The Case for Economic Espionage

For decades, both adversaries and allies of Washington have spied on American companies to gain insights into innovation in the United States. During the Cold War, KGB spies routinely sought to steal trade secrets from U.S. industries. In the 1980s, French intelligence stalked American technology firms. In recent years, China has been especially aggressive on this front. The Center for Strategic and International Studies recorded 224 incidents of Chinese-sponsored espionage against the United States that occurred between 2000 and 2023, of which more than half targeted commercial technologies. Invariably, the goal of this kind of espionage is to help key sectors in the spying country rapidly replicate or surpass American advances. As the former National Security Agency director Keith Alexander memorably put it, cybertheft of U.S. technologies amounts to “the greatest transfer of wealth in history.”

Yet amid this brazen robbery, the U.S. intelligence community has long maintained a policy against spying on foreign companies to provide a commercial advantage to U.S. businesses. That self-imposed ban on economic espionage was reaffirmed repeatedly throughout the Cold War and in the decades since, including by President Barack Obama, who codified it in 2014 and tried to get China and other countries to follow suit. At the time, this made sense. U.S. economic policy had long forsworn government intervention in the private market, and providing select firms with secret intelligence would unavoidably distort the economy. In any case, through much of the Cold War and early post–Cold War era, most technological innovation important to national security emerged under government auspices rather than in the commercial market. Moreover, its lead in many technologies meant that the United States had much more to lose than to gain by legitimizing commercial spying.

Today, these rationales no longer hold. To an ever-growing extent, U.S. national security now depends on private-sector innovations. In such disparate areas as artificial intelligence, semiconductors, quantum science, bioengineering, next-generation energy, and space, breakthroughs that are crucial to the country’s power and influence are emanating from private companies. At the same time, even as technological supremacy has become increasingly central to national security, the U.S. lead in many crucial advanced technologies is being contested or even erased by China. By abstaining from economic espionage, the United States has tilted the playing field against itself and magnified the Chinese threat.

To right the balance, the United States should allow U.S. intelligence agencies not only to collect commercial secrets from foreign companies but also to deliver that intelligence where it could have the greatest impact: to the firms producing the frontier technologies that will be vital to U.S. national security in the years to come. In September, the Trump administration appeared to take a step in this direction when it disclosed that the CIA and other intelligence agencies had begun to broaden their long-standing espionage efforts against China, including Chinese industry.

But a comprehensive strategy requires the United States to formally lift its existing prohibition on economic spying. The government must also establish robust rules and oversight to ensure that commercially valuable intelligence shared with the private sector serves the national interest, preserves competition, and, critically, is not used to advance partisan, political, or personal ambitions. Although economic espionage is not without risk, unilaterally renouncing the practice in the current global environment is far more dangerous.

PARIS IS LISTENING

Although the United States has generally avoided commercial spying, it is not without precedent in American history. During the founding period, both early states and the newly formed Republic paid bounties to private citizens to encourage the theft of crucial technology from Britain. To Alexander Hamilton, the first secretary of the treasury, obtaining pilfered industrial secrets was a crucial way to spur the country’s economic independence from its former colonial master. But as Hamilton’s economic interventionism gave way to Thomas Jefferson’s laissez-faire approach, the bounty programs faded away.

The first modern U.S. debates about economic espionage date to the Cold War. In the early 1970s, when Japanese manufacturers began to pose a threat to the American auto industry, the Nixon administration considered having the government provide intelligence to Detroit automakers to improve their commercial prospects. But the president’s Foreign Intelligence Advisory Board rejected the plan as “inappropriate.” During the Carter administration, Stansfield Turner, the director of the CIA, again broached the idea of economic espionage internally at the agency but also met with strong resistance. As Turner later recounted, CIA officers “did not see helping business as being part of their mission of promoting national security.”

At the end of the Cold War, as the national security community turned its focus away from ideological and military competition with the Soviet Union, economic security took on new importance. In a 1991 article in these pages, Turner, who had stepped down from the CIA at the end of the Carter administration, called on U.S. intelligence agencies to pursue “economic intelligence” to prevent the country from being surprised by technological breakthroughs elsewhere. “If economic strength should now be recognized as a vital component of national security, parallel with military power,” he asked, “why should America be concerned about stealing and employing economic secrets?”

In 1996, the CIA told the Senate Intelligence Committee that it had identified numerous foreign governments that were doing precisely this—not only rivals such as China, Cuba, Iran, and Russia but also allies such as France and Israel. According to news reports, French intelligence had installed microphones in the first-class seats of Air France jets to eavesdrop on American business executives’ conversations; Pierre Marion, who served as head of French intelligence in the early 1980s, acknowledged that French President François Mitterrand had expressly ordered the government spy agency to steal the secrets of U.S. tech companies.

Nonetheless, Washington continued its self-imposed refusal to engage in the practice. Having the government provide commercially valuable secret information to select companies ran counter to the country’s ingrained free-market orthodoxy. It also ran against the deep-rooted cultures of the agencies themselves. As a case officer told CIA Director Robert Gates in the early 1990s, “I’m prepared to give my life for my country, but not for a company.” In a 1996 review of U.S. intelligence practices, a nonpartisan commission called for improvements in the quality of economic intelligence, but it also “strongly” endorsed existing policies that barred “clandestinely collecting proprietary information of foreign commercial firms” to help American companies. Summing up the thinking at the time, the commission wrote, “The role of the Intelligence Community is to provide support to the Government, not to the private sector.”

THE CHINA PROBLEM

In the early twentieth century, as China rapidly emerged as a global economic power, U.S. officials became concerned that Beijing was systematically stealing intellectual property from American companies. Under Obama, the FBI and other agencies stepped up efforts to crack down on Chinese espionage. But after the National Security Agency contractor Edward Snowden leaked embarrassing disclosures from documents—which included information purporting to show that the NSA had collected signals intelligence on a variety of foreign businesses—in 2013, the Obama administration had no interest in reopening the debate on economic espionage. Instead, it sought to strengthen the U.S. prohibition by formally codifying it—and by trying to persuade the rest of the world to follow suit.

In a 2014 presidential policy directive known as PPD-28, the Obama administration established that collecting foreign trade secrets in order to “afford a competitive advantage to U.S. companies” was “not an authorized foreign intelligence or counterintelligence purpose.” Then, during a 2015 summit meeting with Chinese leader Xi Jinping, Obama announced that the two countries had reached a “common understanding” not to “conduct or knowingly support” the “cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage.”

Two months after the Xi summit, the administration also secured a G-20 communiqué that reaffirmed that prohibition, extending it to the world’s 20 largest economies. But these commitments did not change other countries’ behavior—certainly not China’s. Although there was a brief lull immediately after the 2015 summit meeting, Beijing resumed its spying on U.S. industries a few months later.

Despite negligible evidence that the Obama strategy had gained international traction, the first Trump administration endorsed the 2014 directive, and in 2022 the Biden administration formally reaffirmed it in an executive order. Today, despite the CIA’s announcement in September that it was focusing more of its intelligence gathering on Chinese companies, the second Trump administration has not rescinded the executive order, at least not publicly.

One explanation for the survival of the norm is that it covers only a small sliver of intelligence activities. Although it forbids sharing intelligence with U.S. companies for the purpose of commercial advantage, it does not exclude doing so for security reasons. Thus, under current standards, the government can alert an AI company that Chinese spies might be seeking to steal the proprietary weights—the internal numeric parameters learned during training—of its latest frontier model or inform a bank that a weapons proliferator is seeking to open an account. U.S. spy agencies are also permitted to collect a broad array of economic intelligence to inform negotiations on trade and tax treaties, identify foreign firms that engage in bribery and kickbacks, track terrorist financing, enforce sanctions, and conduct counterproliferation operations. As I saw firsthand during my years at the CIA and the Treasury Department, this is all vital intelligence work that the existing norm does not restrict.

But the norm has also endured because economic espionage is difficult to put into practice. Which firms should receive commercial intelligence? How should the decision be made? Who gets to decide? What companies would be eligible? What standards would guide the decision? What could a company do with the intelligence? Regardless of how these questions are answered, some degree of favoritism would be unavoidable because not every company would benefit. Without neutral, well-defined, and clearly enforced rules, the practice could easily be politicized or slip into outright corruption, since public officials would be deciding which companies receive commercially valuable intelligence from the government.

Although these concerns need to be taken seriously, they no longer justify retaining the norm. U.S. national security increasingly depends on whether American frontier technology firms—companies whose dual-use products serve both commercial and government customers—can innovate faster than their Chinese competitors and field the results sooner. Warning these companies that their trade secrets are being stolen is necessary, but that alone will not protect U.S. technological leadership, nor will loosening collection rules so that the intelligence community can pursue a broader range of targets in China. To address the daunting tech-dependent national security challenges the country now faces, Washington needs to rewrite the rules on economic espionage with the explicit aim of helping U.S. frontier firms compete—even if doing so means handing some of them a commercial advantage.

SPY VS. SPY

A new approach to economic spying fits well with the government’s expanding use of industrial policy to further national security priorities. As early as 1999, the government founded In-Q-Tel as a CIA-linked venture capital firm, which was initially seeded, and remains partially funded, with federal money; the firm invests in companies that are developing cutting-edge, dual-use technologies such as precision navigation, quantum sensing and computing, and artificial intelligence deemed critical to defense and intelligence.

More recently, the government has used national security rationales in a far more ambitious effort to support key sectors of the U.S. commercial economy. Thus, the first Trump administration’s tariffs against China, as well as the legislative tightening of export controls and screening for inbound investment, were defended on national security grounds. The Biden administration’s signature legislation, the CHIPS and Science Act and the Inflation Reduction Act, along with its “small yard, high fence” export-control policy, similarly cited national security imperatives to inhibit the free flow of commerce. The second Trump administration has taken this national security industrial policy further. Notably, the administration’s so-called Liberation Day tariffs, promoted as a key economic policy tool, relied entirely on a national security law as its statutory foundation. And the second Trump administration has invested $28 billion of taxpayer money in nearly 40 U.S. companies in the semiconductor, critical mineral, quantum technology, and energy sectors, among others.

At the same time, the way new security technologies are developed has changed. In the decades after World War II, most key innovations developed by government contractors—ballistic missiles, nuclear weapons, and stealth technology—had no commercial market. What is more, the new technologies that eventually reshaped the U.S. and global economies, including secure information systems, communications and reconnaissance satellites, jet engines, integrated circuits, and digital computers, were initially viable only because of government demand, not because of commercialization. As a result, U.S. intelligence agencies could and often did give contractors secret information to spur development, with little risk that they were enhancing the companies’ commercial prospects. Technical intelligence collected on Soviet antiballistic missile capabilities, for example, helped commercial contractors design U.S. ballistic missiles that were capable of defeating Soviet defenses. But these innovations had no commercial application.

Today, by contrast, defense and intelligence work is deeply dependent on dual-use technologies that are produced by commercial enterprises. This is true in such areas as quantum computing, biotechnology, semiconductors, next-generation energy, batteries, storage, 6G mobile communications, and high-performance computing. Consider the frontier AI models that have been developed by privately funded commercial labs. They are essential to national security for such purposes as target recognition, coordinating drone swarms, intelligence analysis, and cyberwarfare, but the same or similar models are already used by businesses and consumers across the general economy, enhancing efficiency and personal productivity. Quantum sensors provide atomic clocks and inertial tracking for submarines, aircraft, and satellites, while the same technology is used to find oil and gas deposits. And bioengineering innovations promise to provide localized biodefense—the ability to detect a biological threat and quickly deploy a custom-made countermeasure—even as they are used to produce new drugs, medical therapies, and drought-resistant crops.

An electronic board showing Shanghai stock indices, Shanghai, China, March 2026 Go Nakamura / Reuters

Recent studies have also found that China leads, or is catching up quickly, in many of these technologies. In June 2026, a Chinese lab announced that it had built the world’s most powerful supercomputer, taking the lead from a U.S. competitor. What was most surprising, however, was that the supercomputer achieved a 20 percent improvement over its closest American competitor while using a conventional architecture and traditional microprocessors rather than expensive and comparatively scarce advanced graphics processing units. In 2025, the Chinese battery maker CATL unveiled an automobile battery that relies on traditional chemistry to charge in just five minutes; the company also has perfected the mass production of next-generation sodium-ion batteries. American firms lag far behind in both.

What matters most in this competition is the performance of the American high-tech sector relative to its Chinese competitors. Beijing recognizes this. That is why, for many years, Chinese intelligence services have systematically stolen trade secrets from American and other Western companies and shared those secrets with Chinese companies. It is why in 2015, China’s State Council, building on the foundation laid by economic espionage, announced the “Made in China 2025” initiative, an extraordinarily well-resourced and deeply integrated industrial policy designed to catapult the country to global leadership in advanced manufacturing in ten key technologies by that year. And it is why, having made substantial progress on many of these goals, Beijing has carried forward the initiative in its 15th Five-Year Plan (2026–30).

U.S. leaders have also come to realize the strategic value of maintaining an edge in commercial innovation. The last several administrations have deployed an array of economic tools to protect and enhance critical U.S. tech industries while containing aggressive Chinese rivals. These include tariffs, financial backing of select U.S. companies, export and import restrictions, barriers to inbound and outbound investments, procurement bans, indictments, and financial sanctions. American diplomats have been dispatched to persuade allies and partners of the United States to work with Washington to restrict the spread of Chinese technology. Likewise, the U.S. intelligence community has devoted significant resources to understanding the nature and pace of new-technology adoption by the Chinese military.

Yet one instrument is conspicuously absent from this “all tools” approach: economic espionage. Although sharing intelligence on Chinese companies with the U.S. private sector would not, in itself, fundamentally alter the competitive landscape, neither would equity investments, export controls, or any of the other tools the government employs to enhance the relative position of American high-tech firms. The United States uses those tools because each helps incrementally. If economic spying were added to the mix, the cumulative impact of this effort would be significantly enhanced.

GET AND GIVE

The core question about economic espionage is not whether there is a strong enough national security rationale for it, but how to pursue it in a way that truly helps the United States’ frontier companies without doing more harm than good. The best way to approach the challenge is to establish formal protocols for economic espionage through both executive and congressional action. The president should issue an executive order authorizing intelligence sharing with the private sector, even if it provides the companies in question a commercial advantage; and Congress should enact complementary provisions in the annual Intelligence Authorization Act. The order and accompanying legislation must be designed so that collecting and disseminating foreign trade secrets advances defense and intelligence priorities and does not unduly distort the free market. They must also ensure that decisions about sharing sensitive intelligence are made on the merits and are not infected by partisan, political, or personal considerations.

Specifically, the executive order would need to set out which countries’ commercial sectors should be targeted for intelligence collection. Plainly, companies in China and other adversaries such as Iran, North Korea, and Russia should be fair game. And just as plainly, the companies of close allies should be off limits: the harm to our cooperative intelligence endeavors would outweigh the benefit from targeting allies’ companies for commercial espionage. Beyond these clear lines, determining the scope of economic spying would involve sensitive deliberation and discretion, which the executive order should leave to the intelligence community, with ongoing oversight from the congressional intelligence committees.

The executive order must also require that the fruits of economic espionage be shared only with specifically identified frontier tech sectors. To allow for shifting national security priorities in the years to come, the order should permit the administration, after consulting with the intelligence committees, to add new sectors, provided that they meet rigorous criteria. Although industrial policy that supports American companies’ global competitiveness may generally advance national security, recipients of economic espionage should be limited to companies in frontier tech sectors that have a clear and demonstrable national security purpose.

The executive order should state that any intelligence must be shared sufficiently broadly within the targeted industry sector—including with smaller, newer, and nonpublic companies, as well as companies that have not received other forms of special government support. This will help ensure that the competitive advantage conveyed does not entrench incumbents or impede lesser-resourced startups, whose innovations may prove crucial in the future. The specific criteria for inclusion in intelligence sharing will need to be flexible enough to account for the diversity of markets, sectors, and firms, but sufficiently objective and neutral so that the rationale for selecting a company to receive intelligence can be reliably assessed. It should also require that any firm receiving intelligence be able to use the information to advance U.S. national security and have adequate safeguards in place for personnel, cybersecurity, and other areas to protect the information it receives.

Relatedly, the executive order should determine whether to limit receipt of pilfered trade secrets and other economic intelligence to companies that are entirely American—that is, founded and operating in the United States with boards of directors made up of U.S. citizens only—or whether companies in allied or partner countries, particularly allies with which Washington routinely shares intelligence, should be included. If the decision is to allow non-American companies to benefit, deciding which countries’ companies are potential recipients should also be left to the discretion of the intelligence community to work out with the committees.

The executive order should provide specific oversight measures to ensure proper implementation. It should require the relevant intelligence agency to regularly brief congressional intelligence committee members and staff on commercial spying activities, including the intelligence shared, the recipients, and the basis for the decisions made on sharing. Congress should mirror this briefing requirement in its annual Intelligence Authorization Act and direct the inspectors general of the United States Intelligence Community, the CIA, and any other government intelligence agency involved to conduct an annual audit to verify whether the economic espionage program is advancing national security objectives and is not being used to further political or personal agendas. Again, this requirement should be codified by Congress in the legislation.

Traders at the New York Stock Exchange, New York City, September 2026 Jeenah Moon / Reuters

Congress and the administration should also agree that economic spying to help U.S. frontier industries be pursued principally through signals intelligence collected by the NSA rather than human intelligence collected by the CIA. This makes practical sense: the secrets to be harvested will be highly technical specifications, design details, and processes that principally reside on digital infrastructure, making them especially vulnerable to technical collection. Moreover, it may be easier to identify cutting-edge advancements by collecting at scale and then winnowing down the collection to locate a key insight, a process for which signals intelligence is much better feedstock than intelligence from recruited sources. Relying on remote technical collection could also avoid inflaming opposition by field officers who may not be prepared to take great personal risks to help the private sector.

Because collectors need to know what truly matters to the intelligence consumer for any collection program to deliver real value, Congress and the administration should also take steps to facilitate communication between the intelligence community and frontier tech companies in the sectors critical to national security. Put simply, targeting needs to be fairly specific—this is no less true for economic intelligence than for any other type of collection. Enabling this free flow of information and expertise will require continuing work to modernize and rationalize the security clearance process, including by accelerating efforts to lower barriers to the movement of personnel between advanced industries and the intelligence community.

Finally, while work is underway to build a formal framework for economic espionage, Congress must prevent any creeping erosion of the existing norm through the potentially corrupt dissemination of intelligence to favored companies. As a critical first step, the intelligence committees should initiate a thorough oversight investigation into how the norm has been implemented in practice and the current administration’s adherence to its prohibitions. Since the current administration has not publicly announced that it has departed from the norm, it is imperative that policymakers be fully briefed on the current situation before proceeding, particularly in light of questions about conflicts of interest in business ventures involving President Donald Trump, members of his administration, and their families.

SECURING THE FRONTIER

Crafting an exception to the United States’ unilateral self-prohibition on economic espionage will not be risk-free. Internationally, abandoning the norm against economic espionage may spur a spy race with other countries, China in particular. But there is no evidence that the Chinese intelligence services have been holding back until now because of U.S. self-restraint. And any moderation that may have existed has almost surely evaporated now that the Trump administration has publicly declared a redoubling of efforts to collect intelligence from Chinese companies.

Domestically, even with a carefully drafted executive order backed by reinforcing provisions in the Intelligence Authorization Act, an embrace of economic espionage is likely to have some distorting impact on the innovation ecosystem that has served the United States so well. And politicization and corruption are still possible, even with meticulous compliance by U.S. intelligence agencies overseen by watchful congressional committees. Still, instituting a deliberative process for sharing commercially valuable intelligence with the private sector is far better than drifting into the practice through a de facto loosening of existing norms combined with ad hoc exchanges of information.

The United States could reap crucial benefits from sharing foreign trade secrets with select tech firms. This is not to denigrate what pathbreaking American technology companies can accomplish on their own—their innovation is the envy of the world, and rightly so. But the technology problems they confront are difficult, the solutions elusive, the discoveries few and far between. That’s why what they work on are called frontier technologies. Given the ever-tightening link between national security and the commercial economy, the United States can no longer afford to withhold its most sophisticated intelligence from the companies that may well define the country’s security and power in the years to come.

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