Home inFocus Agenda for a New Congress (Winter 2023) U.S. Security at Risk as China Exploits American Technology

U.S. Security at Risk as China Exploits American Technology

Stephen Bryen Winter 2023
Chinese army soldiers in uniform lining up in Tiananmen Square, Beijing.

The U.S. Department of Defense has published its 2022 version of “Military and Security Developments Involving the People’s Republic of China.” But the Pentagon fails to explain how American technology is aiding and abetting China’s increasingly powerful and technologically advanced military and makes no useful suggestions as to how the U.S. can respond. Unless concrete measures are taken soon, American security will be increasingly at risk as China deploys sophisticated weapons at home and sells them to its foreign friends.

The report suggests that espionage activities against America began in 2015, although there is plenty of evidence it has been going on for decades. The review does not mention that China’s stealth technology was acquired in part by a massive cyber-theft operation. There is no discussion of the infiltration of American universities and top research organizations and laboratories by Chinese “students” or “researchers,” or how U.S. institutions offered China access to their most important cutting-edge developments.

And the report says nothing about U.S. export controls, or lack thereof, or the penetration of American industry – either domestically or in China where sensitive U.S. companies operate. Nor does it explain how to protect critical technology.

For these reasons and others, the Pentagon’s report fails to provide any useful policy guidance either to the Congress or the Biden administration.

What’s Really Going On

China is building its military power on U.S. technology. Previously, China depended on Russia, but saw clearly that Russia was not competitive in high technology and lacked the industrial base to support its war industries. China’s leaders recognized that the U.S. had significant advantages, but that it was also their main competitor. China was, in any case, anxious to open its doors to U.S. industry and it flooded the U.S. with Chinese students. These students focused on key industries including microelectronics, sensors, computers, special materials, advanced software, automation, artificial intelligence, manufacturing technology and “commercial” aerospace. America’s top companies, attracted by a potentially huge Chinese market, were willing to share their expertise and know-how. The U.S. government encouraged them to move into China and imposed few, if any, real restrictions so long as the technology ostensibly was civilian.

Espionage and Cooperation

China makes no distinction between civilian and military technology. Every contribution of American technology is a contribution to Beijing’s military-industrial complex. Where doors remain closed, especially for technology developed under U.S. defense contracts, China engages in systematic espionage operations.

Chinese espionage in the United States is aimed at both civilian and military targets. Many companies have learned, to their dismay, that China can take American commercial products and manufacture cheaper copies. A great example is solar panels. Despite significant U.S. investments in solar panel technology during the Obama administration (most of which has gone down the proverbial taxpayer-funded toilet), China “now holds a market share in excess of 80 percent for all manufacturing stages of solar panels, more than double its share of global demand,” according to Nikkei.com. Or battery technology, important for electric vehicles but also for battery-powered devices. China has all but cornered the market on lithium and other rare earth materials needed for batteries. The United States, on the advice of the Pentagon unfortunately, decided not to invest in domestic mining and refining rare earth production.

It gets even more serious with new technologies including gallium nitride micro-chips and sensors. The single most important use for gallium nitride is detecting stealth aircraft and defeating long-range weapons, including Beyond Visual Range (BVR) missiles launched from aircraft. The distribution of gallium nitride technology is already mostly out of control because the U.S. made no attempt to regulate its spread abroad, especially to China. New types of radars that can detect and target stealth aircraft, including the B-2 bomber, F-22 and F-35 fighter jets, or even the future 6th Generation Fighter the U.S. intends to develop, are being deployed by China. China’s most modern aircraft and air defense systems are being equipped with active electronically-scanned radars (AESA) that feature gallium nitride components.

Chinese “Scholars”

The number of Chinese citizens studying in the United States tops 250,000 for graduates and undergraduates, and more than 10,000 others are in research institutions. Many of them have previously served in China’s military, while others are trained spies.

China’s scholars operate in sensitive areas such as biotechnology (see National Institutes of Health and other grants to Wuhan’s National Institute of Virology), nanotechnology, and advanced materials. One Chinese-American expert, Ming Han Tang, who was the chief engineer of NASA’s hypersonic program in the late 1990s, developed a hypersonic glide vehicle design that China now uses for its DF-ZF nuclear weapons glide vehicle, considered China’s most dangerous nuclear delivery platform. The U.S. hypersonic effort, in the formative period, included extensive cooperation with Russia and China. America did not advance the hypersonic design it originated; in fact, it trashed the X47C that would have used Ming’s design. Meanwhile, Russia and China already have introduced hypersonic weapons into their arsenals. Now the United States is trying to catch up but has no operational system.

U.S. government agencies have hired Chinese nationals who are connected to the People’s Liberation Army. NASA’s Marine data expert Li Zhijin, who also has worked for the U.S. Navy and other government agencies, graduated from a research academy of the People’s Liberation Army Air Force (PLAA) in Nanjing. Li presided over the development of data assimilation systems to support multiple major research projects and observational experiments of NASA, the Navy, and the Department of Energy.

China also invites hundreds of academics and scientists to China, offering them a chance to participate in conferences, present papers, or take honorary teaching posts. Often these are lucrative opportunities for professors and researchers. One hundred sixty-two scientists and technicians from the super-sensitive Los Alamos National Laboratory, some with top U.S. security clearances, took jobs in China between 1987 and 2021.

Top-Down and Bottom-up

China’s technology operations work from the top down where possible, or from the bottom up when necessary. Top-down means collaborating with U.S. scientists and industry. China typically identifies the scientists and institutions and organizations and sets out a plan to attract them to work with Chinese entities.

Bottom-up works when open collaboration is not possible, either because of export controls or because the company or organization wants to protect its proprietary information. Through cyber-espionage, Chinese cyber-teams get lists of employees, especially those with U.S. government security clearances, and hack their email and social media accounts. Often this will expose their circle of colleagues and friends, and even passwords to company computer systems. Chinese hackers then see what they can steal. In some cases, especially where the employee may have Chinese relatives or have personal problems, Chinese spies seek to suborn individuals in the United States and put them to work for Beijing.

In sum, Chinese operations against American tech, based on the premise that China is building an advanced industrial base as well as exploiting American commercial and defense technology for its military expansion, present a challenge to the United States that is not being met.

What Should Be Done

The incoming Congress features a Republican-led House of Representatives. There is a push to create a new Select Committee on China to strengthen American policies. The Select Committee could be a powerful force if it formulates executable policies to protect U.S. national security and America’s competitive posture.

Congress could:

1. Legislate an export organization comparable to the Committee on Foreign Investment in the United States (CFIUS). CFIUS, led by the Treasury Department with the participation of other departments and agencies supported by U.S. intelligence, determines whether foreign investments in the United States could negatively impact national security.

A different committee should focus on companies that want to sell sensitive technology, know how, manufacturing, and product designs to foreign entities. The only – and mostly non-functioning – barriers to such sales are U.S. export control laws and review mechanisms, managed by the State Department (for military technology) and the Commerce Department for dual-use technologies organized under the U.S. Export Control Act. Treasury also administers sanctions on foreign entities in its Office of Foreign Asset Controls (OFAC). These departments and organizations typically focus on the export of products to foreign end-users. Other than OFAC, which can prevent an industrial deal with a sanctioned foreign country, there is no practical way foreign deals are reviewed unless a specific category of manufacturing technology and equipment already is prohibited.

This was done recently by the Biden administration, acting unilaterally, on very advanced semiconductor manufacturing equipment for China. On the other hand, the White House did not stop technological cooperation; it only prevented the export of chips and manufacturing equipment.

A new agency should be empowered to review technological cooperation before an American company makes deals with Chinese entities. A Committee on Exports of Sensitive Technology (CEST) offers a solution. A company that wants to set up shop in China or cooperate with Chinese entities would need to ask CEST for permission, and CEST (like CFIUS) could either block a deal or put in place limits and requirements, which the government would enforce. CEST, like CFIUS, would be charged with protecting U.S. national security and competitiveness in sensitive sectors including energy, nanotechnology, artificial intelligence, sensors, materials (such as rare earths, copper, nickel, uranium, titanium, advanced composites), and aerospace.

2. Remove Chinese Products from U.S. Critical Infrastructure. Today, U.S. critical infrastructure is loaded with Chinese equipment. This includes the military, the Departments of Defense, State, and Energy, and virtually all government agencies. Workers in DoD type on computers either made in China or containing Chinese parts, military networks rely on routers manufactured in China but carrying the labels of American companies, and surveillance cameras protecting U.S. military bases and embassies abroad are built in China and connected to the Internet without any security. Congress should set a hard timetable to get rid of Chinese equipment and require government departments and agencies to audit existing installations, identify the equipment of Chinese origin, and implement an urgent removal program.

3. New Standards for Security. Despite the U.S. spending tens of billions of dollars on computer security solutions, China (and others, including Russia) have stolen billions of dollars’ worth of sensitive national security information and information on government employees with security clearances. Chinese hacking is sophisticated and relentless. Between 2013 and 2015 the U.S. government’s Office of Personnel Management was attacked successfully by Chinese hackers who got their hands on records of current and former government employees. Approximately 22.1 million records were stolen, including over four million that involved security clearance forms, providing the Chinese with extensive personal histories of the victims, their home addresses, phone numbers, family member names, friends names, and more. While efforts have been made to harden government and military data centers and networks, most of the information is not encrypted nor is it classified.

Data centers and networks need multi-layer security, strong encryption of all information (classified or not), data controlled on a need-to-know basis, hardware tokens for access with geolocation and geofencing capabilities so stolen tokens won’t work, and a comprehensive clean-out of both foreign and compromised equipment conducted on an urgent basis.

4. Restore and strengthen the Trump-era China initiative on research collaboration that was unilaterally cancelled by the Biden administration. The Trump administration sought to limit government research grants to professors and scientists who are not affiliated with China, and to remove grants and support where a China connection was identified. The level of U.S. government funding is huge. In 2020 the numbers look like this:

In 2020, Washington provided Beijing almost $43 billion dollars in research money. It makes sense to ensure that research money is not a backdoor subsidy for China or supports Chinese research.

5. Build a new Critical Technologies List. In the 1970s, DoD undertook an effort to create a Military Critical Technology List (MCTL), which proved helpful in identifying technology that needed protection and was useful in reviewing export licenses. In recent years, the significance of the MCTL declined as export control discipline generally disappeared.

In 2021, the Pentagon made another effort to build a critical technology list and the General Accounting Office reviewed the effort optimistically, even though the program stalled. To fully support a program that focuses on vital current and emerging technology, a new Critical Technologies List (CTL) is needed. New generations of weapons depend on elaborate sensor-to-shooter capabilities with a high level of automation. The underlying technologies need to be protected, and decision makers need clear information on what is strategically important to security and how to protect it – as well as information on what potential adversaries are doing to develop their own and/or steal ours. In particular, a new CTL needs to focus on what near-peers China and Russia are doing, how advanced they are, how dependent they may be on U.S. technological assets. It should propose effective measures to counter them.

A whole-of-government solution is needed to reestablish American leadership in high technology. But there is no official policy that clearly outlines the threat posed by China nor is there guidance on the protection of U.S. technology. The new Congress should promote a complete program to answer the challenge.

Stephen D. Bryen, Ph.D., is a senior fellow at the Center for Security Policy and the Yorktown Institute, and former director of the Defense Technology Security Agency at the Pentagon.