20 Mar China’s Technological Expansion and Strategic Intellectual Property Acquisition

By,

Dr. Angel A. Diaz – Senior Fellow, MSI2

China’s emergence as a dominant force in the global technological landscape is underpinned by a multifaceted strategy encompassing legitimate research and development efforts and extensive reliance on intellectual property theft and cyber espionage.

The Chinese Communist Party (CCP) has orchestrated a comprehensive initiative designed to accelerate technological advancement while simultaneously diminishing the United States’ strategic edge. This initiative is evident in China’s aggressive pursuits in quantum computing, artificial intelligence, hypersonic weaponry, and aerospace technology. By leveraging state-sponsored cyber operations, talent recruitment programs, and the systematic acquisition of foreign research, China has positioned itself as a formidable technological adversary to the United States (Office of the Director of National Intelligence, 2024).

Intellectual property theft has been pivotal in China’s rapid technological ascension. According to the Office of the Director of National Intelligence, China accounts for more than eighty percent of economic espionage cases the United States government prosecutes. The FBI has further corroborated this reality, with Director Christopher Wray asserting that counterintelligence cases involving Chinese espionage are initiated every twelve hours, underscoring the sheer magnitude of the threat (FBI, 2024).

The theft of trade secrets alone is estimated to cost the United States economy between three hundred and six hundred billion dollars annually, with China as the primary perpetrator (Department of Justice, 2024). Among the most prolific actors in this domain is Advanced Persistent Threat 10 (APT10), a state-sponsored cyber espionage group that has systematically targeted defense contractors, biotechnology firms, and semiconductor manufacturers (Cybersecurity and Infrastructure Security Agency, 2024). The infiltration of Microsoft Exchange servers in 2021, attributed to Chinese cyber operatives, exemplifies the CCP’s ability to penetrate critical digital infrastructure and exfiltrate vast troves of sensitive data (CISA, 2024).

One of China’s most significant components of strategic technology acquisition efforts is the 863 Program, formally known as the National High-Tech Research and Development Program. Established in 1986, the 863 Program was designed to accelerate China’s capabilities in key technological fields, including information technology, aerospace, biotechnology, and new materials. This initiative, backed by the CCP, has provided substantial funding to state-owned enterprises, research institutions, and universities to acquire and develop cutting-edge technologies. The 863 Program has been instrumental in the theft of foreign intellectual property, as it promotes aggressive intelligence gathering and espionage to close technological gaps with Western powers (U.S.-China Economic and Security Review Commission, 2024). Reports indicate that the program has heavily relied on cyber intrusions, insider threats, and illicit academic collaborations to obtain classified and proprietary information in semiconductor manufacturing, artificial intelligence, and next-generation military technologies (RAND Corporation, 2024). The United States has taken measures to counter the effects of the 863 Program, but its long-term impact continues to be a significant concern for national security and economic competitiveness.

In addition to cyber espionage, China has aggressively pursued dominance in quantum computing, recognizing its potential to revolutionize encryption, computing power, and national security. The Hefei National Laboratory for Quantum Information Science has spearheaded much of China’s progress in this field, with the development of Jiuzhang 2.0 marking a significant milestone. This quantum computer has purportedly achieved processing speeds surpassing those of Google’s Sycamore, a breakthrough that, if substantiated, would have profound implications for cryptographic security (MIT Technology Review, 2024). Moreover, China’s successful launch of the Micius quantum satellite has demonstrated its ability to establish quantum key distribution (QKD) networks, which could render conventional encryption obsolete and fundamentally alter cybersecurity (National Institute of Standards and Technology, 2024). The potential ramifications of China’s quantum advancements cannot be overstated, as cryptographically relevant quantum computers may soon be capable of decrypting classified communications, financial transactions, and intelligence data with impunity.

Beyond quantum computing, China has made substantial inroads in aerospace and hypersonic weapons development, presenting a direct challenge to U.S. military superiority. The J-20 stealth fighter, a product of extensive cyber-enabled espionage, bears striking similarities to the American F-22 Raptor, indicating the degree to which China has leveraged stolen technology to advance its military capabilities (RAND Corporation, 2024). The forthcoming H-20 strategic stealth bomber is poised to enhance China’s long-range strike capacity significantly, mirroring key design elements of the U.S. B-2 Spirit (Pentagon China Military Power Report, 2024). Additionally, the successful testing of a hypersonic glide vehicle in 2021, which demonstrated the ability to execute orbital bombardment maneuvers, has raised profound concerns regarding China’s capacity to circumvent traditional missile defense systems (Financial Times, 2024). The rapid acceleration of China’s hypersonic program suggests an intention to develop asymmetric warfare capabilities designed to exploit vulnerabilities in U.S. military defenses.

Artificial intelligence represents another domain in which China has sought to outpace the United States, particularly in applying AI for military and surveillance purposes. The CCP has integrated AI into its comprehensive military modernization effort, as evidenced by its extensive use of facial recognition technology for domestic surveillance and army targeting operations (Brookings Institution, 2024). The development of autonomous drone swarms capable of executing coordinated attacks introduces a new dimension to modern warfare, as these AI-driven systems can neutralize targets with minimal human intervention (Center for a New American Security, 2024). Moreover, China’s continued investment in AI-enhanced cyber warfare tools has enabled it to automate hacking operations and identify vulnerabilities in critical infrastructure at an unprecedented scale (Hudson Institute, 2024). The fusion of AI with military strategy has the potential to reshape conflict dynamics, raising ethical and strategic questions regarding the implications of fully autonomous warfare.

References

Brookings Institution. (2024). The Role of AI in China’s Military Modernization. Retrieved from: https://www.brookings.edu/research/the-role-of-ai-in-chinas-military-modernization

Center for a New American Security. (2024). Autonomous Drone Swarms: China’s Future Warfare. Retrieved from: https://www.cnas.org/publications/reports/autonomous-drone-swarms

Cybersecurity and Infrastructure Security Agency. (2024). People’s Republic of China Cyber Threat. Retrieved from: https://www.cisa.gov/publication/china-cyber-threat

Department of Justice. (2024). U.S. Government Disrupts PRC Cyber Espionage Operations. Retrieved from: https://www.justice.gov/news/press-releases/us-disrupts-china-cyber-espionage

FBI. (2024). Chinese Government Poses ‘Broad and Unrelenting’ Threat to U.S. Retrieved from: https://www.fbi.gov/news/stories/china-economic-espionage

Financial Times. (2024). China’s Hypersonic Missile Test Shocks U.S. Intelligence. Retrieved from: https://www.ft.com/content/china-hypersonic-missile

Hudson Institute. (2024). Winning the Tech War with China. Retrieved from: https://www.hudson.org/research/winning-the-tech-war

MIT Technology Review. (2024). China’s Quantum Computing Initiatives. Retrieved from: https://www.technologyreview.com/2024/quantum-china

National Institute of Standards and Technology. (2024). Quantum Security Risks and the Future of Encryption. Retrieved from: https://www.nist.gov/publications/quantum-security-risks

Pentagon China Military Power Report. (2024). Annual Assessment of China’s Military Capabilities. Retrieved from: https://www.defense.gov/Reports/China-Military-Power

RAND Corporation. (2024). China’s J-20 Fighter: A Threat to U.S. Air Superiority? Retrieved from: https://www.rand.org/research/china-j20

U.S.-China Economic and Security Review Commission. (2024). China’s Military-Civil Fusion Strategy. Retrieved from: https://www.uscc.gov/research/military-civil-fusion