Bills
| 3.23.22

Should the Chinese Military be Barred From Acquiring Sensitive American Technology? (H.R. 3532)

Do you support or oppose this bill?

What is H.R. 3532?

(Updated January 31, 2022)

This bill — the China Technology Transfer Control Act of 2019 — would stop the Chinese military’s acquisition of sensitive American technology. It would also formally admonish China for its predatory trade policies. 

Specifically, this bill would do three things: 

  • admonish
  • Place all “core technologies” from China’s “Made in China 2025” strategy on the Commerce Dept.’s Export Control List.
  • Impose sanctions on foreign entities and individuals that violate the Export Control List’s export controls by transferring “core technologies” to China.

“Core technologies” that’d be subject to export controls would include robotics, lithium battery manufacturing, advanced construction, semiconductors, quantum computing, and artificial intelligence (AI).

Argument in favor

China’s acquisition of sensitive American technologies through coercion or outright theft is wrong. It also poses a major threat to U.S. security. Keeping sensitive technologies out of the hands of Chinese companies and the Chinese military should be a priority for U.S. policymakers.

Argument opposed

Many technologies are produced by both American and non-American companies, so banning American companies from selling sensitive technologies to Chinese companies and the Chinese government would be ineffective — they’ll just get the technology from non-U.S. companies.

Impact

Technology companies; technology companies holding assets or making products with national security applications; technology companies seeking to sell products in China; China; Chinese military; Chinese military’s acquisition of sensitive technologies; and predatory Chinese trade policies.

Cost of H.R. 3532

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Rep. Mark Green (R-TN) introduced this bill to stop the Chinese military’s acquisition of sensitive American technology and formally admonish China for its predatory trade practices: 

“Why should we continue to let China steal American intellectual property, only for them to turn around and use it to undermine our national security, threaten peaceful neighbors, and oppress their own people? CNN reported China’s IP theft has cost U.S. companies 225-600 billion dollars. That is unacceptable.”

Original House cosponsor Rep. Henry Cuellar (D-TX) adds that China’s aggressive theft of technology from both the U.S. and other foreign militaries threatens the United States’ global military advantage: 

“China is aggressively stealing technology from the United States and foreign militaries to advance and modernize its military. This legislation will take the first step in stopping the theft of U.S. technology by China, and help secure the U.S. global military advantage.  For the safety and security of our country, we must end China’s ability to use cyber theft and other methods to advance its military power. Congress must act now to thwart these unfair trade practices.”

Senate sponsor Sen. Josh Hawley (R-MO) adds that it’s time to acknowledge China’s adversarial practices:

“It’s time to acknowledge that China acts more like an adversary than a friend. For too long, China has exploited American innovation to undermine our values and threaten our security. This legislation is an important step toward keeping American technology out of the hands of the Chinese government and its military.”

Information Technology and Innovation Foundation President Rob Atkinson says this bill goes too far. He says that it’s one thing to object to pay-to-play policies forcing U.S. companies to establish joint ventures with Chinese companies or open their testing labs to the Chinese government, but quite another to compel businesses to obtain special licenses to sell their commercial products in China or ban them from doing so. He asks: 

“We export a lot of semiconductors to China, are we really saying we don't want to do that anymore? I think that would be cutting off our nose to spite our face. There's a difference between sharing technology with the Chinese and selling products -- those are two separate things."

Atkinson also points out that placing restrictions on U.S. technologies alone won’t keep sensitive technologies out of Chinese hands. Observing that many technology products are also made by foreign competitors, he says, “[I]t's not as if somehow if we did this we would really be limiting the Chinese military's capabilities. They would still get these technologies, they just wouldn't be getting them from our companies."

This legislation has 18 bipartisan House cosponsors, including 15 Republicans and three Democrats. Its Senate companion, sponsored by Sen. Josh Hawley (R-MO), has two Republican Senate cosponsors.


Of Note: Rep. Green’s office contends that China has used both IP theft and exploitation of loopholes to advance its military capabilities. Both the Dept. of Defense (DOD) and the intelligence community have warned that Chinese investments in U.S. firms working on facial recognition, 3D printing, virtual reality, and autonomous vehicles could help China build its warfighting capabilities. 

The Chinese government has used “pay-to-play” laws to force U.S. companies that want to access the Chinese market to help advance the Chinese surveillance state and military. This is called the “Trade-Technology-for-Market” policy, and it requires American companies to form joint ventures with Chinese state-owned partners and share strategic technology in exchange for access to the Chinese market. Once the Chinese partners have the strategic technology, Sen. Hawley’s office observes, it “inevitably finds its way to the Chinese military.” 

Google’s plan to launch a censored version of its search engine in China is a particularly high-profile example of the Chinese government’s heavy-handed use of the “Trade-Technology-for-Market.” In August 2018, The Intercept reported that an in-development China-specific Google app, codenamed Google Dragonfly, complied with China’s censorship laws by restricting access to content deemed “unfavorable” by the Communist Party. This includes blocking information about political opponents, free speech, sex, news, academic studies, the 1989 Tiananmen Square massacre, “anticommunism,” “dissidents,” George Orwell’s 1984, and George Orwell’s Animal Farm. It also filtered out censored Western websites and social media, including Instagram, Facebook, Twitter, the New York Times, and the Wall Street Journal. 

In late 2018, public pressure and internal dissent caused Google’s leadership to move engineers off Dragonfly. However, in March 2019, The Intercept reported that a group of employees had found “ongoing work on a batch of code… associated with the China search engine.” Three months later, in a July 2019 Senate Judiciary Committee hearing, Google’s vice president of public policy, Karan Bhatia, said, confirmed the project’s termination. However, Bhatia declined to committing that Google wouldn’t participate in censorship with the Chinese regime.

There have also been cases of China exploiting loopholes in U.S. law to pay to use technology, such as U.S.-owned satellites, to threaten minorities’ rights in China and to threaten its neighbors and the U.S. In April 2019, the reported that China was using nine satellites built by Boeing and Maxar Technologies subsidiary SSL and financed through the Carlyle Group to boost its capabilities. 

China had circumvented U.S. trade laws preventing U.S. companies from selling satellites directly to China or Chinese companies by using a Hong Kong-based company, Asia Satellite Telecommunications (AsiaSat), as an intermediary. AsiaSat was jointly owned by Carlyle Group and Chinese state-controlled Citic Group. 

After AsiaSat purchased the satellites in question, Citic Group sold some of the AsiaSat satellites’ services to Chinese government operators. Those services included propaganda telecommunications and communicating with Chinese soldiers at remote outposts, including in Tibet and Xinjiang (two places where the Chinese military has used a heavy-handed approach to quash dissent against the Communist regime). According to the Wall Street Journal’s reporting, bandwidth on the satellites was used to connect Chinese soldiers at South China Sea outposts, to boost propaganda broadcasts, and to help state police fight protestors in Xinjiang. 

China has been heavily criticized for using both military and police forces to forcibly relocate the Uigher Muslim ethnic minority in Xinjiang. Some reports claim that as many as one million Uighurs have been subject to forcible relocation into re-education and forced labor camps. However, the Chinese government claims the camps are innocuous, and meant for vocational and educational programs.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / IvancoVlad)