A new C4ADS report reveals that China through its Military-Civil Fusion strategy seeks to fully-integrate its civilian industry base into the People’s Liberation Army supply chain. The military think tank also says that Western companies and universities engaging with Chinese firms and institutions should guard against misappropriation of their technology.
Chinese leader Xi Jinping claimed on Sept. 25 that China’s prowess to engineer and construct Beijing’s $63 billion Daxing International Airport in just five years demonstrates “the political advantages of the Communist Party leadership and China’s socialist system that can mobilize all sources to make great achievements.”
But according to a report titled “Open Arms” from the non-partisan C4ADS military think tank, the Chinese regime’s welcoming foreign commercial research and investment from the West since the 1970s has always been tied to technology transfers with military applications to strengthen the People’s Liberation Army (PLA). Combined with PLA scientists attending leading global universities to access advanced technologies, China’s defense industry has been able to catch up with the West.
China’s ‘National Medium- and Long-Term Plan for the Development of Science and Technology’ (2006–2020) outlined PLA tactics for accessing advanced Western technologies as “Introduce, Digest, Absorb, and Re-innovate” (IDAR). Domestic Chinese companies were directed to “digest and absorb advanced technology, conquer critical technologies bearing on the national strategic interest, [and] develop major equipment and critical products that harness independent knowledge.”
IDAR encouraged Chinese firms to import foreign technology to launch its world-renowned high-speed rail system. Once the nation gained access to the technology and re-innovated it, China leveraged its marketplace size and became the world’s leading manufacturer of high-speed locomotives and rail cars.
Xi Jinping in his 2016 State Council keynote speech launched the ‘Innovation-Driven Development Strategy’ for China to become a “world powerhouse in scientific and technological innovation” by 2050. Although Xi described the initiative as accelerating and invigorating the country’s economic transformation, C4ADS analysts suggests it marked the launch of the Military-Civil Fusion (MCF) strategy that encouraged Chinese non-defense companies to begin selling directly to the PLA.
China’s 13th Five-Year Special Plan released in March 2016 stated: “We will stress both development and national security, strive to build both a prosperous country and a strong military, and move forward with the integrated military-civilian development strategy to bring about deep and highly efficient integration of the development of the military and civilian sectors across multiple fields and for all factors, and to achieve comprehensive progress in the modernization of defense and the armed forces.”
C4ADS’ review of 65,727 import records and 429 investment transactions over the last three years found that 1,655 Chinese civilian companies through engagement with the West, acquired foreign technology and then “re-innovate” the technology to supply products or services to advance the PLA’s military competitiveness.
With numerous examples of sensitive technologies commercially procured from the United States and Europe that contributed to advanced PLA weapon systems, C4ADS recommends that states, companies, and universities engaging with Chinese firms and institutions must proactively guard against misappropriation of their technology.
C4ADS recommends that governments restructure surveillance and regulatory structures regarding technology licensing and transfers. The goal should be to continue protecting legitimate commercial activities, “while keeping risky transactions at bay.”
Chriss Street is an expert in macroeconomics, technology, and national security. He has served as CEO of several companies and is an active writer with more than 1,500 publications. He also regularly provides strategy lectures to graduate students at top Southern California universities.