the

public?

A So it's very rare for the Five-Year Plan as a standing

document to be published. In fact, I don't think we've ever

seen a full copy of one, but it is heavily publicized in the

Chinese state media, so the goals of the plan, you know, key

programs that are going to be launched, key things that are

going to be funded receive a tremendous amount of fanfare,

so we're often able to reverse engineer the key elements of

the plan from that very loud state media coverage of its

launch.

Q I'd like to turn your attention to the far right of

the screen where it says Ministry of Education. Please

explain to the Jury what the Ministry of Education is, and

what it does?

A So this is the easiest one on the chart in a sense

that it -- the role of the Chinese Ministry of Education is

almost exactly the same as the U.S. Department of Education.

In other words, it sets high level education policy

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JAMES MULVENON, Ph.D. -- DIRECT 95

across the entire Chinese system, whether that's curricula,

teacher training, things along those lines; but one of the

big differences is, is that whereas in the United States we

have private universities as well as state universities but

that are still run by individual State Boards of Regents and

things like that, in China all of the universities in China

are directly subordinate to the Ministry of Education, and

the party committee of the Ministry of Education chooses the

leaders of those universities as well as even Deans and

Provosts and heads of departments.

Q I'd like to turn your attention now to the Ministry of

Industry and Information Technology. That's a mouth full.

Is that sometimes referred to as the MIIT?

A Yes.

Q Please explain what the MIIT is to the Jury?

A So the MIIT is a massive organization that is

basically in charge of all industrial planning in China, and

so within MIIT, for instance, there are planning Bureaus

related to every industry you could think of -- petroleum,

chemicals, telecommunications -- and within each of those

offices, they then manage all of the industry factories and

companies throughout China that are in that particular

industry.

They develop the smaller parts of the Five-Year Plans

related to that industry. They develop the objectives for

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JAMES MULVENON, Ph.D. -- DIRECT 96

it, the funding for various initiatives to be able to fix

bottlenecks or gaps, and so it is just sort of a massive

centrally planned organization.

Q You mentioned objectives and initiatives, are you

familiar with the phrase Made in China 2025?

A Yes. So Made in China 2025 was a really important

industrial plan that was published in 2015 just before the

start of the 13th Five-Year Plan; and it identified ten

critical industrial areas that the Chinese Government

believed were going to be essential for the future economic

modernization of the country, and then it identified within

those what the bottlenecks were, you know, what kind of

progress they wanted to make up to the year 2025; and then

put billions of dollars worth of funding toward being able

to achieve those objectives.

Q You mentioned that there were ten areas identified in

that Made in China 2025. Was aviation industry one of

those --

A Yes.

Q -- factors?

A Yeah, aviation and aerospace was definitely one of the

ten industries identified as a key priority under Made in

China 2025.

Q Was that the first time that MIIT had identified

aviation as a key industrial sector for the PRC Government?

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JAMES MULVENON, Ph.D. -- DIRECT 97

A No, no. Aviation has actually been a key priority for

decades, and a key source of frustration because whereas

China has wanted to build, for instance, its own commercial

aircraft, its failures to do that have resulted in them

forced to buy either Boeing or Airbus.

Q Now, I'm going to direct your attention to a box down

and to the right. The State Administration of Science,

Technology, and Industry for National Defense. Is that

sometimes called SASTIND?

A It is because that's a real mouth full.

Q Will you can please explain to the Jury what the

SASTIND's role is?

A So SASTIND was an organization that was set up in

order to communicate the requirements from the military to

the Defense Industrial Base, to the companies that were

building China's weapons -- the State-Owned Enterprises that

were building China's weapons; and so that is, its primary

function is to be the intermediary to say what are the

military requirements and then to make sure that the Defense

Industrial companies were producing weapons that met those

requirements.

Q Now, what, if any, relationship does the Ministry of

Industry and Information Technology have with universities

in China?

A So through SASTIND there are a subset of universities

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JAMES MULVENON, Ph.D. -- DIRECT 98

that, you know, frankly, for lack of a better term, I call

them Defense Industrial Universities.

These are universities that are largely engineering

schools and are deeply, deeply connected to the Chinese

defense industry and the military system, and largely do

research and academic training to train people to basically

build weapons in the Defense Industrial Base.

Q Does the United States have an, an analogous type of

university that you can point to?

A No, and that's one of the difficulties. We don't

really have anything in the United States that would

approach these Defense Industrial Universities, particularly

the closeness of their ties to the defense industries and to

the military.

Q Directing your attention to the bottom right corner,

are you familiar with the Nanjing University of Aeronautics

and Astronautics?

A Yes, more commonly known as the NUAA. It is one of

the oldest and most prestigious of those Defense Industrial

Universities; and as you can see from the title, primarily

focuses on aviation research, primarily military aircraft,

as well as space, space craft.

Q Are you familiar with the term Seven Sons of National

Defense as it relates to NUAA?

A Yes. So within the Chinese system the most -- the

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JAMES MULVENON, Ph.D. -- DIRECT 99

oldest and most prestigious of these Defense Industrial

Universities, there are seven of them, and they are known as

the Seven Sons of National Defense, and NUAA is one of those

seven sons.

Q Now, can you please explain how the management of NUAA

works between the Ministry of Industry and Information

Technology and the Ministry of Education?

A Sure. So they're sort of co-parenting in a sense.

The Ministry of Education is largely responsible for the

running of NUAA as a university. So appointing leadership,

curricula policy, teaching and testing, and things along

those lines.

Whereas SASTIND under the MIIT is almost entirely

focused on determining what the defense and military-related

research agenda is at the university. So they have pretty

clear lanes in the road that separate their

responsibilities.

Q I'd like to pivot now to State-Owned Enterprises. Are

you familiar with the term State-Owned Enterprises as it

relates to China?

A Yes.

Q Will you please explain to the Jury what a State-Owned

Enterprise is?

A In China currently a State-Owned Enterprise is a

company that is majority owned by the Chinese Government,

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JAMES MULVENON, Ph.D. -- DIRECT 100

not necessarily 100 percent. They have outside investors in

many cases, but many of these very large government

dominated companies grew out of the socialist period and

were the sort of mainstays of the socialist production, and

then they've tried to transform them as China underwent its

economic revolution.

Q I'm going to direct your attention to the box in the

middle that says State-Owned Assets Supervision and

Administration Commission or SASAC.

Please explain to the Jury what SASAC's role is as it

relates to State-Owned Enterprises?

A So as you can imagine, many of these State-Owned

Enterprises are huge. They're bloated. They are

inefficient. They're unprofitable, and so over the years,

the Chinese Government has really tried to sort of coach

them up and make them more attractive for sources of

international investment, make them more profitable.

SASAC is in charge of running the largest of all of

these State-Owned Enterprises and is the mechanism by which

the Government really tries to regulate them, and, frankly,

just make them better companies.

Q I'm going to turn your attention to the next row. But

before I do, have you researched the Chinese aviation

industry?

A I have. A number of years ago, along with a colleague

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JAMES MULVENON, Ph.D. -- DIRECT 101

of mine, Sam Sax, I published a public report for a

Congressional commission on the Chinese aviation industry.

Q And as part of your experience, did you become

familiar with a State-Owned Enterprise known as the Aviation

Industry Corporation of China or AVIC?

A Yes.

Q Will you please explain to the Jury what AVIC is?

A So within the Chinese Defense Industrial Companies,

AVIC is responsible for production of military fighter

aircraft, bombers, drones, as well as helicopters.

Basically anything that -- anything that flies -- anything

that's air breathing, and is roughly analogous, I would say

to -- think companies like Lockheed-Martin or Northrop

Grumman that build advanced fighter aircraft and bombers in

the United States.

Q Directing your attention now to the box in, to the

left of AVIC. Did you become familiar with the Commercial

Aircraft Corporation of China or COMAC?

A Yes. COMAC was actually a primary focus of the report

that we wrote because COMAC is the latest in a series of

Chinese companies that have been setup by the Government to,

again, try to achieve that goal of finally being able to

build a commercial airliner, and COMAC is the latest in that

string of companies that have tried to achieve that, and

their primary focus is a regional airliner known as the

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JAMES MULVENON, Ph.D. -- DIRECT 102

C-919.

Q Directing your attention to the box to the left, the

Aero Engine Corporation of China, or the AECC, did you

become familiar with this State-Owned Enterprise?

A Yes, this is the primary State-Owned Enterprise for

building advanced aircraft engines.

Q And how does -- excuse me. How do these State-Owned

Enterprises fit into the PRC's central planning and

Five-Year Plans?

A So at the Ministry level, when you're developing one

of these Five-Year Plans -- these are bureaucrats. That's

not to disparage them, but they're bureaucrats. They don't

necessarily have the technical expertise within each of

these industrial areas to know what the priorities should

be, what the gaps and bottlenecks are that need to be

overcome, where the money would be best spent.

So during the planning process, they reach down into

the lower levels of the system where they can find that

expertise, and then that moves back up, and it is

incorporated in the planning.

So, for instance, if the Ministry of Science and

Technology and the Ministry of Industry and Information

Technology wanted to understand the current dilemmas related

to advanced aircraft engine development in China, they would

consult with Aero Engine Corporation of China and various

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JAMES MULVENON, Ph.D. -- DIRECT 103

research institutes subordinate to it in order to get that

technical expertise for planning.

Q How do AVIC, COMAC, and AECC fit into Made in China

2025?

A Well, there's a big focus in Made in China 2025 of

making sure that COMAC is a success in building a regional

airliner like the C-919, and there's a major focus in the

Made in China 2025 reports related to overcoming historic

bottlenecks related to building advanced aircraft engines,

which has tended to be one of the biggest impediments to

successful development of a competitor to Boeing and Airbus.

Q Now, to fulfill these Five-Year Plans, including Made

in China 2025, does each Ministry work on its own to achieve

the goals set out by the plan or do they collaborate across

Ministries?

A They have to collaborate, and within the Five-Year

Planning document and within Made in China 2025, they

actually identify which Ministries or which commissions are

the lead in achieving an objective and which Ministries and

commissions are required to support them, and that's all

laid out in black and white in the documents.

Q Next, I'll direct your attention to the top left of

the screen. Are you familiar with the term Ministry of

State Security?

A I am.

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JAMES MULVENON, Ph.D. -- DIRECT 104

Q Is that sometimes referred to as the MSS?

A Yes.

Q What is the MSS?

A So the MSS is China's premiere intelligence

organization, and it is responsible for external

intelligence operations, operations occurring in foreign

countries, as well as an important role in domestic

counterintelligence.

So in that way it is roughly analogous on the one hand

to the Central Intelligence Agency in the United States, but

also the counterintelligence part of the F.B.I.

Q So internally, within the MSS, how is the bureaucracy

of the MSS structured?

A So the headquarters level at MSS, they have a series

of numbered Bureaus, and these numbered Bureaus correspond

to either regional focus.

So there are Bureaus that focus on Europe and the

United States and Russia and other sort of international

targets by region, and there are a number of Bureaus that

are focused on functional issues like surveillance or

technical collection and things along those lines.

Q Are you familiar with the Sixth Bureau?

A Yes.

Q What is the Sixth Bureau?

A So under the current re-organization, the Sixth Bureau

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JAMES MULVENON, Ph.D. -- DIRECT 105

is responsible for science and technology intelligence.

Q In addition to this bureaucratic structure, does the

Ministry of State Security have a regional structure across

China?

A It does.

Q And please explain that to the Jury?

A So, again, I said that China has provinces, which are

roughly the same as our states here in the United States;

and each of those provinces has a State Security Department,

which is subordinate to the MSS headquarters in Beijing.

Also most of the major metropolitan areas that have

province level status because they're so huge, they also

have State Security Departments associated with them.

Q Are you familiar with the Jiangsu State Security

Department?

A So Jiangsu is a province of China, so naturally it has

its own State Security Department, and that's responsible

for counterintelligence issues within the Province of

Jiangsu as well as running operations potentially that could

exploit opportunities like foreign companies that are based

in Jiangsu Province, and that even includes then extending

international operations if, in fact, there is a nexus with

Jiangsu somehow in the operation.

Q Is the Jiangsu State Security Department sometimes

referred to as the JSSD?

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JAMES MULVENON, Ph.D. -- DIRECT 106

A Yes.

Q So how is the JSSD structured internally and

bureaucratically?

A So it's roughly a mirror to the headquarters in

Beijing, so it also has a series of numbered Bureaus and

that creates kind of a matrix management system, so if

you're in the Sixth Bureau at JSSD, so the S&T intelligence,

you're, you're subordinate to your bosses there at the

Jiangsu State Security Department level, but you also have a

direct relationship with the Sixth Bureau at headquarters,

so it's a bit of a cross matrix.

Q So what is the responsibility of the Sixth Bureau of

the JSSD?

A On one level it's -- if there are opportunities to do

science and technology intelligence collection in the

Province of Jiangsu itself -- for instance, if there's a

foreign multinational company headquarter and based in

Jiangsu -- that provides an opportunity; and you also have

opportunities then to take advantage of relationships that

organizations in Jiangsu have with organizations abroad and

then use those as a cover for intelligence operations.

Q Earlier you testified that you wrote a book on Chinese

Industrial Espionage and that also used the term technology

transfer.

A Uh-huh.

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JAMES MULVENON, Ph.D. -- DIRECT 107

Q When you use the phrase industrial espionage and

technology transfer, please explain to the Jury what you

mean by that?

A Well, I want to be clear. There's legal technology

transfer. I mean, lots of U.S. companies, for instance,

when they do business in China will set up joint ventures

with a Chinese partner.

It's often, you know, encouraged (Indicating), by the

Ministry, the regulator, that you then transfer technology

to the Chinese partner as part of the deal, which is, which

is completely aboveboard.

But illegal or illicit tech transfer obviously is when

trade secrets or other corporate proprietary information is

stolen from the company or is misused or transferred by

someone associated with the company.

Q Based on your research in publications, what, if any,

role does the Chinese Government have in this illicit

technology transfer that you described?

A Well, the Chinese Government has a very direct and

active role in industrial espionage abroad both in terms of

activities by humans but also cyber espionage through

hackers; and the reason was very clear. There are a number

of Chinese documents that very clearly say, in cases where

the technology can be obtained from within China, China

obtain it within China; but in cases where it can't be, we

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JAMES MULVENON, Ph.D. -- DIRECT 108

have to obtain it through other means, and those other means

are taken to mean industrial or cyber espionage.

Q Why does the Chinese Government care about targeting

technology for this type of transfer?

A Well, as you can probably get the impression from my

earlier comments, the Chinese Government is sitting on top

of a -- sort of a hybrid capitalistic economy where there's

still a tremendous state role in central planning and

directing the economic.

As such, the Chinese Government doesn't believe that

its companies are just supposed to go figure these problems

out for themselves, but instead takes upon it as one of its

roles to develop systems that allow those companies to

overcome these problems; and the ultimate goal, of course,

is for China to increase -- as a country, to increase its

economic and its military power commensurate with the view

of the leadership about China's rightful place in the

world.

Q Who within China directs this technology transfer?

A Well, there are thousands of different elements within

the Chinese system that are working on pieces of this. That

was the main thrust of our 2013 book, Chinese Industrial

Espionage, and so there is not one single figure sort of in

the center of the system, but instead it is a very diffused

set of requirements. It just -- it really varies from

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JAMES MULVENON, Ph.D. -- DIRECT 109

technology to technology and from goal to goal.

Q Earlier you mentioned both the words espionage and

cyber espionage. Before I get to that, I would like to ask

you about a phrase called non-traditional collectors. Are

you familiar with that phrase?

A I am.

Q Have you published books and articles about this

phrase?

A Our 2013 -- the 2013 book and the 2018 book that I

published extensively discussed the term non-traditional

collector.

Q Will you please provide the Jury with an overview of

what is a non-traditional collector?

A Well, I think it might be helpful first to talk about

what a traditional collector is, and this is your standard

view of espionage where you have an intelligence officer

from a foreign intelligence service who seeks to recruit

assets and then runs those assets and communicates with

them, and either wittingly or unwittingly that asset

provides information or technology or things to his handler

(Indicating), if you will.

Non-traditional collection is much more common in

Chinese industrial espionage, and the difference is you

often don't have that nexus of a formal foreign intelligence

service officer managing agents.

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JAMES MULVENON, Ph.D. -- DIRECT 110

Instead what you have are scientists and researchers

from either -- let's just take the case of the United

States -- from U.S. institutions or scientists and

researchers from Chinese institutions who then informally

work to identify potential sources of technology, set up

companies to try and buy it or acquire it, and so because of

that lack of a direct nexus with a, you know, foreign

intelligence service like the MSS, that's why they call it

non-traditional.

Q Let's pivot back to the traditional method that you

were referring to. Within China -- within the Chinese

Government, who, if anyone, conducts traditional espionage

targeting cyber -- excuse me, targeting science and

technology?

A The primary, the primary organization is the Ministry

of State Security, and to a lesser extent there are military

intelligence elements that do this; but the MSS takes

requirements from all of the planning processes that I've

been describing and converts them into intelligence

targeting priorities and then tries to identify people or

organizations either within China or abroad who have direct

or indirect access to what they want, and then they build

intelligence collection operations around the goal of then

exploiting those accesses to get -- to get the technology or

the scientific data.

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JAMES MULVENON, Ph.D. -- DIRECT 111

Q And in earlier explanation you were talking about

running sources and people being witting or not witting.

Are you familiar with the term non-official cover?

A Yes.

Q Will you please explain to the Jury what that means?

A So now we're talking about intelligence officers; but

there are two basic categories of intelligence officers,

both within our own C.I.A. as well as foreign services.

One is a declared officer. Often these individuals

have diplomatic cover. They work at the embassy as the

cultural attache or some other anodyne title, but they are

in a sense known to the host government as potential

intelligence officers.

Non-official cover are really the sort of spies of

fiction in a sense that they come in under, under commercial

cover or journalist cover or, you know, any other type of

organization that tries to reduce the suspicion about them.

They do not have any diplomatic protections. They do

not have diplomatic immunity. Those are called non-official

cover officers or NOCs.

Q I'm going to ask you about an organization not on this

chart. Are you familiar with an organization called the

Jiangsu Provincial Association for Science and Technology or

JAST?

A Yes. JAST was one of the many organizations that we

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JAMES MULVENON, Ph.D. -- DIRECT 112

profiled in our 2013 book.

Q And please explain to the Jury what JAST purports to

be, and what it actually is?

A Well, on one basic level, and it is -- it is a

legitimate professional association for scientists and

engineers and researchers who are based in the Province of

Jiangsu to be a member of a professional association of

their peers.

But at the same time -- as we documented in our

book -- these organizations also have an operational role in

the sense of spotting and assessing potential sources of

science or technology, again, either in the Province of

Jiangsu or in terms of attracting people from abroad to come

to China, live in China, do research in China through

various talent programs or other sources of funding that

they might be able to offer in order to entice people to

bring those -- that capability and that knowledge to the

Province of Jiangsu.

Q Earlier you mentioned cyber espionage. What do you

mean by cyber espionage?

A By cyber espionage I mean using computer hackers to

break into networks and people's accounts to be able to

steal digital data, often at a remote distance, and in many

ways cyber espionage has become one of the preferred methods

for the Chinese Government because you don't have to build

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JAMES MULVENON, Ph.D. -- DIRECT 113

the infrastructure of intelligence officers and language

training and everything that goes along with that, which

has the potential risk of your intelligence officer

getting arrested or captured in a foreign country and put on

trial.

Whereas cyber espionage, as many of you know, there's

a large level of plausible deniability. Sometimes it's very

difficult to do attribution of who is actually hacking your

network, and so you can steal large volumes of information

very quickly and then plausibly say that wasn't us.

Q When the MSS conducts these traditional espionage

operations or cyber espionage operations, do they limit

themselves to only publicly available information or do they

target proprietary information including trade secrets?

A They definitely target proprietary information

including trade secrets up to and including stealing

actually classified information.

Q How does the MSS know what technology to target?

A Well, intelligence services sometimes have a level of

technical expertise, but in general, they are -- they rely

on the technical expertise offered by other elements of the

Chinese system in order to refine the targeting

requirements.

So as an example, if there was a targeting requirement

to obtain advanced engine technology, they would consult

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JAMES MULVENON, Ph.D. -- DIRECT 114

with and receive technical inputs from organizations in

China that, that are filled with engineers and experts on

aircraft engines.

Sometimes -- because sometimes in the intelligence

collection process, you don't know exactly what you have.

You think you have -- you have a big pile of documents,

maybe people have given you a big pile of blueprints or

schematics, but often the intelligence officer doesn't have

the expertise to be able to make heads or tales of it, and

so that has to be processed and evaluated by technical

experts who can then say, this is what we wanted. This

isn't what we wanted. We want something that looks similar

to that, and then you can iterate the intelligence

collection process with those new more precise targeting

guidance to be able to try to actually get what you want.

Q Once the information is collected by the MSS, where

does the information go? What do they do with it?

A Well, the information by itself is of no use to the

MSS, and so it then at the national level, there's a variety

of pathways by which it could be processed and exploited,

and we document a number of those very large groups in

Beijing that have large numbers of technically trained

English translators who can then go through all the material

to make it more intelligible to people who don't read

English; and then it works its way back down the system,

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JAMES MULVENON, Ph.D. -- DIRECT 115

largely to State entities, State-Owned Enterprises, State

Research Institutes that then can exploit that information

in order to overcome whatever bottleneck or gap caused that

to become a requirement in the first place.

Q And what is the net effect of this industrial

espionage on the State-Owned Enterprises?

A Well, the net effect is twofold. One, it potentially

allows China and its State-Owned Enterprises to achieve the

objective that they have in their planning apparatus,

frankly, without all of the hard work and the billions of

dollars that went into the R&D from the people who invented

it themselves.

And so it saves the Chinese system time. It saves the

Chinese system money, and they take advantage of all of the

time and money that, that the people they stole the

information from invested in it.

On the other side, of course, is that if that then

leads to the development of a Chinese State-Owned Enterprise

that then becomes a competitor to the company that

originally had the science and technology information, then

it can potentially have a negative economic impact on the

U.S. company that now has a very potent competitor that is

building products using their stolen technology.

MR. McKENZIE: Can I have a moment, Your Honor?

THE COURT: Yes.

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JAMES MULVENON, Ph.D. -- DIRECT 116

(Mr. McKenzie confers with co-counsel.)

BY MR. McKENZIE:

Q I just have one quick clarification for you. Is the

Nanjing University of Aeronautics and Aeronautics in Jiangsu

Province?

A It is. Nanjing is the capitol of Jiangsu Province.

Q And similarly we talked about JAST earlier, is that

also in Jiangsu Province?

A Yes.

MR. McKENZIE: Okay. I have no further questions,

Your Honor.

THE COURT: Very well. Ladies and gentlemen of the

Jury. We started at two. We're going to try and stop at

4:30. Your break should be in the middle of that.

I had that calculated at 3:07, and the lawyer must

have seen my calculation because this is a good moment to

get your break.

Other days our afternoons will be longer so each

half will be just a little longer. I've been watching you.

You're paying close attention, and the Court and the

community appreciate it.

During the next 15 minute break, I want you to take

a break. No talking about the case with anybody, including

yourself. No independent research. Continue to keep an

open mind.

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JAMES MULVENON, Ph.D. -- DIRECT 117

We will ask you -- we will call for you from the

ninth floor in 15 minutes, and out of respect for you, we'll

rise as you leave.

COURTROOM DEPUTY: All rise for the Jury.

THE COURT: Lead them out, sir. Just walk right

out. Let's not invade the court reporter.

(The Jury exited the courtroom.)

THE COURT: The Jury is leaving the room, and the

door is closing. To the witness, sir, do not discuss your

testimony that you've given with anyone during the break.

Understood?

THE WITNESS: Understood.

THE COURT: We're in recess until that time.

COURTROOM DEPUTY: This Court is now in recess.

(Court was in recess at 3:05 p.m. and resumed at 3:21 p.m.)

THE COURT: You may be seated. We're back in the

open courtroom. The Jury's not yet here. We've had a

15 minute break. The full government team is here. Full

Defense team is here, including the Defendant and his

interpreter.

Are we ready to get the Jury from the Government's

perspective?

MR. McKENZIE: Yes, Your Honor.

THE COURT: And from the Defense?

MS. CORS: Yes, Your Honor.

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JAMES MULVENON, Ph.D. -- DIRECT 118

THE COURT: Are you going to cross-examine this

witness?

MS. CORS: I am, Your Honor.

THE COURT: Do you really feel that's necessary?

MS. CORS: Just a few questions.

THE COURT: Very well. Let's call for the Jury.

Outside the presence of the Jury, once this witness is done,

I'm not overwhelmingly committed to move forward on your

next witness. Do you have an estimate of direct on your

next witness?

MS. GLATFELTER: Your Honor, about 20 to

30 minutes.

THE COURT: Very well.

MS. GLATFELTER: Maybe less.

THE COURT: Is there any problem if we don't get

him on today?

MS. GLATFELTER: I don't think so. He has a flight

back to Belgium tomorrow afternoon, so he's our first

witness, I think.

THE COURT: Very well. But he's here and ready to

go if we get to him?

MS. GLATFELTER: Yes, Your Honor.

THE COURT: Very well. Outside the presence of the

Jury, if we have time to put the next witness on for

purposes of direct only, is the Defense going to be

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JAMES MULVENON, Ph.D. -- DIRECT 119

uncomfortable holding cross until tomorrow as opposed to

doing them both tomorrow? I just don't want to set you

off.

MR. MIEDEL: Your Honor, Florian Miedel. I'm going

to be crossing. I'm not uncomfortable --

THE COURT: I heard you're going to do the cross.

What else did you saying?

MR. MIEDEL: It's fine if we do cross tomorrow.

THE COURT: Is that your preference rather than

splitting it?

MR. MIEDEL: We can do the direct today if you

prefer --

THE COURT: Okay.

MR. MIEDEL: -- and I can do cross tomorrow or we

can do both tomorrow.

THE COURT: You are a true professional.

COURTROOM DEPUTY: All rise for the Jury.

(The Jurors entered the courtroom.)

THE COURT: All Jurors returned. We may all be

seated. Members of the Jury, we've taken our mid-afternoon

break. Next stage is for the Defense to have an opportunity

to ask questions of the first witness of the Government, so

we will proceed to cross-examination in that regard.

You understand you're still under oath, sir?

THE WITNESS: Yes, Your Honor.

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JAMES MULVENON, Ph.D. -- CROSS 120

THE COURT: Very well. Cross may commence.

MS. CORS: Thank you, Your Honor.

THE COURT: And for the court reporter's benefit,

name of the lawyer?

MS. CORS: Good afternoon, Your Honor, ladies and

gentlemen of the Jury, Dr. Mulvenon, counsel, Jeanne Cors on

behalf of Mr. Xu.

CROSS-EXAMINATION

BY MS. CORS:

Q Good afternoon, Dr. Mulvenon. On your direct, you

spent some time talking about your background, and the

various trainings that you have had over the years; and as I

understand your testimony, you have been trained as a

linguist; is that correct?

A Yes, ma'am.

Q And you have degrees in political science, Asian

studies specifically; is that correct?

A Yes.

Q But you don't have any formal training in computer

science; is that correct?

A That is true.

Q Okay. And you have no formal training as an engineer;

is that correct?

A That is correct.

Q And you've never worked in the aviation industry; is

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JAMES MULVENON, Ph.D. -- CROSS 121

that correct?

A I have not.

Q So you're not in a position to talk about any specific

information relating to the aviation industry and whether it

is or is not a trade secret; is that correct?

A That is correct.

Q And you have never worked for the Federal Government,

I believe you testified; correct?

A I have not had the privilege.

Q And that includes no work at one of the Federal

Government's intelligence agencies; correct?

A Correct.

Q Either with the Department of Defense, the F.B.I., the

C.I.A.; is that correct?

A That is correct.

Q So am I correct in assuming that your information

regarding those entities and whatever work that they do is

primarily based on open source information?

A It's based primarily on 26 years of working with them

directly.

Q Is it based on publicly available information?

A Not entirely.

Q Classified information?

A None of the testimony I gave today in any way involved

classified information.

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JAMES MULVENON, Ph.D. -- CROSS 122

Q Okay. So the testimony you gave today involves

generally publicly available information?

A All of my testimony today involved publicly available

information.

Q Okay. And your current job as you've described it is

with a company called SOS International; correct?

A Yes.

Q And that company is primarily a contractor for the

Federal Government; is that correct?

A Primarily for the DOD and for the Department of

Homeland Security.

Q Okay. And do you know how much income SOS has derived

from the Federal Government since 2008?

A I do not. It is a privately owned family company, and

even within SOS International, those pieces of data are very

closely held by the family members.

Q Would it surprise you to know that there are reports

that the company's received $1.2 billion from the Federal

Government since 2008 in the form of contracts?

A That wouldn't surprise me, no, but I can't verify that

number.

Q Okay. As an aside, you're being compensated to be

here today; is that correct?

A I am being paid for my time to give truthful

testimony, yes.

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JAMES MULVENON, Ph.D. -- CROSS 123

Q Understood. You mentioned that part of your job at

SOS and the team that you lead is to assist in collecting

and analyzing information on behalf of the Department of

Homeland Security, Department of Defense, and other entities

within the Federal Government; is that an accurate

description?

A Yes, ma'am.

Q And you describe that, I believe, as open source

research; correct?

A Right. The current term of art is publicly available

information, because open source requires government

authorities.

Q So publicly available information?

A Yes, ma'am.

Q Can you walk the Jury through -- and I'm not asking

you for specifics with respect to any project -- but if the

Department of Homeland Security comes to you and has a

project, can you walk me through the steps of how you come

to understand what the terms of the project are, and how you

would go about fulfilling, collecting, and analyzing the

information that's requested?

A Well, in most cases, they know roughly what they want,

but they don't know what kinds of data are available. So

I'll give you an example just as a theoretical example.

Let's say the U.S. Government is interested in China's

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JAMES MULVENON, Ph.D. -- CROSS 124

current research on artificial intelligence, and they want

to know who's doing it in China? Where are they doing it?

What kind of progress are they making?

There are enormous amounts of publicly available

Chinese material, technical journal articles, patents,

corporate records, government websites, and then my analyst

would then, utilizing a variety of tools, collect all of the

relevant information in primary source language, in Chinese,

to be able to answer those questions, exploit that material

in native language, and then produce an analytic report in

English for our sponsor.

Q So you're provided with guidelines, what is the

Government looking for, and then you take those guidelines

and you go out and you search for information that may

answer those questions; is that an accurate description?

A I would say that's about 50 percent of the time.

About 50 percent of the time we go to them and we say, we

have discovered a new source of publicly available

information that we think might answer questions that we

know are appropriate to your office because of your mission,

and then we introduce that new information to them, and that

tends to be more successful because we've already got the

answer in hand.

Whereas if the Government asked us to try to go find

something, I can't guarantee that we're going to be able to

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JAMES MULVENON, Ph.D. -- CROSS 125

find information.

So I would say most of the time we actually come to

them with at least the raw information and then design a

research program around it.

Q Would it be fair to say it's a pretty symbiotic

relationship? That they're sharing what they need. You're

sharing information you can find, and sometimes it goes back

and forth as you narrow down the target of -- what targeted

information the Government agency is interested in obtaining

and getting analyzed?

A Yes. I mean, it works best when it's iterative like

that. When, in fact, there is a sharing of requirements,

yes.

Q And is that -- that's standard in a lot of your

projects that it would be iterative? You would come back

with information. They would drill down on that

information. Come back maybe with some follow-ups.

A That's exactly how it works.

Q Okay. And with respect to this information, you

mentioned a lot of the information may be in, in Mandarin

Chinese; correct?

A Yes.

Q Is that information in the United States, information

in China, information that's mainly on the web, or would it

be a combination of all three of those?

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JAMES MULVENON, Ph.D. -- CROSS 126

A It's a combination. The one thing they have all in

common is that the information is publicly available.

Q Okay. When you mentioned -- discussed information,

is this always documents or written information or would the

information sometimes be obtained from individuals?

A It's almost entirely documentary information. There

are rules about talking to humans, and there are certain

authorities that contractors do not have in terms of talking

to human beings that, that are important bright line legal

distinctions, and so we focus almost exclusively on

obtaining documentary material.

Q Have you ever gone over to China to obtain

information?

A So during the first ten years of my career when I was

at the Rand Corporation, part of my job was to travel to

Beijing and meet with Chinese think tanks and other

specialists and talk to them about their view of Sino-U.S.

relations or their view of any number of issues, and then

sometimes write those reports up; but not surprisingly after

the 2013 publication of my book Chinese Industrial

Espionage, I was told by the Chinese Government that I was

persona non grata and would not be able to get a Visa to go

to the PRC.

Q I assume that wasn't a big surprise to you; correct?

A No, it was not.

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JAMES MULVENON, Ph.D. -- CROSS 127

Q So when you mentioned that you went over to China, you

would meet with other individuals, other experts in the

field; is that correct?

A Right. One distinction I'd like to make is that I

would always travel on an official Visa via an invitation

letter from a Chinese Government Institution. I believed it

was unethical for me to fly there on a tourist Visa

particularly given the somewhat shifting Chinese rules on

what constitutes espionage activities in the PRC, so I was

always there at the behest and invitation of an official

Chinese Government sponsor.

Q And on those Visas, I assume the employer that you

indicated was the Rand Corporation or whichever other

employer you were affiliated with at that time?

A Yes, ma'am.

Q Did you ever disclose that you may be doing work on

behalf of one of the Government agencies as part of that

trip?

A It was actually assumed by the Chinese side. The

Chinese actually have a very inflated and exaggerated view

of the Rand Corporation's influence on the Pentagon that is

wholly unwarranted in my view, but it was not a -- it was

not a mystery to anyone why we were there and often we told

them specifically what we were looking for because we were

being asked not to surreptitiously gather information in

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JAMES MULVENON, Ph.D. -- CROSS 128

China, but we were there specifically to talk to them and to

talk to their experts and write it up in published reports

that would be unclassified and put on Rand's website, so if

the Chinese didn't know what we were doing there when we

were there, they certainly knew soon after.

Q So that's your assumption that they knew, but it was

never disclosed in your Visa application, correct, that you

may be also working on a contract for the Department of

Homeland Security or an intelligence agency; is that

correct?

A It was -- the specific contractual details were not

mentioned in any of the Visa materials, no.

Q So as far as the documentation that you used was

concerned, it always solely referenced the private entity

with which you are affiliated; correct?

A Right.

Q Okay. During your direct testimony you talked about

these Five-Year Plans; correct?

A Yes.

Q And as I understand your description of the Five-Year

Plans, these are China's method of industrial planning; is

that correct?

A Yes.

Q So these are programs that are put in place to

establish priorities?

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JAMES MULVENON, Ph.D. -- CROSS 129

A Correct.

Q To help figure out where funding should be allocated

over this period of time to best achieve the priorities of,

of the Government; correct?

A Yes.

Q Now, I think, you know, in past statements you've

made, you've indicated industrial planning, Five-Year Plans,

there's nothing illegal about those; correct?

A Not at all.

Q Okay. And, in fact, you take issue with anyone

suggesting that something like the phrase Industrial

Planning is a dirty phrase; correct?

A Yes.

Q Could you share with the Jury from your perspective,

what are some of the benefits of engaging in industrial

planning?

A Well, there's a central level of government

coordination. You know, you can see that here in the United

States with President Biden's Infrastructure Plan that he's

trying to pass through Congress.

There's a sense that individual states in the United

States thinking of their own interests are not thinking of

larger industrial planning priorities, and that there are in

some cases is an advantage for the Federal Government of the

United States to engage in what looks like industrial

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JAMES MULVENON, Ph.D. -- CROSS 130

planning.

Like building the Eisenhower Interstate System. The

U.S. states individually would not have built the national

interstate system. It took the Federal Government to do

that.

Q And I believe you stated in the past NASA was part of

an industrial planning program, was it not?

A There's no other way to describe NASA other than a

Government's directed industrial planning organization.

Q And how about the Internet?

A The Internet was, in fact, not necessarily industrial

planning, but it was funded and built by the Pentagon under

what was then called ARPA. It's now called DARPA, the

Defense Advance Research Projects Agency, and the Internet

wouldn't exist without the U.S. Government's leadership on

that.

Q And every year the President of the United States puts

out a budget, right, a budget request? Would you view that

as a type of planning document?

A It mostly is.

Q And how about documents prepared by the U.S. Congress,

like, Defense Authorization Bills? Bills that will say we

want to spend money on a certain program, but, in fact, the

money is separately allocated through a different process,

would those types of authorization bills also be a type of

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JAMES MULVENON, Ph.D. -- CROSS 131

planning?

A Yes.

Q So not always funded but establishing the goals and

the policy preferences of that entity; correct?

A Yes.

Q And you testified that the Made in China 2025 Program

focused on ten priority sectors; correct?

A Yes.

Q That included aerospace and aviation?

A Correct.

Q In your opinion, is it smart for a government to try

to identify priorities before spending money?

A Yes.

Q Okay. So, again, you don't see anything nefarious

about these plans. You actually view them as something

positive; correct?

A Right. My objection is to how they're executed.

Q Okay. We'll get to that. In those plans -- let's

focus first on the current Five-Year Plan. Is there any

statement in that plan directing anyone in China to engage

in illegal conduct?

A As we've not seen the actual text of the 14th

Five-Year Plan, I couldn't tell you that.

Q So you have no basis for concluding that the

Five-Year Plan directs anyone to engage in anything illegal;

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JAMES MULVENON, Ph.D. -- CROSS 132

correct?

A No. I can only point to a correlation between illegal

tech transfer acquisition activities that just happened to

line up 100 percent with the requirements of the plan.

Q So you're making assumptions about the plan, but you

can't point to anything in the plan that would direct anyone

to engage in illegal conduct; correct?

A Not in the 14th Five-Year Plan, but I can point to

other Chinese plans that specifically mention using

espionage as an acquisition technique.

Q Do they specifically mention stealing trade secrets?

A Yes.

Q And what were those -- what are those?

A The 2006 to 2020 Medium to Long-Range Science and

Technology Plan, for instance, has an entire section

explaining how to obtain technology that is not resident in

China.

Q Okay.

A And it specifically talks about using, using

non-traditional collection to achieve that.

Q Okay. We're going to return to that, but you just

mentioned technology, non-traditional collection, but my

question was very, very targeted. Trade secrets. Does that

plan specifically direct anyone to steal trade secrets?

A No public Chinese document that I've seen says that,

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JAMES MULVENON, Ph.D. -- CROSS 133

no.

Q Okay. Thank you. I'd like to turn to your testimony

regarding the Ministry of State Security, and you spent a

long time talking about the Ministry itself, how -- where it

fits in the overall structure of the Chinese Government;

correct?

A Yes.

Q And then you talked about these different divisions

and departments and local offices; correct?

A Yes.

Q Let's start with the functions of the MSS. You

testified that the MSS is somewhat of a hybrid of, and

similar to the F.B.I. and the C.I.A. in the United States;

correct?

A Yes.

Q Okay. I believe you stated that it was a civilian

intelligence service; correct?

A Yes.

Q Okay. Also that it's responsible for external

intelligence operations; is that correct?

A Yes.

Q Okay. And that it also serves -- and I apologize. I

didn't recall if you've testified to that -- but isn't it

true that also serves domestic counterintelligence

functions?

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JAMES MULVENON, Ph.D. -- CROSS 134

A That is correct.

Q Can you describe to the Jury what domestic

counterintelligence functions would be?

A They are dedicated to finding foreign spies operating

in China.

Q And what are some of the methods from your

understanding that an entity like the MSS or any other

domestic Chinese organization would use to do that?

A Well, I've seen them firsthand. Extensive

surveillance, both human, vehicle, and physical and

technical surveillance, bugging hotel rooms, breaking into

hotel rooms and either stealing or copying laptops and

phones. Any number -- you know, monitoring communications

while in country.

Q Is it fair to say that you would view China as a

surveillance state?

A Very much so, and I've written extensively about it.

Q And with respect to that surveillance, you just

described individuals. How about companies?

A Yes.

Q Okay.

A Extensive industrial espionage.

Q No, I'm asking about surveillance and

counterintelligence. Surveillance is one method that these

entities use to monitor the companies and the individuals

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JAMES MULVENON, Ph.D. -- CROSS 135

who are on -- within their boarders; is that correct?

A Very much so, yes.

Q Okay. I've seen in literature references to China

believing that cyberspace is not something that's

international. That cyberspace, when it is used within the

national boarders of China, is something that China as a

country may regulate?

A They, they've explicitly written that in a document

called the International Code of Conduct that Beijing

submitted to the United Nations, yes.

Q So China believes that any use of the cyberspace

within its boarders is an appropriate area for them to

regulate; correct?

A They believe that they not only are responsible for

protecting the networks within their boarders but also

policing the content on those networks, yes.

Q Controlling information; correct?

A Yes, yes, ma'am.

Q Okay. Now, you mentioned that you had served as an

expert in the past; correct?

A Yes, ma'am.

Q And you've been deposed in connection with some of

those factions in the past; correct?

A Yes, ma'am.

Q And do you recall in the past being asked what the

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JAMES MULVENON, Ph.D. -- CROSS 136

various functions of the MSS were?

A Not specifically, no.

Q Do you recall indicating that in addition to the

functions we just mentioned -- and I'm going to quote

this -- that another function of the MSS is open source

collection and analysis. Do you recall stating that in a

deposition?

A I do.

Q Okay. That's not a function you testified to on

direct; correct?

A That is correct. MSS 11th Bureau, known as the China

Institute for Contemporary International Relations, which is

an organization that we met with frequently when I worked at

Rand, is, in fact, the open source intelligence organization

within the MSS.

Q Well, we'll circle back to that, but let me just be

clear: In your opinion one of the many functions of the MSS

as an entity is open source collection and analysis;

correct?

A Yes, that's correct.

Q All right. I'd like to step back and just make sure

the Jury understands a couple of terms, and I know you have

defined these terms in some of your writings.

You've made a distinction between the term information

and the term intelligence?

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JAMES MULVENON, Ph.D. -- CROSS 137

A Uh-huh.

Q Can you explain to the Jury what you mean by those two

terms and how they interrelate?

A So information or data is just simply any piece of,

piece of data or information that, that has meaning to it.

Whereas, intelligence is a very stylized term that

really means a piece of data or information that has value

to a government or a collection agency that seeks to collect

it.

There are many, many billions of pieces of information

or data that exist in this world that the C.I.A. and the MSS

don't care about.

They are very focused on a narrower set of information

or data that specifically aligns with the questions they're

trying to answer for their national security customers and

that would be intelligence.

Q Now, I believe you've defined intelligence, though,

even more broadly in some of your writings, haven't you?

Haven't you talked about this concept that information is

what you collect. Intelligence is the analysis you conduct

to take the value from the information to answer questions;

is that accurate?

A That's another way of thinking about it. You take

large volumes -- but, again, you can't take large volumes

of irrelevant information like soybeans and understand

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JAMES MULVENON, Ph.D. -- CROSS 138

intelligence about Chinese nuclear weapons, so the actual

information itself has to at least be within the scope of

what would eventually be the focus of the intelligence

analysis.

Q But intelligence doesn't necessarily mean on behalf of

government, does it?

A No, there's certainly corporate and commercial and

business intelligence, yes --

Q And, in fact --

A -- conducted by corporations.

Q And, in fact, corporations do that all the time,

right, collect publicly available information and have a

team of individuals who analyze that and draw out the useful

conclusions or --

A Right.

Q -- information from it; correct?

A Yes. The distinction I would make, though, is the

difference in authorities. You asked me about my

information collection activities in Beijing, and I was

careful to clarify that there are certain activities that I

am legally prohibited from engaging in that are the sole

purview of the U.S. Government.

Similarly there are plenty of collection activities

that Chinese entities could engage in; but when we're

talking about the intelligence operations that break foreign

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JAMES MULVENON, Ph.D. -- CROSS 139

laws, that tends to be the purview of organizations like the

MSS.

Q Let's talk about laws. The MSS operates within China;

correct?

A Yes.

Q Okay. When it's operating within China, it's

obligated to follow Chinese laws and customs; correct?

A In theory, yes.

Q In theory. And those are the laws that are relevant

to the MSS in China; correct?

A But the Chinese legal system is completely penetrated

by the Chinese Communist Party, so I would argue that you're

not getting the same kind of independent judicial review

that the judge represents.

Q Well, my question is: When the MSS operates in China,

they're required to follow Chinese law; right?

A They are formally required to do so, yes.

Q And those laws may be different than U.S. law;

correct?

A They are.

Q Okay. You testified regarding the structure of the

MSS, and these various divisions and Bureaus. What is the

basis for your opinions regarding how the MSS is structured

both nationally and at the provincial level?

A There's a surprising amount of publicly available

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JAMES MULVENON, Ph.D. -- CROSS 140

information about the MSS. It is difficult to find. It is

almost entirely in Chinese. There is no single source that

lays all of it out; but, frankly, we've had to piece it

together over years from small pieces of data.

Q Can you identify for the Jury any of this data that

you're relying on to opine regarding the structure of the

MSS?

A So, you know, good example would be Chinese technical

journal articles in which a representative of the MSS would

identify the organization that they're associated with in

the technical journal article.

There are trade shows. There are patents. There are

a number of situations in which, because it's in Chinese,

there is a sense that somehow this is not being noticed.

And -- but, like I said, there is no single source. I

mean, I -- you know, for my dissertation I found a book in

China that was publicly available that talked extensively

about how the MSS de-commercialized its business enterprises

in 1998 and named specific numbered Bureaus, so it's

possible to do. It's just extremely difficult.

Q So you're not able to identify anything specifically

for this Jury; correct?

A Well, it wouldn't be much use to the Jury since it's

all in Chinese.

Q Okay. Haven't you noted in the past that there's very

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JAMES MULVENON, Ph.D. -- CROSS 141

little known about the inner workings and decision making

structure of the MSS?

A That is certainly true. It is largely a black box.

Q Okay. And, in fact, you've referenced a number of

times your book, Chinese Industrial Espionage; correct?

A Uh-huh.

Q And I looked in the index of your book, and which,

again, is titled Industrial Espionage. Do you know how

many times Ministry of State Security is referenced in this

book?

A Not very many because the book is primarily about

non-traditional collection, which is not conducted by the

MSS.

Q Okay. Two references to the MSS. How many divisions

does the MSS have?

A I know of at least 18, and they are Bureaus not

divisions. That's an important term of difference in

Chinese.

Q Okay. What does the first Bureau do?

A The First Bureau, I believe -- you have me without my

notes -- is responsible for operations within China.

Q And what's your basis for opining on that?

A Because of defector testimony that was included in

Nick Eftimiades book Chinese Intelligence Operations.

Q Who was the author again?

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JAMES MULVENON, Ph.D. -- CROSS 142

A Nicholas Eftimiades.

Q Is that his book from 1994?

A It is.

Q So your reliance is on a book from 1994 to discuss the

current structure of MSS's First Bureau today?

A As a student of Chinese politics, I can tell you that

there are many, many parts of Chinese system that are --

have great continuity back going decades. There was a major

MSS re-organization in 2018 in which a number of Bureaus

were renumbered.

Q Okay. Let's focus on the Sixth Bureau specifically.

Do you know how many members are in the Sixth Bureau?

A I do not.

Q Do you know all of the functions performed by the

Sixth Bureau?

A I do not.

Q Do you know whether the Sixth Bureau may engage in

open source collection and analysis?

A It wouldn't surprise me, but I can't tell you for

certain.

Q You don't know either way --

A No.

Q -- correct?

A It's a secret intelligence agency. They don't tend to

publish a lot of that information.

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JAMES MULVENON, Ph.D. -- CROSS 143

Q Okay. Would that be the same as -- with respect to

the provincial office that some information may be known but

a lot of information may not be known --

A That's correct.

Q -- is that fair?

A That's fair.

Q Okay. Back on this topic of domestic

counterintelligence, this is when China, right, is seeking

to protect itself, its own national interest, from what it

considers to be foreign threats; correct?

A Yes.

Q And we discussed a little earlier how China has used

surveillance monitoring to ensure that its interests are

protected and to monitor what's going on within its

boarders; correct?

A Yes.

Q Could hacking be a technique used to do that as well

in your experience?

A Yes.

Q Okay. And, in fact, I think you've testified that

China has really made information dominance a central

priority -- a central military priority; correct?

A Yes.

Q And, in fact, the Government of China sees as a threat

allowing information to be exchanged to flow, but that it

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JAMES MULVENON, Ph.D. -- CROSS 144

hasn't -- does not have control over; correct?

A Very much so.

Q And I think you just testified that they certainly

regard cyber intrusions as a legitimate tool of preserving

national power, correct, would that be a fair

characterization?

A The planetary scale level of their activity would

suggest the answer is yes.

Q Okay. And this includes surveillance of people,

companies, basically any entity or any individual within the

country that they would view as important or necessary to

surveil; correct?

A Yes.

Q Okay. And another purpose of that is to maintain this

idealogical purity; correct?

A Correct.

Q And this all sort of flows back, doesn't it, to this

one state concept?

A Very much so, yes.

Q Okay. Now, when you talked about sort of this one

state concept, China doesn't really have private and public

companies like you would think of in the United States;

correct?

A There are companies in China that I would regard as

private. Hauwai, for instance, because there is no

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JAMES MULVENON, Ph.D. -- CROSS 145

identified state ownership.

My point earlier in my testimony was to say that under

the current leadership, they appear to have shifted back to

a much greater emphasis on State ownership and State

capitalism at the expense of private enterprise.

Q Okay. So is it fair to characterize a broad sloth of

the economy of the businesses operating in China as having

some affiliation with the Government or some owner -- or the

Government having some ownership interest or control of

them?

A No. I think actually a larger percentage of the

economy is actually private enterprise. I was -- again, I

was speaking to the emphasis under the current

administration; but I will point out that in the last three

or four years, the central government has insisted that even

private enterprises now set up their own Communist Party

committee cells within those companies, and so implying that

even private enterprises are being brought under broader

State control.

Q Have you ever heard of the term the military civilian

fusion?

A Yes.

Q What does that term mean to you?

A Military civilian fusion is an important strategy that

has been promulgated at the very highest levels of the

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JAMES MULVENON, Ph.D. -- CROSS 146

Chinese Government that operates basically in two

directions.

It's meant to say that if there is science or

industrial progress in the civilian economy, that there

should be a conduit by which those breakthroughs make their

way to military modernization; and if there are science and

technology breakthroughs in military modernization, there

should be a way to convert those into advances on the

civilian economic side, and thus the term fusion of the

military and the civilian economies.

Q So as I think about it, you could have military

economy here (Indicating), right, civilian military here

(Indicating), and they're siloed, and there's not a lot of

interaction between the two.

Is this fusion really describing increased interaction

between the two in a more symbiotic relationship?

A It's meant to breakdown those silos, yes.

Q To pursue, I assume, some of these policy goals that

the Government has set out; correct?

A Yes, ma'am.

Q And there's nothing illegal about this type of fusion,

is there?

A No.

Q Okay. In fact, it could be -- it could be a positive

in terms of allowing the Government to better set policy and

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JAMES MULVENON, Ph.D. -- CROSS 147

achieve those policies; correct?

A It could be positive for the Chinese Government, yes.

Q Okay. Now, you testified regarding an entity called

SASAC; correct?

A Yeah, SASAC, yeah.

Q And what is SASAC again?

A The State-Owned Asset Supervision Administration

Commission.

Q Okay. And as I understood it, this is a commission

that is established -- they're primarily policy planners

with supervisory control of assets that are held in

State-Owned Enterprises and their subsidiaries; correct?

A Correct.

Q Do you know how many State-Owned Enterprises are under

SASAC's control?

A Dozens.

Q Would it surprise you to know that at least as of 2009

there are over 100?

A Yeah, it wouldn't surprise me at all.

Q And that as of 2009, there are over 17,000

subsidiaries?

A Uh-huh, (Witness nods head affirmatively.)

Q Do you know to what extent SASAC is this large entity

controlling, what, billions in assets?

A Trillions probably.

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JAMES MULVENON, Ph.D. -- CROSS 148

Q Trillions?

A Yeah.

Q Do you know what role they would have in day-to-day

operations of any individual entity?

A I would be surprised if they had a significant

day-to-day role, but they're deeply involved in major

corporate decisions related to doing IPOs in foreign stock

markets, finding investment opportunities, and things along

those lines. It's a very high level policy organization.

Q Okay. So their job, as you understand it, isn't to

run any of the entities below it. It's really to serve sort

of in this supervisory function and this policy making

function --

A Yes.

Q -- is that correct?

A Yes.

Q Okay. Back to this discussion of, you know, cyber

intrusions and protecting national intelligence, you

mentioned you, you know, have had interactions with the

intelligence agencies in the United States.

The United States intelligence agencies are authorized

to engage in certain cyber intrusions to protect national

security, are they not?

A I assume so. I don't have any direct knowledge.

Q Have you heard of Presidential Directive 28, which

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JAMES MULVENON, Ph.D. -- CROSS 149

specifically allows for the collection of foreign, private,

commercial information or trade secrets to protect national

security? Are you familiar with that?

A I am.

Q And that would, in fact, authorize the U.S. Government

for national security purposes to commit what is referred to

as signals intelligence, right, cyber intelligence, cyber

activity to protect national security?

A There's one key difference, which is, that that is

commercial economic espionage to provide information to the

U.S. Government, not provide information to Exxon Mobil.

Q Okay.

A And that is an argument and a debate that I have had

with Chinese interlocutors for more than 15 years.

Q But we just discussed previously, correct, that cyber

intrusions could also be engaged in by Chinese intelligence,

including the Ministry of State Security for national

security purposes; correct?

A That is true, yes.

Q And that is something that's allowed under

Presidential Directive 28 specifically in the United States;

correct?

A Yes.

Q Okay. Now, as you work through the chart that you

talked about, you went -- talked about a number of these

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JAMES MULVENON, Ph.D. -- CROSS 150

different entities, and I'd like to talk a little bit about

a few of these entities.

First, NUAA. Can you explain, again, to the Jury what

NUAA is?

A Nanjing University of Aeronautics and Astronautics is

a very large defense industrial university, tens of

thousands of students and faculty that largely conduct

research on aviation and aerospace topics. In other words,

aircraft and space vehicles.

Q And it has undergraduates and provides undergraduate

degrees in aviation-related fields; correct?

A It does.

Q Okay. And it has graduate programs that provide

degrees, graduate degrees in these areas as well; correct?

A Yes.

Q And it has a large body of professors who teach the

courses within each of these areas of study; correct?

A Yes.

Q And NUAA also has many collaborations, relationships

with universities in the United States, are you aware of

that?

A I would find that hard to believe because NUAA is on

the Commerce Department entity list --

Q Well, let's --

A -- and, therefore, there would be restrictions about

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JAMES MULVENON, Ph.D. -- CROSS 151

sharing technology with them.

Q So it surprises you to know that they have

affiliations with Temple University, Stonybrook, Purdue

University, University of Texas, University of Virginia,

just over time?

A I, I would want to know the contents of those, and I

would want to know whether the U.S. authorities responsible

for enforcing our export control regimes know about it,

yes.

Q And, in fact, are you aware that NUAA has a broad

based alumni organization in the United States?

A In fact, that's discussed in my 2013 book.

Q And would you agree that it's highly likely that many

of those alumni are working in companies throughout the

United States?

A It's possible.

Q Okay. And you don't know to what extent any of these

entities you described in your chart that are above NUAA,

what role, if any, they have in the day-to-day operations of

NUAA; correct?

A I do have some understanding of their roles.

Q How is the leadership structure at NUAA specifically

structured?

A It is structured like most universities. You have a

thick administrative layer, followed by the academic college

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JAMES MULVENON, Ph.D. -- CROSS 152

and department systems, and then there is a parallel set of

national defense and state key labs subordinate to NUAA.

The key difference being that party Secretary of NUAA has

more power than the President of the NUAA.

Q Okay. Do you know who that individual is?

A I have no idea what his name is. No, I do not.

Q Okay. So as I understand it, what you're describing

is your general understanding of the university system, not

specifically what is taking place within NUAA itself;

correct?

A That is true, but I have direct experience having

actually attended a Chinese university for two years,

yes.

Q And when did you attend that university?

A 1991 and 1992.

Q Okay. Thank you. Now, as a university that offers

programs in aviation, that offers areas of study in

aviation, that has undergraduates and graduate students,

wouldn't you agree that as with universities all throughout

the United States, it would be very beneficial and very

common for NUAA to hold conferences and invite speakers from

overseas or elsewhere to attend?

A Yes.

Q Okay. And to have exchange programs where they bring

in an expert and have that expert present to maybe a smaller

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JAMES MULVENON, Ph.D. -- CROSS 153

group?

A Yes.

Q And in your experience, is it uncommon for

universities, particularly universities with particular

areas of study like aviation, to have relationships with

trade associations that may also operate in that area?

A Yes.

Q Okay. So nothing illegal about that in general?

Nothing improper about that in general; correct?

A No.

Q Okay. And, in fact, you, yourself, have presented at

conferences at universities; isn't that correct?

A Yes, but I don't work for an intelligence agency.

Q How many times -- well, you do work for intelligence

agencies; isn't that correct? You do contract for the

intelligence agencies?

A I do not.

Q You do not do work for any intelligence agency, the

Department of Homeland Security?

A The Department of Homeland Security is not an

intelligence agency.

Q Do they do intelligence-type work?

A Not under Title 50, no.

Q Okay. Department of Defense, they don't have any

types of functions like that?

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JAMES MULVENON, Ph.D. -- CROSS 154

A Department of Defense does, yes.

Q Okay. And you -- you testified that you, in fact,

have done work for the Department of Defense; correct?

A That is true.

Q Okay. I'd like to now talk a little bit about this

discussion -- your testimony regarding technology transfer.

That is a primary focus of a lot of your writings recently,

isn't it?

A Yes.

Q Okay. And I think you mentioned the first book that

you wrote, correct, Chinese Industrial Espionage and a more

recent book; correct?

A (Witness nods head affirmatively.)

Q Now, I'd like to ask you about technology transfer.

What do you mean by that?

A Well, as I said in my direct testimony, there is

both -- there's legitimate legal technology transfer that

are negotiated between companies, and then there is illicit

technology transfer, in which trade secrets and technology

are, in fact, inappropriately transferred.

Q All right. Let's separate that out. One, you're

talking about a body of enforcement relating to trade

secrets; correct?

A Uh-huh. Yes.

Q And that's, that's what this case is about; correct?

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Efforts to steal trade secrets under U.S. law; correct?

A Yes, correct.

Q Okay. But then you continued on. What else did you

include in that answer? You said trade secrets and other

information; right?

A Right. As you know, trade secret is a term of art

that has a specific legal meaning that does not encompass

all of the things that are stolen in industrial espionage.

Q And, in fact, there may not be a regime to enforce the

stealing -- as you would say -- or the obtaining of

information that is not a trade secret; correct?

A I'm not a lawyer, ma'am, but a lot of that would

seemingly fall under 18 U.S.C. 1831 in contrast to 1832.

Q So when you talk about technology transfer, are you

only talking about technology transfer involving trade

secrets?

A When talking about illegal technology transfer, no. I

am talking about a much broader universe than simply just

trade secrets.

Q Okay. So would it be fair to say you have had

concerns and have written about a broader body of

information that you believe may implicate national security

concerns but exchanges of which may be unregulated today?

A I, I, I -- I agree with all of that except the word

unregulated. I believe that there are other parts of the

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JAMES MULVENON, Ph.D. -- CROSS 156

Export Control Reform Act, other U.S. laws that govern the

other areas that I'm concerned about that are beyond simply

the trade secrets.

Q Okay. So you recognize there are laws governing

exchanges and obtaining of trade secrets, and you're saying

there may be other laws that govern this broader area,

including export controls or something else?

A Yes, I do -- I do believe that there are other laws

that govern the other aspects of those tech transfers.

Q Okay. But sitting here today, you can't identify

those?

A I already identified 18 U.S.C. 1831 Economic

Espionage. I identified the Export Control Reform Act.

I've identified a wide variety of complementary laws to the

trade secret theft law.

Q Now, do you recall in September of 2020, presenting at

the Fairbank Center for Chinese Studies?

A I do.

Q And do you recall testifying regarding your concerns

about non-traditional collection, and your concerns about

information that may not constitute a trade secret?

A I have a vague recollection of it, yes.

Q Okay. And in that testimony, you referred to this

concept of non-traditional collection, right, and talked

about this could be researchers in labs or information

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JAMES MULVENON, Ph.D. -- CROSS 157

exchanges involving universities; but it's this broad body

of collection that might not necessarily involve a trade

secret; correct?

A Yes.

Q Okay. And do you recall opining that your opinion at

the time was that, in fact, that broad body of collection

fell well outside of the statutes governing trade secrets

and that this was an area that may be in need of additional

enforcement?

A I agree with that, yes.

Q Okay. I'd like to talk a little bit about technology

transfer in China. On your direct testimony you mentioned

that there are legal ways, correct, that China is obtaining

information regarding foreign technology; correct?

A Yes. Foreign companies willingly enter into

agreements to transfer technology, yes.

Q Well, let's step back for a minute and talk about

China. China has been playing catch up in some of these

sectors, including aviation; is that fair?

A It is particularly true in aviation, yes.

Q And part of what China's doing -- has been doing for

many, many years is building a comprehensive system of

identifying relevant open source publicly available

information, collecting it, analyzing it, and trying to get

a leg up on what's already known, what's already done before

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JAMES MULVENON, Ph.D. -- CROSS 158

it takes the next step; correct?

A Yes.

Q Again, that's something U.S. businesses -- the U.S.

Government do all the time, isn't it?

A Just not at the scale and centrally delected

(verbatim) level that the Chinese Government does it, yes,

but it is accurate to say other people do it.

Q And, in fact, it's an attribute to the Chinese

Government, isn't it, that it's been able to develop such a

comprehensive system for collecting and analyzing publicly

available information?

A They do a very good job of it, yes.

Q They don't want to re-invent the wheel, is that

another way of describing it?

A They want to skip stages of development and save the

billions of dollars they would have to spend doing the R&D

by themselves, yes.

Q And, in fact, that's what companies in the U.S. do,

don't they? They, they find all the available R&D that's

out there and build from that?

A U.S. companies legally study what is -- the research

that is going on in other countries so that they can learn

from it, yes.

Q Okay. And to the extent China 's doing that from

publicly available information, that's perfectly legal,

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JAMES MULVENON, Ph.D. -- CROSS 159

isn't it?

A As long as that's exactly what it is, yes.

Q Okay. Now, there's -- as I mentioned, there's many,

many ways China can obtain information about foreign

technology through legal means; is that correct?

A Yes.

Q One way is reverse engineering; is that correct?

A Yes.

Q Can you describe to the Jury what reverse engineering

is?

A So you could buy a Dyson vacuum cleaner, and you could

take it a part and measure all of the components of it, and

then build a tooling and dying system and then build an

identical replica of a Dyson vacuum cleaner, and that's

reverse engineering.

In other words, taking it a part, understanding how it

works, and then rebuilding it.

Q So that's one legal way China can learn about foreign

technology, right, reverse engineering? Take the product,

take it a part, see how it's made, and seek to replicate it;

correct?

A I would say that Dyson might disagree with you about

that given that that's their patented product.

Q If they don't interfere with patent and simply learn

sort of how to make a better version of that through reverse

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JAMES MULVENON, Ph.D. -- CROSS 160

engineering --

A Well, I --

Q -- that is a way --

A -- I know, for instance, that it violates the user

license agreement for you to take a part your iPhone, so

there are restrictions that prevent you from doing that.

Q But you don't know what restrictions would apply in

China; correct?

A I would think that Dyson would have a civil case if

someone reverse engineered their vacuum cleaner, and then

started producing one that looked just like it.

Q Okay. But you don't know what law in China would

apply pertaining to this; correct?

A No, I do not.

Q Okay. You mentioned patents. Patent mining is

another way that China can learn a lot of information about

foreign technology; correct?

A Yes. Particularly patent trolling where China is

what's called a first-past-the-post patent system, which

means that the first person to patent something to China is

presumed to have the original patent, and so you could

simply copy -- as they do -- foreign patents, and then

registered those patents in China and then force foreign

companies to have to buy back their own patent.

Q So let's talk about patents. Patent filings contain a

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JAMES MULVENON, Ph.D. -- CROSS 161

lot of technical information regarding a product; right?

A Right.

Q Patent filings in the United States --

A True.

Q -- contain a lot of technical information. So by

looking at that technical information, in any specific area,

a Chinese company can learn a lot about technology in the

United States; right?

A And that's the trade off of the patent system, and

that's why many companies don't actually patent their

technologies because they don't want their competitors to

find out how things are built.

Q But this -- a lot of this information is public;

correct?

A Absolutely.

Q And it's information that's public to someone from

China as much as someone in the United States; correct?

A Yes.

Q Okay. Another way -- and really this is in collecting

technology, but on your direct you talked about funding for

research and development; correct?

A Uh-huh.

Q And is it fair to say that China has dramatically

increased its funding for science and technology research

and development?

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JAMES MULVENON, Ph.D. -- CROSS 162

A Yes.

Q Okay. In fact, China in 2020 spent more on research

and development in science and technology areas than the

United States, were you aware of that?

A Yes.

Q Were you aware that the R&D spending for China in 2020

was $378 billion to $134 billion in the United States?

A That sounds right.

Q So when you talk about technology transfer, China may

be obtaining technology -- technological information

overseas, but they're spending a lot of money today and over

the last decade on their own research and development; isn't

that correct?

A That is correct.

Q Another way that China can obtain information about

foreign and technology is joint ventures, isn't it?

A Yes.

Q And, in fact, many, many multinational corporations

from the United States have entered into joint ventures in

China; isn't that correct?

A It is.

Q And, in fact, GE itself has joint ventures in China;

correct?

A I don't have direct knowledge of that.

Q Are you aware of the GE AVIC -- and this is the

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JAMES MULVENON, Ph.D. -- CROSS 163

company you talked about earlier, the aviation company. Are

you aware of a joint venture between GE and AVIC to

manufacture avionic systems?

A I am not.

Q Okay. How about a joint venture between AVIC and

Honeywell, another company in the United States that's been

discussed today?

A I'm not aware of that specific arrangement.

Q How about Boeing, are you familiar with a joint

venture between AVIC and Boeing?

A I know Boeing does co-production of airplane tails and

doors in Xi'an; but other than that, I'm not aware of

anything.

Q And these are joint ventures with AVIC, a company you

testified about earlier; correct?

A Yes.

Q Okay. So apparently these companies at least view

them as a, a legitimate and viable business partner and one

that is worth entering into a joint venture; correct?

A Sure.

Q Okay. Foreign R&D labs, that's another way that China

can gain information and access to foreign technology;

correct?

A Yes.

Q Can you describe to the Jury sort of foreign labs in

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JAMES MULVENON, Ph.D. -- CROSS 164

China, is that a growing area?

A So foreign labs in China --

Q Correct.

A -- is that what you said? Yes. So about a decade

ago, the Ministry of Science and Technology that I mentioned

in the chart as away of accelerating technology transfer

began to insist that companies doing business in China open

up R&D labs inside the country, which then would have

Chinese students and people working there as a way of

facilitating technology transfer, yes.

Q And, in fact, I think you've described it as China

leveraging its market, the need for these companies, the

desire for these companies to come into China to obtain that

access to that technology; right?

A Yes. The primary motivation for foreign companies

transferring their technology inside labs like that is

precisely to convince the Regulator Ministry to give them

access to the China market.

Q And I think you've got a segment in your book you talk

about trade for technology; correct?

A Uh-huh, yes.

Q And is that what you're talking about here?

A Yes.

Q So it's really a pay-to-play system?

A Yes.

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JAMES MULVENON, Ph.D. -- CROSS 165

Q And that's not illegal?

A It is not.

Q If China wants to enter into a contract with GE

Aviation and have GE Aviation turn over its proprietary

information to get a foot in the door, that's a legal

method of obtaining access to that technology; is that

correct?

A As long as that technology is not export controlled,

yes.

Q Okay. And there are a lot of reasons these

multinational corporations want to have access to China;

correct?

A Almost entirely financial, yes.

Q Okay. What are some of the reasons from your -- in

your experience that a multinational corporation would agree

to set up a lab in China?

A Greed.

Q Okay. How about tapping into the expertise of the,

the students, the experts in the field?

A Sure. Cheap labor.

Q Cheap labor. Maybe more educated labor; correct --

A Yes.

Q -- in a specific area? Isn't another reason for these

labs and the reason these multinational corporations want to

go into these labs that it helps them improve the

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JAMES MULVENON, Ph.D. -- CROSS 166

penetration of the Chinese market?

A The research I've seen suggested it primarily improves

what's called localization of the product, so it makes the

product more amenable to the specific features of the China

market.

Q So you may have a product in the U.S., take the

iPhone --

A Yeah.

Q -- that you know U.S. consumers want certain functions

on it; correct?

A Uh-huh.

Q But maybe the Chinese market, a very large Chinese

market may prefer different functions?

A Uh-huh.

Q Are you saying one of the benefits of these labs is

that helps a company understand these differences and tailor

their product more to that local market?

A The research suggests that that's the primary benefit

that has been obtained from these foreign labs over the

years.

Q So there are benefits to these companies in setting up

these labs?

A Yes.

Q They recognize they may have to give up some of their

rights in technology and proprietary information, but

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JAMES MULVENON, Ph.D. -- CROSS 167

they're making a business decision that that is worth the

cost of breaking into that market and getting the know-how

they need to sell in that market; correct?

A That is correct, yes.

Q Okay. And, in fact, since 2000, since -- there has

been an explosion in the number of foreign R&D labs situated

in China; isn't that correct?

A Yes.

Q Okay. I've seen numbers saying from two thousand

thirty labs to over twelve hundred and two ten. I'm sure

it's even larger now. Does that sound about right to you?

A That's in the ballpark, yeah.

Q And these companies can include Microsoft, IBM,

Motorola, Siemens, GE; is that correct?

A Yes.

Q And, in fact, I believe you may have referenced in one

of your writings that GE actually developed its ultra

compact medical imaging technology in China in Beijing at a

lab?

A Yes.

Q Now, you also talk about another popular arrangement

that some of these entities do, and that's to set up a lab

but to go to a university and set up a lab at the

university; correct?

A Yes.

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JAMES MULVENON, Ph.D. -- CROSS 168

Q What are the benefits, in your experience, of setting

up a research and development lab at a Chinese

university?

A Easy access to knowledgeable professors and students.

Q And it helps them build relationships and ties;

right?

A Yes.

Q To individuals that may help them then develop the

market that they want to have in that country to sell their

product; correct?

A Yes.

Q And it's also a way to educate potential employees;

correct?

A Yes.

Q And introduce new products to local markets; correct?

A Yes.

Q So, again, another legal way China is leveraging its

market to obtain science and technology information legally

from companies overseas; correct?

A Yes.

Q Okay. Another area of -- I think, you had referred to

this as non-traditional collection or talent programs. Can

you explain to the Jury what a talent program is?

A So the Chinese -- we've identified about 507 national

and provincial level talent programs, and what they are are

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JAMES MULVENON, Ph.D. -- CROSS 169

efforts by organizations at those levels to identify

scholars living abroad. In many cases it's members of the

Chinese diaspora -- so people who have left China to go

study abroad and then stayed abroad working -- and to give

them financial grants to conduct research; but there's

always a very specific requirement that says that they have

to return to China for periodic short periods of time,

interact with their Chinese colleagues and in some cases

share or turn over the rights to the technology or the, or

whatever they develop using that money.

And so this is a very popular thing for China to do;

and like I said, there are hundreds of these different

talent programs.

Q So China identifies experts, many who are Chinese

nationals or Chinese origin; correct?

A Correct.

Q Who may be in the United States, who have a high level

of expertise in some area --

A Uh-huh.

Q -- they may be a researcher, they may be a professor,

but often these are looking at people who are highly

qualified; is that correct?

A Yes.

Q And China is -- has developed programs to encourage

them to come back to China to use their expertise and apply

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JAMES MULVENON, Ph.D. -- CROSS 170

their expertise to help China develop technology science in

certain areas; correct?

A That is correct.

Q And, again, this is a perfectly legal relationship,

correct, or can be?

A Can be provided that they follow the rules. You're

aware that there are dozens of cases around the country of

people who are being charged with wire fraud and tax fraud

and Visa fraud for failing to report that income either to

their home university or to the U.S. Government agencies

that were also providing them with parallel grants.

Q I'm well aware of most of those cases, and, in fact, I

think you just explained that many of those cases, if not

the majority, have been brought under statutes different

from the statutes at issue in this case; correct?

MR. McKENZIE: Objection, Your Honor. We're

getting pretty far afield from the scope of direct

examination.

THE COURT: Overruled. Ms. Cors, it's after 4:30.

How much more do you have?

MS. CORS: Your Honor, I can finish up probably in

15 minutes.

THE COURT: 15?

MS. CORS: 15. Or if you would like to break, I'm

fine finishing up tomorrow morning.

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JAMES MULVENON, Ph.D. -- CROSS 171

THE COURT: Once she finishes her 15 minutes, then

he gets to ask more questions, and then she gets to ask more

questions.

One of the things I try to do is keep my promises

to the Jurors. I told you you'd go at 4:30. If we stay

until five, would it be a problem? If it is, raise your

hand? And I'm not going to be offended.

(No Jurors raised their hand.)

THE COURT: You can stay here and get this done; is

that right?

(The Jurors nodded their heads affirmatively.)

THE COURT: Did you wish to be heard, sir?

MR. McKENZIE: Yes, I just want to point out that

the witness has --

THE COURT: I can't hear you.

MR. McKENZIE: I just wanted to point out that the

witness has a flight tonight, so if we can try to finish

today, I would appreciate it, Your Honor.

THE COURT: Well, you can be a part of that. Go

ahead, Ms. Cors.

MS. CORS: Thank you, Your Honor.

BY MS. CORS:

Q Another legal method of technology -- learning about

technology is expert exchanges; correct?

A Yes.

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JAMES MULVENON, Ph.D. -- CROSS 172

Q Okay. And this could be when a university, a trade

association, someone -- other entity invites experts from

overseas to come share general knowledge about an area of

study, aviation, for example; correct?

A Yes.

Q These are very common in the United States, are they

not?

A Yes.

Q Holding conferences where individuals from around the

world come to share information about the level of where the

technology is at any given moment in an industry is very

common; correct?

A Yes.

Q And you're aware that companies like GE Aviation even

invite people in to talk about best practices or, you know,

the research that's out there?

A Yes.

Q Okay. And, again, a perfectly legal way to obtain

information regarding foreign science and technology and

developments; correct?

A Yes. There are rules that need to be followed; but as

long as those rules are followed, than it is legal, yes.

Q Back on this open source system, China has an

extraordinary well-developed expansive system for collecting

open source information; correct?

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JAMES MULVENON, Ph.D. -- CROSS 173

A It's very impressive, yes.

Q And, in fact, that's the subject of an entire chapter

in your book; is that correct?

A Yes, I did not write that chapter; but, yes, you're

right.

Q Okay. And as we've discussed, the collection of

publicly available open source information is perfectly

legal in the United States, around the world, and very

common; correct?

A Yes.

Q And applying analysis -- taking that information,

analyzing it, is not nefarious either. That's something

companies and governments do all over the world, don't

they?

A Yes.

Q And to the extent this information is publicly

available as open source information, you don't see anything

illegal or improper about collecting it?

A I've built a career on it.

Q And the fact that a government agency in China may be

involved in identifying what information is needed or

helping to narrow down what information to collect, that

doesn't make that collection illegal, does it?

A Open source collection is not illegal, no.

Q Okay.

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JAMES MULVENON, Ph.D. -- CROSS 174

THE COURT: This is beginning to sound redundant.

MS. CORS: Okay. I'll move on, Your Honor. If

you'll give me just a minute, Your Honor.

(Ms. Cors reviews her notes.)

BY MS. CORS:

Q And when you talk about open source information, I

believe in one of your recent presentations and in your

recent book, you talk about open source collection can also

include verbal information; is that correct?

A Yes.

Q And what is verbal information? Can you explain that

to the Jury?

A It's information that isn't written down. It's just

information that is shared as I'm talking to you right now.

Q And I think you opined that it's an area of

intelligence not normally associated with open source and

usually something that clandestine intelligence services

would engage in, but you've actually -- or the authors of

your book prize it for timeliness and accuracy; is that

correct?

A Yes.

Q So you collect documents that are open source, but

then it can be efficient, give you more current information,

help provide context if you talk to individuals about that

information; correct?

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JAMES MULVENON, Ph.D. -- CROSS 175

A Correct. One of the concerns about the talent

programs is that that's precisely why it's being used to

fill-in the gaps that are missing in documentary evidence.

Q But filling in gaps is not necessarily illegal;

correct?

A Not if the information isn't protected, no.

Q Okay. And specifically if it's not a trade secret;

correct?

A Correct.

MS. CORS: One minute, Your Honor.

(Ms. Cors confers with co-counsel.)

MS. CORS: I have no further questions, Your Honor.

THE COURT: Very well.

MR. McKENZIE: Your Honor, the Government has no

further questions for this witness.

THE COURT: Very well. Sir, you may step down.

You're free to go.

THE WITNESS: Thank you, sir.

(The witness exited the witness stand.)

THE COURT: Ladies and gentlemen of the Jury,

you've had a big day. You've done a great job. Thank you

for hanging in there.

It's especially important when you go home today

that you remember, don't talk about it. When somebody you

love says, oh, what happened? Who testified? What kind of

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176

case is it?

You answer one of those questions, and you're out

talking about the case outside the walls of this room. So

take the break.

No talking about the case with anybody, including

yourselves or anybody at home. No checking it out on the

news, if any. No Google, Twitter, Instagram, Snapchat, none

of that electronic checking. Put it behind you for the

evening.

Enjoy your break; and, remember -- I'll tell you

this every day -- continue to keep an open mind. We're just

getting started. But the thrust of my message is, good

effort.

Out of respect for you, we want to start tomorrow,

same deal, be in the courthouse by 9:15, so we can try and

get you at 9:30. I'll be working hard to accomplish that.

If you wish to pray for me tonight, you're welcomed

to. You're not required to.

Out of respect for you, we'll rise as you leave.

COURTROOM DEPUTY: All rise for the Jury.

(The Jury exited the courtroom.)

THE COURT: Jury has a left the room, and the door

is closed. Is there anything that requires my attention

before we recess for the day from the Government?

MR. MANGAN: No, Your Honor.

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177

THE COURT: From the Defense?

MS. CORS: No, Your Honor.

THE COURT: Good effort. We're in recess until

tomorrow.

COURTROOM DEPUTY: This Court's now in recess.

(The trial was recessed at 4:43 p.m.)

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CERTIFICATE OF REPORTER

I, Julie Hohenstein, Federal Official Realtime

Court Reporter, in and for the United States District Court

for the Southern District of Ohio, do hereby certify that

pursuant to Section 753, Title 28, United States Code that

the foregoing is a true and correct transcript of the

stenographically reported proceedings held in the

above-entitled matter and that the transcript page format is

in conformance with the regulations of the Judicial

Conference of the United States.

s/Julie Hohenstein

__________________________________ OCTOBER 27, 2021

JULIE HOHENSTEIN, RPR, CRR, RMR

FEDERAL OFFICIAL COURT REPORTER

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