The United States has dominated the world over the past few decades largely because of its technological prowess. But China, the emerging power, seeks to destabilize American technological supremacy by buying out U.S. tech companies and stealing trade secrets.
Investing in American tech
When the Chinese government revealed its “Made In China 2025” vision a couple of years ago, they also had plans to bring in foreign technologies to China. The Chinese officials understood that even though their country was leading in the manufacturing sector, it was trailing far behind the United States when it came to producing new technology.
And since China’s prosperity ended up creating tons of millionaires in the country, Beijing started encouraging its high net worth individuals to invest in U.S. tech companies, especially those that dealt with emerging technologies like nanotechnology, robotics, AI, quantum technologies, and so on. By owning U.S.-based companies, Beijing wanted to gain ownership of the latest technological breakthroughs so that it could utilize advanced tech for market advantage over America.
“A concerted push by China to reshape the market in its favor, using industrial policies backed by over one hundred billion dollars in government-directed funds, threatens the competitiveness of U.S. industry and the national and global benefits it brings,” Politico quotes a report by the President’s Council of Advisors on Science and Technology.
Cyber-theft and espionage
China is not just relying on investing in U.S. companies to acquire American technologies. Instead, Beijing is also heavily involved in the theft of intellectual properties. The targets of such thefts are usually companies involved in cutting-edge sciences like alternative energies, nuclear technology, and so on.
“I’d say they’re [Chinese] very systematic, very long term in their approach and very well-funded… They don’t play by the same rules that we do. So cybertheft is on the table; industrial espionage is on the table,” National Public Radio quotes Michael Brown, managing director of the Pentagon’s Defense Innovation Unit in Mountain View, California.
In addition to using cyber-attacks, Beijing also has a number of spies working in U.S. firms who are tasked with leaking sensitive trade secrets. Several Chinese-origin people in the U.S. have recently come under the scanner of intelligence agencies. The U.S. government also passed a new law that restricts admission of Chinese students in high-end STEM fields.
Blocking Chinese investment
To prevent China from acquiring U.S. companies, the Trump administration has introduced a new system that will review all foreign investment transactions in sensitive sectors like telecommunications and technology, blocking those deemed to be a threat to American security.
“The expanded review system, which Congress passed into law this summer, will apply to a wide array of foreign transactions, but is aimed primarily at China, which the administration has accused of trying to gain an unfair edge by acquiring valuable technology through investments or partnerships with U.S. companies,” says a San Francisco Chronicle article.
The new system is expected to go into effect on November 10. The review committee can block a deal involving a foreign investor if it is found that the investor will gain control over nonpublic technical information once the deal is passed. Though Chinese officials have criticized the policy, the current U.S. administration is dedicated to preventing China from usurping America’s position as the leading technology provider in the world.