Untangling the web: Why the US needs allies to defend against Chinese technology transfer

Light of Internet Expo 2019 of 6th World Internet Conference kicks off in Wuzhen town, Jiaxing city, east China's Zhejiang province, 18 October 2019.   fachaoshiNo Use China. No Use France.

Executive summary

Learn more about Global ChinaTo defend against the transfer of sensitive technical information to China, the United States and its allies will need to be targeted, collaborative, and agile in their response. The Chinese government undertakes multiple, coordinated efforts to obtain sensitive information from U.S. and allied researchers. Many of these pathways and access points for technology transfer are legal or extralegal and therefore poorly understood or monitored by Western intelligence agencies.

In this paper, we aggregate preliminary data on three tools the Chinese Communist Party (CCP) uses to incorporate foreign technical information: scholarships for Chinese Ph.D. students abroad, technology entrepreneurship competitions, and foreign direct investments and acquisitions made by Chinese technology companies. Drawing on original datasets, we show how the United States and its allies can work together to protect sensitive technical information.

The goal of allied cooperation should not be to restrict China’s access to all technologies, but to instead focus on countering particular acquisition methods and protecting specific technologies. When deciding which kinds of technologies deserve special protection, the United States and its allies should assess the potential risks to U.S. and allied economic security, the resilience of American and allied companies to withstand potential reprisal and loss of market share, and the rules of the road that will protect liberal democratic values and strengthen long-term economic competitiveness. Based on this analysis, we recommend the United States and its allies pursue two broad policy initiatives: gather more data — including open-source, publicly available records of technology transfer beyond China’s Thousand Talents Plan — and coordinate investment screening procedures while mitigating risks to U.S. and allied companies.