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SECTION 8

Technology and Research

Technology transfers between nations exist on a spectrum of legitimacy. In many developing economies, multinational corporations willingly agree to skills and technology transfer arrangements in exchange for the right to operate. Governments support these measures in the hopes of furthering economic development. Transfers cross the threshold into illegitimacy when coercion, misappropriation, theft, or espionage are deployed with the effect of undermining a company’s, and ultimately its home country’s, economic competitiveness. China’s expropriation of American technology is an example of how it leverages its influence among universities, corporations, and diaspora communities to further strategic objectives. This section reviews the targets of China’s expropriation efforts, the state and nontraditional collectors involved, and concludes with recommendations for how the United States can better defend against this phenomenon. It is important to note that not all expropriation of intellectual property occurs at the explicit direction of the government and that China is not the sole country targeting the United States. Nonetheless, China—whether at the level of the state or individual—is considered the most serious offender.

While Chinese cyberthreats and clandestine spying against the United States dominate the public discourse, a far more serious threat is posed by China’s informal or “extralegal” transfers of US technology and IP theft.¹ Operating under the radar, these quiet diversions of US technical know-how are carried out by groups and individuals in the United States, whose support for China erodes America’s technological edge and ability to compete in international markets. These groups are managed by a professional cadre of Chinese government and government-associated science and technology transfer specialists who facilitate intellectual property “exchanges” through a maze of venues. They target specific advanced technologies drawn from China’s industrial planning priorities (e.g., Made in China 2025²) such as semiconductors, robotics, next-generation information technologies (e.g., big data, smart grid, internet of things), aviation, artificial intelligence, and electric vehicles. As a result of their efforts, a commission convened by the National Bureau of Asian Research concluded that IP theft, primarily from China, costs the American economy hundreds of billions of dollars each year, with significant impact on employment and innovation.³ Former commander of United States Cyber Command and Director of the National Security Agency General Keith Alexander was even more grave when he asserted the ongoing theft of IP by China represents “the greatest transfer of wealth in human history.”⁴

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