Congress must act to create a stronger system to stop the flow of technology that can aid Beijing’s military goals, according to the U.S.-China Economic and Security Review Commission.
“U.S. export controls toward China have expanded substantially, though they now face significant obstacles to enforcement” because China’s civil-military fusion creates a seamless flow of technology between its commercial sector and military establishment, the commission said in an annual report released this month.
The current restrictions on U.S. investments flowing to China’s tech sector are “insufficient to stem the flow of U.S. and foreign technology expertise and capital into China’s defense sector.”
Congress must examine the merits a unified export control system that combines the separate roles currently held by the Commerce and State departments, the commission said.
The report’s recommendations come as the Biden administration has steadily ramped up restrictions on exports of key technologies, including advanced semiconductors. President Joe Biden in August issued an executive order asking the Treasury and Commerce departments to draw up a plan to restrict U.S. venture capital funding flowing to China’s tech sector.
White House officials and members of Congress are concerned that access to advanced technologies and funding would enable China to build a sophisticated military that could allow it to take Taiwan by force.
In October the Commerce Department announced further tightening of rules for export of advanced semiconductor chips, updating restrictions imposed a year earlier.
The Republican-led House created a bipartisan Select Committee on the Chinese Communist Party, led by Rep. Mike Gallagher, R-Wis., to examine and recommend ways that Congress can act to halt China’s advances both in military and economic spheres.
The U.S. export control approach traditionally has been divided between a focus on safeguarding U.S. national security and economic security but China has blurred that line, Carolyn Bartholomew, chairman of the U.S.-China Economic and Security Review Commission, said in an interview.
U.S. and Western companies, for example, may be investing in “what they believe to be or purport to be civilian technologies but we know that the Chinese government through its military-civil fusion program is basically doing crossovers,” Bartholomew said. “So if you are investing in a company that is doing something that is going to be consumer-based AI, but it turns out that what they’re learning is being used for the PLA or military security security purposes,” she said referring to China’s People’s Liberation Army.
The U.S. export control system was first created in the late 1940s and updated in the 1970s but technology has advanced significantly since, while government approval processes for exports of technology moves slowly, Bartholomew said.
Congress “should be looking at streamlining the export control process, which would provide more certainty to companies and provide more certainty that the things that are being exported are not going to be dangerous,” for U.S. national security, Bartholomew said.
One way to streamline would be a single export control licensing system, the report said.
The report includes testimonies and several examples of technologies that were supplied to China for civilian purposes but were likely adapted for military purposes.
“A 2021 Chinese research paper stated that the Norwegian-origin multi-beam sonar equipment it had utilized in a deep-sea geography survey improved its awareness of geomorphological features in the seafloor — knowledge that could be used for military purposes,” including undersea warfare and identifying U.S. submarines, the report said.
A majority of the People’s Liberation Army military equipment comes from nonstate-owned commercial firms, according to the report.
Such companies include “Anwise Global Technologies, founded in 2016, which has grown to be China’s largest intelligent equipment manufacturer, primarily through servicing the military aerospace and electronics industries,” it said. Another artificial intelligence company called Realis, founded in 2015, “also develops virtual reality training rooms equipped with AI that allows for multi-person training for PLA personnel,” it added.
Kevin Pollpeter, a senior research scientist at the Center for Naval Analyses, a U.S. government-funded think tank, told the commission that China was the “world leader in missile and space technologies in both quantity as well as quality,” the report said.
Pollpeter told the commission that China had made significant advances in commercial space activities that also yielded military benefits despite 30 years of U.S. control restrictions targeting the country’s space sector.
Whether the United States can design an export control system and investment restrictions narrowly aimed at slowing China’s military advances without halting broader economic ties remains to be seen, Bartholomew said.
“We need to be more thoughtful and almost comprehensive in terms of what the U.S. government is doing and looking at” when it comes to China, Bartholomew said. “Technology makes that more challenging.”