China’s strategy to reorient US tech companies is exposed — what next?


It used to be difficult to convince U.S. policymakers that China was stealing our intellectual property and gaining advantages over the United States in critical national security technology.

Now — not so much.

And it is our current national focus on the COVID-19 pandemic that yet again reminds us of the importance of innovation, technology, and supply chains — as well as China’s aggressive behavior to undermine these at the expense of the United States.

China’s aggressive behavior to outright steal our technological secrets, build a generic version of our technological platforms, and re-orient U.S. tech companies has been exposed, to paraphrase Ernest Hemingway, “slowly… then suddenly.”

From China’s theft of intellectual property, including “one in five corporations saying China has stolen their intellectual property within the last year;” to Chinese influence and espionage in academia as exemplified by the recent criminal complaint against the Chair of the Harvard Chemistry and Biology Department; to Chinese investment in U.S. tech with “Chinese investor-backed deals with U.S. tech startups jumping as much as 185-percent” — China’s strategy has been fully exposed.

Retired Admiral William McRaven probably had it right when he said this is a “holy s— moment” for the United States.

U.S. policymakers now see China’s strategy for what it is — a not-so-subtle attempt to influence and ultimately control U.S. tech. The government of China has been engaged in a deliberate campaign to re-orient U.S. technology companies towards China.

But now that China’s true intentions have been unmasked, important questions remain: What “team” will U.S. tech companies ultimately choose, and what are the second and third order policy implications of such choices?

Could it now be that segments of our most prominent and successful tech companies believe that China is a credible and trusted partner?

Could it now be that some leaders of our most prominent tech companies are so drawn to the market potential of China that they forgot the market-based, democratic principles that allowed these companies to be created, grow, and thrive in the first place?  

Could it now be that we are losing brilliant engineers, university researchers, and tech innovators to China?

The unfortunate reality is — in some ways — yes.

Indeed, answers to these questions will continue to be yes if the U.S. government does not: (1) Create new ways for emerging U.S. tech companies to be economically viable through working with the U.S. government and (2) Clearly articulate policies that are inclusive of the values and approaches that have allowed U.S. tech companies to be creative and thrive.

Luckily, the competition is still very much afoot. The successes of the Chinese government to date are not permanent.

China’s aggressive behavior has created a new, bipartisan consensus to counter this national security challenge. And we are now seeing the White House and Congress — not to mention the U.S. investment community — respond accordingly.

The White House has signaled concern and moved to change the focus of the entire national security apparatus from counterterrorism to great power competition — with a particular focus on China. The most prominent example of this change is the 2018 National Defense Strategy (NDS)— asserting: “Inter-state strategic competition, not terrorism, is now the primary concern in U.S. national security…China is a strategic competitor using predatory economics.” Today, the executive branch is aligning and institutionalizing resources to meet this “inter-state competition” with China.

We have also seen Congress respond with steps to achieve a holistic approach to the competition with China such as the creation of the National Security Commission on Artificial Intelligence and the Cyberspace Solarium Commission. These commissions are the most significant steps — to date — focused towards outlining a whole-of-nation playbook to compete with China.

Moreover, we are seeing U.S. investors recognizing the strategic challenge that China presents — with billions raised toward transformative defense-focused technology startups that have promising advances in AI, advanced computing power, cybersecurity, and weapon systems of tomorrow.

But these initiatives from the executive branch, Congress, and the venture capital investment community will not be enough.

U.S. tech companies — small and large — need to get on the record and establish a consensus view of the strategic competition with China. Do they see it the same way as the U.S. government, and what are ways the U.S. government should change policy and law to establish the appropriate environment for tech companies to thrive with the United States and our partners and allies?

Perhaps the U.S. and allied tech communities should establish a joint commission or a forum of their own on strategic competition with China?

On the government side, the United States should make it more viable for start-up tech companies to work with federal agencies. The U.S. government can achieve this through:

  • Consistently and effectively communicating the moral and ethical shortcomings of China — and clearly demonstrating how the U.S. government is different and oriented towards making the world a safer, more open and just place;
  • Creating new ways for emerging technology to be validated against real-world problems;
  • Establishing a National Security Innovation Base technology fund that would de-risk the testing and building of such technology to solve critical U.S. national security problems; and
  • Creating forums for the U.S. government to share insights into the critical tech it needs and will buy — thereby incentivizing VC investments, reducing risk, and accelerating companies with these technologies.

Even as China’s strategy to “control” U.S. tech has come into the light of day, in the final analysis, it remains unclear whether such companies view the United States as the best long-term play.

Without the U.S. government shaping both the economic incentive structures for these companies as well as changing the way it communicates its moral role in the world, U.S. tech companies may inadvertently choose China over the U.S. — putting at risk a U.S.-led 21st Century.

Alex Gallo is a Visiting Fellow with the National Security Institute at George Mason University’s Antonin Scalia Law School and a former Professional Staff Member with the House Armed Services Committee.

Tags China China–United States relations Chinese technology Coronavirus coronavirus pandemic COVID-19 Entrepreneurship

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