By Ben Blanchard
DANDONG China (Reuters) - China is investigating a Canadian couple who ran a coffee shop on the Chinese border with North Korea for suspected theft of military and intelligence information and for threatening national security, China's Foreign Ministry said on Tuesday.
The official Xinhua news agency identified the two as Kevin Garratt and Julia Dawn Garratt. In a brief report, Xinhua said the State Security Bureau of Dandong city in northeast Liaoning province was investigating the case, adding it involved the stealing of state secrets.
Neither the Foreign Ministry nor Xinhua said if the couple had been detained, although the ministry said the Canadian embassy in Beijing was notified on Monday and that the couple's "various rights have been fully guaranteed".
Canada's Globe and Mail newspaper said the Vancouver couple had been living in China since 1984 and had opened a coffee shop called Peter's Coffee House in Dandong, a key gateway to reclusive North Korea, 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. A family friend said the Garratts had three children.
"Kevin Garratt and his wife ... are suspected of collecting and stealing intelligence materials related to Chinese military targets and important Chinese national defense scientific research programs, and engaging in activities that endanger China's national security," the Foreign Ministry said in a short statement.
The Canadian embassy said it was aware of reports that two Canadians had been detained in China and was gathering information on the matter.
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 companies such as aircraft and train maker Bombardier Inc.. In response, Beijing accused Canada of making irresponsible accusations that lacked credible evidence.
"SEE YOU SOON!"
China's state secrets law is notoriously broad, covering everything from industry data to the exact birth dates of state leaders. Information can also be labeled a state secret retroactively.
In severe cases, the theft of state secrets is punishable with life in prison or the death penalty.
One of the Garratts' sons told the Hong Kong-based South China Morning Post newspaper that he didn't believe the accusations.
"It sounds so wildly absurd," said 27-year-old Simeon Garratt, who lives in British Columbia. "I know for a fact it's not true."
He said he last spoke with his parents on Monday.
A second son, Peter Garratt, who lives in Dandong with his parents, said in an email to Canada's CBC News that he received a call from the State Security Bureau in Dandong asking him to come in.
"They also asked me to pick up some clothes and toiletries for them, so I assume they are at the bureau," he wrote.
In an earlier on-air interview with CBC News television, Peter Garratt said that at first he thought the news was a joke.
"It sounds ridiculous," he said. "Military secrets? It sounds like something out of a movie or something. Those are the accusations, but I have no idea where they are coming from or how it even came about."
The Garratts' western-style restaurant, which bears a sign touting french toast and hot dogs, has a view of traffic flowing across the Yalu River that divides China and North Korea.
Shades covered the windows when a reporter visited on Tuesday, and the entrance was shut up. A chalkboard sign in a window read in English: "SORRY, WE ARE CLOSED".
"See you soon!" it added, with a smiley face underneath.
The couple also had a side business helping intrepid travelers plan tours to North Korea, the Globe and Mail reported.
"It was open during the day (on Monday), and the police came during the evening," a woman working in a seafood restaurant next door to the cafe said.
Beijing is very sensitive about its relationship with North Korea, which has been hit with sanctions by the United Nations several times over its banned nuclear and missile programs and whose ruined economy is kept afloat with Chinese aid.
Dandong is a stopover for North Korean traders and officials traveling between North Korea and northeast China. It is also a magnet for foreign reporters seeking information on one of the most isolated countries in the world. The city is home to an air force base, according to Chinese military blogs.
The cafe is only three blocks from the Friendship Bridge, which spans the Yalu River, and its website calls the venue the "perfect stop-off while en route to, or returning from, the Hermit Kingdom".
A large police station is located two doors down, and a sign posted near the river warns passers-by not to photograph or film military installations.
The shop also runs a weekly "English Corner" conversation club, where Chinese can practice speaking English. A map of the world posted on a wall inside the shop bore the words "where are you from?" with bright pushpins at different locations.
The Globe and Mail said the shop was named after the couple's youngest son, Peter. The couple has three children, said David Etter, an American who knew the family and had run a restaurant in another city bordering North Korea. He told Reuters the Garratts had lived in Dandong for at least six years.
Canada's right-leaning Conservative government has had an uneven relationship with Beijing since taking power in 2006.
"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 as saying by the Globe and Mail.
On taking office, Canadian Prime Minister Stephen Harper initially kept his distance from China, citing human rights concerns. Under pressure from business in Canada, he then 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 ($64 billion) in 2012 and C$72.9 billion in 2013, according to official Canadian data.
In July, Chinese prosecutors charged British corporate investigator Peter Humphrey and his American wife Yu Yingzeng with illegally obtaining private information. The couple were detained last year following work they did for the British drugmaker GlaxoSmithKline Plc (GSK) and their trial is set for Aug. 8 in Shanghai.
(Additional reporting by Michael Martina, Megha Rajagopalan and Li Hui in Beijing and Brenda Goh in Shanghai; Editing by Dean Yates, Mike Collett-White and Peter Galloway)