How Chinese Companies Facilitate Technology Transfer from the United States



Sean O’Connor

Chinese companies utilize a variety of methods—many of them covert or coercive—to acquire valuable technology, intellectual property (IP), and knowhow from U.S. firms. These efforts are often made at the direction of and with assistance from the Chinese government, part of Beijing’s larger effort to develop its domestic market and become a global leader in a wide range of technologies. These acquisition attempts frequently target advanced technologies such as artificial intelligence, biotechnology, and virtual reality, which are still in the early stages of development but could provide dual military and civilian capabilities in the future. This report explores six methods used by Chinese companies to acquire U.S. technology and IP, including (1) foreign direct investment, (2) venture capital investment, (3) joint ventures, (4) licensing agreements, (5) cyber espionage, and (6) talent acquisition programs. It then examines the effectiveness of existing U.S. regulations to assess and address the risks of increased technology transfers to China.

While the United States has long maintained a free and open foreign investment environment, Chinese government led efforts to acquire U.S. technology raise questions about whether current U.S. disclosure, investment review, and
export control laws are sufficient for preserving U.S. economic and national security interests. To ensure these
interests remain effectively guarded against the risks of foreign influence and technology transfers, Congress should
consider the following questions:

  • Do current U.S. disclosure requirements provide sufficient information on foreign investments in U.S.
    early-stage technology companies and joint research partnerships?
  • Does the U.S. government’s ability to review foreign investment transactions in the United States extend
    to all investments or business arrangements that could grant a foreign entity effective control over U.S.
  • How are current export controls applied to technologies developed by U.S. startups or developing
  • How can the United States work with its allies and economic partners to address the risks posed by Chinese
    technology transfer practices?
  • What are the implications of Chinese talent recruitment programs? Should any restrictions be imposed to
    limit technology transfer risks resulting from these programs?
  • Are there sufficient U.S. government assessments of CCP efforts to leverage the development of strategic
    dual-use industries to aid in China’s competition with the United States (a strategy commonly referred to
    as military-civil fusion)? What additional steps, if any, should be taken to ensure a proper evaluation of
    these Chinese activities vis-à-vis U.S. interests?
How Chinese Companies Facilitate Tech Transfer from the US

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