According to a report prepared by Republican staff of the Senate Homeland Security Committee and promptly rejected by the Fed as “unfair, unsubstantiated, and unverified,” the Federal Reserve lacks adequate systems to counter a “malign” effort by China to gather inside information on the US economy and monetary policy.
The report, released on Tuesday, is heavily based on information provided by the US central bank itself, dating back to a 2015 internal probe of the “P-Network,” a group of 13 people at eight regional Fed banks whose patterns of “foreign travel, emails, details in curriculum vitae, and academic backgrounds” raised concerns.
The Federal Reserve Bank of Washington and its 12 quasi-independent regional banks employ thousands of economists, many of whom are from other nations, particularly China. The committee report agreed that this collaborative approach improves the Fed’s capacity to analyze the economy and set policy.
Rather than intellectual partnership, the episodes detailed in the dossier amounted to “a persistent attempt by China over more than a decade to obtain influence over the Federal Reserve,” according to the study.