'Healthy appetite'

Two Chinese executives pleaded guilty Wednesday in a Virginia federal court to attempting to purchase and export military-grade microchips, a violation of the U.S. arms embargo against China.

Hong Wei Xian, 32, and Li Li, 33, top executives of Beijing Starcreates Space Science & Technology Development Co., tried to buy specialized microchips that are typically used on space or military projects from an unidentified Virginia company.

"There's no secret that China has a healthy appetite for sensitive U.S. information," said Neil MacBride, U.S. attorney for the Eastern District of Virginia, in a conference call with reporters after the hearings. "The line between traditional espionage and economic espionage is becoming increasingly blurred."

MacBride noted that this latest case is one of several espionage efforts from Beijing to acquire information that could be used to modernize its military. Over the last several years, MacBride's office alone has taken on roughly a dozen cases of espionage-related activity connected to China. The U.S. placed an embargo on the export of defense items to China in 1990.

Xian and Li attempted to purchase the chips in 2008, but triggered suspicion within the Virginia technology company. The company contacted law enforcement and agents from the Immigration and Customs Enforcement began an undercover operation to catch the buyers.

Xian and Li offered $64,500 to an undercover agent for 40 microchips and asked about buying 1,000 more in staggered purchases, hoping to avoid suspicion.

The pair were arrested in September 2010 in Hungary and were transferred to U.S. marshals on April 1. They pleaded guilty to one count of conspiring to violate the Arms Export Control Act, and face a maximum of five years in prison when they are sentenced on August 26.

This is the second trial involving attempted Chinese espionage that has taken place in Virginia federal courts over the past few weeks. On May 19, Petty Officer 2nd Class Bryan Minkyu Martin admitted that he stole classified documents from Fort Bragg in North Carolina and sold them to an undercover FBI agent, posed as a Chinese officer. To avoid the possibility of life in prison, Martin agreed to plead guilty in his court-martial trial at the Norfolk Naval Station.

The Associated Press contributed to this report.

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