China’s technology acquisition for military innovation: spectrum of legality in strategic competition

ABSTRACT

The People’s Republic of China’s (PRC) acquires foreign technology to upgrade its military capabilities. We describe how PRC-affiliated actors acquire technology according to a legal, extra-legal, and illegal taxonomy based on laws in the United States and highlight each activity using illustrative examples. Policymakers in advanced industrial countries lack comprehensive data and do not have accurate estimates of the size of the problem for activities such as technology licensing, investing in technology companies, or talent programs. For intellectual property theft, the economic estimates are high but assessing the impact on military innovation remains fraught with measurement errors. Devising appropriate policy responses requires a complete inventory of methods used across the spectrum of legality to decide on technology protection priorities and allocate resources accordingly.

Acknowledgments

The authors presented an early version of this paper to the NYU Project on Innovation in China working group held in July 2021 and would like to thank Dave Denoon and Kevin Pollpeter for the invitation to that event. The authors would also like to thank Jeffrey Becker, Brian Waidelich, and Scott Harold for comments on earlier drafts of the manuscript and two anonymous reviewers for their constructive feedback on the original article submission.

Disclosure Statement

The views expressed in this paper do not represent the views of CNA nor the U.S. Department of State.

Notes

^1. PRC State Council, “National Innovation-Driven Development Strategy Outline,” Xinhua, May 19, 2016, http://www.gov.cn/zhengce/2016–05/19/content_5074812.htm; PRC State Council, 第十四个五年规划和2035年远景目标纲要 [Outline of the 14th Five-Year Plan and the 2035 Vision], Xinhua, March 13, 2021, http://www.gov.cn/xinwen/2021–03/13/content_5592681.htm; PRC State Council, 中国制造2025 [Made in China 2025], May 8, 2015, http://www.gov.cn/zhengce/content/2015–05/19/content_9784.htm; PRC State Council, “The National Medium- and Long-Term Program for Science and Technology Development (2006–2020) Outline,” 2006, translation from International Telecommunications Union, https://www.itu.int/en/ITUD/Cybersecurity/Documents/National_Strategies_Repository/China_2006.pdf.

^2. National rules for export control, investment screening, and technology protection policies vary widely so we only address the United States in this analysis. However, this taxonomy could be applied to other advanced industrial economies.

^3. Elisabeth Braw, The Defender’s Dilemma: Identifying and Deterring Gray-Zone Aggression (American Enterprise Institute Press, 2022). Braw’s “subversive economics” and the empirical cases therein are consistent with some of our examples and build a useful foundation for understanding PRC activities. However, “gray zone” analysis needs further theoretic clarification to specify how dyads interact with one another in the international system. Moreover, assessment of legality is necessary for policymakers to devise appropriate policy responses.

^4. The term 自主创新 has been translated into English as independent, indigenous, and self-reliant. Academic publications use the term indigenous innovation, so we opted for that translation here. PRC State Council, “14th Five-Year Plan and 2035 Vision Goals Outline.” For use of the term “independent innovation” see: “Xi Focus: Xi Stresses Independent Innovation during Guangdong Inspection,” Xinhua Online, October 13, 2020, http://www.xinhuanet.com/english/2020–10/13/c_139436733.htm; Xi Jinping, Hold High the Great Banner of Socialism with Chinese Characteristics and Strive in Unity to Build a Modern Socialist Country in All Respects, Report to the 20th National Congress of the Communist Party of China,” Xinhua, Oct. 16, 2022, https://news.cgtn.com/news/files/Full-text-of-the-report-to-the-20th-National-Congress-of-the-Communist-Party-of-China.pdf. Chinese language version of the report is available at http://www.news.cn/politics/cpc20/2022–10/25/c_1129079429.htm.

^5. The PRC Foreign Ministry states that MCF “aims to effectively integrate military and local resources, encourage economic and social development and national defense construction.” PRC Foreign Ministry, 军民融合 [Military-Civil Fusion], April 2023, https://www.fmprc.gov.cn/web/wjb_673085/zzjg_673183/jks_674633/zclc_674645/cgjk_674657/202104/t20210401_9176283.shtml.

^6. For a summary, see: Karen M. Sutter, “Foreign Technology Transfer Through Commerce,” in China’s Quest for Foreign Technology: Beyond Espionage, edited by William Hannas and Didi Kirsten Tatlow (London and New York: Routledge, 2021).

^7. Daniel W. Drezner, Henry Farrell, and Abraham L. Newman, eds., The Uses and Abuses of Weaponized Interdependence (Washington, DC: Brookings Institution Press, 2021). We agree with Drezner, Farrell, and Newman that research on coercive economics needs to consider “how states may leverage network structures” (p. 20), but also recognize that in understanding the range of technology acquisition activities and potential counter-responses, “bilateral interdependencies” also need further theoretical and empirical analysis.

^8. William Hannas and Huey-Meei Chang, “Chinese Technology Transfer – an Introduction,” in China’s Quest for Foreign Technology: Beyond Espionage, edited by William Hannas and Didi Kirsten Tatlow (London and New York: Routledge, 2021).

^9. Tai Ming Cheung, Thomas G. Mahnken, and Andrew L. Ross, “Frameworks for Analyzing Chinese Defense and Military Innovation,” in Forging China’s Military Might: A New Framework for Assessing Innovation, edited by Tai Ming Cheung (Baltimore, MD: Johns Hopkins University Press, 2014). Increasingly, both the U.S. and the PRC have emphasized economic competitiveness as a component of each country’s national security. However, we scoped our study to military technology since the definitional challenges of “strategic innovation” are daunting and many U.S. export controls remain premised on potential military use.

^10. In this regard, we include telecommunications infrastructure that could be used by militaries and thus include debates about 5G technology and undersea cables. For 5G and 6G networks, PRC media has touted the importance of these networks and the U.S. has listed Huawei Technologies and its non-U.S. affiliates on its Entity List. See: Fan Feifei, “5G, 6G at ‘forefront’ for High-Quality Development, Digital Transformation,” China Daily, March 14, 2023, https://www.chinadaily.com.cn/a/202303/14/WS640fc9aea31057c47ebb447f.html; U.S. Department of Commerce Bureau of Industry and Security (BIS), “Addition of Huawei Non-U.S. Affiliates to the Entity List, the Removal of Temporary General License, and Amendments to General Prohibition Three (Foreign-Produced Direct Product Rule),” 85 Federal Register 51,596, August 17, 2020, https://www.federalregister.gov/documents/2020/08/20/2020–18213/addition-of-huawei-non-us-affiliates-to-the-entity-list-the-removal-of-temporary-general-license-and. For debates about undersea cables, see: Anna Gross, Alexandra Heal, Chris Campbell, Dan Clark, Ian Bott, and Irene de la Torre Arenas, “How the U.S. Is Pushing China out of the Internet’s Plumbing,” Financial Times, June 12, 2023, https://ig.ft.com/subsea-cables/.

^11. National Bureau of Asian Research (NBR), Update to the IP Commission Report, The Theft of American Intellectual Property: Reassessments of the Challenge and United States Policy, The Commission on the Theft of American Intellectual Property, NBR, 2017.

^12. Export Control Reform Act of 2018, 50 U.S.C. § 4801–4852 (2018); U.S. Department of Commerce BIS, Review of Controls for Certain Emerging Technologies: Advance notice of proposed rulemaking, Pub. L. No. 15 CFR Part 744, § 223, 83 58,201 (2018); BIS, Identification and Review of Controls for Certain Foundational Technologies, Pub. L. No. 15 CFR Parts 742 and 774, § 167, 85 (2020).

^13. U.S. Department of Commerce BIS, Foreign-Direct Product Rules: Organization, Clarification, and Correction, Pub. L. No. 15 CFR Parts 734, 736, 744, and 774, Final Rule (2022); U.S. Department of Commerce BIS, “Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification,” October 7, 2022, https://public-inspection.federalregister.gov/2022- 21658.pdf.

^14. We surveyed the defense innovation literature and note the many definitional challenges as described in: Mark Zachary Taylor, The Politics of Innovation: Why Some Countries Are Better Than Others at Science and Technology (New York: Oxford University Press, 2016); Michael C. Horowitz and Shira Pindyck, “What Is a Military Innovation and Why It Matters,” Working Paper, October 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3504246.

^15. William Hannas and Huey-Meei Chang, “China’s Access to Foreign AI Technology: An Assessment,” Washington, DC: Center for Security and Emerging Technology, September 2019, http://cset.georgetown.edu/research/chinas-access-to-foreign-ai-technology/, 4; William Hannas and Huey-Meei Chang, “Chinese Technology Transfer – an Introduction,” in China’s Quest for Foreign Technology: Beyond Espionage, edited by William Hannas and Didi Kirsten Tatlow (London and New York: Routledge, 2021).

^16. Horowitz and Pindyck, “What Is a Military Innovation”

^17. ibid., 9.

^18. Saunders, Phillip C., Arthur S. Ding, Andrew Scobell, Andrew N.D. Yang, and Joel Wuthnow, eds. Chairman Xi Remakes the PLA: Assessing Chinese Military Reforms (Washington, DC: National Defense University Press, 2019).

^19. For goals to become a world-class military, see: Xi Jinping, Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and Strive for the Great Success of Socialism with Chinese Characteristics for a New Era, 19^th National Congress of the Communist Party of China, Oct. 18, 2017, http://www.chinadaily.com.cn/china/19thcpcnationalcongress/2017–11/04/content_34115212.htm. Tai Ming Cheung refers to this phenomenon as the “techno-security state” and the “security-innovation-development nexus” in Innovate to Dominate: The Rise of the Chinese Techno-Security State (Ithaca, NY: Cornell University Press, 2022).

^20. PRC State Council, “14th Five-Year Plan and 2035 Vision Goals Outline”

^21. Ibid.

^22. PRC State Council, “National Innovation-Driven Development Strategy Outline”

^23. PRC State Council, “National Innovation-Driven Development Strategy Outline.” One particular dual-use technology that has been the focus of recent U.S.-China competition has been semiconductor manufacturing. Emily Weinstein, “The Role of Taiwan in the U.S. Semiconductor Supply Chain Strategy,” NBR Congressional Affairs Brief, January 2023; Ming-Chin Monique Chu, “China’s Defense Semiconductor Industrial Base in an Age of Globalization: Cross-Strait Dynamics and Regional Security Implications,” Journal of Strategic Studies, February 6, 2023, https://doi.org/10.1080/01402390.2023.2164852.

^24. We do not make a legal assessment of any specific case but rely on secondary sources such as Department of Justice filings. Our purpose is not to litigate the case but explain the typology of activity to further theory development and empirical categorization.

^25. The U.S. Congress enacted the Export Control Reform Act of 2018 to establish protections for “emerging and foundational technologies … essential to the national security of the United States.” See: Bureau of Industry and Security, Review of Controls for Certain Emerging Technologies: Advance notice of proposed rulemaking, November 19, 2018.

^26. For example, Australia has a somewhat restrictive FDI regime that allows for screening of transactions; see: Vivienne Bath, “Foreign Investment, the National Interest and National Security – Foreign Direct Investment in Australia and China,” Sydney Law Review 34, no. 5 (2012): 5–34. The European Union is revising its investment screening policies as discussed in: Sophie Meunier and Kalypso Nicolaidis, “The Geopoliticization of European Trade and Investment Policy,” Journal of Common Market Studies 57, no. S1 (October 2019): 103–13, https://doi.org/10.1111/jcms.12932.

^27. Stockholm International Peace Research Institute (SIPRI), “TIV of Arms Imports to the Top 10 Largest Importers, 1992–2020,” SIPRI Arms Transfers Database, May 9, 2020, http://armstrade.sipri.org/armstrade/html/export_toplist.php.

^28. This figure is SIPRI’s “trend indicator value” (TIV). TIV does not represent the actual sales price but is instead based on “the known unit production costs of a core set of weapons and is intended to represent the transfer of military resources rather than the financial value of the transfer.” See: SIPRI, “Sources and methods,” May 9, 2021, https://sipri.org/databases/armstransfers/sources-and-methods#TIV-tables.

^29. SIPRI, “TIV of Arms Imports”

^30. As of 2022, China ranked second worldwide in terms of military expenditures and, according to SIPRI, the top three spenders in that year were the United States, China, and Russia. Nan Tian, Diego Lopes da Silva, Xiao Liang, Lorenzo Scarazzato, Lucie Beraud-Sudreau, and Ana Carolina de Oliveira Assis, Trends in World Military Expenditure, 2022, SIPRI Fact Sheet, April 2023.

^31. U.S. Navy, Office of Naval Intelligence, “The PLA Navy: New Capabilities and Missions for the 21st Century,” Washington, DC, 2015, https://www.oni.navy.mil/News/Naval-Capabilities/China/, 15. Domestically designed ships include the Jiangkai-class frigate (Type 054A), Luyang-class destroyers (Type 052B/C/D), and various newer model cruisers.

^32. Tai Ming Cheung, “Innovation in China’s Defense Technology Base: Foreign Technology and Military Capabilities,” Journal of Strategic Studies 39, no. 5–6 (2016): 728–61.

^33. Rose Tenyotkin, April Herlevi, Alison Kaufman, and Anthony Miller, Economic Statecraft: How China Legally Accesses Foreign Technologies to Build Military Capabilities, Arlington, VA: CNA, July 2020, 8.

^34. Xavier Vavasseur, “China’s CSIC Lays Keel for Royal Thai Navy’s First S26T Submarine,” Naval News, September 17, 2019, https://www.navalnews.com/naval-news/2019/09/chinas-csic-lays-keel-for-royal-thai-navys-first-s26t-submarine/.

^35. “Learning-by-licensing” is examined in: Yuandi Wang, Zhao Zhou, and Jason Li-Ying, “The impact of licensed-knowledge attributes on the innovation performance of licensee firms: evidence from the Chinese electronic industry,” Journal of Technology Transfer, 38 (2013): 699–715. See also: Tenyotkin, et al., Economic Statecraft: How China Legally Accesses Foreign Technology; Richard A. Bitzinger, “From Cold War Science Diplomacy to Partnering in a Networked World: 30 Years of Sino-U.S. Relations in Science and Technology,” 2009, http://chinaus.uoregon.edu/pdf/030409.pdf.

^36. U.S.-China Business Council, Licensing Challenges and Best Practices in China, January 2014, http://uschina.org/sites/default/files/Licensing-Jan2014.pdf.

^37. Tenyotkin, et al., Economic Statecraft: How China Legally Accesses Foreign Technology, 13–16.

^38. U.S. Office of Trade and Manufacturing Policy, “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World,” June 2018, https://www.hsdl.org/?view&did=812268; U.S. Office of the Trade Representative (USTR), “Findings of The Investigation Into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act Of 1974,” March 22, 2018, http://www.iberchina.org/files/2018/ustr_china_summary.pdf.

^39. Examples of technology transfer through the administrative process include disclosure requirements and expert panel reviews, both of which can be used to access proprietary technical information during the application process. For more on these requirements, see: U.S.-China Business Council, Improving China’s Licensing System: Recommendations for Key Sectors 2014, March 2014, https://www.uschina.org/reports/improving-china’s-licensing-system-recommendations-key-sectors-2014. Reforms to the administrative licensing rules were announced in 2013, but implementation varies widely; see: Owen Haacke and Ryan Ong, “Administrative Licensing Reform Fails to Address Foreign Concerns, Dec. 9, 2015, https://www.uschina.org/administrative-licensing-reform-fails-address-foreign-concerns.

^40. This example is drawn from Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies,” 15–16.

^41. Agam Shah, “AMD Strikes Chip Licensing Deal, Which Could Create More x86 Rivals for Intel,” PC World, April 21, 2016, https://www.pcworld.com/article/3060273/a-new-amd-licensing-deal-couldcreate-more-x86-rivals-for-intel.html.

^42. THATIC owned 70% of Chengdu Haiguang Integrated Circuit Design and AMD owned 30%. Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies,” 15.

^43. Kate O’Keefe and Brian Spegele, “How a Big U.S. Chip Maker Gave China the ‘Keys to the Kingdom,” Washington Journal, June 27, 2019, https://www.wsj.com/articles/u-s-tried-to-stop-china-acquiring-world-class-chips-china-got-them-anyway-11561646798.

^44. AMD Press Release, Archived Version of “AMD Reports 2016 First Quarter Results,” accessed via WayBack Machine, January 15, 2018, https://web.archive.org/web/20180115004632/http://www.amd.com/en-us/press-releases/Pages/press-release-2016apr21.aspx.

^45. AMD, “AMD Denies Improperly Giving Sensitive Chip Technology to China,” Fortune, June 28, 2019, https://www.amd.com/en/corporate/wsj-response.

^46. U.S. Department of Commerce BIS, Addition of Entities to the Entity List and Revision of an Entry on the Entity List, Final Rule, Pub. L. No. 15 CFR Part 744, June 24, 2019, https://www.govinfo.gov/content/pkg/FR-2019-06-24/pdf/2019–13245.pdf.

^47. European Union (EU) Commission, “China – Certain Measures on the Transfer of Technology,” December 21, 2018, https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157591.12.20%20-%20REV%20consultation%20request%20FINAL.pdf.

^48. EU Commission, “China – Certain Measures on the Transfer of Technology”

^49. PRC National People’s Congress, Foreign Investment Law of the People’s Republic of China, March 15, 2019, https://en.ndrc.gov.cn/policies/202105/t20210527_1281403.html; Ma Qian, “Spotlight: China’s foreign investment law to boost investor confidence, say overseas observers,” Xinhua, March 19, 2019, http://www.xinhuanet.com/english/2019–03/19/c_137907707.htm.

^50. New regulations for data, cyber-security, and intellectual property are emerging in the PRC that could further complicate the calculus businesses operating in China. See: Yvonne Lau, “Here’s what Beijing’s sweeping new data rules will mean for companies,” Fortune, September 1, 2021, https://fortune.com/2021/09/01/china-data-security-law-beijing-management-regulation-internet/. For the future of intellectual property rights, see: Chinese Communist Party Central Committee, 中共中央 国务院印发《知识产权强国建设纲要（2021－2035年）》[PRC State Council issues ‘Outline for Building a Strong Intellectual Property Nation (2021-2035)'], September 22, 2021, https://www.gov.cn/zhengce/2021-09/22/content_5638714.htm.

^51. Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies”

^52. United Nations Convention on Trade and Investment (UNCTAD), “China Outward FDI Flows, in U.S. dollars at current prices, in millions,” 2002–2019.

^53. Rhodium Group, “PRC FDI Flows into the U.S., All Industries, 2002–2020,” U.S.-China Investment Hub, 2021, https://www.us-china-fdi.com.

^54. Ibid.

^55. Ibid.

^56. U.S. Bureau of Economic Analysis, “Foreign Direct Investment Position in the United States on a Historical-Cost Basis, in millions of dollars,” 2002–2021, https://apps.bea.gov/. Graphics to support this analysis available upon request.

^57. For more on the regulations underpinning these changes, see: Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies,” 20–21.

^58. PRC National Development and Reform Commission (NDRC), 企业境外投资管理办法 [Measures for the Administration of Outbound Investment by Enterprises], Dec. 26, 2017, https://www.ndrc.gov.cn/fggz/lywzjw/zcfg/201712/t20171226_1047050.html?code=&state=123; PRC NDRC, 境外投资敏感行业目录 [Catalogue of Sensitive Industries for Overseas Investment], Jan. 31, 2018, https://www.ndrc.gov.cn/fggz/lywzjw/zcfg/201802/t20180211_1047052.html?code=&state=123.

^59. “Reassessing the Landscape for Chinese Investment in North America and Europe,” Baker McKenzie, April 2021, https://www.bakermckenzie.com/-/media/files/insight/publications/2021/04/reassessing-the-landscape-for-chinese-investmentupdated22-april.pdf.

^60. U.S. Office of the Trade Representative, “Findings of The Investigation Into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act Of 1974,” March 22, 2018, http://www.iberchina.org/files/2018/ustr_china_summary.pdf.

^61. Ibid.

^62. U.S. Department of Treasury, “Summary of the Foreign Investment Risk Review Modernization Act of 2018” (FIRRMA), n.d., https://www.treasury.gov/resource-center/international/Documents/Summary-of-FIRRMA.pdf.

^63. Foreign Investment Risk Review Modernization Act of 2018, 31 U.S.C, § 802 (2018); Export Control Reform Act of 2018, 50 U.S.C. § 4801–4852 (2018).

^64. Foreign Investment Risk Review Modernization Act of 2018, 31 U.S.C, § 802 (2018).

^65. “Executive Order 14083: Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States.” Federal Register, Vol. 87, No. 181, September 15, 2022. https://www.govinfo.gov/content/pkg/FR-2022-09-20/pdf/2022–20450.pdf.

^66. U.S Department of Commerce BIS, Export Administration Regulations, https://www.bis.doc.gov/index.php/regulations/export-administration-regulations-ear.

^67. U.S Department of Justice, District of Massachusetts Attorney’s Office, “Chinese National Allegedly Exported Devices with Military Applications to China,” Press Release, Nov. 2, 2018, https://www.justice.gov/usao-ma/pr/chinese-national-allegedly-exported-devices-military-applications-china.

^68. Ibid.

^69. Ibid.

^70. Portman and Carper, “Threats to the US Research Enterprise: China’s Talent Recruitment Plans,” 2019; Andrew Spear, “Serve the Motherland While Working Overseas,” in China’s Quest for Foreign Technology: Beyond Espionage, edited by William Hannas and Didi Kirsten Tatlow (London and New York: Routledge, 2021); Jeffrey Stoff, “China’s Talent Programs,” in China’s Quest for Foreign Technology: Beyond Espionage.

^71. For a catalog of national-level talent programs, see: Emily Weinstein, Chinese Talent Program Tracker, Georgetown University Center for Security and Emerging Technology, November 2020, https://cset.georgetown.edu/publication/chinese-talent-program-tracker/. For listing of PRC universities involved in military technology research, see: Alex Joske, The China Defence Universities Tracker: Exploring the military and security links of China’s universities, Australian Strategic Policy Institute (ASPI), Policy Brief Report No. 23 (2019), https://unitracker.aspi.org.au.

^72. Stoff, “China’s Talent Programs”

^73. Spear, “Serve the Motherland While Working Overseas,” 29; Strider Technologies, Inc., The Los Alamos Club: How the People’s Republic of China Recruited Leading Scientists from Los Alamos National Laboratory to Advance its Military Programs, 2022.

^74. Strider Technologies, The Los Alamos Club.

^75. Ibid., 5.

^76. Anne-Marie Brady with Jichang Lulu and Sam Pheloung, Holding a Pen in One Hand, Gripping a Gun in the Other: China’s Exploitation of Civilian Channels for Military Purposes in New Zealand, July 2020, https://www.wilsoncenter.org/publication/holding-pen-one-hand-gripping-gun-other.

^77. Rob Portman and Tom Carper, “Threats to the US Research Enterprise: China’s Talent Recruitment Plans,” Staff Report, Washington, DC: Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, U.S. Senate, November 2019, https://www.hsgac.senate.gov/imo/media/doc/2019-11-18%20PSI%20Staff%20Report%20-%20China%27s%20Talent%20Recruitment%20Plans.pdf; Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies,” 29.

^78. Dr. Charles Lieber was accused of “making false statements,” according to the U.S. Department of Justice, “Harvard University Professor Indicted on False Statement Charges,” June 9, 2020, https://www.justice.gov/opa/pr/harvard-university-professor-indicted-false-statement-charges. See also: Tenyotkin et al., “Economic Statecraft: How China Legally Accesses Foreign Technologies,” 31.

^79. “Former Los Alamos physicist gets probation for failing to disclose China ties,” Science, Sept. 17, 2020, https://www.science.org/content/article/former-los-alamos-physicist-gets-probation-failing-disclose-china-ties.

^80. U.S. Department of Justice, District of New Mexico Attorney’s Office, “Former scientist from Los Alamos National Laboratory pleads guilty in federal court to making false statement about involvement with Chinese government technology program,” Press Release, Jan. 24, 2020, https://www.justice.gov/usao-nm/pr/former-scientist-los-alamos-national-laboratory-pleads-guilty-federal-court-making-false.

^81. Title 18 - Crimes and Criminal Procedure, 18 U.S.C., Chapter 37 Espionage and Censorship § 793, https://uscode.house.gov/view.xhtml?path=/prelim@title18/part1/chapter37&edition=prelim.

^82. World Trade Organization, “What are intellectual property rights?” n.d., https://www.wto.org/english/tratop_e/trips_e/intel1_e.htm.

^83. Ibid.

^84. USTR, “2018 Report to Congress on China’s WTO Compliance,” Washington, DC, February 2019.

^85. NBR, Update to the IP Commission Report, The Theft of American Intellectual Property: Reassessments of the Challenge and United States Policy.

^86. IP Commission, “Chapter 2: Measuring the Scale and Scope of the Loss of Intellectual Property,” The IP Commission Report: The Report of the Commission on the Theft of American Intellectual Property, 2013.

^87. Dan Ciuriak and Maria Ptashkina, Quantifying Trade Secret Theft: Policy Implications, CIGI Papers No. 253, May 2021, https://www.cigionline.org/static/documents/documents/no.253.pdf.

^88. Paul Goldstein, “Intellectual Property and China: Is China Stealing American IP?” Stanford Law School, April 10, 2018, https://law.stanford.edu/2018/04/10/intellectual-property-china-china-stealing-american-ip/.

^89. Customs and Border Patrol, “Intellectual Property Rights Seizure Statistics Fiscal year 2020,” September 15, 2021, https://www.cbp.gov/document/report/fy-2020-ipr-seizure-statistics.

^90. Marissa Michel, Craig Stronberg, and Peter Geday, Economic Impact of Trade Secret Theft: A framework for companies to safeguard trade secrets and mitigate potential threats, February 2014, Center for Responsible Enterprise and Trade (CREATE.org), https://www.innovation-asset.com/hubfs/blog-files/CREATe.org-PwC-Trade-Secret-Theft-FINAL-Feb-2014_01.pdf.

^91. Cyber-attacks are defined as “deliberate and malicious attempts … to access or damage a computer system.” See: Global Crime: An Encyclopedia of Cyber Theft, Weapons Sales, and Other Illegal Activities, edited by Philip L. Reichel (United States: ABC-CLIO, 2019), 139.

^92. Senator Angus King and Representative Mike Gallagher, “Cyberspace Solarium Commission,” March 2020, https://www.solarium.gov.

^93. James Andrew Lewis, “How Much Have the Chinese Actually Taken?” Center for Strategic International Studies (CSIS), March 22, 2018, https://www.csis.org/analysis/how-much-have-chinese-actually-taken; Adam Segal and Tang Lan, “Reducing and Managing US-China Conflict in Cyberspace,” National Bureau of Asian Research (NBR), NBR Special Report #57, April 2016, 45; U.S. Council of Economic Advisors, “The Cost of Malicious Cyber Activity to the US Economy,” February 2018, https://www.hsdl.org/?view&did=808776.

^94. U.S. District Court for the Central District of California, Plea Agreement for Defendant Su Bin, No. SA CR 14–131, https://www.justice.gov/opa/file/834936/download.

^95. U.S. Department of Justice, “Seven International Cyber Defendants, Including ‘Apt41’ Actors, Charged In Connection With Computer Intrusion Campaigns Against More Than 100 Victims Globally,” September 16, 2020, https://www.justice.gov/opa/pr/seven-international-cyber-defendants-including-apt41-actors-charged-connection-computer.

^96. Ibid.

^97. Ibid.

^98. U.S. National Counterintelligence and Security Center, “Foreign Economic Espionage in Cyberspace,” 2018, https://www.dni.gov/files/NCSC/documents/news/20180724-economic-espionage-pub.pdf.

^99. Title 18 - Crimes and Criminal Procedure, 18 U.S.C., Chapter 37 Espionage and Censorship § 793, https://uscode.house.gov/view.xhtml?path=/prelim@title18/part1/chapter37&edition=prelim.

^100. James Mulvenon, “Economic Espionage and Trade Secret Theft Cases in the U.S.,” in China’s Quest for Foreign Technology: Beyond Espionage, 2021, 295. The cases examined in the Mulvenon study do not include cases related to classified materials in the U.S.

^101. U.S. Department of Justice National Security Division, “Information about the Department of Justice’s China Initiative and a Compilation of China-related Prosecutions since 2018,” June 14, 2021, https://www.justice.gov/nsd/information-about-department-justice-s-china-initiative-and-compilation-china-related.

^102. Mulvenon, “Economic Espionage,” 301.

^103. Christopher Balding and Donald C. Clarke, “Who Owns Huawei?” April 17, 2019, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3372669.

^104. PRC State Council, “Made in China 2025.” For an explanation of how civil-military integration policies have expanded over time, see: James Mulvenon and Chenny Zhang, “Targeting Defense Technologies,” in China’s Quest for Foreign Technology, 2021, 95–96.

^105. U.S. Department of Commerce BIS, “Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic of China (PRC),” October 7, 2022, https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3158–2022-10-07-bis-press-release-advanced-computing-and-semiconductor-manufacturing-controls-final/file; U.S. Department of Commerce BIS, “Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification,” October 7, 2022, https://public-inspection.federalregister.gov/2022-21658.pdf.

^106. The ability to monitor PRC reactions to these export controls may also depend on whether the regulatory measures are upheld by the World Trade Organization (WTO). In December 2022, the PRC initiative a WTO dispute complaint requesting consultations on this issue; see: “United States – Measures on Certain Semiconductors and Other Products, and Related Services and Technologies: Request for Consultations by China,” World Trade Organization, December 15, 2022, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/DS/615–1.pdf&Open=True.

^107. Xi Jinping, Hold High the Great Banner of Socialism with Chinese Characteristics, p. 48.

^108. Hannas and Tatlow, “Conclusion,” China’s Quest for Foreign Technology, 329.

^109. Ibid.

^110. U.S. Department of Commerce BIS, Review of Controls for Certain Emerging Technologies: Advance notice of proposed rulemaking, Pub. L. No. 15 CFR Part 744, § 223, 83 58,201 (2018); U.S. Department of Commerce BIS, Identification and Review of Controls for Certain Foundational Technologies, Pub. L. No. 15 CFR Parts 742 and 774, § 167, 85 (2020).

Additional information

Funding

The work was supported by the New York University (NYU) Center on U.S.-China Relations.

Notes on contributors

April A. Herlevi

April A. Herlevi examines China’s political economy and foreign economic policy to educate policymakers, scholars, and the national security community on the role of Chinese commercial, economic, and military actors globally. Dr. Herlevi currently serves as senior research scientist in the China and Indo-Pacific Security Affairs Division at the Center for Naval Analyses (CNA) and non-resident fellow at the National Bureau of Asian Research. *Corresponding author ([email protected]).

Rose Rodgers

Rose Rodgers is an analyst in the United States Department of State. Prior to joining the Department of State, she worked as an associate research analyst for the Center for Naval Analyses in the China and Indo-Pacific Security Affairs Division. Her research focuses on Chinese economic statecraft, overseas investment, export control laws, and China’s nuclear weapons program.