U.S. President Joe Biden signed an executive order Thursday (June 3) barring Americans from investing in dozens of Chinese companies, including Huawei, linked to defense and surveillance technology. In fact, one of the big drivers of Chinese technology investment cooperation with countries in recent years has been the technology diplomats at Chinese embassies and consulates abroad. A new report found that the Chinese consulate in Houston, which was ordered closed by the U.S. government last year, was even the most active of all Chinese embassies and consulates, with nearly 90 percent of information on U.S. technology projects coming from there.
A week before the Houston consulate closed, the China International Science and Technology Cooperation website, operated by the Chinese Ministry of Science and Technology, posted a referral program sent back from the Houston consulate. The project announcement said PharmaJet, a medical device company based in Colorado, has two patented needle-free syringe products that it plans to promote in China and collaborate on needle-free vaccinations.
Tech diplomats = tech brokers
In 2008, in order to implement China’s 11th Five-Year Plan for international science and technology cooperation and to build an innovative country, the Department of International Cooperation of the Chinese Ministry of Science and Technology launched the “In the past 13 years, science and technology diplomats from Chinese embassies and consulates abroad have recommended thousands of international science and technology cooperation and investment opportunities to Chinese companies and institutions.
Ryan Fedasiuk, a senior fellow at Georgetown University’s Center for Security and Emerging Technologies, said China currently has about 150 science and technology diplomats stationed at its embassies and consulates in 52 countries who play the role of “brokers” in China’s strategy to acquire foreign technology.
He told Voice of America, “We have found that Chinese diplomats help Chinese companies that appear to be private enterprises to obtain foreign technology projects and act as intermediaries so that Chinese companies can invest in specific fields and companies, as well as overseas government and university research projects that advance Chinese goals.”
A recent report co-authored by Ferrien and colleagues, titled China’s Foreign Technology Wish List, examines Chinese science and technology diplomats by analyzing 642 international collaborative project messages sent back by Chinese science and technology diplomats between 2015 and 2020. Diplomats operate in a four-step process, the report says.
The process is divided into four steps, according to the report. First, science and technology diplomats identify China’s domestic needs, particularly targets established in China’s science and technology and industrial policies; then, through industry organizations, Chinese groups and the Chinese Communist Party’s United Front System in their home countries, science and technology diplomats learn about cutting-edge developments in science and technology overseas and identify projects and talents that Chinese companies and institutions can connect with and invest in; then, they coordinate with overseas industry organizations and the Chinese Communist Party’s United Front Organization to organize science and technology investment Next, coordinate with overseas industry organizations and CCP organizations to organize science and technology investment matchmaking activities; and finally, translate foreign technologies into domestic benefits.
The report randomly surveyed 30 foreign companies recommended by Chinese science and technology diplomats, 14 of which had formed joint ventures or patent licensing agreements with Chinese companies or otherwise demonstrated their technology to Chinese companies, such as by participating in Chinese-sponsored science and technology investment matchmaking events.
The report singled out the Chinese Consulate in Houston for its important role in China’s global technology information gathering operations. Prior to its closure, the Houston consulate was the Chinese embassy or consulate with the most referrals for international cooperation programs, and nearly 90 percent of information about U.S. programs came from the consulate, the report said.
Interestingly, after the Houston consulate was closed by the U.S. government in July 2020, the number of international science and technology cooperation projects from the U.S. posted on the China International Science and Technology Cooperation Network plummeted to just one so far.
What’s on China’s wish list?
What technology projects are Chinese science and technology diplomats interested in? The report analyzed 642 international technology cooperation projects and found that the largest number of projects involved biotechnology, with 190 of them related to the biomedical and medical instrumentation industries listed in “Made in China 2025”; followed by information technology, with 171 projects with keywords related to artificial intelligence and machine learning, and several projects involving integrated circuit design. Several projects are related to integrated circuit design and semiconductor manufacturing equipment.
For example, the Chinese Embassy in Israel recommended in July 2019 that Chinese companies work with Israeli LIDAR company Innoviz Technologies. Founded in 2016, Innoviz is considered a dark horse in the lidar industry, having developed lidar as one of the key elements of self-driving cars.
Six months later, Innoviz announced a partnership with Shaanxi Heavy Duty Automobile Co. to develop and deploy driverless trucks in China.
The report notes that Chinese tech diplomats are also clearly interested in projects with potential military applications. For example, the Chinese Embassy in Israel recommended in April 2019 that Chinese companies start cooperation with the UAS program of Israeli aerospace technology development company Aeronautics Group, noting that the company “has a rich and internationally leading human and technological reserve in the field of military and civilian aircraft development and application The company has “a rich and internationally leading human and technological reserve in the field of military and civil aircraft development and application” and “considers China as its main development market and hopes to cooperate in various forms in various fields such as production, marketing and R&D.” The Israeli company develops the Aerostar Tactical UAS unmanned aircraft system used by the military in the United States, the Netherlands and Poland, among other countries.
Many of the technology projects recommended by Chinese science and technology diplomats are commercial in nature, more to enhance the competitive advantage of Chinese companies, and may not be related to national security, but some technologies have high-tech and military applications, Ferrien said. He said, “I don’t think they are very picky about what technologies they absorb, though they are particularly focused on the information technology area, which can be relevant to the military or at least in some ways can be used for military purposes.”
In the regional distribution of these cooperative projects, the report found that the most came from Russia (112), followed by the United States (77), the United Kingdom (62) and Japan (57). But while U.S. projects accounted for only 12 percent of the total number of projects examined, the report noted, projects from U.S. allies accounted for more than 70 percent.
The report also noted that of the 642 projects, Chinese science and technology diplomats mostly focused on companies and universities, particularly some tech startups with financing needs, but about 80 projects involved foreign government-funded laboratory research projects, 41 of which were related to artificial intelligence, machine learning or intelligent systems.
Voice of America emailed inquiries to the Chinese Embassy in the U.S. about the report’s contents and did not receive a response by press time.
China’s Technology Ambitions
China is ambitious in the field of science and technology, and has been spending increasing amounts on research and development over the past decade or so. According to the “China Power” project at the Center for Strategic and Studies (CSIS), a Washington-based think tank, China’s R&D spending has increased nearly 30-fold from $13 billion in 1991 to $410 billion in 2016, and is now second only to the United States in terms of investment. In high-tech fields such as artificial intelligence and 5G, China is poised to overtake the United States.
Eric Schmidt, former CEO of Google and chairman of the National Security Council for Artificial Intelligence (NSCAI), warned earlier this year that the U.S. must lead in the AI race with China or “we will face a future where other values are imposed.”
In an exclusive interview with the BBC in late May, Microsoft President Brad Smith also said that China’s surveillance AI technology is developing so rapidly that if left unchecked and unregulated, the mass surveillance society of Orwell’s novel “1984” will come true by 2024.
James Lewis, director of the Center for Strategy and Research’s Strategic Science and Technology Program, argued that China still relies on Western technology in many areas, but noted that its goal is “to end its dependence on Western technology and to dominate the global market.”
He told VOA that China’s approach is worrisome, “combining normal business practices with illegal ones, such as intellectual property theft, disregard for WTO commitments and espionage.”
What Chinese tech diplomats are doing in facilitating foreign technology transfers may not be illegal, but “it’s a systematic approach to finding the latest and most cutting-edge technological advances around the world, and China is using its diplomatic resources to promote the private sector as a national force to help Chinese companies expand their global market share,” Ferrien said. “
He noted that “from the perspective of U.S.-China competition and private sector competition between the two countries, this is worrisome.”
He previously tweeted that it is clear that China’s conception of science, technology and diplomacy is significantly different from the West’s, and that Beijing’s ultimate goal in international cooperation is not really a “win-win” situation, but rather technological replication.
U.S. should coordinate with allies in response
Over the past few years, the U.S. government has taken aggressive steps to address unfair trade practices such as China’s theft of intellectual property and forced technology transfers, and has increased scrutiny of China’s overseas talent recruitment programs, technology investments and other influence activities.
President Biden signed an executive order this Thursday barring Americans from investing in 59 Chinese technology companies, including Huawei and SMIC. The proposed American Innovation and Competition Act in Congress would authorize $100 billion in funding for research and development in advanced technologies such as artificial intelligence, biotechnology and semiconductors to help Washington compete with Beijing in these areas.
The United States should also coordinate with its allies to address China’s access to foreign technology, according to Ferrien.
The U.S. government has taken more aggressive steps in reviewing foreign investment into the United States, and Congress is considering introducing bills to review foreign investment related to sensitive technologies,” he said. But U.S. allies including the U.K., Japan and Israel, from which projects account for more than 70 percent of those of interest to Chinese science and technology diplomats, are among the countries that have adopted similar vetting procedures. It is critical that these countries adopt similar vetting procedures to prevent unnecessary technology outflows.”
He believes that companies, universities and laboratories, as well as researchers, should also take precautions and conduct due diligence on potential collaborators when engaging in international collaborations.
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