By: Charles Emmett |
An often overlooked consequence of the United Statesâ€™ 13 years of war in the Middle East is theÂ insights adversaries have acquired into the technological advantages the U.S. military holds overÂ the rest of the world. The Peopleâ€™s Republic of China (PRC) has taken advantage of thisÂ opportunity to studyÂ U.S. military strategyÂ and close the technology gap. The PRC has developedÂ counter measures such asÂ anti-satellite missilesÂ to disrupt communications and GPS, therebyÂ limiting battlefield awareness. Â It has built sophisticated cyber capabilities to steal technologyÂ and critical information that the PRC sees as essential for gaining information dominance forÂ informationized warfare. Most recently the PRC claims to have launched the worldâ€™s firstÂ Quantum Radar System, which can reportedly detect stealth aircraft and is highly resistant toÂ jamming.
According to theÂ U.S.-China Security and Economic CommissionÂ (USCC), the PRC has increasedÂ investment in research and development by 10 percent over the last decade and has institutedÂ several technology development plans focused on offensive capabilities. Â The report goes on toÂ say that PRC Generals in the Peopleâ€™s Liberation Army (PLA) have alluded to these capabilitiesÂ being aimed specifically at the United States. Â The Medium and Long Term Defense Science andÂ Technology Development Plan was instituted in the early 2000s with the goal of surmountingÂ the technology gap between the PRC and the worldâ€™s tech leaders by 2020. Â The Plan expandsÂ the number of defense laboratories engaged in basic research and establishes closer connectionsÂ with civilian universities. Â The plan also aims to create a more favorable environment forÂ technology companies to promote innovation and increase the scale and channels of investmentÂ in defense science and technology. Â Most importantly, it improves the ability to leverage foreignÂ sources of technology and knowledge transfer by finding opportunities for internationalÂ research and development cooperation. Â This includes encouraging defense enterprises andÂ research institutes to set up joint research centers and laboratories.1Â Â The second critical plan isÂ the New High Technology Plan, also known as the 995 Plan. Â This plan was instituted after theÂ accidental U.S. bombing of the PRC embassy in Belgrade, a potential cause of the intensifiedÂ development of strategic weapons systems. Â One of the guiding principles of the plan put forthÂ by then Chairman of the Central Military Commission Jiang Zemin was the need to acquireÂ foreign technology transfers by â€œwhatever means necessary.â€2Â Â The results of these plans haveÂ been the growth of precision strike systems, command and control systems and weaponsÂ allowing the PLA to strike accurately from a distance.3Â Â In addition to these two plans, theÂ aspirations set out in the 12th Five Year-Plan set goals for the PLA to matchÂ first-tier globalÂ military powers. Finally, the PLAâ€™s 2015 DefenseÂ White PaperÂ explicitly stated the intent toÂ increase development in advanced weaponry equipment, and in depth civil-military integration,Â (å†›æ°‘èžåˆ), specifically in key areas like technology.
In response to the PLAâ€™s increased technological capabilities, in 2014 then Secretary of DefenseÂ Chuck Hagel announced theÂ Third Offset Strategy. Â This new strategy is meant to addressÂ concerns that â€œour militaryâ€™s technological advantage is being challenged in ways weâ€™ve neverÂ experienced before.â€ Â The strategy focuses on developing new technologies to allow the U.S.Â military to maintain its technological advantage going into the future. Â It also looks atÂ developing new, innovative ways to leverage current capabilities. Â UnderÂ Secretary Carter, theÂ Department of Defense (DOD) is attempting to further this initiative by building closerÂ relationships with private technology firms in Silicon Valley. Â To help with engaging tech innovators, the DOD established the DefenseÂ Innovation Unit Experimental facility (DIUx) with offices in Silicon Valley, Boston, and mostÂ recently Austin. Â DIUxÂ is meant to streamline the process so it is easier to do business withÂ commercially-focused companies and seeks to introduce commercial technologists to nationalÂ security challenges for potential military applications. Some of the innovative technologiesÂ DIUx and DOD are concentrating on include automation and artificial intelligence (AI). Â TheÂ 2017Â defense budgetÂ will include $12 billion to $15 billion for experimentation andÂ demonstration of new technologies, including AI andÂ deep learningÂ machines.
The U.S. military is not the only one with an increasing interest in these new technologies. TheÂ same year Secretary of Defense Chuck Hagel announced the Third Offset Strategy, the PRC alsoÂ began significantly increasing its investment in innovative technologies like AI. Just in the firstÂ half of 2016, PRC investors including Baidu andÂ state owned enterprisesÂ investedÂ $6 billionÂ in AI startup firms. Â The increase in investment is part of a government push to develop theÂ technology industry. Â According to PRCÂ state media, the National Development and ReformÂ Commission, Ministry of Science and Technology, the Ministry of Industry and InformationÂ Technology, and the Cyberspace Administration of China have formulated a three year plan toÂ speed up the development of the AI sector. This will include projects on unmanned vehicles andÂ robots. Â Undoubtedly, the PLA is seeking to incorporate such technology into its systems. Â InÂ AugustÂ Wang Changqing, director of the General Design Department of the Third Academy ofÂ the China Aerospace Science and Industry Corp (CASIC)4, announced that future cruise missilesÂ will have a high level of AI and automation.
Accompanying the increased investment has been an increase in mergers and acquisitions byÂ PRC buyers in the United States. Â According to theÂ Rhodium Group, in 2006 there were seven completed mergers and acquisitions. In 2014 there were 100, an increase of 1,328 percent. Â The Rhodium Group also found since 2013 the majority of deals haveÂ switched from the energy sector to technology. Â However, the numbers of investigationsÂ performed by the Committee on Foreign Investment in the U.S. (CFIUS)Â Â were found to be “disproportionately low” compared to the increased number of mergers and acquisitions that have taken place. Â In its latest reportÂ CFIUSÂ states, “There is an effort by foreign governments or companies to acquire U.S. companies involved with research, development, or production of critical technologies for which the U.S. is a leading producer.” Â This is worrisome as there areÂ national securityÂ implications involvedÂ with the acquisition of U.S. technology firms.
There are recent examples of attempted acquisitions by the PRC being ruled a threat to nationalÂ security. Â InÂ 2012Â Ralls Corporation attempted to buy wind farms near U.S. Navy airspace whereÂ drones are tested. Â Last year a U.S. chip maker, Micron, turned down aÂ $23 billionÂ acquisitionÂ offer from the state-owned Tsinghua Unigroup because the deal would have likely been blockedÂ by CFIUS. Â Several months later Tsinghua Unigroup side stepped CFIUS andÂ announced it had made a â€œpurely financialâ€ investment of $41.6 million in LatticeÂ Semiconductor, giving it a six percent stake in the company. Â Because it is only a financialÂ investment it was not subject to CFIUS investigation. Â This is the same Lattice SemiconductorÂ that was targeted by two Chinese residents attempting to sendÂ sensitive technologiesÂ back to theÂ PRC without an export license. Â The two were indicted in 2012 for export and money launderingÂ violations for attempting to acquire Programmable Logic Devices (PLD), which are designed toÂ operate in extreme climates and can be used in missiles and radar systems. Â Eight years beforeÂ this incident, Lattice Semiconductor wasÂ accusedÂ of illegally exporting PLDs six times to theÂ PRC between April 2000 and July 2001, and agreed to pay a $560,000 civil penalty to settle theÂ charges.
One possible explanation for the increase in technology company acquisitions is the increased focus onÂ artificial intelligence. Â Artificial Intelligence is much more difficult to steal throughÂ cyberÂ theft. Â According to theÂ DOD, â€œChina continues to leverage foreign investments, commercial jointÂ ventures, academic exchanges, the experience of Chinese students and researchers, and state-sponsored industrial and technical espionage to increase the level of technologies and expertiseÂ available to support military research, development, and acquisition.â€ Â The PRCâ€™s increasedÂ efforts are paying off. Â Whereas the U.S. used to be the leader in deep learning research, it wasÂ recentlyÂ surpassedÂ by the PRC.
As the U.S. and the PRC are engaged in a long-termÂ strategic competition, both sides are
increasingly investing more in technologies like AI to achieve the advantage in theÂ battlefieldsÂ ofÂ the future. Â The PRC knows the promotion of dual-use technology development in criticalÂ sectors like AI is essential to building modern armed forces. Keeping with the 2015 DefenseÂ White Paper, President Xi Jinping recentlyÂ urgedÂ greater cooperation between the civilian andÂ military sectors in order to build stronger armed forces. Â He has also called for the ChineseÂ Communist Party (CCP) to reaffirm itsÂ leadershipÂ in state-owned firms to ensure that theyÂ remain â€œa reliable force that the party and the nation can trust and an important force in firmÂ implementation of the central leadershipâ€™s decisions.â€ Â Decisions such as investing in andÂ acquiring U.S. technology firms in order to help the PLA overcome the technology gap itÂ currently faces against the U.S. military. Â If the United States government wants the Third OffsetÂ Strategy to be successful and maintain the Department of Defenseâ€™s technological advantageÂ over the PLA, it must increase its scrutiny of Chinese acquisitions of U.S. technology firms byÂ these state-owned enterprises.
Charles Emmett is an Intern at the Project 2049 Institute. He is currently a Master’s candidate at the Josef Korbel School of International Studies at the University of Denver, where he focuses on China and U.S. National Security.
1Â Planning for Innovation: Understanding Chinaâ€™s Plans for Technological, Energy, Industrial, and Defense Development. U.S.-China Economic and Security Review Commission. Pg. 24. July, 2016.
<Â http://www.uscc.gov/sites/default/files/Research/Planning for Innovation-Understanding China’s Plans for Tech Energy Industrial and Defense Development.pdfÂ >Â .â†©
2Â Ibid., Pg. 26â†©
3Â Ibid., Pg. 135â†©
4Â <ä¸å›½èˆªå¤©ç§‘å·¥é›†å›¢ç¬¬ä¸‰ç ”ç©¶é™¢ä¸»ç ”å‘éƒ¨ä¸»ä»»çŽ‹é•¿é’> and Mark Stokes for more background on CASIC published 2009. <Â . https://cesionline.org/documents/chinese_anti_ship_ballistic_missile_asbm.pdf>â†©