China’s Foreign Ministry denounced the criminal case as “pure fabrication,” but it has neither confirmed nor denied that Mr. Xu was an intelligence officer. China’s relatively muted reaction could be an effort to minimize attention on an embarrassing intelligence failure and leave room for quiet negotiations for an exchange.
Mr. Xu’s was the most high profile of several recent cases, including two others that had links to the Ministry of State Security’s branch in Jiangsu Province, which extends north from Shanghai.
In September, the Justice Department announced the arrest of Ji Chaoqun, a 27-year-old graduate student who had joined the Army Reserves under a special waiver for foreigners.
The F.B.I. affidavit in the case said that Mr. Ji’s handler — presumably Mr. Xu — had been arrested, allowing the bureau to send an undercover officer to meet the student in April. Mr. Ji, the affidavit said, had been recruited to gather background information about eight potential recruits for the Jiangsu branch.
Mr. Xu, who went by at least two aliases, often claimed to represent the Jiangsu Association for International Science and Technology Cooperation and Nanjing University of Aeronautics and Astronautics, both based in the provincial capital, Nanjing.
The reasons Jiangsu has become a hotbed of China’s cyberespionage are not entirely clear, though it is an important manufacturing center, with many foreign investments, and is thus one of China’s richest provinces.
In 2016, the director of the Jiangsu intelligence branch, Liu Yang, declared that “the national security departments should actively cooperate and promote enterprises” in their efforts to expand and compete globally, according to a report from the Suzhou General Chamber of Commerce. In January, Mr. Liu was promoted and is now the vice governor of the province.