High profile China-Taiwan spy case sends tremor through strengthening ties

Taiwan's arrest of its highest-level suspected spy for China will tickle Beijing, irritate Washington, and embarrass the local government but have little lasting affect on efforts by the three sides to get along, despite a history of tensions.

China stands to gain another point from from the Jan. 25 arrest of Taiwan Gen. Lo Hsien-che, who is accused of steadily leaking it secrets since 2004, analysts say, as the case may cause US officials to question their military involvement in territory that Beijing claims as its own.

Meanwhile, Washington should wonder whether Lo handed over information on low-key but high-tech and multilayered US military cooperation with its strategic ally Taiwan, say observers. China sees itself as the owner of self-ruled Taiwan and staunchly opposes US military aid to the island.

"Washington will not forget, and Beijing becomes a big winner if this weakens Taipei-US ties," says Lin Chong-pin, strategic studies professor at Tamkang University in Taiwan.

Taiwan's military must investigate further to find out what General Lo leaked in what officials call their worst spy case ever, says deputy defense minister Andrew Yang.

Lo had met Chinese counterparts offshore, complicating the case, says Mr. Yang. He adds that the probe may point to additional suspects but would not specify what information might have been leaked.

Taiwan media says Lo, undetected because of his rank, turned over material on a Taiwan-US Pacific Command joint military strike information-sharing platform, proposed sales of Apache helicopters made by Boeing and an island-wide optical cable network.

China has claimed Taiwan since Chiang Kai-shek's Nationalists fled to the island after losing the Chinese civil war to Mao Zedong's Communists. Both sides continue to arm themselves in case of war with the other side just 160 km (100 miles) away.

Even as relations have warmed quickly since 2008 through trade talks under Taiwan's China-friendly President Ma Ying-jeou, the two historic foes have avoided discussion of far more sensitive military issues.

Conversely, Taiwan is pleading with Washington to sell it more US-made weapons systems as the island falls behind China's quickly modernizing armed forces.

Washington risks its own tense but improving relations with global economic powerhouse China by approving any new arms sales to Taiwan and may hold off further as the spy case unfolds, political experts say. Beijing scolds Washington after every Taiwan arms sale.

The de facto US embassy has made no comment on the arrest.

Taiwan, for its part, may look bad at home for allowing the suspected espionage, which could reach back as far as the 1960s.

But the next election in Taiwan, where voters are deeply divided on China policy, is at least nine months away. That gives ruling party officials time to turn the arrest in their favor before the next face-off against the anti-China leading opposition party.

If the case is processed fast and Taiwan follows up with tougher state security rules, voters may see the government as tough on spying.

"In many ways this is evidence that Taiwan's counter-intelligence capabilities are still good," says Wendell Minnick, Asia bureau chief with Defense News. "They caught someone who was working for the Chinese using third country locations to meet. That makes it difficult to locate and identify someone who is working for the other side."

China-Taiwan spy cases come up regularly as trade and transit channels increase but seldom involve ranking people in government. Most are dealt with quietly as China and Taiwan, realizing that even friends can spy on each other, get on with their economic cooperation agenda.

The last major China case came up in November. Taiwan military intelligence Col. Lo Chi-cheng was arrested then over alleged spying that was said to threaten the island's security.

The arrest last month stands out because of the general's unusually high rank, the deputy defense chief says. The next move, he adds, is "damage control" to keep military secrets at home.

Some doubt the would-be leaks offer China any real edge as the odds of war fade as Beijing, Taipei, and Washington strive to get along. Recent military buildup in Taiwan is seen geared more toward improving bargaining power than expectations of a conflict.

"It's not clear to me just how much access General Lo [Hsien-che] had to truly important classified information so I doubt that militarily this will prove to be that big a security loss," says Ralph Cossa, president of the Pacific Forum CSIS think tank in Hawaii.

"In short, if this is the worst case of espionage in 50-60 years, then Taiwan is doing pretty good for itself," says Mr. Cossa.