2 Canadians suspected of stealing state secrets in China

China is investigating two Canadians who ran a coffee shop on the Chinese border with North Korea for suspected theft of state secrets involving military and national defence research, the official Xinhua news agency said on Tuesday.Xinhua identified the two as Kevin Garratt and Julia Dawn Garratt, but did not say whether they had been detained. In a brief report, it said the State Security Bureau of Dandong city in northeast Liaoning Province was investigating the case.

Canadian newspaper ‘The Globe & Mail’ said the Vancouver couple had been living in China since 1984 and opened a coffee shop called Peter's Coffee House in Dandong in 2008. The couple previously worked as teachers in southern China.

It said the whereabouts of the Garratts was unknown. Calls by Reuters to the coffee shop went unanswered. The Canadian embassy in Beijing also could not be reached for immediate comment.

China's state secrets law is notoriously broad, covering everything from industry data to capital punishment statistics. Beijing is also sensitive about its relationship with North Korea, whose ruined economy is partly kept afloat with Chinese aid. Information in China can be labelled a state secret retroactively.

The investigation into the Garratts comes a week after Canada took the unusual step of singling out Chinese hackers for attacking a key computer network and lodged a protest with Beijing.

Canadian officials have said "a highly sophisticated Chinese state-sponsored actor" broke into the National Research Council, the government's leading research body, which works with big firms such as aircraft and train maker Bombardier Inc. In response, Beijing accused Canada of making irresponsible accusations that lacked credible evidence.

The Garratt's western-style coffee shop has a view of traffic flowing across the Yalu River that divides China and North Korea, The Globe & Mail newspaper said. The couple also had a side business helping holidaymakers plan tours to North Korea, it added.

The coffee shop's website says the cafe is only metres from the Friendship Bridge that spans the river, calling the venue the "perfect stop off while enroute to or returning from the Hermit Kingdom". The shop also runs a weekly "English Corner" conversation club, where Chinese can practice speaking English.

The newspaper said the shop was named after the couple's youngest son. It was unclear how many children they had and whether they had also been living in Dandong.

"It's completely unprecedented. We haven't had this sort of thing (before)," Charles Burton, a Brock University professor who served as a diplomat at Canada's embassy in Beijing in the early 2000s, was quoted by The Globe & Mail as saying.

Canada's right-leaning conservative government has had an uneven relationship with Beijing since taking power in 2006.

Citing human rights concerns, Prime Minister Stephen Harper initially kept his distance. Under pressure from business in Canada, he sought to reach out to Beijing.

China is Canada's second most important trading partner after the United States, and bilateral trade is growing. Total Canada-China trade was C$69.8 billion in 2012 and $72.9bn in 2013, according to official Canadian data.

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