The U.S.-China Economic and Security Review Commission
The U.S.-China Economic and Security Review Commission was created by the United States Congress in October 2000 with the legislative mandate to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action.
Please find below their most recent Trade Bulletins:
Commerce Adds 60 Additional Chinese Companies, Including SMIC, to its Entity List On December 18, 2020, the US Department of Commerce Bureau of Industry and Security (BIS) announced the designation of 60 additional Chinese companies to its Entity List, including SMIC, China’s largest semiconductor manufacturer; over 25 affiliates of China State Shipbuilding Corporation (CSSC); and several other companies in a range of sectors. As of that date, a license is now required for any export, re-export or transfer of technology, goods or software of items subject to US export controls for which any of the targeted entities is a party to the transaction.
Technology used in Xinjiang Outside understanding of the technology used in China’s campaign of massive repression in Xinjiang continues to grow. New research by Human Rights Watch shows big data is used to target minorities in Xinjiang. Chinese companies, including Huawei, meanwhile, are openly boasting that their technology can identify Uighur faces and issue immediate alerts—within China, that is a selling point.
2020 Annual Report of the U.S.-China Economic and Security Review Commission The U.S.-China Commission is mandated by Congress to investigate, assess, and report to Congress annually on “the national security implications of the economic relationship between the United States and the People’s Republic of China.” This year’s report addresses key findings and recommendations for Congressional action based upon the Commission’s hearings, research, and review of the areas designated by Congress in its mandate.
The Elements of the China Challenge The U.S. State Department’s Office of Policy Planning released a blueprint for America’s response to China’s rise as an authoritarian superpower. The unclassified paper draws inspiration from an influential article published in 1947 by the policy planning team’s founder, U.S. diplomat George Kennan, in which he introduced the idea of containment as a strategy to deal with the Soviet Union. The lengthy document examines the Chinese Communist Party’s harmful conduct and its ideological sources, the vulnerabilities China faces, and how the U.S. and its allies should respond. “Meeting the China challenge requires the United States to return to the fundamentals,” the paper states. The U.S. must fashion “sturdy policies that stand above bureaucratic squabbles and interagency turf battles and transcend short-term election cycles. The United States’ overarching aim should be to secure freedom.”
The United States and Europe The Republican majority on the Senate Foreign Relations Committee has released a new report on confronting China. In the report, the lawmakers press for a multilateral approach with expanded help from Europe—a strategy that coincides with the stated policy objectives of the incoming Biden administration.
Understanding Chinese Consumers: Growth Engine of the World This special edition of McKinsey’s China Consumer Report provides perspectives on the trends that are defining the ‘next normal’ in post-pandemic China. The articles within aim to provide consumer and retail companies with the insights necessary to thrive in this challenging environment.
Regime Realism and Chinese Grand Strategy The key points of this new report of the American Enterprise Institute are:
• The US-China contest is a clash of systems as much as a clash of interests. China is challenging American influence and America’s conception of what values an international order should embody.
• China’s behavior is difficult to understand solely, or even primarily, through a “realist” lens. A paradigm of regime realism—one that combines an understanding of power and anarchy with an appreciation of ideology and the nature of a country’s government—offers greater insight.
• The US-China contest is one for the long haul, even though its intensity will wax and wane over time. The United States cannot cease being a threat to the Chinese Communist Party without ceasing to be what it is—a democracy concerned with the fate of freedom around the world. And China cannot cease being hostile to the US-led international order without ceasing to be what it is—an autocratic regime whose strength masks pervasive insecurity.
The Shanghai Cooperation Organization: A Testbed for Chinese Power Projection The new staff report of the U.S.-China Commission examines China’s efforts to use the Shanghai Cooperation Organization (SCO), an organization originally founded by China, Russia, and Central Asian countries, as a platform to project power and influence beyond China’s borders. The paper analyzes the power projection capabilities and diplomatic agreements China is developing through the SCO and assesses the implications of China’s efforts for the United States.
European public opinion on China in the age of COVID-19 In September and October 2020, the Sinophone Borderlands project at Palacký University Olomouc (Czech Republic) conducted a wide-scale survey of public opinion on China in 13 European countries. The polled countries included: Czechia, France, Germany, Hungary, Italy, Latvia, Poland, Russia, Serbia, Slovakia, Spain, Sweden, and the United Kingdom. The report presents the basic findings of the survey, which are a result of a joint analysis of the survey data by CEIAS (Slovakia) and Sinophone Borderlands.
The 5th Plenary Session of the Central Committee of the CCP The Plenary Session (October 26-29, 2020), has elevated the status of President and CCP General Secretary Xi Jinping to that of Helmsman, a title once reserved only for the late Chairman Mao Zedong. Strong signals were also sent that the Central Committee supported the 67-year-old supreme leader’s desire to continue exercising power for an additional ten years or more. During the session the Central Committee passed the main points of the 14th Five-Year Plan (FYP) (2021-2025) for National Economic and Social Development and the 2035 Long-Range Objectives. These can be understood as a general and detailed outline of the 14th FYP. The actual plan will likely be published early 2021.
China’s Inroads into Slovak Universities This new policy paper of the Central European Insitute of Asian Studies (CEIAS) maps the relations between Slovak academia and various Chinese entities.
Responding to China at the United Nations This NSI Law and Policy Paper describes the energetic and persistent activities of China to promote its geopolitical objectives through the United Nations. The paper summarizes China’s activities in the World Health Organization, the International Telecommunications Union, the United Nations Industrial Development Organization, and the Subsidiary Bodies addressing the Internet and cyberspace, as well as its pursuit of leadership positions in key UN Departments. It also evaluates the impact of these efforts on control of pandemics, Internet freedom, the development of international law and norms in cyberspace, and the future trajectory of the developing world, and proposes actionable recommendations to counterbalance China’s activities, including remaining in and reforming the World Health Organization and renewing the focus on other specific UN Agencies, Subsidiary Bodies, and Departments.
Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies This new executive order, issued on November 12, 2020, will prohibit investments in companies that the US government determines support the military of the People’s Republic of China. The order builds on the US Department of Defense’s recently released list of “Communist Chinese military companies” by prohibiting US individuals and entities from purchasing these companies’ securities. For the initial list, click here, for the updated list, click here.
Chinese and Russian intelligence among most active in Czech Republic “Russia aims for the destabilization and breakup of its enemies, whereas China aims to create a Sino centric global community, where all the other nations approve the legitimacy of Chinese interests and respect,” the Czech Security Information Service said in its annual (2019) report. “Chinese actors tried to influence public opinion, spread Chinese propaganda through Czech media and were quite active in academia, according to the annual report. In particular, Chinese intelligence services used the “openness of the Czech Republic towards Chinese investments”, which the report stated were related to energy infrastructure, without naming specific ones. According to a recent EURACTIV article however: “the Czech Republic will publish a tender for new blocks of Dukovany nuclear plant in December and Russian and Chinese companies are among the top candidates. When it comes to domestic threats, the Czech Security Service emphasized that extremists had no common topic to mobilize the public”.
Artificial Intelligence and Strategic Trade Controls Balancing the benefits and risks posed by artificial intelligence (AI), one of the most diffuse and rapidly evolving emerging technologies, is imperative when forming sound policy. This report of the Strategic Trade Research Institute (STRI) and Center for International and Security Studies at Maryland (CISSM) at the University of Maryland’s School of Public Policy analyzes the threats, trade linkages and mechanisms, and policy options in light of ongoing discussions regarding the prospects for applying export controls on artificial intelligence technologies and applications.
Emerging Technologies and Trade Controls: A Sectoral Composition Approach The rapid development of dual-use emerging technologies has magnified the importance of reconciling technological leadership, economic competitiveness, and national security objectives. While trade controls on dual-use technology transfer can promote peace and mitigate security threats, overly cumbersome policies may impose economic burdens on the private sector that threaten competitiveness and innovation. Striking a balance between these opposing agendas has become especially challenging in the context of emerging technologies that have elicited significant interest in both the military and civilian markets. The dilemma has also been complicated by the merging of economic security discourse and policy with national security. Policymaking mechanisms should be calibrated at the level of individual technologies to avoid security and/or economic consequences of under or over-regulation.
This report of the Strategic Trade Research Institute (STRI) and Center for International and Security Studies at Maryland (CISSM) at the University of Maryland’s School of Public Policy offers policymakers data, findings, and recommendations to strengthen the effectiveness of individual policies and to work towards a comprehensive technology strategy.
Survey of Chinese-linked Espionage in the United States Since 2000 This survey lists 147 publicly reported instances of Chinese espionage directed at the United States since 2000. It does not include espionage against other countries, U.S. firms or persons located in China, nor an additional 50 cases involving attempts to smuggle munitions or controlled technologies from the U.S. to China. CSIS also did not include more than 1200 cases of intellectual property litigation brought by U.S. companies against Chinese entities in either the U.S. or Chinese legal systems
Working Paper for the Penn Project on the Future of U.S.-China Relations According to this new paper of the Brookings Institution, Washington’s growing focus on the risks posed by Chinese technology companies operating in the United States embodies the complexity of the challenges confronting U.S. policymakers in responding to China’s rise in technological, economic, and geopolitical power. Concerns over companies such as telecommunications equipment-maker Huawei and social-media platform TikTok are multidimensional and scarcely amenable to characterization in terms of discrete national security risks. This paper traces one aspect of the “securitization” of technology policy in U.S.-China relations. It seeks to identify and disaggregate the main challenges facing policymakers who are troubled by China’s growing technological power as expressed through the actual or potential effects of Chinese technology companies doing business in the U.S. market. These concerns can be broadly categorized along (at least) two dimensions: risks inherent in the nature of emerging technologies and risks related to the nature of China’s governing system. The paper illustrates how these concerns apply in the context of 5G telecommunications and artificial intelligence. The essay concludes with several recommendations for U.S. policy reform: (1) enacting comprehensive federal data privacy legislation; (2) advancing a digital trade agenda with U.S. allies and partners; (3) rationalizing the U.S. cybersecurity liability regime; (4) increasing the costs for malicious hackers; and (5) improving mechanisms for governmental policy coordination along domestic and international dimensions.
China: Can It Be Integrated into the Trading System? According to the Cato Institute, a public policy research organization, China’s accession to the WTO in 2001 was a momentous event. Unfortunately, although China’s entry into the WTO was an important first step in its integration into the world economy, a proper follow‐through did not occur. The Bush administration was distracted by 9/11 and then the financial crisis; the Obama administration argued that it was pushing for liberalization with other major trading countries as a way to write the rules rather than letting China do so, but its major initiatives failed. Then the Trump administration came along and started a trade war with China, with a goal of pressuring China to liberalize; but that administration has also started trade wars with many other countries, undermining its China strategy in the process. A Biden administration will inherit a difficult situation. More in Cato’s Free Trade Bulletin.
American funding of China is becoming Dangerous The key points of this AEI report are:
• American investment in the People’s Republic of China probably exceeds $1 trillion, most occurring in the past six years. The vast majority is portfolio investment—holdings of bonds and, especially, small equities stakes. The amount is surprising because half or more is routed through offshore conduits such as the Cayman Islands.
• Investment anywhere near this magnitude undermines the view that the US is confronting China economically. Despite tariffs, the 2019 goods trade deficit was almost the same as in 2016. Over that period, Chinese money exited US Treasuries on a net basis. Meanwhile, more than $500 billion in American capital flowed into Chinese securities.
• One policy step is obvious: Require investors to disclose the true end user of funds. If transparency is controversial, limit disclosure to potentially harmful destinations such as China. Any restrictions on outbound investment, say in advanced technology, would call for a new body similar to CFIUS (the Committee on Foreign Investment in the United States).
Divided Internet / China and US Switch Places as Data Powerhouse Back in 2001, according to recent article in NikkeiAsia, the U.S. was the dominant country when it came to cross-border data flows. It was the early days of the internet boom, and America was where tech companies and tech-savvy consumers were. But the global data order is changing rapidly. China now accounts for 23% of cross-border data flows, nearly twice the share of the U.S., which ranks a distant second with 12%.
Learn more with a graphic-rich version of this article.
A Transatlantic Effort to Take on China Starts with Technology As the European Union releases an ambitious digital regulatory agenda, the Center for European Policy Analysis calls for strategic cooperation between the United States and Europe on technology policy to increase competitiveness, protect the democratic digital domain, and engender innovation. With the publication of the Digital Services Act and Digital Markets Act, the authors of this report discuss how Europe and the United States can keep their competitive edge, democracies must develop a shared strategic approach that reflects values of openness, drives innovation, and establishes a framework for digital governance.
Securing U.S. Interests Across the Greater Mediterranean According to this new CSIS report, China’s main investments in the Greater Mediterranean are concentrated in transport and energy infrastructure and in the technology sector. While many investments—solar energy, power plants, and container terminals—are benign or fill a domestic need, others are more concerning. These include assets located at major access points and along trade routes. For example, once complete, the El Hamdania portin Algeria (49 percent Chinese ownership) will be the second-largest in North Africa and connect with European and Southeast Asian shipping routes.
Similarly, China has an agreement to operate the strategic Haifa port in Israel for the next 25 years. Potential Chinese tracking activity and surveillance presents a security risk to the U.S. Navy, which conducts exercises and port visits in the area. In NATO ally Greece, China’s COSCO owns 51 percent of the port of Piraeus, which is regularly used by NATO. This investment raises questions about whether Greece’s blocking of EU statements on the South China Sea and Chinese human rights is mere coincidence.
While not an immediate concern, Chinese investments in the technology space in Europe (including 5G) could create security vulnerabilities for NATO and the European Union and complicate either’s ability to work with partners in North Africa and the Middle East.
A final concern with Chinese economic influence is the dependency created by unsustainable debt levels. Funded by China’s Exim Bank, the loan for the Bar-Boljare highway in Montenegro pushed public debt over 80 percent of GDP. In Albania, China owns 100 percent of Tirana airport and 95 percent of the country’s crude oil fields. These investments take advantage of internal elements of instability, such as patronage networks and corruption, and could impact stability and government spending in the long term.
Domestic and International (Dis)Order: A Strategic Response The Aspen Strategy Group recently released this publication bringing together preeminent experts to explore race, democracy, and political divisions on the American home front; the global economy; and U.S. foreign policy priorities for 2021, and there are eight Chapters regarding the future of U.S.-China relations.
A China Strategy According to this new CEPA Strategy Paper, China has become the West’s most formidable competitor. Under its most centralized government since the Mao era, China has emerged as an economic, technological, and military superpower. The Chinese Communist Party (CCP) wields political influence and technological developments to instigate disinformation campaigns and censor those critical of its regime. In order to mitigate China’s rise, the United States, Europe, and other allies, such as Australia, Japan, and Canada, must unite to constrain the CCP’s harmful behavior.
NATO 2030: United for New Era Recent years have seen a series of political challenges facing NATO Allies and a period of unusual turbulence in Western societies. Some of this is the result of strains caused by the 2008 global financial crisis, which prompted a questioning of aspects of international order. Trust and faith in democratic and international institutions has decreased, alongside heightened tensions over trade and competition for resources, exacerbated by developments in EDTs, and the spread of disinformation.
NATO is waking up to China. The alliance’s foreign ministers held a China Summit with counterparts from Australia, New Zealand, Japan, and South Korea as well as from Finland, Sweden, and the EU’s chief diplomat Joseph Borrell. The secretary-general, Jens Stoltenberg, highlighted the threat: “China is investing massively in new weapons. It is coming closer to us, from the Arctic to Africa. It does not respect fundamental human rights and tries to intimidate other countries.” A report by the alliance’s “reflection group” urged “much more time, political resources, and action” when it comes to Beijing. Covering all possible bases, the Global Times said that NATO was abandoned by and a puppet of the U.S., out of date, ineffective, paranoid, and also a troublemaker.
Annual Risk Assessment of the DDIS The growing interests and presence of Russia, China and the U.S. in the Arctic have a destabilizing effect on the region’s security, according to the annual risk assessment conducted by the Danish Defence Intelligence Service (DDIS).
Tensions within the Danish Kingdom, which includes Denmark, Greenland and the Faroe Islands, may be more openly exploited, especially by Russia and China, according to a report published by DDIS on Thursday. Although Denmark is responsible for the Danish Kingdom’s defense and foreign affairs, the three countries have different views and interests when it comes to foreign relations.
China, which according to the Arctic Today web magazine, has already invested in mining projects in Greenland, might eventually benefit more from such investments, the Danish foreign agency pointed out. China is increasing its bilateral cooperation with Arctic nations in the realms of trade, research and culture, and is using increased cooperation on research and trade as entry points for influence.
When it comes to Russia, the risks appear to be more military in nature. The newly established Nagurskoye Air Base located 2,000 kilometers from Greenland makes it easy for Russian fighters to operate widely in the region. An arms race is probable since the US, together with Denmark, are thinking about how to strengthen the Thule Air Base in Greenland.
US Sanctions Policy The Atlantic Council has published a report which assesses and criticises the Trump administration’s sanctions policy and makes recommendations for the Biden administration to fix what the author describes as “a bad feedback loop”.
Reconfiguring to Win the Innovation Race in the Intelligence Community This report represents the culmination of the House Permanent Select Committee on Intelligence’s Subcommittee on Strategic Technologies and Advanced Research efforts during the 116th Congress to understand how the Intelligence Community pursues innovation.
The U.S. Defense Industrial Base This report is the culmination of a collaboration between the National Security Institute (NSI) and Duco, where more than 100 top national security experts at NSI and Duco shared their insights on the National Defense Authorization Act (NDAA), as well as the broader state of United States national security and its geopolitical standing. The experts were asked to contribute to this project via a survey. This report summarizes the findings, trends, and key takeaways that emerged from the expert responses. Specifically, this report breaks down the trends in four sections: I) the double threat posed by China, II) the U.S. military advantage is under pressure from adversaries, III) the U.S. defense industrial base is vulnerable, and IV) the U.S. must maintain its military advantage.
Democratic Offense Against Disinformation According to the Center for European Policy Analysis (CEPA), now is the time for the United States and Europe to devise a democratic offense against disinformation. A new CEPA report offers a more proactive approach to fighting foreign influence. By building up offensive cyber capabilities, imposing sanctions, and supporting free media, democracies around the world can successfully defend themselves against disinformation.
America’s Use of Coercive Economic Statecraft In this new CNAS report,” Task Force coordinators and principal co-authors outline the major findings from the work of the task force. The report discusses key trends in U.S. coercive economic statecraft and how policymakers can best continue to leverage American economic strength to meet national security goals. The authors conclude that “economic power, as an engine of national security, will form a basis for leverage for American leaders to advance foreign policy goals in an array of domains,” however, “experience suggests that coercive economic tools need to be deployed carefully.”
Mapping the Future of U.S. China Policy In the new survey, CSIS surveyed the American public and thought leaders in the United States, Asia, and Europe to map perspectives on China policy. The surveys covered a range of issues, including trade, security, human rights, and the trajectory for U.S.-China relations. The United States and U.S. allies generally converge on the need for a tougher stance toward China but not containment. The results point to possible contours of an enduring strategy around international coalition building on the China challenge. View the full survey results and analysis here.
Reengaging the Asia-Pacific on Trade: A TPP Roadmap for the Next U.S. Administration This ASPI report examines the options that the next administration would have for reengaging the CPTPP countries on trade in light of domestic considerations and developments, as well as input from the CPTPP countries. The report concludes with a road map that offers concrete recommendations for how the next administration, Democrat or Republican, could proceed, including advocating a narrower trade negotiation as a first step to rebuilding trust and to lay the groundwork for pursuing a full-fledged CPTPP re-entry.
Charting a Transatlantic Course to Address China The United States is set for a prolonged period of competition with China. To be successful, however, Washington cannot compete alone. The United States must amass influence, resources and know-how among its allies and partners, including in Europe. In a new report from CNAS and the German Marshall Fund (GMF), experts outline a roadmap for how the United States and Europe can deepen coordination and cooperation to navigate the challenges posed by China’s growing influence.
UK Parliament : Huawei Colludes with “Communist Party Apparatus” The British parliament’s defense committee has found evidence that Chinese telecom giant Huawei colludes with Beijing, and said Britain may need to remove all Huawei equipment years earlier than planned. The committee did not go into detail about the exact nature of the ties, but said it had seen clear evidence of Huawei collusion with “the Chinese Communist Party apparatus.” In July, Prime Minister Boris Johnson ordered Huawei equipment to be purged from the UK’s 5G network by the end of 2027. Huawei, for its part, said the committee report is not credible.
China’s Influence in Japan: Everywhere Yet Nowhere in Particular This new CSIS report details Chinese influence in Japan, a country deeply shaped by Chinese culture yet strangely immune to China’s present-day influence efforts. As the report points out, that is in part because of the clumsiness of such efforts, which often target the wrong people. But it’s also because of Japan’s relatively placid political environment, where suspicion of outside influence prevails.
Amendments to National Security License Review Policy under the EAR In this final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to revise the license review policy for items controlled for national security reasons destined to the People’s Republic of China (PRC), Venezuela, or the Russian Federation (Russia). With this revision, BIS and reviewing agencies will determine whether the export, reexport, or transfer (in-country) of items controlled for National Security (NS) reasons will make a material contribution to the “development,” “production,” maintenance, repair, or operation of weapons systems of the PRC, Venezuela, or the Russian Federation, as well as setting forth several factors that will be considered in reviewing license applications.
Toward a Stronger U.S.-Taiwan Relationship CSIS established the task force on U.S. Policy Toward Taiwan in January 2020 to review the efficacy of U.S. policy toward Taiwan in the broader context of an increasingly complex strategic situation and enduring American interests in the Indo-Pacific region. Their primary aim was to prepare recommendations for the coming four years and beyond. CSIS and the China Power Project launched their newest report, written by the co-chairs of the Taiwan Task Force.
Chinese State-Sponsored Actors Exploit Publicly Known Vulnerabilities The US National Security Agency published an in-depth report detailing the top 25 vulnerabilities that are currently being consistently scanned, targeted, and exploited by Chinese state-sponsored hacking groups.
All 25 security bugs are well known and have patches available from their vendors, ready to be installed.
The Chinese Communist Party Targets the Private Sector On September 15, 2020, the General Office of the Central Committee of the Chinese Communist Party (CCP) issued the Opinion on Strengthening the United Front Work of the Private Economy in the New Era, calling on the nation’s United Front Work Departments (UFWDs) to increase CCP ideological work and influence in the private sector. CSIS translated the document as part of the Freeman Chair in China Studies’ ongoing efforts to provide important documents setting out the CCP’s aims and ambitions.
FCC’s New Report and Order (Released: October 1, 2020) In this Report and Order, the FCC adopts rules and procedures that streamline and improve the timeliness and transparency of the process by which the Federal Communications Commission coordinates with the Executive Branch agencies for assessment of any national security, law enforcement, foreign policy, or trade policy issues regarding certain applications filed with the Commission. “The rules we adopt today formalize the review process and establish firm time frames for the Executive Branch agencies to complete their review consistent with the President’s April 4, 2020 Executive Order No. 13913 that established the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the Committee). The rules will provide greater regulatory certainty for applicants and facilitate foreign investment in, and the provision of new services and infrastructure by, U.S. authorization holders and licensees in a more timely manner, while continuing to ensure that the Commission receives the benefit of the agencies’ views as part of its public interest review of an application.” “These new rules and procedures will also improve the ability of the Executive Branch agencies to expeditiously and efficiently review the applications and make the review process more transparent. Among other requirements, for most applications referred by the Commission, the Committee has 120 days for initial review, plus an additional 90 days for secondary assessment if the Committee determines that the risk to national security or law enforcement interests cannot be mitigated with standard mitigation measures.”
National Strategy for Critical and Emerging Technologies The new National Strategy for Critical and Emerging Technologies outlines how the US will protect and promote US technologies in fields such as AI, energy, quantum, information science, communication, semiconductors, military and space. The Strategy also aims to restrict such exports to adversarial countries by ensuring export laws and regulations are adequate, encouraging allies to develop similar restrictions, and further engagement with the private sector. In support of the National Strategy for Critical and Emerging Technologies, Secretary of Commerce Wilbur Ross said the Department is fully behind the President’s strategy and has already implemented a number of export controls on emerging technologies. Earlier this month, the Bureau of Industry and Security (BIS) in Commerce imposed controls on six more emerging technologies, bringing the total to 37.
“The National Strategy for Critical and Emerging Technologies is a critical roadmap to protecting our national security and ensuring the United States maintains its technological leadership in military, intelligence, and economic matters,” said Secretary Ross. “Under President Trump’s leadership, the Department of Commerce has already imposed controls on more than three dozen emerging technologies and we will continue to evaluate and identify technologies that warrant control.” The most recent Commerce controls were implemented under agreements reached at the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies’ December 2019 Plenary meeting. Developing and implementing multilateral controls on emerging technology is consistent with the requirements of the Export Control Reform Act of 2018 (ECRA) to identify emerging and foundational technologies that are essential to U.S. national security.
The six emerging technologies now controlled on the Commerce Control List are:
1. Hybrid additive manufacturing/computer numerically controlled tools
2. Computational lithography software designed for the fabrication of extreme ultraviolet masks
3. Technology for finishing wafers for 5 nanometer integrated circuit production
4. Digital forensics tools that circumvent authentication or authorization controls on a computer and extract raw data
5. Software for monitoring and analysis of communications and metadata acquired from a telecommunications service provider via a handover interface
6. Sub-orbital spacecraft
This is the fourth set of emerging technology controls imposed by BIS since ECRA’s 2018 enactment. BIS has previously published three Federal Register Notices implementing new controls on 31 specific emerging technologies in the aerospace, biotechnology, chemical, electronics, encryption, geospatial imagery, and marine sectors, most of which were imposed with multilateral support. They include 24 chemical weapons precursors controlled for Chemical/Biological and Anti-Terrorism reasons as well as:
1. Discrete microwave transistors
2. Continuity of operation software
3. Post-quantum cryptography
4. Underwater transducers designed to operate as hydrophones
5. Air-launch platforms
6. Geospatial imagery software (unilateral)
7. Single-use biological cultivation chambers
Additionally, in accordance with ECRA, BIS requested public comment on the identification of foundational technologies on August 27, 2020, and the public comment period remains open until November 9, 2020.
The new China consensus: How Europe is growing wary of China According to this report of the European Council on Foreign Relations (ECFR, the first pan-European think-tank), the relationship between EU member states and China is undergoing a transformation that the coronavirus crisis has accelerated. While efforts to enhance trade and other economic links continue to play a major role in the relationship – especially due to the financial impact of the pandemic – countries across Europe are becoming increasingly skeptical of Beijing’s intentions. They are debating reducing their dependency on China for supplies of critical goods, and are ever more concerned about the future of the relationship in a rapidly shifting geopolitical environment marked by growing US-China rivalry. The pandemic has moved the debate about China, which is heavily influenced by EU member states’ domestic political constellations and considerations, much closer to the center of national and European policymaking.
Treasury Department Issues Ransomware Advisories Ransomware has his pandemic proportions and there does not seem to be a clear end in sight. On October 1, 2020, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) issued an advisory regarding ransom payments and the risk of sanctions violations associated with such payments.
Overseas Chinese Students and Scholars in China’s Drive for Innovation The new report of the U.S.-China Commission examines Beijing’s ecosystem of programs and incentives designed to exploit the expertise of Chinese students and scholars studying in STEM fields at universities in the United States and other advanced countries. This ecosystem leverages the scientific and technical knowledge Chinese researchers acquire while abroad to benefit China’s commercial and defense sectors. Much of this research is “fundamental” and not subject to controls, but both countries recognize its strategic value and potential. China’s programs are designed to encourage it to be commercialized or applied in China first, depriving the United States of an early mover advantage in developing this technology despite funding the research, in many cases, in the first place. China’s activities raise concerning economic and national security implications for the United States.
Chinese Companies Listed on Major U.S. Stock Exchanges (Update) October 6, 2020, the U.S.-China Economic and Security Review Commission released an updated list of Chinese companies listed on the NASDAQ, New York Stock Exchange, and NYSE American, the three largest U.S. stock exchanges.
As of October 2, 2020, there were 217 Chinese companies listed on these U.S. exchanges with a total market capitalization of $2.2 trillion. Companies are arranged by the size of their market cap. There are 13 national-level Chinese state-owned enterprises (SOEs) listed on the three major U.S. exchanges, marked with an asterisk (*) next to the stock symbol.
This list of Chinese companies was compiled using information from the New York Stock Exchange, NASDAQ, commercial investment databases, and the Public Company Accounting Oversight Board (PCAOB). NASDAQ information is current as of February 25, 2019; NASDAQ no longer publicly provides a centralized listing identifying foreign-headquartered companies.
US and EU Actions to Address Supply Chain Threats Caused by Reliance on Critical Mineral Imports In Executive Order 13953, the President declared a national emergency under the International Emergency Economic Powers Act, in order to “deal with the threat posed by our Nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries.” The President also directed a group of federal agencies to recommend possible executive actions to ensure an uninterrupted supply of critical minerals for the US economy.
OFAC and FinCEN Communicate Ransomware Expectations in New Guidance On October 1, 2020, the US Treasury Department issued—in the form of advisories from the Office of Foreign Assets Control (“OFAC”) and the Financial Crimes Enforcement Network (“FinCEN”)—important guidance on what victims of ransomware attacks, as well as financial institutions (particularly money services businesses and other companies that facilitate such payments), should consider when confronted with potential ransomware demands.
China embarks on economic inward shift Facing an unbalanced recovery and geopolitical stress in the wake of COVID-19, Beijing is increasingly wary of its economy’s intricate connection with global supply chains. In response, it is embarking on an important inward shift, explains a Research Analyst of the International Institute for Strategic Studies (IISS).
Lessons from the Trump Administration’s Policy Experiment on China The Trump administration’s policy experiment on China sought to slow China’s progress and pressure China’s leaders to become more responsive to American priorities and concerns about its behavior. So far, this policy experiment has not achieved its aspirations, according to this piece, originally published by The University of Pennsylvania as part of its Project on the Future of US-China Relations.
Uyghur Forced Labor Prevention Acts This bill imposes various restrictions related to China’s Xinjiang Uyghur Autonomous region, including by prohibiting certain imports from Xinjiang and imposing sanctions on those responsible for human rights violations there. Goods manufactured or produced in Xinjiang shall not be entitled to entry into the United States unless Customs and Border Protection (1) determines that the goods were not manufactured by convict labor, forced labor, or indentured labor under penal sanctions; and (2) reports such a determination to Congress and to the public.
The President shall periodically report to Congress a list of foreign entities and individuals knowingly facilitating (1) the forced labor of Uyghurs, Kazakhs, Kyrgyz, and members of other Muslim minority groups in Xinjiang; and (2) efforts to contravene U.S. laws regarding the importation of forced labor goods from Xinjiang. The President shall impose property-blocking sanctions on the listed individuals and entities and impose visa-blocking sanctions on the listed individuals.
Securities issuers required to file annual or quarterly reports with the Securities Exchange Commission shall disclose in such reports certain information related to Xinjiang, including instances where the issuer knowingly (1) engaged in activities with an entity helping to create mass surveillance systems in Xinjiang, (2) engaged in activities with an entity running or building detention facilities for Muslim minority groups in Xinjiang, or (3) conducted a transaction with any person sanctioned for the detention or abuse of Uyghurs or other Muslim minority groups in Xinjiang. After being notified of such a disclosure, the President shall determine whether to investigate if sanctions or criminal charges are warranted.
The Forced Labor Enforcement Task Force and the Department of State shall report to Congress strategies to address forced labor in Xinjiang.
The China Deep Dive: A Report on the Intelligence Community’s Capabilities and Competencies with Respect to the People’s Republic of China
The House Permanent Select Committee on Intelligence has released a partially-redacted summary of its “China Deep Dive” report on the U.S. intelligence community’s capabilities and competencies regarding the People’s Republic of China. The report explores China’s rise to power and examines how the U.S. intelligence apparatus “meets the challenge of China’s arrival on the global stage, as well as the continued potential for highly disruptive transnational crises that originate within our competitors’ borders, the profound technological change transforming societies and communication across the globe, and the international order’s return to near-peer competition.”
Rep. Adam Schiff commissioned the report in May 2019. On a bipartisan basis, committee staff reviewed intelligence practices, assessments and facilities. Their findings resulted in 36 public recommendations and over 100 classified recommendations to further bolster the intelligence community’s ability to collect, analyze and deliver intelligence products on China to American leaders. Issue areas covered include Chinese military capability, disinformation efforts, technological advancements and counterintelligence and influence operations in the United States, among other security threats.
The committee concludes with a “central finding” that the intelligence community is “not sufficiently adapted to a changing geopolitical and technological environment increasingly shaped by a rising China,” and further states that “absent a significant realignment of resources, the U.S. government and intelligence community will fail to achieve the outcomes required to enable continued U.S. competition with China on the global stage for decades to come, and to protect the U.S. health and security.” (emphasis in original)
CFIUS Implements Mandatory Filing Based on Export Licensing This final rule modifies certain provisions in the regulations of the Committee on Foreign Investment in the United States that implement section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018. Specifically, the rule modifies the mandatory declaration provision for certain foreign investment transactions involving a U.S. business that produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies. It also makes amendments to the definition of the term “substantial interest” and a related provision, and makes one technical revision.
The Impact of China’s Dominant Position in Global Supply Chains In this episode, Dr. Wang Tao joins CSIS to discuss the factors behind China’s shifting role in global supply chains. Dr. Wang explains how China came to play such a dominant role in global manufacturing and the potential consequences of reshoring or moving supply chains elsewhere. Dr. Wang Tao is a Managing Director, Chief China Economist, and Head of Asia Economic Research at UBS Investment Bank, where she leads a team that covers macroeconomic and policy issues in Asia and China. Listen.
Pandemic and Politics: US-China Investment Hits Nine-year Low Escalating bilateral frictions and the economic fallout from the COVID-19 pandemic pushed US-China capital flows to their lowest level in almost a decade in the first half of 2020. This report by the US-China Investment Project reviews the latest trends in US-China investment and analyzes the political dynamics and market developments behind them.
China and the Rules-Based Order In this new Lowy Institute digital feature, seven experts debate Beijing’s goals for the international order and the changes it seeks.
Becoming a Chinese Client State: The Case of Serbia This CSIS report, the second in a series, sheds light on China’s political and economic objectives, its mechanisms for influence, and the implications of its activities in Serbia, including a second wave of digital infrastructure projects.
Forced labor in Xinjiang Major new research by the Australian Strategic Policy Institute (ASPI) shows the extent of the mass destruction of religious and cultural sites across Xinjiang—more than two-thirds of all mosques have been damaged or destroyed—and the growth of prison sites. It also reveals the effective sale of coerced Uighur labor in the rest of China. Western firms are facing growing questions about their supply chains in China, too, as the use of forced labor from detained Uighur Muslims grows.
Asia’s Future Beyond US-China As Beijing and Washington fight to set the rules in Asia, third countries are increasingly choosing to shape their future themselves. The Carnegie Endowment for International Peace explains how Asia’s future may not be Washington’s or Beijing’s to determine. Instead, a patchwork of rules, norms, and standards will emerge.
The China Economic Risk Matrix Many aspects of China’s economy look unsustainable in the long term, but it is difficult to identify any particular problem that Beijing authorities cannot manage effectively in the short term. The potential for economic crisis in China is always present, but a crisis is never quite there. The China Economic Risk Matrix, a report of the CSIS Trustee Chair in Chinese Business and Economics, has been developed, similar to a threat matrix in security parlance. The risk matrix attempts to track developments within the key areas of financial risk in China where changes in Beijing’s credibility can have an outsized impact on financial stability.
Regulations on Unreliable Entity List On September 19, 2020, China’s Ministry of Commerce finally issued the Regulations on Unreliable Entity List, which consist of 14 provisions that provide further detail about the administration of the List. According to the Chinese Government, the Regulations were promulgated in the name of safeguarding China’s interests in “sovereignty, security, and development,” maintaining a “fair and free international economic and trade order,” and protecting the “lawful rights and interests of Chinese companies, other organizations or individuals.”
Chinese Hackers Charged for Cyber Attacks on Over 100 Companies The Department of Justice has charged five Chinese nationals with a variety of crimes for allegedly hacking into over 100 organizations worldwide (such as software development companies, computer hardware manufacturers, telecommunications providers, social media companies, video game companies, non-profit organizations, universities, think tanks, and foreign governments, as well as pro-democracy politicians and activists in Hong Kong), including targeted attacks on U.S. companies. The defendants were allegedly involved in attacks researchers have tracked by the threat labels “APT41,” “Barium,” “Winniti,” “Wicked Panda” and “Wicked Spider.”
New federal court documents released include an August 2019 indictment against two Chinese nationals, Zhang Haoran and Tan Dailan, as well as an August 2020 indictment against three other Chinese nationals—Jiang Lizhi, Qian Chuan and Fu Qiang—for allegedly committing “hacking offenses targeting high-technology and similar organizations in the United States and elsewhere.”
The Razor’s Edge: Liberalizing the Digital Surveillance Ecosystem In this new CNAS report the author, Fellow in the CNAS Technology and National Security Program, examines the global digital surveillance ecosystem and offers avenues for a U.S. response. The author analyzes China’s proliferating model of digital surveillance, trends in “global swing states” like Brazil and India, ongoing debates over surveillance in open societies, and digital responses to the COVID-19 pandemic. The author assesses that, while open societies tend to seek ways to balance security with privacy, the process of civic debate opens “an opportunity for the United States and other democratic nations to articulate the right way to imbue technology with privacy protections from the outset, in addition to maintaining a strong system of checks and balances to redress privacy infringements that do occur.”
Publication of Ransomware Advisory The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing an advisory to alert companies that engage with victims of ransomware attacks of the potential sanctions risks for facilitating ransomware payments. This advisory highlights OFAC’s designations of malicious cyber actors and those who facilitate ransomware transactions under its cyber-related sanctions program. It identifies U.S. government resources for reporting ransomware attacks and provides information on the factors OFAC generally considers when determining an appropriate enforcement response to an apparent violation, such as the existence, nature, and adequacy of a sanctions compliance program. The advisory also encourages financial institutions and other companies that engage with victims of ransomware attacks to report such attacks to and fully cooperate with law enforcement, as these will be considered significant mitigating factors.
Hikvision, Corporate Governance, and the Risks of Chinese Technology As concerns have grown in recent years about the economic, national security, and human rights risks posed by Chinese technology firms, the United States has responded by banning or restricting the way many Chinese firms can operate in the country. Around the world, other governments are taking similar measures, citing security risks due to these companies’ alleged ties to the Chinese Communist Party (CCP). According this Technology Policy Blog of the Center for Strategic and International Studies (CSIS), many Chinese firms, like Hikvision, Huawei, and TikTok, have pushed back on these measures, asserting their independence from the Chinese government. However, questions remain about how susceptible these companies are to Chinese influence, and how countries can evaluate these risks to calibrate their policy measures according to the actual dangers posed to citizens and their data. In making this risk calculation, one of the most important questions regards the corporate governance structure of Chinese firms.
India’s non-alignment in the telecommunications sector A Strategic Comment published by The International Institute for Strategic Studies
India has long been wary that telecommunications firms from China and the US would come to dominate the sector. After the June 2020 border skirmish with China, India has redoubled its efforts to limit the influence of Chinese firms on its networks, while at the same time relying on funding from China and the US to become an international leader in its own right in 5G technology.
The Razor’s Edge: Liberalizing the Digital Surveillance Ecosystem In this new CNAS report the author, Fellow in the CNAS Technology and National Security Program, examines the global digital surveillance ecosystem and offers avenues for a U.S. response. The author analyzes China’s proliferating model of digital surveillance, trends in “global swing states” like Brazil and India, ongoing debates over surveillance in open societies, and digital responses to the COVID-19 pandemic. The author assesses that, while open societies tend to seek ways to balance security with privacy, the process of civic debate opens “an opportunity for the United States and other democratic nations to articulate the right way to imbue technology with privacy protections from the outset, in addition to maintaining a strong system of checks and balances to redress privacy infringements that do occur.”
The United States, China, and the Contest for the Fourth Industrial Revolution Dr. Rush Doshi’s statement before the U.S. Senate Committee on Commerce, Science, and Transportation, Subcommittee on Security. For the Hearing “The China Challenge: Realignment of U.S. Economic Policies to Build Resiliency and Competitiveness”
A new DHS 5G Strategy The new strategy comes after several years during which the United States has largely fought rear-guard actions trying to limit the power of Huawei and other Chinese firms in 5G networks. The initiative echoes a 5G security strategy released by the White House in March. The 24-page document from the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency does not include the words “China” or “Huawei” but is clearly aimed at regaining lost ground. It lists five main pillars including improving vetting for 5G components to ensure they’re not aiding spying and promoting trusted 5G vendors in the United States and Europe. As part of the initiative, CISA will release profiles addressing potential security risks in specific industry sectors such as health care, finance and manufacturing.
Risk, resilience, and rebalancing in global value chains In recent decades, value chains have grown in length and complexity as companies expanded around the world in pursuit of margin improvements. Since 2000, the value of intermediate goods traded globally has tripled to more than $10 trillion annually. Businesses that successfully implemented a lean, global model of manufacturing achieved improvements in indicators such as inventory levels, on-time-in-full deliveries, and shorter lead times.
However, these operating model choices sometimes led to unintended consequences if they were not calibrated to risk exposure. Intricate production networks were designed for efficiency, cost, and proximity to markets but not necessarily for transparency or resilience. Now they are operating in a world where disruptions are regular occurrences. Averaging across industries, companies can now expect supply chain disruptions lasting a month or longer to occur every 3.7 years, and the most severe events take a major financial toll.
This recent McKinsey report explores the rebalancing act facing many companies in goods-producing value chains as they seek to get a handle on risk.
Commerce Department Further Restricts Huawei Access to U.S. Technology and Adds Another 38 Affiliates to the Entity List On the morning of Monday, August 17, the Department of Commerce issued a press release previewing a formal rule announcement in the Federal Register: the Bureau of Industry and Security (“BIS”) planned to take additional action directed at Huawei Technologies Co., Ltd. and its Entity List-designated affiliates (collectively, “Huawei”) by not only letting the Temporary General License (“TGL”) expire and adding an additional 38 affiliates to the Entity List, but also further revising the foreign direct product rule as applied to Huawei. The official implementation of this policy came a few hours later with the publication of an immediately effective final rule in the Federal Register.
Gulf Financial Aid and Direct Investment Much energy has focused on China’s Belt and Road Initiative and the debt-trap diplomacy it represents. But there is another set of players on the scene whose growth and influence in this sphere have been largely ignored. Gulf Arab states, particularly Saudi Arabia and the United Arab Emirates, have increasingly embraced an aggressive growth, investment, and development model for the broader Middle East.
This report of the American Enterprise Institute is an effort to understand the breadth and scope of Gulf aid and financial intervention into a representative set of cases in the Middle East, the Horn of Africa, and West Asia.
A cautious embrace: defending democracy in an age of autocracies This report of the Foreign Affairs Committee (UK Parliament) and published on the 5th of November, 2019, focuses on three policy areas: autocracies’ influence on academic freedom; the use of sanctions against autocracies; and the UK’s cooperation with other democracies in responding to autocracies. It is necessary for the Government to engage with autocracies, for reasons of security, trade, and tackling issues such as climate change and modern slavery. We concentrate in particular on Russia and China. Our evidence suggests that both have engaged in overt and covert interference in the affairs of the UK and its partners. The two take different approaches to the rules-based system: Russia has been accused of actively working to undermine the system, whilst China largely works within the system, but aims to change it to suit its own goals, which may be very different from those of the UK. Our evidence cited as examples Russia’s 2014 annexation of Crimea, the repression of Uyghur Muslims in Xinjiang, the chemical attack in Salisbury in 2018, and attempts at interference in elections within democracies.
Dangerous Synergies Today, Beijing and Moscow have resorted to tools of digital influence to obscure the origins of COVID-19, while China cynically recasts itself as a global leader in responding to the very pandemic that it failed to contain. In a report released this May, CNAS experts argued that there is growing evidence of strategic convergence in Beijing’s and Moscow’s digital influence campaigns. They call for the United States and its democratic allies and partners to adopt a holistic approach to countering digital influence campaigns by China and Russia.
Keynote Remarks by Assistant Secretary Feddo at the American Conference Institute’s Sixth National Conference on CFIUS
Report on Member States’ progress in implementing the EU Toolbox on 5G Cybersecurity This document constitutes the report on the implementation of the Toolbox referred to in the Commission Communication “Secure 5G deployment in the EU – Implementing the EU toolbox”. Its main objective is to provide an overview of the state of play of the ongoing Toolbox implementation process by Member States as of June 2020. It was prepared and agreed by the NIS Cooperation Group, with the support of the Commission and ENISA.
NSA – Limiting Location Data Exposure The National Security Agency (NSA) released guidance that warned that mobile location data could pose a serious security threat for users if it were infiltrated by cyber hackers. The guidance was released specifically for Department of Defense (DOD) staff and others who have access to federal systems, but the NSA noted that it could be “useful to a wide range of users.” The agency made clear that location data can be tracked even when GPS and cellular data is turned off.
Global Risks Report 2020 The 15th edition of the World Economic Forum’s Global Risks Report is published as critical risks are manifesting. The global economy is facing an increased risk of stagnation, climate change is striking harder and more rapidly than expected, and fragmented cyberspace threatens the full potential of next-generation technologies — all while citizens worldwide protest political and economic conditions and voice concerns about systems that exacerbate inequality. The challenges before us demand immediate collective action, but fractures within the global community appear to only be widening. Stakeholders need to act quickly and with purpose within an unsettled global landscape.
Section 889 of the 2019 National Defense Authorization Act DoD, GSA, and NASA are amending the Federal Acquisition Regulation (FAR) to implement section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019. Effective: August 13, 2020. Section 889 of the 2019 NDAA broadly prohibits federal executive branch agencies from obtaining, or contracting with entities that use, certain “covered telecommunications equipment or services,” specifically those produced by five Chinese companies (and any subsidiary or affiliate thereof)—as a “substantial or essential component of any system, or as critical technology as part of any system.” The FAR Council released the long-awaited Interim Final Rule on July 14, 2020 (85 Fed. Reg. 42665), implementing the statutory use prohibition in Section 889(a)(1)(B).
Holding a Pen in One Hand, Gripping a Gun in the Other How can we stop our companies and universities from being used to boost China’s military development? This is the question many governments around the world are grappling with, and now New Zealand is too. A must-read report published by the Wilson Center can be found here.
Open Future / The Way Forward on 5G Communication networks are the central nervous system of the 21st century economy. The fifth generation of wireless technology—5G—will be essential to and inseparable from all we do. Getting 5G right is all the more urgent. In a new report of the Center for a New American Security, experts examine the various solutions to the 5G dilemma available to policymakers.
Countering China’s Influence Activities This report is the Australia case study of an ambitious year-long CSIS initiative to analyze China’s influence activities in Australia and Japan and Russian influence activities in the United Kingdom and Germany.
New Global China report: Regional influence and strategy China now touches virtually every region in the world. In the newest installment of the Global China project, Brookings scholars examine how China’s increasing involvement is impacting the Middle East, the South Pacific, Latin America, and elsewhere.
China’s Sticks and Carrots in Central Europe A new comparative study has revealed that China has been using a targeted mix of ‘carrots’ and ‘sticks’ to increase its influence in Central European countries. Findings reveal that China does not use a ‘one size fits all’ approach towards the Czech Republic, Poland, Hungary and Slovakia, instead relying on varying local political climates, existing geopolitical standing and level of bilateral interactions to shape its strategy and tactics in the region. The study was undertaken by the MapInfluenCE project and involved collaborative research across these four Central European nations.
Techlash and National Security: The Need for U.S. Leadership on Privacy and Security A new NSI Law and Policy Paper summarizes how “Techlash” and criticism of Big Tech are realigning the regulatory instincts of policymakers and companies. This dynamic may embolden government action to regulate in the name of lawful government access and national security, among other goals. It also describes how movements to regulate technology companies may undermine privacy and security protective end-to-end encryption and erode Section 230 of the Communications Decency Act. It suggests that policymakers should prioritize data protection as essential for national security in the digital era and urges U.S. global leadership to inspire digital democracies and counter digital authoritarianism, and it proposes actionable recommendations for policymakers to address encryption, federal data protection regulation, cybersecurity expertise, and global leadership.
Click here to read the complete paper.
New Memorandum of the Department of Defense The Department of Defense (DoD) has issued a memorandum with instructions on how it will implement the looming prohibition on contracting with any “entity” that “uses equipment, systems, or services that use” covered telecommunications equipment or services produced by certain Chinese companies.
California-Based Company, Company President and Employee Indicted in Alleged Scheme to Violate the Export Control Reform Act The president of a California-based electronics distribution company, his company, and an employee have been indicted by a federal grand jury in Providence, Rhode Island, on charges they participated in a conspiracy to conceal information from the U.S. Department of Commerce and U.S. Customs and Border Protection as part of a scheme to illegally export chemicals manufactured and/or distributed by a Rhode Island-based company to a technology company in China.: China Electronics Technology Group Corporation, aka Nanjing Electronic Devices Institute (NEDI). NEDI is subject to export controls under the Export Administration Regulations (EAR) for engaging in the development and procurement of commodities and technologies for military use.
Does China pose a threat to global rare earth supply chains? China has established itself as the dominant global supplier of rare earths, a group of 17 minerals that are crucial to countless advanced technologies. China’s capacity to disrupt global rare earth supply chains has raised alarm bells in several major countries, but Beijing’s influence within the industry is likely to erode in the coming years. Learn more in the latest ChinaPower (CSIS) exclusive.
US and China: Decoupling in the Era of COVID-19 Questions about the utility of globalization are not new. Could the COVID-19 outbreak be the final nail on the coffin for an idea that drove the world economy in the past three decades? In theory, countries would produce what they specialized in, leaving it to the market to ensure everyone got a better price for it. As 2020 began, the pandemic spread from one province of China and soon disrupted production across the world. Countries banned the export of key medicines and equipment, throwing light on the hollowing out of manufacturing in developed countries. Economic trends in the past decade encouraged diversification of production away from China; another process, rooted in geopolitics, has seen the decoupling of information technology links between the US and China. COVID-19 has not only accentuated issues like re-shoring and near-shoring key industries and shortening supply chains, but has provided a push to a larger idea of “decoupling” technology ties between the US and China. This is driven largely by politics, though it has implications for the entire global economy. ORF Occasional Paper No. 253, June 2020, Observer Research Foundation
5G and Security: There is More to Worry About than Huawei Given much of the recent coverage surrounding security and the fifth generation (5G) of cellular networks, you would be forgiven for assuming that security concerns are largely limited to China in general and Huawei in particular. This is not the case.
Department of Energy: Executive Order 13920 Pursuant to Executive Order 13920 (E.O. 13920) issued May 1, 2020, titled “Securing the United States Bulk-Power System,” the Department of Energy (DOE) is seeking information to understand the energy industry’s current practices to identify and mitigate vulnerabilities in the supply chain for components of the bulk-power system (BPS). The RFI identifies which countries are considered “foreign adversaries” for the purposes of the E.O. and, therefore, from which countries the acquisition of electrical equipment might be restricted. The RFI notes that Russia and China are of particular concern.
The Rise of China’s Shipping Industry Chinese companies are increasingly dominant across the maritime supply chain, aided by a complicated and opaque system of formal and informal state support that is unrivaled in size and scope. Combined state support to Chinese firms in the shipping and shipbuilding industry totaled roughly $132 billion between 2010 and 2018, according to CSIS analysis. This includes financing from state banks ($127 billion) and direct subsidies ($5 billion). Owing to data limitations and the opacity of China’s political system, this conservative estimate does not include direct subsidies to unlisted firms, indirect subsidies, state-backed fundraising, preferential borrowing rates, and other nonmarket advantages from China’s state capitalist system. While most analysis focuses on more traditional types of state backing, most notably direct subsidies, CSIS finds that China has evolved increasingly sophisticated financial tools to select and support winners that render our traditional understanding of China’s state capitalist system largely outdated. Future research will be needed to understand Beijing’s evolving playbook for supporting the global rise of strategically significant industries.
The new CSIS Brief “Hidden Harbors China’s State-backed Shipping Industry” can be found here.
China’s Attempt to Influence U.S. Institutions: A Conversation with FBI Director Christopher Wray Wray, speaking to the Hudson institute in Washington on 7-7-2020, said that, “China is engaged in a whole-of-state effort to become the world’s only superpower by any means necessary,” pointing to numerous Chinese interferences, including economic espionage, cyber theft and blackmail, all attempts to attack the U.S. as the world’s dominant power. Stressing the threats of espionage, the F.B.I. Director said: “We are conducting these kinds of investigations in all 56 of our field offices, and over the past decade, we have seen economic espionage cases linked to China increase by approximately 1,300 percent. The stakes could not be higher, and the potential economic harm to American businesses and the economy as a whole almost defies calculation,” adding that his agency opened a new Chinese counterintelligence investigation “about every 10 hours.”
Ministry of Foreign Affairs of the People’s Republic of China
Foreign Ministry Spokesperson Zhao Lijian’s Regular Press Conference on July 8, 2020
CNN: ”On Tuesday, FBI Director Christopher Wray mentioned China multiple times in his speech, saying that China is the greatest, biggest threat to US information and intellectual property, and to its economic vitality. According to him, of all FBI cases currently underway across the US, almost half are related to China. He also said China’s Fox Hunt operation is an illegitimate campaign that threatens some Chinese in the US. Do you have any response to that?”
Zhao Lijian: “You are buying FBI’s words? For real?
We regret that US foreign policies are kidnapped by FBI officials like Wray and other anti-China forces. You mentioned some claims, and I also noticed that Wray said the FBI opens a new case concerning China every ten hours. They’d better think again if they take Chinese security authorities to be amateurs!
The words of some US officials are full of political lies in negligence of basic facts, exposing their deep-seated Cold-War mindset and ideological bias. China resolutely opposes their comments. I’d like to stress that certain US politicians have been tarnishing China’s image and painting China as a threat with false accusations in an attempt to shift the blame and cover up their own problems. However, their intention will not lead to any result as it is seen through by the whole world.
In response to US remarks on the Fox Hunt operation, I want to stress that combating cross-border crimes is the consensus of the international community. China’s Fox Hunt operation abroad is aimed to repatriate fugitives and uphold the sanctity of law and social justice. In recent years, many countries have conducted Law-Enforcement cooperation with China on this front. By saying those words, does this US official suggest his country will become a safe haven for criminals?
We urge certain US official to immediately rectify mistakes and stop issuing erroneous remarks on China, cooking up political lies day after day and undermining trust and cooperation between the two countries.”
Partial decoupling from China: A brief guide Partial decoupling from China is overdue. The People’s Republic of China (PRC) suppresses foreign competition and infringes intellectual property. It is an ugly dictatorship at home and increasingly aggressive overseas. Decoupling involves a range of tools and economic activities. Policymakers should quickly move to document and respond to Chinese subsidies, implement already legislated export control reform, monitor and possibly regulate outbound investment, and provide legal authority to move or keep supply chains out of the PRC. Decoupling has costs—higher prices, lower returns on investment, and lost sales. But they are dwarfed by the costs of continued Chinese economic predation and the empowerment of the Communist Party.
PDF (American Enterprise Institute)
Xinjiang Supply Chain Business Advisory TREAS, DOC, DOC, and DHS have published the Xinjiang Supply Chain Business Advisory on the 1st of July, highlighting the sanctions risks for US businesses with links in their supply chains to companies in the Xinjiang region, because some of these companies are suspected of engaging in human rights abuses such as forced labor.
Countering Russian and Chinese Influence Activities CSIS released their digital summary report and the first product of an ambitious yearlong CSIS initiative to examine Russian influence activities in the United Kingdom and Germany and Chinese influence activities in Australia and Japan. This July 2, 2020 report offers a brief overview of the project and its key findings.
As the Covid-19 pandemic sheds new light on how Moscow and Beijing advance their geopolitical goals through a range of influence activities, governments and societies need to develop better and more effective countermeasures. CSIS examined factors which make countries particularly vulnerable to Chinese or Russian malign influence operations and identified the sources of resilience that enable democratic governments and polities to mitigate, fend off, or push back on malign efforts. We assessed how the strategies and tactics used by Russia and China differ or converge as well as the degree to which they have been successful in influencing outcomes through their activities.
Trends in U.S. Multinational Enterprise Activity in China, 2000–2017 The report analyzes nearly two decades of data compiled by the Bureau of Economic Analysis to profile U.S. commercial activity in China. It finds that the vast expansion of U.S. multinational enterprise (MNE) activity in China may challenge U.S. industrial competitiveness and long-term tech leadership. Since 2000, U.S. companies’ operations in China have been among the fastest growing globally for all foreign subsidiaries, with total U.S. commercial assets in China surging 15-fold. The rapid evolution of U.S. business operations in China away from manufacturing and toward higher value-added activity such as research and development, often coerced by Beijing, increases the risk that U.S. firms are unwittingly enabling China to achieve its industrial policy objectives.
FCC Prohibits Subsidized Huawei and ZTE Gear From America’s Networks On June 30th, the Federal Communications Commission formally designated Chinese telecommunication firms Huawei Technologies Company and ZTE Corporation as national security threats to the integrity of our communications networks and communications supply chain. This decision means that funds from the FCC’s Universal Service Fund cannot be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services provided by Huawei or ZTE. This designation is the latest step that the FCC has taken to secure America’s communications networks from the threats posed by Communist China and bad actors that might do its bidding. Those efforts include prohibiting a company linked to Communist China from connecting to our communications networks, directing numerous other entities to show cause why their authority to remain connected to our networks should not be revoked, and launching a proceeding aimed at removing Huawei and ZTE gear from our communications networks.
“We cannot treat Huawei and ZTE as anything less than a threat to our collective security,” Commissioner Carr stated. “Communist China intends to surveil persons within our borders and engage in large-scale, industrial espionage. Nothing short of prohibiting subsidized Huawei and ZTE gear from our networks could address this serious national security threat. After all, Chinese law does not meaningfully restrain the Communist regime given its authoritarian nature.“America has turned the page on the weak and timid approach to Communist China of the past. We are now showing the strength needed to address Communist China’s threats. And our efforts will not stop here. The FCC will continue to take whatever steps are necessary to secure America’s communications networks from bad actors that would do us harm,” Commissioner Carr added.
FCC officially names Huawei, ZTE as national security risks The U.S. Federal Communications Commission has designated Chinese telecommunication providers Huawei and ZTE as national security risks, a decision that officially prohibits American phone companies from purchasing their equipment with government subsidies.
The announcement on June 30, 2020 comes after U.S. intelligence agencies have repeatedly warned that Huawei and ZTE could conduct espionage against the U.S. and its allies on Beijing’s behalf. The FCC’s decision takes effect immediately. It prevents U.S. companies regulated by the agency from spending federal funds obtained through the $8.3 billion Universal Service Fund (USF) — which is designed to promote universal access to phone services — on equipment or services from Huawei or ZTE. The companies are subject to a Chinese law that requires firms to provide authorities with sensitive data, even if they’re unwilling to do so. FCC Chairman Ajit Pai said in a statement that both companies “have close ties to the Chinese Communist Party and China’s military apparatus,” and that the FCC considered the intelligence community’s recommendations in its final determination. “We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical infrastructure,” the FCC statement said. Huawei and ZTE each have consistently denied any wrongdoing.
Statement from U.S. Secretary of Commerce Wilbur Ross on Revocation of Hong Kong Special Status June 29, 2020 / “With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy. Those are risks the U.S. refuses to accept and have resulted in the revocation of Hong Kong’s special status. Commerce Department regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended. Further actions to eliminate differential treatment are also being evaluated. We urge Beijing to immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world.”
National Security Implications of Fifth Generation (5G) Mobile Technologies The Congressional Research Service updated their report on June 5, 2020.
Limited welcome: protecting the media from hostile foreign influence A new policy paper by Ivana Karásková and Matej Šimalčík deals with the issue of protecting media from hostile foreign influence. Authors argue that media needs to be seen as a strategic industry. Especially during crises, such as COVID-19, external actors can misuse media to spread disinformation and competing narratives damaging to the health of democratic political systems. The possibility that foreign ownership can influence the content of media reporting on selected issues proved by MapInfluenCE research on Chinese media investment in Czechia. Reporting changed to exclusively positive after the CEFC investment.
Authors argue that a multifaceted approach is needed, combining various legal tools: investment screening mechanism, restrictions on foreign ownership, limiting state support for media owners, antitrust legislation, banning media cross-ownership, anti-SLAPP legislation, etc. While these measures are mostly for the member states to implement, the EU should play a role in spearheading harmonizing the legislation on media protection, giving more support to independent journalism, perfect the existing tools such as the investment screening mechanism to better protect media and also improve its own democratic narratives to offset the impact of foreign influence.
Weaponizing transparency: Dealing with security risks of Chinese investments Increasing transparency is a key measure to manage and mitigate many security risks posed by Chinese investments into sensitive sectors. Slovakia’s experience in fighting shell corporations and oligarchs offers an example of how to do it, writes Matej Šimalčík, the executive director of the Central European Institute of Asian Studies (CEIAS) and national coordinator of internationally acclaimed project MapInfluenCE.
US-China Trade War: A Way Out? The on-going trade war between the US and China has posed challenges to the existing multilateral trading system and evoked discussions among academics and experts. The US-China Phase One trade deal signed on 15 January 2020 seems to be a good sign of mitigating the tensions, but it actually does not address the fundamental problems that triggered the trade war.
A thought-provoking Joint Statement entitled “US-China Trade Relations: A Way Forward” issued by a group of eminent Chinese/US economists and legal scholars in October 2019 has proposed a framework for the bilateral trade talks going forward. However, in the co-authored article entitled “US-China Trade War: A Way Out?”, Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre member Dr Weihuan Zhou and Associate Professor Henry Gao of Singapore Management University’s School of Law have argued that the Statement provided little substantive guidance for the parties to resolve the true problems and may further undermine the current rules-based multilateral trade system.
The article will be published in the October 2020 issue of the World Trade Review.
Uyghurs in China The Congressional Research Service updated their report on June 22, 2020.
China Cables: Exposed – China’s Operating Manuals for Mass Internment and Arrest by Algorithm The Washington, D.C., Pro Chapter of the Society of Professional Journalists on June 9 announced the recipients of its 2020 Dateline Awards for journalism excellence. The chapter awarded its highest honor, the Robert D. G. Lewis Watchdog Award, for work that best exemplifies journalism aimed at protecting the public from abuses by those who would betray the public trust. The Watchdog Award went to Bethany Allen-Ebrahimian, with the Reporting and Data Teams of the International Consortium of Investigative Journalists for “China Cables: Exposed – China’s Operating Manuals for Mass Internment and Arrest by Algorithm.” The judges called “China Cables” one of the most impressive pieces of journalism in 2019, recognizing the team effort of many reporters and media partners across multiple countries and languages. This comprehensive investigative journalism effort detailed a first-of-its-kind glimpse into the massive internment camps holding hundreds of thousands of Muslim Uighurs and other civilians. One judge called it “an impressive use of records, source trust-building and shoe-leather reporting on a delicate and dangerous situation, with global implications.” The judge added that the repercussions of the reporting were almost immediate. Outrage spanned the globe, the judge noted, “leading to both the U.S. Congress and the European Parliament seeking sanctions against top Chinese officials and U.S. Secretary of State Mike Pompeo calling on the Chinese government to release all citizens detained.”
Uyghurs for sale The Australian Strategic Policy Institute (ASPI), an Australian think tank, has accused the Chinese government of transferring more than 80,000 ethnic Uighurs out of internment camps and into factories that supply major international brands. In their report, ASPI identified at least 27 factories across China where detainees from camps in the western region of Xinjiang had been relocated since 2017.
What’s the Difference?—Comparing U.S. and Chinese Trade Data The Congressional Research Service updated their report on May 20, 2020
U.S. Competition with China and Russia: The Crisis-Driven Need to Change U.S. Strategy According to this CSIS report, it is still far from clear how much the Coronavirus crisis will affect the relative competitiveness of the United States versus China and Russia. All three countries have suffered a major shock. The U.S. has reached unemployment levels equal to those of the Great Depression, and it has already spent more than $3 trillion dollars in an effort to ease the economic strain on its people and help prepare for recovery. It will certainly face problems in both maintaining its planned levels of national security spending and meeting its new economic needs.
China too has suffered major blow in terms of employment, trade, economic growth, although the data available prove to be uncertain. The same is true of Russia, but both China and Russia have the potential advantage to use their state-driven systems and enable their leaders to directly allocate resources and to keep funding competition in ways that may demand more sacrifices from their peoples. Both are almost certain to keep competing with the United States and will continue to seek and exploit any new opportunities in other states that are facing political and economic crises.
Dealing with demand for China’s global surveillance exports According to the author, a nonresident senior fellow at the Center for East Asia Policy Studies at Brookings, countries and cities worldwide now employ public security and surveillance technology platforms from the People’s Republic of China (PRC). The drivers of this trend are complex, stemming from expansion of China’s geopolitical interests, increasing the market power of its technology companies, and conditions in recipient states that make Chinese technology an attractive choice despite security and privacy concerns. Both “push” and “pull” factors contribute to the growing use of Chinese surveillance technology: countries that are strategically important to the PRC are comparatively more likely to adopt it, but so are countries with high crime rates.
Major questions remain about the implications and advantages that China could derive from these developments, including how dominance in this sector and access to data could shape the contours of strategic competition between China and the United States. Questions also remain about what impact these technologies will have on data privacy/security, human rights, and democracy.
Maintaining China’s dependence on democracies for advanced computer chips According to the authors, both research fellows at Georgetown’s Center for Security and Emerging Technology (CSET), the Chinese government is investing tens of billions of dollars in its computer chip factories and may eventually achieve global state-of-the-art manufacturing capabilities. However, China can succeed only if the United States, Japan, and the Netherlands continue to sell it the manufacturing equipment necessary to operate its chip factories. If these states deny access to this specialized equipment, China would find it nearly impossible to develop or maintain advanced chip factories for the foreseeable future. Countering the Chinese government’s market-distorting subsidies with such export controls would shift chip factory capacity to democracies, especially the United States, Taiwan, and South Korea. As a result, the firms making specialized manufacturing equipment for chips would experience little to no long-term revenue loss from such export controls, and may even benefit from working with more reliable partners in these democracies.
Untangling the web: Why the US needs allies to defend against Chinese technology transfer To defend against the transfer of sensitive technical information to China, the United States and its allies will need to be targeted, collaborative, and agile in their response. The Chinese government undertakes multiple, coordinated efforts to obtain sensitive information from U.S. and allied researchers. Many of these pathways and access points for technology transfer are legal or extralegal and therefore poorly understood or monitored by Western intelligence agencies.
In this paper, Brookings aggregates preliminary data on three tools the Chinese Communist Party (CCP) uses to incorporate foreign technical information: scholarships for Chinese Ph.D. students abroad, technology entrepreneurship competitions, and foreign direct investments and acquisitions made by Chinese technology companies.
China’s “Hub-and-Spoke” Strategy in the Balkans As China’s funding for infrastructure and other investments expands along its Belt and Road Initiative, its economic and political influence is growing in the Western Balkans, a strategically contested area on the EU’s periphery. This Center for Strategic and International Studies (CSIS) report, part of a two-year effort to track Chinese economic influence in the region, draws from a new CSIS dataset to identify key trends, including China’s geographic and sectoral priorities, low project completion rates, and an emerging second wave of digital investments.
A New Arsenal for Competition (Coercive Economic Measures in the U.S.-China Relationship) In a new CNAS report the authors outline ways to improve the effectiveness of U.S. coercive economic measures and the resiliency of the United States to China’s coercive efforts.
National Security Implications of Fifth Generation (5G) Mobile Technologies The Congressional Research Service updated their report on March 27, 2020.
The Race to 5G: Securing the Win On March 18, 2020, the National Security Institute (NSI) published the Law and Policy Paper: “The Race to 5G: Securing the Win”.
Export Controls and the US-China Tech War (policy challenges for Europe) The March 18, 2020 report of the Berlin-based the Mercator Institute for China Studies (MERICS) can be found here.
Foreign Intelligence Surveillance Act (FISA): An Overview This document was prepared by the Congressional Research Service and issued on March 10, 2020.
Executive Order Formalizes Telecom Foreign Investment Review On April 4, 2020, the White House released an Executive Order establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the “Committee”) to assess foreign ownership and national security issues in the telecommunications sector. The Attorney General will chair the committee, which includes the Secretaries of Homeland Security and Defense.
COVID-19: Potential Implications for International Security Environment—Overview of Issues and Further Reading for Congress The Congressional Research Service updated their report on June 29, 2020
The Cyberspace Solarium Commission On March 11, 2020, the Cyberspace Solarium Commission released a report outlining a comprehensive strategy for defending the U.S. against major cyber-attacks. The Cyberspace Solarium Commission (CSC) was established in the John S. McCain National Defense Authorization Act for Fiscal Year 2019 to “develop a consensus on a strategic approach to defending the United States in cyberspace against cyber-attacks of significant consequences.”
Targeting U.S. Technologies Feb. 25, 2020 – The DCSA Counterintelligence annual report, “Targeting U.S. Technologies: A Report of Foreign Targeting of Cleared Industry,” is now available. This product details and enumerates cleared industry’s reporting of suspicious contact reports that represent potential foreign intelligence entities attempts to illicitly acquire U.S. technologies resident in cleared industry. You can click the title of this article to read the report. You can read the 2019 report here.
CFIUS Reform Under FIRRMA The Congressional Research Service updated their report on February 21, 2020.
2019 National Intelligence Strategy This National Intelligence Strategy (NIS) provides the Intelligence Community (IC) with strategic direction from the Director of National Intelligence (DNI) for the next four years. It supports the national security priorities outlined in the National Security Strategy as well as other national strategies. In executing the NIS, all IC activities must be responsive to national security priorities and must comply with the Constitution, applicable laws and statutes, and Congressional oversight requirements.
The Committee on Foreign Investment in the United States The Congressional Research Service updated their report on December 16, 2019.
Interim Report of the National Security Commission on Artificial Intelligence. For decades, the United States has maintained an open economy and championed academic freedom, while also protecting its edge in defense and security-related technologies. It has preserved this balance through robust counter-intelligence, reviews of foreign investment, and export controls, among other techniques. Those tools remain important. But certain features of the current geopolitical and technology landscape are straining America’s ability to institute a coherent and effective technology protection regime:
- The nature of AI technologies makes the protection of those technologies for national security very difficult. AI research has been largely decentralized and industry-driven; as a result, knowledge is more diffuse and accessible than historical breakthrough technologies such as nuclear or stealth.
- Open access to AI research is a strong norm in computer science. Even if restrictions were placed on AI products or services, much of the underlying code is publicly available.
- The United States and China have close linkages in the field of AI, including constant exchanges of people, research, and funding. Chinese AI researchers train at U.S. universities. American cities host Chinese AI research centers, and major U.S. companies have research ventures in China. Chinese venture capitalists have invested in American AI start-ups, and vice versa.
- At the same time, China takes advantage of the openness of U.S. society in numerous ways––some legal, some not––to transfer AI know-how. S intelligence agencies confirm that the “targeting of national security information and proprietary technology from U.S. companies and research institutions will remain a sophisticated and persistent threat.”
- America’s research universities thrive by welcoming topminds from around the globe. At the same time, universities and other research institutes are vulnerable to foreign exploitation and other forms of influence by strategic competitors, notably China.
Taken together, it is difficult to resolve these issues in ways that balance security concerns with the principles of an open society and the core American traditions of free enterprise and free inquiry. The November 2019 Interim Report of the NSCAI can be found here.
2019 Report to Congress of the U.S.-China Economic and Security Review Commission The U.S.-China Economic and Security Review Commission was created by the United States Congress in October 2000 with the legislative mandate to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action. The 2019 Annual Report to Congress covers an expansive array of topics including U.S.-China trade tensions, U.S. reliance on Chinese pharmaceuticals, China’s global military ambitions, and U.S.-China competition in critical emerging technologies.
Threats to the US Research Enterprise: China’s talent recruitment plans On November 18, 2019, the Permanent Subcommittee on Investigations (PSI), unveiled a new bipartisan report titled Threats to the U.S. Research Enterprise: China’s Talent Recruitment Plans. The report documents how American taxpayers have been unwittingly funding the rise of China’s economy and military over the last two decades while federal agencies have done little to stop it. The report by the US Senate Permanent Subcommittee on Investigations follows an eight-month investigation into how the American taxpayer has, in effect, unwittingly funded research that has contributed to China’s global rise over the past 20 years.