Chinese police highlight crime crackdown in strategically important finance, tech sectors

Police in Shanghai have said a string of arrests in connection with the theft of hi-tech trade secrets was the result of a stepped up effort to protect the strategically important sector, as well as a renewed crackdown on financial crimes.

Fourteen suspects were detained and seven servers confiscated after police were tipped off that former employees of an unnamed chip supplier had stolen the firm’s trade secrets, which might lead to huge financial loss, the police said at a press conference on Thursday.

The company’s former managers established their own start-up company after quitting, and lured other colleagues at the company who worked in semiconductor research and development to join their operation with promises of stock shares and high pay, said Cai Ye, an officer who had worked on the case.

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The managers urged staff to take screenshots and copy sensitive information, Cai said, which was then used to develop their own chip. Investigators discovered that the newly developed chip was 90 per cent similar to the original chip.

Cai cautioned that Chinese tech companies need to improve internal security and report any theft of trade secrets, classified information or other corporate crimes to the police.

The decision to publicise the case was made as law enforcement agencies around the country tried to draw attention to their battles to improve China’s business environment, which they said will help improve China’s sluggish economic growth.

In Shanghai this year, authorities have focused particular attention on financial crimes, fighting against increasingly complex criminal tactics, cracking over 4,000 cases and recovering more than 9.12 billion yuan (US$1.28 billion) in stolen proceeds, according to police.

The stepped-up enforcement came as more attention has been focused on Shanghai’s role in China’s economy and technical innovation. During a recent inspection tour to Shanghai by Chinese President Xi Jinping, he stressed the city’s importance as an innovation leader, adding that it needed to create a fair, competitive market for companies and attract talent.

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Zhang Yulan, deputy director with the Economic Investigation Corps at the Shanghai Municipal Public Security Bureau, said the police have focused on many kinds of illegal financial activities, including tax fraud, insider trading, credit fraud, loan sharking and money laundering. They have cooperated with authorities in 27 countries and regions, including Morocco and Ethiopia, to extradite suspects.

Zhang said the police crackdown on offences like theft of commercial and trade secrets in hi-tech sectors, as well as copyright infringement investigations in fields like auto parts and children’s toy manufacturing, and publishing would improve Shanghai’s business environment by protecting the rights of such entities.


The cryptocurrency scandal gripping Hong Kong

The cryptocurrency scandal gripping Hong Kong

“The Economic Investigation Corps will improve our ability to prevent financial crimes, do our best to safeguard the national economic security, protect a first-class business environment and the people’s fundamental interests,” Zhang said.

As the internet and social media have developed in recent years, police have had to tackle increasingly sophisticated financial crimes. The police said many culprits have used short videos and online advertising to lure investors into schemes that are linked to popular themes like “artificial intelligence”.

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