This section intends to highlight three main developments. First, China is supporting
an increasing number of local chambers of commerce in the United States with direct
ties to CCP officials. Second, as Chinese companies have become more global, they
have also grown more sophisticated in their efforts to socialize and localize
themselves in their new American communities, but also acquire political influence
in the United States. Finally, China increased its efforts to pressure, co-opt and sometimes
even coerce foreign corporations with the aim of influencing politics in their home
countries.
The Use of Business-Related United Front Organizations
Consistent with the practice of other nations, major Chinese firms operating in America
are represented by a chamber of commerce network. Analysis detailed below suggests
that China also operates an extensive list of United Front organizations purporting to
be regional chambers of commerce. China’s public-facing chamber in the United States
is known as the China General Chamber of Commerce (CGCC), which was founded in
2005. It is headquartered in New York with five regional operations in Chicago, Houston,
Los Angeles, San Francisco, and Washington, DC. Its website states that it has 1,500 member
companies, both Chinese and non-Chinese. The organization’s chair is Bank of China USA
president and CEO Xu Chen. Its website lists more than sixty individuals, many from stateowned
companies, in governance roles; its website lists a staff of nine.
Consistent with business organizations of other countries, the CGCC engages in a mix
of political engagement with its host and home countries (e.g., testifying at the US
International Trade Commission 5 and hosting officials from the Chinese Ministry of
Commerce 6 ); informational activities for its members (e.g., a lunch-and-learn on labor
and safety issues in the United States); 7 and promotional activities (e.g., dinner galas and
charity events). The CGCC is actively engaged with senior American political and business
leaders. In July 2017, it hosted a welcome luncheon at the National Governors Association
meeting in Rhode Island, at which the governors of Maryland, Kentucky, Alaska, Arizona,
Louisiana, and Rhode Island attended. In September 2017, the group organized the visit of
the governors of Alaska and Missouri to China. 8
Inconsistent with the practice of other countries, China also oversees an extensive network
of local chambers of commerce. This raises a question of their possible ties to the Chinese
party-state, and whether these chambers may be misrepresenting themselves as local
concerns when they are instead activated by, or in liaison with, the Chinese government.
Research for this project has identified thirty-one business-focused organizations operating
in the United States that are explicitly associated with or whose profiles and activities
are highly suggestive of involvement with United Front work. 9 Most of these groups are
concentrated in Greater Los Angeles and New York City, two principal communities of the
Chinese diaspora. They are typically organized by hometown province of origin. This count
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does not include many other professional diaspora groups that may be used to facilitate
China’s influence operations.
Such Chinese groups have increased their activity in the United States since 2015, 10 and
many of these groups have had interactions with the United Front Work Department and
other Chinese officials both in the United States and in China, contacts that are distinctly
different from invitations to embassy or consular diplomats and bear further scrutiny. 11
At least eleven of the chambers identified in this
analysis were established in 2016 or later, consistent
with heightened activity observed in other sectors
of society dedicated to projecting China’s soft power
and influence abroad. (Tellingly, China’s spending
on diplomacy has doubled to $9.5b per year under
Xi Jinping.) 12 The US-Zhejiang General Chamber of
Commerce’s WeChat description explicitly references
a 2015 provincial directive on strengthening the
province’s overseas Chinese connections (see
screenshot). Many of these groups maintain their
own presence, via a website or, increasingly, the
WeChat social media platform. In one instance, our
researcher’s antivirus software blocked an intrusion
attempt while researching the US-Fujian Chamber of
Commerce.
Chinese Companies Operating in America as a Vector of Influence
More than 3,200 Chinese-owned companies operate in the United States, employing
140,000 Americans. 13 Chinese establishments operate in all but ten congressional districts. 14
As Chinese companies’ presence in the US economy grows, given the United Front’s
penchant for using civil society organizations for its purposes, they bring with them several
potential risks. First, their potential to be used by Beijing may result in activities that are
contrary to US interests, as evidenced by intense scrutiny of their investment activities by
CFIUS and reported warnings by counterintelligence officials. Second, growing access to the
US political system, even if currently used to advance legitimate economic interests, creates
openings for future exploitation by the Chinese government. Third, Chinese companies
may effectively “export” corrupt or unethical business practices.
Activities Contrary to US Interests
The technology sector has been the most consistent and prominent source of concern.
In 2012, the Intelligence Committee of the US House of Representatives declared
Chinese technology companies Huawei and ZTE a national security threat given the
firms’ alleged ties to the Chinese military and the potential for their technology to
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be exploited for espionage or cyberattacks. 15 Both companies were key providers of
technology at the African Union headquarters building, where investigators have
found widespread electronic infiltration traceable to China, whose state-owned firms
constructed the building. 16 Both Huawei and ZTE have also been accused of bribery
abroad to win contracts. 17
For years, the federal government has actively discouraged American companies, local
governments, and allied countries from partnering with Huawei. Nonetheless, the
company’s global presence has continued to grow, and it is playing an important role in
setting standards for 5G wireless technology. 18 In April 2018, the United States announced
sanctions against ZTE for violating restrictions on sales to Iran and North Korea, barring
American companies from transacting with the company. This would have effectively put
ZTE out of business because of its dependence on American inputs, but shortly thereafter,
and against the objections of many in Congress, the Trump administration agreed to a
settlement that would allow the firm to stay in business.
There are other instances of companies being used to advance objectives contrary to the
US interest. For example, front companies have been used to aid in the illegal export of
sensitive technologies to China. In another instance, Newsweek in 2016 reported that
the United States was investigating the acquisition by the Chinese company Fosun of
a US insurer that has sold legal liability insurance to senior American intelligence
officials. 19
Growing Access to the US Political System
Although federal campaign contributions by foreign nationals or companies are illegal in
US federal elections, there are alternative avenues for foreign corporate interests to influence
the US political system, as the Australians have learned. These include lobbying, indirect
campaign contributions via US subsidiaries, and the hiring of former senior government
officials. All these approaches, while currently legal, are discussed below to demonstrate the
full spectrum of activities Chinese entities are involved with and to highlight where they
may raise questions of impropriety.
Lobbying The most direct and legal route to the American political system is lobbying.
For example, within one day of President Trump tweeting his openness to a settlement
with ZTE Corporation that would keep it from going out of business, the company signed
a contract with lobbying firm, Mercury Public Affairs. The lead on the ZTE account was
Bryan Lanza, a former Trump campaign official. 20 Also in 2018, the former senior advisor
to Secretary of Commerce Wilbur Ross was hired as chief of International Corporate
Affairs for another Chinese firm, HNA. Both instances underscore the need for updated
revolving-door policies, particularly with respect to foreign corporations that are subject to
significant state control. 21
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All told, major Chinese companies publicly acknowledge spending $3.8 million on
federal lobbying in 2017 and $20.2 million in total since 2000, 22 modest amounts by
global standards. The Chinese e-commerce behemoth, Alibaba, was the largest source of
expenditures in 2017, accounting for $2 million, followed by technology company ZTE
($510k), Sinopec ($384k), 23 and the Wanda America Group ($300k), affiliated with Dalian
Wanda. 24 More difficult to track is Chinese corporate participation in American trade
associations. In early 2018, two Chinese companies have joined two major lobbying groups
noted for their political heft. 25
Indirect Donations A key exception to the ban on foreign federal campaign contributions
is permitted through activity conducted via a US subsidiary of a foreign company.
The Federal Election Commission has written that “where permitted by state law, a US
subsidiary of a foreign national corporation may donate funds for state and local elections
if (1) the donations derive entirely from funds generated by the subsidiaries’ US operations,
and (2) all decisions concerning the donations, except those setting overall budget amounts,
are made by individuals who are US citizens or permanent residents.”
This exception inherently creates the potential for exploitation, particularly given the
intrinsic difficulties of monitoring and enforcement. For example, the Intercept has reported
that American Pacific International Capital (APIC), an American subsidiary of a corporation
owned by a Chinese citizen, contributed $1.3 million to the Super PAC of presidential
candidate Jeb Bush on the advice of a prominent Republican campaign finance lawyer. 26
(Neil Bush, the brother of George W. and Jeb Bush, and former ambassador Gary Locke have
served as advisors of American Pacific International.) 27
Employees of Chinese enterprises, who in making the donations are presumably American
citizens, are also active donors. A review of campaign donation data finds that several
individuals cited as members of the China General Chamber of Commerce or employed
by member firms have made recent campaign contributions. For example, two individuals
associated with HNA Group, including Tan Xiandong, the group’s president, in 2017
donated $2,500 each to the congressional campaign of Greg Pence, the brother of the vice
president. 28
In May 2018, China-based companies reportedly invited Chinese to attend several
Republican Party fund-raising dinners at which President Trump would appear. The
invitations prominently featured the Republican Party’s logo along with that of
China Construction Bank, making it appear as if there was some formal connection. 29
The Republican Party and China Construction Bank both denied awareness of the
solicitations in their name. Foreigners may attend fund-raisers so long as they do not pay
their own entry, another instance in which the fungibility of money makes it easy to
skirt this rule.
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Hiring of Former Senior Government Officials In other countries (such as Australia, UK,
France, and Germany), former senior government officials routinely take positions with
Chinese companies. This pattern appears less pronounced in the United States. A prominent
exception is the law firm Dentons, which merged with the Chinese law firm Dacheng in
2015 30 and employs numerous former government officials, including former ambassadors,
members of Congress, mayors, and generals. 31
Earlier in 2018, Bloomberg News reported on the Imperial Pacific casino, a Chinese-owned
company operating in the American territory of Saipan. Its large transaction volumes have
raised concerns about potential money laundering. It has also made millions of payments to
family members of the territory’s governor and, at one time, counted the former governors
of three states as well as the former directors of the CIA and FBI as members of its board or
advisors. 32
State and Local Politics Many states do not have prohibitions against foreign contributions
in local races. 33 One of the most notable examples of an individual contributor comes
from Virginia, where in 2013 and 2014, Wang Wenliang, a Chinese industrialist who was
expelled from China’s national legislature in 2016, contributed $120,000 to Governor Terry
McAuliffe’s campaign. 34
Chinese firms are also involved in lobbying at the state and local level, another means
of acquiring legitimate influence. While the quality of data reporting and aggregation
for local and state-level lobbying is not always as robust as that at the federal level, this
project was able to identify more than $1 million in state-level lobbying expenses over the
past decade by Chinese firms. BYD Motors, which produces buses for public transit in the
United States, Huawei, and Wanda America Group were among the biggest spenders on
lobbying.
A 2017 complaint with the Federal Election Commission against the California subsidiary
of Dalian Wanda is illustrative of the potential for exploitation granted by the USsubsidiary
exception. The FEC found that Lakeshore, a Chicago real estate company
whose principals are US citizens, was the source of the money that funded a local ballot
initiative in California that would have blocked a Wanda competitor from expanding.
Wanda acknowledged that the money for the measure had come from Lakeshore, with
which Wanda does business, in the form of a $1.2 million loan. In its conclusion, the
FEC did not rule on whether foreign restrictions applied to ballot measure activity.
Further, it argued that even if those restrictions did apply, because “none of the funds
at issue appear to originate with a foreign national” (i.e., they came from Lakeshore);
that because the Wanda deputy manager who was listed as the principal officer of the
Ballot Measure Committee was an American citizen (the general manager is a Chinese
national); and that the funds originated in and would be paid back by revenues generated
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in the United States, the activity was not in violation of laws against foreign campaign
activity. 35
“Exporting” Corrupt or Unethical Business Practices
China scores poorly on international indices of corruption. 36 As Chinese companies
expand abroad, it is possible that they could have a deleterious effect simply by exporting
suspect business practices. An industry of particular importance is banking. The “big four”
Chinese banks all operate in the United States, where their assets have increased sevenfold
between 2010 and 2016 to $126.5 billion. 37 They are often extensively involved in real estate
transactions of Chinese firms operating in the United States. In 2015, 2016, and 2018, China
Construction Bank, 38 the Agricultural Bank of China, 39 and Industrial & Commercial Bank
of China 40 were respectively subject to enforcement action by the Federal Reserve for not
doing enough to fight money laundering.
Chinese corporations in the United States can also hinder the rule of law in other ways.
When responding to lawsuits in US courts, Chinese state-owned enterprises have claimed
exemption due to sovereign immunity; in other instances, Chinese firms with an American
legal presence have refused to comply with US investigations by claiming that cooperation
would violate Chinese law. 41 These actions inhibit the ability of the US government to
regulate commerce and put American competitors at a disadvantage within their own
country.
Chinese Manipulation of American Companies as a Vector of Influence 42
American companies play a significant role in American foreign and domestic politics and
their leaders regularly are selected to take positions of leadership in government. As a result,
corporate America’s traditional role in favor of engagement with China, given the country’s
market potential, has had significant weight in American policy toward the country. 43
China, for its part, welcomed foreign companies’ investment as part of its policy of reform
and opening up in the hope of spurring economic development.
China’s relationship with corporate America has become increasingly fraught. In this report
and elsewhere, China’s state-directed efforts to facilitate the theft of intellectual property,
the lifeblood of developed economies, are well documented. China’s forced transfer of
technology by foreign firms, as a condition of operating in China, is one of the main
complaints of both the Trump administration and the European Union.
But China’s ability to pressure US companies also encompasses three other more elusive
dimensions. First, recognizing the importance of American companies in American
politics, China has frequently cultivated, even leveraged, American executives to
lobby against policies it opposes. Where cultivation fails, it has threatened or exercised
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economic retaliation. For example, in June 2018, the Wall Street Journal reported that Xi
warned a group of global CEOs that China would retaliate with “qualitative measures”
targeted at their companies, if the United States did not back off from the tariff war. 44
Second, China is seeking to pressure American companies into legitimizing its geopolitical
claims and interests, for example by demanding that Western firms overtly acknowledge
that Taiwan is an irreversible part of China. Third, China has wooed American companies
with both sticks and carrots into serving its strategic interests abroad, most notably via its
interactions with Hollywood.
China’s source of leverage over American companies comes from its large domestic market
and its key role in international supply chains; by contrast, China holds little direct
ownership in American companies. American affiliates (i.e., those at least half-owned by
American multinational companies) employ 1.7 million Chinese workers and are indirectly
responsible for the employment of millions more. 45 More than fifty American companies
report that they generate at least 20 percent of their revenues from China. 46 Naturally,
many companies (and industry associations) with large stakes in China lobby the American
government on issues related to China, often seeking to exert a moderating influence on US
policy. This is not in itself evidence of improper influence, but it merits scrutiny and should
be weighed in the context of other evidence in this section. 47
Seeking to Influence American Politics via Corporate Interests
China does, in fact, exert influence on how at least some American companies and
corporate executives interact with the American government. This influence generally
takes two forms. In the first, China relies on American corporations to retard efforts by the
American government to investigate and sanction Chinese behavior deemed harmful to
national economic or strategic interests. For example, some American corporations have
expressed reservations about cooperating with US trade investigations for fear of retaliation
by China.
Chinese officials also regularly convene senior American executives at special meetings
with government officials or major conferences. During these engagements, Western
CEOs’ positive comments on the country receive wide play in the foreign and domestic
media, one of many ways in which the Party continues to seek the appearance of outside
legitimization for domestic purposes. In addition, China uses these meetings to attempt to
coerce American executives to take China’s side in disputes with the US government. As
the risk of a trade war mounted in spring 2018, Chinese officials explicitly warned gathered
executives to lobby the US government to back down or risk disruption to their business
in China. 48 The US government does not strategically convene foreign business leaders, let
alone instruct them to use their influence to shape policy favorable to the United States in
their home countries.
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Advancing Strategic Interests Abroad: A Case Study of Hollywood
As its market power mounts, China is increasingly able to leverage foreign corporations
not just to influence their home governments, but also to advance China’s broader
strategic interests around the world. The most visible manifestation of this strategy is
the Party-state’s effort to influence Hollywood in a bid to advance China’s global soft
power agenda.
American popular culture has enjoyed worldwide influence for decades and is a key element of
the country’s soft power. However, by the end of the Hu Jintao era, China’s leaders had begun
calling for their country, too, to become a soft power leader, a theme Xi Jinping has continued
to stress. The subsequent surge in Chinese spending on entertainment, or its “cultural
industries,” 49 as it calls this sector, amid flat revenues in the United States, has made China’s
market a compelling one for Hollywood, despite continued quotas limiting the number
foreign films that can be shown in China. In 2017, the Chinese box office reached $7.9 billion
on growth of 21 percent, whereas the US market grew just 2 percent to $11.1 billion. 50 (Foreign
films account for roughly half of China’s total, most of which is attributable to Hollywood.)
In the 2010s, in addition to investing in its domestic film industry and maintaining
a restrictive import regime, the Chinese government encouraged the country’s media
companies to enter into alliances or attempt to acquire outright American entertainment
companies. Collectively, these strategies have raised concerns about self-censorship, the
co-opting of the American film industry to advance Chinese narratives, and ultimately, the
risk that the industry will lose its independence.
Hollywood, represented by the Motion Picture Association of America, has long cultivated
close ties to the American government, which it has used to open access to China. For
example, media scholar Aynne Kokas notes that in 2012, Vice President Joe Biden met with
then Chinese vice president Xi Jinping to discuss China’s quota on foreign films. 51 During
Xi’s visit, Biden also helped broker an agreement between DreamWorks and a group of
Chinese investors. Ultimately, in response to these efforts and WTO action, China increased
its annual quota of imported films from twenty to thirty-four.
Film studios can attempt to circumvent the import quota by coproducing films with Chinese
partners. This can invite censorship directly into the production process, potentially
affecting what global audiences see, as opposed to censorship that affects only what the
Chinese market sees. 52 Examples abound of studios that have cast Chinese actors, developed
and/or cut scenes specific to the Chinese market, or preemptively eliminated potentially
objectionable references to China from scripts even when source material has called for it.
Aware of the Chinese market’s growing centrality to the film industry, major studios are
also reluctant to produce any film that would upset China, even if that specific film was
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not intended for the China market, for fear that all films by the studio would be blocked.
Indeed, the last spate of movies made for general circulation that addressed topics that the
Chinese government deemed sensitive were released in 1997 and included such productions
as Red Corner, Seven Years in Tibet, and Kundun. Several prominent American entertainers
have been subject to bans by China, most often for their association with the Dalai Lama.
In an interview with the Hollywood Reporter, actor Richard Gere, an outspoken advocate of
Tibetan culture, stated, “There are definitely movies that I can’t be in because the Chinese
will say, ‘Not with him.’ ” 53
Beyond self-censorship, American studios and creative personnel are at risk of being actively
co-opted in advancing Chinese soft power. Chinese political and entertainment leaders are
conscious that American entertainment companies have played an outsize role in defining
China, from Mulan to Kung Fu Panda. By the time the third edition in the Panda franchise
had been released, however, it was being coproduced with a Chinese partner. The list of
films portraying China in a positive light grow each year, such as the space films Gravity
and The Martian, a movie backed by Chinese money in which the American protagonists
are saved by the Chinese. Ironically, in Gravity, a central plot twist involves the shooting
down of a satellite by the Russians. In fact, the only nation to have shot down a satellite in
real life is China. These positive portrayals, of course, are not inherently objectionable—
and they may, indeed, provide a constructive countervailing force in an otherwise
deteriorating relationship. The issue is: How do these portrayals come to be: In other
words, has independent artistic vision been manipulated by political pressures to
maintain commercial standing?
The rush of Chinese investment into the American film industry has raised legitimate
concerns about the industry’s outright loss of independence. In 2012, Dalian Wanda
acquired the AMC cinema chain, followed in 2016 by the acquisition of the Legendary
Entertainment studio. Before encountering political trouble at home, Wanda’s chairman
announced a desire to invest in each of the six major Hollywood studios. Since then, other
announced partnerships and investments have faded, principally because of Beijing’s
pushback against what it deemed to be grossly excessive, and often ill-considered, foreign
investment plans by Chinese companies. 54
Conclusion and Recommendations
Through control of its companies operating abroad, growing influence over foreign
companies, and the rapid activation of business-related United Front groups, China is
using commercial interests as an important means of exercising “sharp power” influence.
As with other sectors, much of China’s activity is, regardless of its intent, legal and thus
should not be disparaged. The appropriate response to this commercial challenge must be
temperate and multifaceted. In some areas, it will require that the political system increase
its transparency regarding or reduce its exposure to corporate money entirely, which, given
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its fungibility, ultimately renders any distinction between domestic and foreign sources
meaningless. Corporations should also provide greater clarity on their financial and supply
chain exposure to China and disclose the presence of CCP members in joint- or wholly
owned ventures. In certain instances, new limitations on corporate activity that is harmful
to the national interest may be required.
American business leaders should become better versed in the evolving nature of China’s
global ambitions, especially in the use of United Front tactics for influencing almost all
aspects of China’s interaction with the United States. American corporations should raise
their voices through chambers of commerce or other collective commercial entities that can
collectively represent their interests when a company confronts pressures or coercion. To more
effectively resist growing Chinese pressures, American corporations will most certainly need
to find new ways to cooperate more closely with each other, and at times even in coordination
with the US government. Like think tanks, universities, other civil society organizations,
and media outlets, American companies will be most vulnerable to Chinese pressure when
they are atomized and isolated. In this sense, the challenges with which US corporations are
confronted by a rising authoritarian China with a far more ambitious global agenda are not so
dissimilar to those confronted by those other sectors of American society highlighted in this
report. Each confronts an un-level playing field that lacks reciprocity.
To help rectify these imbalances, in certain instances, the US government should be the
one to coordinate collective action, as it recently sought to do with the US airline industry.
It may also need to be more prepared to impose reciprocal penalties on Chinese companies
or even compensate American companies for losses when they stand up to punitive action
from China as an additional incentive to maintain resolve.
Most important, corporate executives, their boards, and their shareholders must double
their efforts to exercise the kind of principled leadership and restraint that will help them
resist the loss of corporate control in pursuit of short-term profit. This includes not only
individual companies but also their representative organizations, notably the US Chamber
of Commerce, the US-China Business Council and other specific trade associations. These
bodies not only need to promote American business interests by pushing back against
Chinese restrictions where necessary but they also need to adopt a heightened awareness of
the role that corporations must play in protecting both their own interests and the national
economic security of the United States itself.
In the corporate sector, China is not just taking advantage of the openness of American
markets, which are rightfully a point of pride for the United States and a pillar of our
economic vitality, but it is also exploiting American capitalism’s short-termism. This latter
predilection could end up being as much of a threat to the ability of American corporations
to maintain healthy economic relations with China as Beijing’s very strategic and targeted
United Front tactics.
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NOTES
1 ​“Trade in Goods with China.” US Census Bureau. July 2018. https://www​.census​.gov​/foreign​-trade​
/ balance​/ c5700​. html.
2 ​“Chinese Investment Monitor.” Rhodium Group. Accessed September 3, 2018. http:// cim​. rhg​. com​
/interactive​/china​-investment​-monitor.
3 ​Feigenbaum, Evan A. “Is Coercion the New Normal in China’s Economic Statecraft?” Carnegie
Endowment for International Peace. July 25, 2017. http:// carnegieendowment​. org​/ 2017​/ 07​/ 25​/ is​- coercion​
- new​- normal​- in​- china​- s​- economic​- statecraft​- pub​- 72632; Levesque, Greg. “China’s Evolving Economic
Statecraft.” Diplomat. April 12, 2017. https:// thediplomat​. com​/ 2017​/ 04​/ chinas​- evolving​- economic​
- statecraft​.
4 ​Bland, Ben, Tom Hancock, and Bryan Harris. “China Wields Power with Boycott Diplomacy.” Financial
Times. May 3, 2017. https:// www​. ft​. com​/ content​/ c7a2f668​- 2f4b​- 11e7​- 9555​- 23ef563ecf9a.
5 ​“CGCC Participates in Public Hearing on Section 301 Investigation of China and Voices for the Legal Rights
and Interests of Chinese Enterprises in the United States.” China General Chamber of Commerce–U.S.A.
October 10, 2017. https://www​.cgccusa​.org​/en​/cgcc​-participates​-in​-public​-hearing​-on​-section​-301​.
6 ​“CGCC-D.C. and Chinese Embassy Host Roundtable Discussion with China’s Ministry of Commerce.”
China General Chamber of Commerce–U.S.A. November 6, 2017. https://www​.cgccusa​.org​/en​/cgcc​-d​-c​-and​
- chinese​- embassy​- host​- roundtable​- discussion​- with​- chinas​- ministry​- of​- commerce​.
7 ​“CGCC Hosts 2017 ‘Lunch & Learn’ Series No. 5: Understanding Labor and Safety Issues in the US &
Get Prepared for Natural Disasters and Emergencies.” China General Chamber of Commerce–U.S.A.
November 6, 2017. https://www​.cgccusa​.org​/en​/cgcc​-hosts​-2017​-lunch​-learn​-series​-no​-5​-understanding​
- labor​- and​- safety​- issues​.
8 ​“CGCC Promotes State-Province Economic and Trade Cooperation between China and US - Alaska and
Missouri Governors’ Trip to China.” China General Chamber of Commerce–U.S.A. October 6, 2017. https://
www​. cgccusa​. org​/ en​/ cgcc​- promotes​- state​- province​- economic​- and​- trade​- cooperation​- between​- china​
- and​- us​- alaska​- and​- missouri​- governors​- trip​- to​- china​.
9 ​Organizations that can reasonably be considered part of United Front activities, include (official English
translations where available): American-Chinese Commerce Development Association ( 美国华人工商业联合会 );
America-China Enterprise Chamber of Commerce ( 美中企业总商会 ); China Enterprise Council ( 洛杉矶中资且
也协会 ); American Chinese National Chamber of Commerce ( 美国华人总商会 ); American One Belt, One Road
Chamber of Commerce ( 美国一带一路总商会 ); America Beijing Chamber of Commerce ( 美国北京总商会 ); US-
Hebei Chamber of Commerce ( 美国河北总会上 ); Chongqing-Sichuan Chamber of Commerce ( 庆穿渝同乡总商会 );
American Fujianese Business Association ( 美国福建商会 ); US-China Guangdong Chamber of Commerce
( 每种广东商会 ); US California-Hebei Chamber of Commerce ( 美国加州河北商会 ); US-China Chamber of Commerce
( 美国总商会 ); US-Henan Business Alliance Association ( 美国河南联合总商会 ); US-Inner Mongolia Chamber
of Commerce ( 美国内蒙古总商会 ); US-Jiangsu General Chamber of Commerce ( 美国江苏总商会 ); US-Jiangxi
Chamber of Commerce ( 美国江西总商会 ); US-Macau Chamber of Commerce ( 美国澳门总商会 ); US-Minjiang
Chamber of Commerce ( 美国闽江总商会 ); US-Northwest China Chamber of Commerce ( 美国大西北总商会 );
American Shandong Chamber of Commerce ( 美国山东总商会 ); US-Shanghai Chamber of Commerce ( 美国上海
总商会 ); US-Shanxi Chamber of Commerce ( 美国山西总商会 ); US-Shanxi Jin Chamber of Commerce ( 美国山西
晋商会 ); Eastern US-Shenzhen Chamber of Commerce ( 美国东深圳总商会 ); US-Tianjin Chamber of Commerce
( 美国天津总商会 ); US Silicon Valley - Tianjin Chamber of Commerce ( 美国硅谷天津总商会 ); Chinese Chamber
of Commerce in Washington State ( 华盛顿州中国总商会 ); US-Wenzhou General Chamber of Commerce
( 美国温州总商会 ); Chamber Zhejiang Chamber of Commerce USA ( 美国浙江商会 ) [San Francisco]; and
US-Zhejiang General Chamber of Commerce ( 全美浙江总商会 ) [Los Angeles]; Los Angeles Hunan Chamber of
Commerce ( 洛杉矶湖南总商会 ), likely rebranded from US-Changsha Chamber of Commerce ( 美国长沙总商会 ).
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10 ​Several of these groups conduct outreach to elected officials. Summaries of Chinese New Year and
other galas regularly mention the presence of American officials or their representatives. The Philadelphiabased
Shenzhen Chamber’s New Year’s party included a city council member and a county commissioner. A
member of the House of Representatives from California has appeared at several events hosted by different
organizations, including a January 2018 forum organized by the Wenzhou chamber that was subsequently
featured prominently on the website of another United Front organization, the All America Chinese Youth
Federation. In another instance, the former mayor of a California city attended a meeting hosted by a
chamber welcoming a visiting Overseas Chinese affairs official from Hebei province. There is no reason to
believe that any of these politicians are aware of the groups’ interactions with the Chinese party-state. See
“ 美东深圳总商会、美东深圳联谊会携手中美交流协会举办中秋敬老联欢晚会 .” 东南网 . September 29, 2017. http://
usa​. fjsen​. com​/ 2017​- 09​/ 29​/ content​_ 20192454​. htm; Ren, Richard. “ 美国温州总商会举办华人商会合作论坛凝聚海外华商力量 .” All America Chinese Youth Federation. January 27, 2018. http://www​.aacyf​.org​/ ?p​=8242;
“ 河北海外联谊会代表团到访湾区 , 加州河北商会举办座谈会热烈欢迎 .” 美国加州河北商会 (Silicon Valley-Hebei
Chamber). November 21, 2017. https://mp​.weixin​.qq​.com​/s​/Xt1CII2rsFsUsIiuLHr9tw.
11 ​For example, in the United States, the Jiangsu chamber’s launch event in California was attended by
a vice chair of the Provincial Standing Committee; a Shenzhen chamber’s launch event, also in California,
was joined by Lin Jie of Guangdong Province’s United Front department; and in 2016, the California-based
Guangdong chamber itself hosted a provincial Overseas Chinese Affairs department secretary. In China,
the America-China Enterprise Chamber of Commerce met a provincial United Front official in Fujian in
September 2017; a US-based Zhejiang chamber was received in Hangzhou by a provincial CPPCC vice
chair who manages Overseas Chinese work; and the leader of the Inner Mongolia-chamber met with
that province’s Overseas Chinese Association chair in 2016. See “ 美国江苏总商会成立 .” Chinese American
Federation. March 15, 2017. http://chinese​-usa​.org​/新闻活动 ​/ 新闻集锦 ​/172​-美国江苏总商会成立 ​. html; “ 参加美国美东深圳总商会 , 美东深圳联谊会领导班子就职仪式 .” 美篇 . September 28, 2016. https://www​.meipian​.cn​
/6m9vy0p; “ 广东省侨办书记一行抵洛侨胞热忱欢迎 .” US-China Guangdong Chamber of Commerce. Accessed
September 12, 2018. www​.uscgcc​.com​/showactivity​.asp​?id​=795; “ 美中企业总商会福建交流中心成立大会在厦门举行 .” 东南网 . September 20, 2017. usa​.fjsen​.com​/2017​-09​/20​/content​_20152181​.htm; “ 全美浙江总商会一行拜访浙江侨联欲在浙落地高新项目 .” 中国侨网 . November 4, 2017. http://www​.chinaqw​.com​/jjkj​/2017​/11​-04​
/ 167171​. shtml; “ 于忠霞的商业密码 .” US News Express. September 2, 2017. http:// www​. usnewsexpress​. com​
/ archives​/ 35405.
12 ​Ju, Sherry Fei and Charles Clover “China’s Diplomacy Budget Doubles under Xi Jinping.” Financial Times.
March 6, 2018. https://www​.ft​.com​/content​/2c750f94​-2123​-11e8​-a895​-1ba1f72c2c11.
13 ​Hanemann, Thilo and Daniel H. Rosen. “New Neighbors 2017 Update: Chinese FDI in the United States
by Congressional District.” Rhodium Group. April 24, 2017. https://rhg​.com​/research​/new​-neighbors​-2017​
- update​- chinese​- fdi​- in​- the​- united​- states​- by​- congressional​- district​.
14 ​Ibid.
15 ​Schmidt, Michael S., Keith Bradsher, and Christine Hauser. “US Panel Calls Huawei and ZTE ‘National
Security Threat’.” New York Times, October 8, 2012. http://www​.nytimes​.com​/2012​/10​/09​/us​/us​-panel​-calls​
- huawei​- and​- zte​- national​- security​- threat​. html.
16 ​Cave, Danielle. “The African Union Headquarters Hack and Australia’s 5G Network.” Strategist, July 13,
2018. https://www​.aspistrategist​.org​.au​/the​-african​-union​-headquarters​-hack​-and​-australias​-5g​-network​.
17 ​McKenzie, Nick. “China’s ZTE Was Built to Spy and Bribe, Court Documents Allege.” Sydney Morning
Herald. June 1, 2018. https://www​.smh​.com​.au​/business​/companies​/china​-s​-zte​-was​-built​-to​-spy​-and​
- bribe​- court​- documents​- allege​- 20180531​- p4ziqd​. html.
18 ​Woo, Stu, Dan Strumpf, and Betsy Morris. “Huawei, Seen as Possible Spy Threat, Boomed Despite US
Warnings.” Wall Street Journal. January 8, 2018. https://www​.wsj​.com​/articles​/huawei​-long​-seen​-as​-spy​
- threat​- rolled​- over​- u​- s​- road​- bumps​- 1515453829.
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116
19 ​Stein, Jeff. “Why the US Is Investigating the Chinese Ownership of a CIA-Linked Insurance Company.”
Newsweek. September 27, 2016. http://www​.newsweek​.com​/wright​-usa​-fosun​-group​-insurance​-company​
-china​-476019.
20 ​Markay, Lachlan. “Embattled Chinese Telecom Giant ZTE Hired Trump Campaign Veteran.” Daily Beast,
June 1, 2018. https://www​.thedailybeast​.com​/embattled​-chinese​-telecom​-giant​-zte​-beefs​-up​-lobbying​
- muscle.
21 ​“HNA Group Names Israel Hernandez as Head of International Corporate Affairs.” PR Newswire. https://
www​. prnewswire​. com​/ news​- releases​/ hna​- group​- names​- israel​- hernandez​- as​- head​- of​- international​
- corporate​- affairs​- 300627805​. html.
22 ​Author’s analysis of OpenSecrets data.
23 ​“Exhibit A to Registration Statement.” US Department of Justice. August 9, 2017. https:// www​. fara​. gov​
/docs​/6452​-Exhibit​-AB​-20170809​-1​.pdf.
24 ​“Client Profile: Summary, 2017.” Open Secrets. Accessed March 9, 2018. https:// www​. opensecrets​. org​
/ lobby​/ clientsum​. php​? id​= D000068897&year​= 2017.
25 ​Wanhua Chemical joined the American Chemistry Council, which has spent over $40 million over
the 2012, 2014, and 2016 election cycles. Alibaba joined the American Legislative Exchange Council,
a group known for its success in effectively ghostwriting legislation in legislatures nationwide. These
associations, which operate as nonprofit 501(c)(6) corporations, are not subject to detailed disclosure
requirements, making it difficult to ascertain whether the funds contributed by foreign members are
being used for political purposes. Similarly, 501(c)(4) social welfare organizations, while limited to
spending no more than half of their expenditures on political activities, do not have to disclose the
names of their donors, making it possible for foreign donors, who are prevented from making political
contributions, to conceal their involvement. See Lee, Fang. “Chinese State-Owned Chemical Firm Joins
Dark Money Group Pouring Cash into US Elections.” Intercept, February 15, 2018. https:// theintercept​
. com​/ 2018​/ 02​/ 15​/ chinese​- state​- owned​- chemical​- firm​- joins​- dark​- money​- group​- pouring​- cash​- into​
- u​- s​- elections​/ ; Lee, Fang and Nick Surgey. “Chinese Corporation Alibaba Joins Group Ghostwriting
American Laws.” Intercept, March 20, 2018. https:// theintercept​. com​/ 2018​/ 03​/ 20​/ alibaba​- chinese​
- corporation​- alibaba​- joins​- group​- ghostwriting​- american​- laws​/ ; Li, Belinda. “Avoiding Chinagate 2.0.”
Kleptocracy Initiative. April 10, 2017. http:// kleptocracyinitiative​. org​/ 2017​/ 04​/ avoiding​- chinagate​- 2​- 0​.
26 ​Lee, Fang. “Gary Locke, While Obama’s Ambassador to China, Got a Chinese Tycoon to Buy His House.”
Intercept, August 3, 2016. https://theintercept​.com​/2016​/08​/03​/gary​-locke​-ambassador​-to​-china​-house​
- sale​- chinese​- tycoon​.
27 ​Ibid.
28 ​“Donor Lookup.” Open Secrets. Accessed March 9, 2018. https:// www​. opensecrets​. org​/ donor​- lookup​
/ results​? name​= &cycle​= &state​= &zip​= &employ​= HNA+Group&cand​= ; Ibid. https:// www​. opensecrets​. org​
/ donor​- lookup​/ results​? name​= &cycle​= &state​= &zip​= &employ​= HNA+Innovation+Finance&cand​= .
29 ​Lee, Michelle Ye Hee, Anu Narayanswamy, Emily Rauhala, and Simon Denyer. “Invitations
Offer Wealthy Chinese Access to President Trump at Fundraiser.” Washington Post. May 25, 2018.
https:// www​. washingtonpost​. com​/ politics​/ invitations​- offer​- wealthy​- chinese​- access​- to​- president​
- trump​- at​- fundraiser​/ 2018​/ 05​/ 25​/ 3bc6a8ae​- 5e90​- 11e8​- a4a4​- c070ef53f315​_ story​. html​? utm​_ term​=
. 5e994d591961.
30 ​Fang, Lee. “Chinese Law Firm to Merge with American Firms, Employ Howard Dean, Newt Gingrich.”
Intercept. May 21, 2015. https://theintercept​.com​/2015​/ 05​/ 21​/ newt​- gingrich​-joins​- lobbying​- firm​-merging​
- howard​- deans​- law​- firm​- major​- chinese​- law​- firm​.
Corporations
117
31 ​“People search results.” Dentons. Accessed February 28, 2018. https://www​.dentons​.com​/en​/our​
- professionals​/ people​- search​- results?locations=%7b01b010ec-b912-4de3-ad35-c18d31d3db87%7d&IsSee
FullTeam=1.
32 ​Campbell, Matthew. “A Chinese Casino Has Conquered a Piece of America.” Bloomberg Businessweek.
February 15, 2018. https://www​.bloomberg​.com​/news​/features​/2018​-02​-15​/a​-chinese​-company​-has​
- conquered​- a​- piece​- of​- america.
33 ​Beitsch, Rebecca. “Lawmakers Look to Curb Foreign Influence in State Elections.” PBS Newshour.
March 12, 2017. https:// www​. pbs​. org​/ newshour​/ politics​/ lawmakers​- look​- curb​- foreign​- influence​- state​
- elections.
34 ​Vozella, Laura and Simon Denyer. “Donor to Clinton Foundation, McAuliffe Caught Up in Chinese Cashfor-Votes
Scandal.” Washington Post. September 16, 2016. https://www​.washingtonpost​.com​/local​/virginia​
-politics​/clinton​-foundation​-mcauliffe​-donor​-caught​-up​-in​-chinese​-cash​-for​-votes​-scandal/ 2016​/09​/16​
/ bfb3b8fc​- 7c13​- 11e6​- ac8e​- cf8e0dd91dc7​_ story​. html.
35 ​“Factual and Legal Analysis.” Federal Election Commission. November 9, 2017. http:// eqs​. fec​. gov​
/ eqsdocsMUR​/ 17044432226​. pdf.
36 ​“Corruption Perceptions Index 2017.” Transparency International. February 21, 2018. https:// www​
. transparency​. org​/ news​/ feature​/ corruption​_ perceptions​_ index​_ 2017.
37 ​Qing, Koh Gui. “China Banks Miss out on US Investment Banking Bonanza.” Reuters. April 26, 2017.
https:// www​. reuters​. com​/ article​/ us​- china​- banks​- wallstreet​/ china​- banks​- miss​- out​- on​- u​- s​- investment​
- banking​- bonanza​- idUSKBN17S0DL.
38 ​Miedema, Douwe. “US Fed Raps China Construction Bank over Money Laundering.” Reuters. July 22,
2015. https:// www​. reuters​. com​/ article​/ us​- fed​- banks​- chinaconstruction​/ u​- s​- fed​- raps​- china​- construction​
-bank​-over​-money​-laundering​-idUSKCN0PV1P920150722.
39 ​Farrell, Greg. “China’s AgBank Fined $215 Million for Hiding Transactions.” Bloomberg. November 4,
2016. https://www​.bloomberg​.com​/news​/articles​/2016​-11​-04​/chinese​-bank​-fined​-215​-million​-for​-lax​
- controls​- by​- new​- york.
40 ​Sender, Henny. “Fed Finds ‘Serious Deficiencies’ at China’s ICBC.” Financial Times. March 14, 2018.
https:// www​. ft​. com​/ content​/ 75f6c914​- 273b​- 11e8​- b27e​- cc62a39d57a0.
41 ​Miller, Matthew. “Chinese State Entities Argue They Have ‘Sovereign Immunity’ in US” Reuters. May 11,
2016. https:// www​. reuters​. com​/ article​/ us​- china​- usa​- companies​- lawsuits​/ chinese​- state​- entities​- argue​
- they​- have​- sovereign​- immunity​- in​- u​- s​- courts​- idUSKCN0Y2131.
42 ​While outside of this report’s focus on Chinese influence in the United States, the authors believed
it important to highlight how China also leverages foreign corporations to legitimize and defend its
core interests. Starting in 2018, joint ventures operating in China have been pressured to allow internal
Communist Party cells an explicit role in decision making, including investment plans and personnel
changes. This is but one of the most explicit signals of Chinese efforts to control foreign enterprises in
an effort to legitimize and defend its rule and other core interests, such as its claim to sovereignty over
Taiwan. While companies must follow the laws of the jurisdictions in which they operate, China uses the
extraordinary combination of its enormous market and its authoritarianism to enforce compliance with
laws and norms that deviate from practice elsewhere. Companies’ decisions to comply not only affect their
financial success within China, but they can also serve to legitimize these practices internationally.
China’s government directs significant attention toward American technology companies in an effort to
control the flow of information in Chinese society. Many of these companies’ services in China are blocked
outright or are subject to intrusive national security reviews or other regulatory obstacles. Regardless,
many American companies redouble their attempted engagement with the Chinese government. But in
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doing so, they not only become subject to the restrictions on Chinese technology users, but they also help
to legitimize China’s vision for “cyber-sovereignty,” an issue that has become an important ongoing global
governance debate. In some cases, they may even be inadvertently advancing China’s goals for military
technological superiority. American technology CEOs, including those from Google, Apple, and Cisco, are
prominent attendees at the World Internet Conference. At one installment of the conference, a Chinese
antiterrorism expert argued that Beijing should increase its pressure on foreign internet companies such
as Twitter, which he argued should be punished for tweets that “defame the party, Chinese leaders, and
related national strategies.” Facebook has been notably solicitous of the Chinese government in an effort
to enter the Chinese market, reportedly developing a tool that could be used by a third party to censor
content. Despite being blocked in China, Facebook nonetheless generates significant advertising revenues
from Chinese companies seeking to reach foreign consumers. As it seeks to reenter the Chinese market,
Google’s willingness to facilitate that country’s national artificial intelligence priorities stand in contrast
to its decision to end limited AI cooperation with the US Department of Defense. In June 2018, Tsinghua
announced that Google’s AI chief would serve as an adviser to that university’s new center for artificial
intelligence research. The company is already involved in research at Peking University and the University
of Science and Technology of China, among others. Artificial intelligence is a declared strategic priority
for the Chinese government with significant military implications. The Chinese government is actively
coordinating the efforts of not just its universities, but also nominally private companies such as Baidu.
Commenting on Google’s AI China Center, at which several hundred engineers are employed, former deputy
defense secretary Bob Work has stated, “anything that’s going on in that center is going to be used” by
the Chinese military. In the summer of 2018, it was reported that Google was considering reentering the
Chinese market with a censored search engine, but Chinese government officials have discounted the
prospect and many of Google’s own employees have expressed opposition.
China also seeks to enlist foreign corporations to reinforce its so-called “core interests” in ways that
have influenced what they feel comfortable saying even outside of China. In early 2018, for example,
foreign companies, particularly in the travel industry, were targeted for listing Hong Kong, Taiwan, Macau,
and Tibet as separate entities on their websites rather than as sovereign parts of China. The Civil Aviation
Administration of China sent letters to international airlines demanding that any references to these
destinations except as part of China be removed from their materials and websites. In May, the Trump
administration declared the Chinese government’s order to airlines to be “Orwellian nonsense and part
of a growing trend by the Chinese Communist Party to impose its political views on American citizens
and private companies” with which they might not necessarily agree. At the direction of the American
government, the airlines initially and collectively declined to follow Beijing’s orders, as the US government
considered the issue a diplomatic matter to be resolved between governments. However, when China
declined to negotiate with the US government over the issue, by July the airlines partially met Beijing’s
demands by referring only to cities.
Targeting foreign companies’ speech extends beyond Taiwan to China’s fraught relationship with its
ethnic minorities. At Marriott, an employee responsible for managing the company’s social media accounts
unwittingly liked a tweet by a pro-Tibet group and was fired as a result of the backlash. The company’s
website and app were blocked in China for one week, at unknown financial cost. Daimler, the German
car manufacturer, was similarly forced to apologize for posting a reference to the Dalai Lama, the exiled
Tibetan spiritual leader, on social media. In the latter two cases, the companies were targeted even though
the social services on which they were posting were blocked inside China. See Martina, Michael. “Exclusive:
In China, the Party’s Push for Influence inside Foreign . . .” Reuters. August 24, 2017. https://www​.reuters​
. com​/ article​/ us​- china​- congress​- companies​/ exclusive​- in​- china​- the​- partys​- push​- for​- influence​- inside​
- foreign​- firms​- stirs​- fears​- idUSKCN1B40JU; Wong, Chun Han, and Eva Dou. “Foreign Companies in China
Get a New Partner: The Communist Party.” Wall Street Journal. October 29, 2017. https://www​.wsj​.com​
/ articles​/ foreign​- companies​- in​- china​- get​- a​- new​- partner​- the​- communist​- party​- 1509297523; “Command
and Control: China’s Communist Party Extends Reach into Foreign Companies.” Washington Post. Denyer,
Simon. January 28, 2018. https:// www​. washingtonpost​. com​/ world​/ asia​_ pacific​/ command​- and​- control​
Corporations
119
- chinas​- communist​- party​- extends​- reach​- into​- foreign​- companies/ 2018​/ 01​/ 28​/ cd49ffa6​- fc57​- 11e7​- 9b5d​
- bbf0da31214d​_ story​. html; Kubota, Yoko, and Tripp Mickle. “Apple CEO to Attend State-Run Internet
Conference in China.” Wall Street Journal. December 2, 2017. https://www​.wsj​.com​/articles​/apple​-ceo​
-to​-attend​-state​-run​-internet​-conference​-in​-china​-1512178941; Mozur, Paul. “China Presses Its Internet
Censorship Efforts across the Globe.” New York Times. March 2, 2018. https://www​.nytimes​.com​/2018​/03​
/02​/technology​/china​-technology​-censorship​-borders​-expansion​.html; Parker, Emily. “Mark Zuckerberg Is
Determined to Launch His Social Network in China, Whatever It Takes.” MIT Technology Review. October 18,
2016. https:// www​. technologyreview​. com​/ s​/ 602493​/ mark​- zuckerbergs​- long​- march​- to​- china ; Abkowitz,
Alyssa, Deepa Seetharaman, and Eva Dou. “Facebook Is Trying Everything to Re-Enter China-and It’s Not
Working.” Wall Street Journal. January 30, 2017. https://www​.wsj​.com​/articles​/mark​-zuckerbergs​-beijing​
- blues​- 1485791106; Isaac, Mike. “Facebook Said to Create Censorship Tool to Get Back into China.” New York
Times. November 22, 2016. https://www​.nytimes​.com​/2016​/11​/22​/technology​/facebook​-censorship​-tool​
- china​. html; Slefo, George P. “Report: China, Despite Ban, Is Facebook’s Second-Largest Ad Market.” Ad Age,
May 15, 2018. http://adage​.com​/article​/digital​/china​-facebook​-s​-largest​-market​/313524​/ ; Wakabayashi,
Daisuke, and Scott Shane. “Google Will Not Renew Pentagon Contract That Upset Employees.” New
York Times. June 1, 2018. https:// www​. nytimes​. com​/ 2018​/ 06​/ 01​/ technology​/ google​- pentagon​- project​
- maven​. html; Wiggers, Kyle. “Tsinghua University Plans to Open AI Research Center in China, Names
Google’s AI Chief as Advisor.” VentureBeat. June 29, 2018. https://venturebeat​.com​/2018​/06​/28​/tsinghua​
- university​- plans​- to​- open​- ai​- research​- center​- in​- china​- names​- googles​- ai​- chief​- as​- advisor​/ ; Freedberg,
Sydney. “Google Helps Chinese Military, Why Not US? Bob Work.” Breaking Defense. July 6, 2018. https://
breakingdefense​.com​/2018​/06​/google​-helps​-chinese​-military​-why​-not​-us​-bob​-work​/ ; Palmer, James,
and Bethany Allen-Ebrahimian. “China Threatens US Airlines over Taiwan References.” Foreign Policy.
April 28, 2018. http://foreignpolicy​.com​/2018​/04​/27​/china​-threatens​-u​-s​-airlines​-over​-taiwan​-references​
- united​- american​- flight​- beijing; Buckley, Chris. “ ‘Orwellian Nonsense’? China Says That’s the Price of
Doing Business.” New York Times. May 6, 2018. https://www​.nytimes​.com​/2018​/05​/06​/world​/asia​/china​
- airlines​- orwellian​- nonsense​. html; Miller, Matthew. “Exclusive: China Shuns US Request for Talks on Airline
Website . . .” Reuters. June 28, 2018. https://www​.reuters​.com​/article​/us​-usa​-trade​-china​-airlines​-exclusive​
/ exclusive​- china​- rejects​- u​- s​- request​- for​- talks​- on​- airline​- website​- dispute​- idUSKBN1JO0JP; Sevastopulo,
Demetri. “White House Presses US Airlines to Resist Beijing over Taiwan.” Financial Times. June 5, 2018.
https://www​.ft​.com​/content​/74498d14​-68cb​-11e8​-b6eb​-4acfcfb08c11; Ma, Wayne. “Marriott Employee
Roy Jones Hit ‘Like.’ Then China Got Mad.” Wall Street Journal. March 3, 2018. https://www​.wsj​.com​/articles​
/marriott​-employee​-roy​-jones​-hit​-like​-then​-china​-got​-mad​-1520094910; Mozur, Paul. “China Presses Its
Internet Censorship Efforts across the Globe.” New York Times. March 2, 2018. https://www​.nytimes​.com​
/2018​/03​/02​/technology​/china​-technology​-censorship​-borders​-expansion​.html; Ma, Wayne. “Delta, Zara
and Medtronic Join Marriott in Beijing’s Doghouse After Location Gaffes.” Wall Street Journal. Dow Jones
& Company, January 12, 2018. https://www​.wsj​.com​/articles​/delta​-zara​-and​-medtronic​-join​-marriott​-in​
- beijings​- doghouse​- after-location-gaffes-1515755791.
43 ​Weisskopf, Paul. “Backbone of the New China Lobby: US Firms.” Washington Post. June 14, 1993. https://
www​.washingtonpost​.com​/archive​/politics​/1993​/06​/14​/backbone​-of​-the​-new​-china​-lobby​-us​-firms​
/ ed135802​- 77fd​- 4a2f​- b9aa​- 7e7a78df96a8​.
44 ​Wei, Lingling and Yoko Kubota. “China’s Xi Tells CEOs He’ll Strike Back at US” Wall Street Journal.
June 25, 2018. https://www​.wsj​.com​/articles​/chinas​-xi​-tells​-ceos​-hell​-strike​-back​-at​-u​-s​-1529941334.
45 ​Hammer, Alexander. “The Size & Composition of US Manufacturing Offshoring in China.” US
International Trade Commission. https:// www​. usitc​. gov​/ publications​/ 332​/ executive​_ briefings​
/ sizecompositionebot​. pdf.
46 ​Author analysis of Bloomberg data, 23 February 2018. The Bloomberg data is subject to company
disclosures, which means these figures undercount total exposure to China. For instance, General Electric
and Walmart earn about 6 percent and 3 percent of revenues respectively from China according to news
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reports, but these do not appear in filings detected by Bloomberg. Similarly, General Motors reports equity
of income of $2 billion from its China joint venture, equivalent to 20 percent of adjusted operating income.
Boeing in 2016 disclosed that 10.9 percent of its revenues came from China. Blackden, Richard. “GE Warns
of Slowing China Sales and Slump in Oil Prices.” Financial Times. January 22, 2016. https://www​.ft​.com​
/content​/29315f70​-c10a​-11e5​-9fdb​-87b8d15baec2; “Wal-Mart Needs to Grow Overseas, and China’s the
Big Prize.” Chicago Tribune. June 1, 2016. http://www​.chicagotribune​.com​/business​/ct​-walmart​-china​
-20160601​-story​.html; “Q4 2017 Results.” General Motors. February 6, 2018. https://media​.gm​.com​/content​
/dam​/Media​/gmcom​/investor​/2018​/feb​/GM​-2017​-Q4​-Earnings​-Deck​.pdf; “Annual Report.” Boeing Company.
2016. http://s2​.q4cdn​.com​/661678649​/files​/doc​_financials​/annual​/2016​/2016​-Annual​-Report​.pdf.
47 ​In 2017, Steve Wynn, then CEO of an American casino that derives a significant portion of its revenues
from the Macau Special Administrative Region, reportedly delivered a request on behalf of the Chinese
government to the American president that a Chinese dissident be deported from the United States and
sent back to China. O’Keeffe, Kate, Aruna Viswanatha, and Cezary Podkul. “China’s Pursuit of Fugitive
Businessman Guo Wengui Kicks Off Manhattan Caper Worthy of Spy Thriller.” Wall Street Journal.
October 23, 2017. https://www​.wsj​.com​/articles/chinas-hunt-for-guo-wengui-a-fugitive-businessmankicks-off-manhattan-caper-worthy-of-spy-thriller-1508717977.
Wei, Lingling, and Yoko Kubota. “China
Warns of Corporate Casualties as Trade War Brews.” Wall Street Journal. Dow Jones & Company, June 15,
2018. https://www.wsj.com​/ articles/trade-fight-squeezes-u-s-companies-working-in-china-1529082957.
48 ​In October 2018, the New York Times reported that Chinese intelligence services were especially
monitoring the president’s interactions with prominent American businesspersons. The Chinese
government has then sought to channel messages, including via Chinese businessmen, to those individuals
with the aim that Beijing’s views would “eventually be delivered to the president by trusted voices.” The
report added that U.S. intelligence officials believed that the president’s associates “were most likely
unaware of any Chinese effort. Rosenberg, Matthew and Maggie Haberman. “When Trump Phones Friends,
the Chinese and the Russians Listen and Learn.” New York Times. October 24, 2018. https://www.nytimes.
com/2018/10/24/us​/politics/trump-phone-security.html
49 ​http://www​.xinhuanet​.com​/english​/2018​-01​/31​/c​_136939098​.htm.
50 ​Fritz, Ben. “Overseas 2017 Box-Office Results Offset US, Canada Slump.” Wall Street Journal.
April 4, 2018. https://www​.wsj​.com​/articles​/overseas-2017-box-office-results-offset-u-s-canada​
-slump-1522868354.
51 ​Kokas, Aynne. Hollywood Made in China. University of California Press, 2017. 28–29.
52 ​Kokas, Aynne. Hollywood Made in China. University of California Press, 2017. 33.
53 ​Siegel, Tatiana. “Richard Gere’s Studio Exile: Why His Hollywood Career Took an Indie Turn.” Hollywood
Reporter. April 18, 2017. https://www​.hollywoodreporter​.com​/features​/richard​-geres​-studio​-exile​-why​-his​
-hollywood​-career​-took​-an​-indie​-turn​-992258. To mitigate the risk that future business in China would be
harmed because of its production of Kundun, a movie about the Dalai Lama, Disney in 1997 hired Henry
Kissinger. Also see Weinraub, Bernard. “At the Movies; Disney Hires Kissinger.” New York Times. October 10,
1997. https://www​.nytimes​.com​/1997​/10​/10​/movies​/at​-the​-movies​-disney​-hires​-kissinger​.html.
54 ​Clover, Charles, and Matthew Garrahan. “China’s Hollywood Romance Turns Sour.” Financial Times.
December 26, 2017. https:// www​. ft​. com​/ content​/ d5d3d06e​- de8b​- 11e7​- a8a4​- 0a1e63a52f9c.
Corporations
SECTION 8
Technology and Research
Technology transfers between nations exist on a spectrum of legitimacy. In many
developing economies, multinational corporations willingly agree to skills and technology
transfer arrangements in exchange for the right to operate. Governments support these
measures in the hopes of furthering economic development. Transfers cross the threshold
into illegitimacy when coercion, misappropriation, theft, or espionage are deployed with
the effect of undermining a company’s, and ultimately its home country’s, economic
competitiveness. China’s expropriation of American technology is an example of how
it leverages its influence among universities, corporations, and diaspora communities to
further strategic objectives. This section reviews the targets of China’s expropriation efforts,
the state and nontraditional collectors involved, and concludes with recommendations
for how the United States can better defend against this phenomenon. It is important to
note that not all expropriation of intellectual property occurs at the explicit direction
of the government and that China is not the sole country targeting the United States.
Nonetheless, China—whether at the level of the state or individual—is considered the
most serious offender.
While Chinese cyberthreats and clandestine spying against the United States dominate
the public discourse, a far more serious threat is posed by China’s informal or “extralegal”
transfers of US technology and IP theft. 1 Operating under the radar, these quiet diversions
of US technical know-how are carried out by groups and individuals in the United States,
whose support for China erodes America’s technological edge and ability to compete
in international markets. These groups are managed by a professional cadre of Chinese
government and government-associated science and technology transfer specialists who
facilitate intellectual property “exchanges” through a maze of venues. They target specific
advanced technologies drawn from China’s industrial planning priorities (e.g., Made in
China 2025 2 ) such as semiconductors, robotics, next-generation information technologies
(e.g., big data, smart grid, internet of things), aviation, artificial intelligence, and electric
vehicles. As a result of their efforts, a commission convened by the National Bureau
of Asian Research concluded that IP theft, primarily from China, costs the American
economy hundreds of billions of dollars each year, with significant impact on employment
and innovation. 3 Former commander of United States Cyber Command and Director of
the National Security Agency General Keith Alexander was even more grave when he
asserted the ongoing theft of IP by China represents “the greatest transfer of wealth in
human history.” 4
122
The Dynamics of Chinese IP Theft
Chinese nontraditional collection and IP theft is not done randomly by individuals acting
on their own. Rather, China has enacted some two dozen laws that have created a staterun
foreign technology transfer apparatus that sponsors, for example, labs in China that
rely wholly on information provided by compatriots working abroad. The apparatus also
maintains databases of foreign co-optees and distributes stipends, sinecures, and cash to
foreign donors of high-tech innovations. In addition, the apparatus is responsible for the
care and feeding of agents willing to “serve China while in place” abroad.
Targets
China targets all sources of American innovation, including universities, corporations,
and government labs, exploiting both their openness and naïveté. The methods and
tradecraft are custom-tailored to each target. For universities, China takes advantage of the
commitment to intellectual freedom on campus, which strongly resists government scrutiny
of the activities of foreign students in hard science programs and international academic
cooperation. For corporations, the lure of the China market gives Beijing tremendous
leverage in exacting tech transfer from American firms, combined with financial incentives
for employees to purloin intellectual property for personal gain. Finally, US government labs
have a historic commitment to international scientific cooperation, and an uneven record of
monitoring that cooperation for unsanctioned transfers of information.
These efforts complement China’s legitimate efforts to invest in its own indigenous
innovative capacity. China has for several decades made science and technology
development a priority and appears to have the political will to see it through. This is
demonstrated by the R&D funding programs it has put into place, the investment in core
scientific infrastructure that is in some cases unparalleled anywhere else in the world, and
a national scientifically oriented industrial policy. Yet the continuing intense engagement
in IP theft is, in many ways, an indication of the gaps in China’s indigenous innovation
efforts.
Once acquired, foreign technology is converted in China into products and weapons at
180 “Pioneering Parks for Overseas Chinese Scholars,” 160 “Innovation Service Centers,”
276 “National Technology Model Transfer Organizations,” and an unknown number of
“technology business incubators.” These facilities are strategically located to ensure wide
distribution of the foreign technologies.
Nontraditional Collectors
Nontraditional collectors include Chinese citizens, Chinese Americans with whom the
Chinese government is better able to cultivate or coerce, and other Americans. They
range from students to researchers. Many are willing participants, such as students from
Technology and Research
123
Chinese defense universities explicitly tasked with acquiring foreign technology; others are
not and targeted for access to research they have pursued by their own passion and intellect.
Indeed, some nontraditional collectors may even be unwitting in their support.
Collectors do not appear to be chosen by Beijing for their race or nationality; rather they
are targeted for their access to the desired intellectual property and their willingness to
violate their employee agreements or national laws. Indeed, more recent scholarship has
shattered the shibboleth that the Chinese government only recruits ethnic Chinese. While
Chinese intelligence does have a historically strong track record of attempting to recruit
ethnic Chinese, primarily because of cultural and language affinity, more recent cases of
espionage and technology transfer suggest that the Chinese government has broadened its
tradecraft to recruit nonethnic Chinese assets and collectors as well, perhaps as a way of
complicating US counterintelligence efforts.
China’s most systematic channel for identifying foreign-based nontraditional collectors is
its Recruitment Program of Global Experts ( 海外高层次人才引进计划 ), commonly known as
the Thousand Talents Plan ( 千人计划 ) or the Thousand Talents Program (TTP). 5 The TTP is a
massive and sustained talent recruitment campaign designed to recruit leading experts from
overseas to assist in the country’s modernization drive.
Initiated in 2008, the TTP aims to recruit leading overseas scientists and experts who work
in areas that are deemed high priority for achieving China’s modernization goals. 6 The
program originally aimed to recruit 1,000 “overseas talents” ( 海外人才 ) over a period of five
to ten years. Official Chinese TTP websites list more than three hundred US government
researchers and more than six hundred US corporate personnel who have accepted TTP
money. 7 In many cases, these individuals do not disclose receiving the TTP money to their
employer, which for US government employees is illegal and for corporate personnel likely
represents a conflict of interest that violates their employee agreement.
State Collection Apparatus
China’s nontraditional collection relies on a web of activities, including open-source research,
exchanges, cooperation and professional organizations, direct funding of research, strategic
acquisition, or cyberespionage.
Open-source
China’s efforts to exploit foreign innovation is further seen in its open-source acquisition
infrastructure, which surpasses that of any other country. China employs a cadre of
thousands to locate, study, and disseminate foreign journals, patents, proceedings,
dissertations, and technical standards without regard to ownership or copyright restrictions.
The documents are indexed, archived, and supplied to Chinese commercial and military
“customers.”
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Exchanges
The Chinese government organizes and pays for exchanges in which participants travel
from the United States, divulge technical knowledge through scripted venues, are briefed
on China’s technology interests, return to their US base to collect more information, and
repeat the process. China has a program for what it euphemistically calls “short-term visits”
by co-opted foreigners, which, stripped of its rhetoric, is indistinguishable from state-run
espionage.
Cooperation organizations and advocacy groups
Many Sino-US S&T “cooperation” organizations in the United States facilitate these transfers
and have individual memberships of hundreds to thousands. The figure scales to some
ninety such groups worldwide. Members usually are expatriate Chinese, although China is
expanding its recruitment of nonethnic Chinese. One significant example of a Sino-US S&T
cooperation organization is Triway Enterprise, Inc. ( 三立国际有限公司 ), an “external training
institute” set up under the auspices of the State Administration of Foreign Experts Affairs
in Falls Church, Virginia, with branches in Beijing and Nanjing. According to the Chinese
version of the website, the company “since 1993 has been putting its energy into promoting
bilateral exchange and cooperation between China and the US in the fields of S&T, culture,
education and management with great success.” 8
China S&T advocacy groups in the United States declare loyalty to China and acknowledge
a “duty” to support China’s development. Members visit China to lecture, guide Chinese
technical projects, transfer technologies, receive shopping lists from Chinese entities, and
engage in other kinds of “technical exchanges.” Many of them sit on Chinese government
boards that decide the future of China’s national technology investment. Another
example of a China S&T advocacy group is the Silicon Valley Chinese Engineers Association
( 硅谷中国工程师协会 ), which describes itself as “a non-profit professional organization formed
mainly by the professionals in the Bay Area from mainland China with a mission to
promote professionalism and entrepreneurship among members,” which is achieved by
“organizing a variety of professional activities and establishing channels to allow members to
engage in China’s rapid economic development” [emphasis added]. 9
Chinese government tech transfer offices, facilitation companies, and career transfer
personnel, some of whom are posted to China’s diplomatic offices, support and direct
the US-based groups. In China, hundreds of government offices are devoted entirely to
facilitating foreign transfers of technology “by diverse means.”
Joint research
The preferred method of establishing a research beachhead in the United States is through
the formation of a joint research center with a prominent US university. One example
Technology and Research
125
is the China-US Joint Research Center for Ecosystem and Environmental Change at the
University of Tennessee, Knoxville. 10 Launched in 2006, researchers from the University
of Tennessee and the DOE-funded Oak Ridge National Laboratory partnered with the
Chinese Academy of Sciences to address “the combined effects of climate change and
human activities on regional and global ecosystems and explore technologies for
restoration of degraded environments.” The center’s research focuses on science at the
heart of the “green technology” revolution, which is one of Beijing’s major national
industrial policy objectives.
The center’s website lays out three goals that match nicely with a tech transfer agenda:
(1) organize and implement international scientific and engineering research; (2) serve as
a center for scientific information exchange; and (3) provide international education and
technical training. 11 The website goes on to outline cooperative mechanisms to achieve
these goals, including joint research projects, academic exchange, student education, and
“technical transfer and training [emphasis added].” 12 This dynamic differs fundamentally
from the mission of Western research facilities abroad, which is to adapt technology already
in their portfolios to sell in foreign markets. A PRC study on the benefits of overseas
“research” to obtain foreign technology put it this way: “How can you get the tiger cub if
you don’t go into the tiger’s den?” ( 不入虎穴 , 焉得虎子 ). 13
Cyber
Perhaps the most damaging channel for stealing US intellectual property is cyberespionage.
As noted above, NSA director Keith Alexander has called cyberespionage by Chinese state
actors the “greatest transfer of wealth in human history.” Cyberespionage is both a means
for pilfering US science and technology, as well as a method of intelligence collection
for potential attacks against American military, government, and commercial technical
systems. As a result, these cyber intrusions represent a fundamental threat to American
economic competitiveness and national security.
Other means of misappropriation
While not technology transfer per se, counterfeiting is so common in China that it has
the same practical effect. Schemes range from the subtle to blatant: benchmarking against
ISO standards; 14 patent research where a design is modified slightly, if at all, re-patented
in China and “legally” produced with government protection; 15 reverse engineering; 16
“imitative innovation” ( 模仿创新 ) 17 with or without the innovation (also called “imitative
remanufacturing” 模仿改造 ); 18 and marketing the pirated product without or with its original
logo. 19 Other reporting has detailed how the Chinese government exploits regulatory panels
(often with members who have direct conflicts of interest by working for local competitors)
and antitrust investigations to acquire trade secrets from foreign companies, aiding
domestic industries. 20
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126
Conclusion and Recommendations
China’s aggressive policy is threatening the advantages the United States has long enjoyed as a
scientifically creative nation. This is occurring as a declining number of US students
are getting advanced degrees in science and technology, R&D funds are dropping off,
and the nation’s manufacturing base is shrinking. 21 When combined with a more
scientifically competent China that is also using the discoveries of others, the future of
US competitiveness comes into question.
The best source of resiliency in the face of rampant IP theft from China is continued
and expanded reinvestment in American innovation. The United States can recover its
competitiveness by manufacturing what it invents and rebuilding the scientific foundation
on which its competitive edge depends. But unless active efforts are made to prevent
countries from inappropriately exploiting American technologies developed at great cost,
efforts at national reconstruction will be wasted. The United States’ current defense of
intellectual property has not been effective in refuting appropriation by China, by all
accounts the world’s worst offender.
A key source of American creativity—the country’s individualism and openness—makes
it difficult to implement collective efforts to protect the products of American innovation.
Nonetheless, policies and processes can be improved to reduce the risk of misappropriation
without compromising America’s innovative capacity. These require improved transparency
with better information and screening, enhanced export controls, and stronger investment
reviews.
Transparency, better information, and screening
One of the most glaring factors that facilitates IP theft is the fact that recipients of Chinese
funding programs, such as the Thousand Talents Program described above, routinely do
not declare their work in China. At a minimum, recipients should be required to register as
foreign agents under the Foreign Agents Registration Act (FARA). 22 Recipients who are active
government employees may be breaking the law, as 18 US Code § 209 prohibits accepting
supplemental income for performing the same role that falls under the scope of their
government employment. 23
The US government and universities should also take an evidence- and risk-based assessment
when determining whether to admit students into major research programs. The current
system, known as the Student and Exchange Visitor Information System (SEVIS), 24 is
designed “to track and monitor schools and programs, students, exchange visitors and their
dependents while approved to participate in the US education system.” SEVIS collects data
on surnames and first names, addresses, date and country of birth, dependents’ information,
nationality/citizenship, funding, school, program name, date of study commencement,
Technology and Research
127
education degree level, and authorization for on-campus employment. As of March 2011,
China had the largest number of students in SEVIS, at 158,698. 25
The FBI has access to all of the student data contained in SEVIS, and no longer needs
the permission of DHS to initiate investigations of foreign students. 26 However, the laws,
regulations, and directives governing SEVIS do not require some additional critical pieces
of information, which are nonetheless perceived to be important to manage the program.
According to the Government Accounting Office (GAO):
• the nonimmigrant visa number, expiration date, and issuing post are optional and
only captured if entered into the system by the school or exchange visitor program;
• the nonimmigrant driver’s license number and issuing state were imposed by the
interagency working group and support investigative efforts; and
• the nonimmigrant passport number, passport expiration date, and passport issuing
country are optional and only captured if entered into the system by the school or
exchange visitor program. 27
It is difficult to ascertain from open sources whether these problems have been fixed, but
the nonmandatory data are key investigative details that would be critical for federal law
enforcement seeking to assess possible illicit technology transfers by students.
Improved export controls
The second major policy problem involves PRC student access to controlled technology
under the deemed export system. According to the Commerce Department, a restricted
product or technology is “deemed,” or considered exported, when it is used by a foreign
national in the United States. 28 However, under these rules, a university or research lab
does not need a deemed export license if a foreign graduate student is merely present in a
lab. It only needs a license if it intends to export that technology to the foreign national’s
country.
From 2004 to 2006, the US Commerce Department attempted to change these rules, 29 but
was stymied by opposition from universities and research labs. 30 Yet the continued flow
of controlled technology to the PRC and the findings of GAO studies on the problems
of university oversight 31 strongly suggest that Commerce’s recommendations should be
reexamined.
In 2009, then president Obama “directed a broad-based interagency reform of the US export
control system with the goal of strengthening national security and the competitiveness of
key US manufacturing and technology sectors by focusing on current threats and adapting
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128
to the changing economic and technological landscape.” 32 Specifically, the initiative aimed
to “build higher fences” around a core set of items whose misuse can pose a national security
threat to the United States. 33
The reform initiative is synchronizing the two existing control lists, the Munitions List and
the Commerce Control List, so that they are “tiered” to distinguish the types of items that
should be subject to stricter or more permissive levels of control for different destinations,
end uses, and end users; create a “bright line” between the two current control lists to clarify
which list an item is controlled on, and reduce government and industry uncertainty about
whether particular items are subject to the control of the State Department or the Commerce
Department; and are structurally aligned so that they potentially can be combined into a
single list of controlled items. 34
Moreover, the lists will be transformed into a “positive list” that describes controlled items
using objective criteria (e.g., technical parameters such as horsepower or microns) rather
than broad, open-ended, subjective, generic, or design intent-based criteria. 35 After applying
these criteria, the list will be divided into three tiers based on their military importance and
availability. 36
On the one hand, these reforms could greatly improve the efficiency of the export control
bureaucracy, preventing fewer technologies from slipping between the cracks and finding
their way to China. They could also make the system and its control lists better able to keep
pace with technological change, which had been a major problem with the old system,
particularly with regard to fast-moving information technologies. On the other hand, the
reforms appear to loosen controls over dual-use technologies, which China has a long and
successful track record of integrating into advanced systems, and which can form the core
of new innovations. The future of these reforms is unclear as the Trump administration
appears to focus on more aggressive trade strategies and policies designed to protect US
industries and punish offending Chinese companies.
Strong investment reviews
The Committee on Foreign Investment in the United States (CFIUS) is an interagency
committee that serves the president in overseeing the national security implications of
foreign investment in the economy. 37 As China’s economy and financial weight has grown,
CFIUS has reviewed an increasing number of proposed acquisitions of American companies
and infrastructure by Chinese entities. Many of these proposed mergers have received
high levels of media and congressional attention, and most of the high-profile cases have
ended in rejection or strong discouragement leading to abandonment of the deal. While
the CFIUS process may have prevented individual cases of sensitive or illegal technology
transfer, it could also have had the unintended effect of forcing Chinese actors to steal the
data through espionage because of their inability to buy them. Recent legislation, signed by
Technology and Research
129
President Trump, is a substantial improvement to CFIUS, closing loopholes that the Chinese
had been exploiting and broadening the scope of the CFIUS authorities in important ways.
The new law extends CFIUS review time-frames, increases the types of transactions
subject to CFIUS’ jurisdiction, makes certain notifications mandatory, and establishes a
process for potentially expedited review and approval of certain transactions. The four
new “covered transactions” include real estate deals near US national security facilities,
deals involving “critical infrastructure” or “critical technologies,” changes in ownership
rights by a foreign investor, and any transaction designed to evade the CFIUS process. In
exchange for all these additional burdens, the new law also helps companies by clarifying
time limits for decisions and places important jurisdictional limits on the expansion of the
law’s scope.
NOTES
1 ​See Hannas, William, James Mulvenon, and Anna Puglisi, Chinese Industrial Espionage. London:
Routledge. 2013.
2 ​For the best analysis of Made in China 2025, see Made in China 2025: Global Ambitions Built on Local
Protections. US Chamber of Commerce. 2017. https://www​.uschamber​.com​/sites​/default​/files​/final​_made​
_in​_china​_2025​_report​_full​.pdf.
3 ​The IP Commission Report: The Report of the Commission on the Theft of American Intellectual Property.
National Bureau of Asian Research. May 2013. http:// www​. ipcommission​. org​/ report​/ IP​_ Commission​
_Report​_Update​_2017​.pdf.
4 ​For his comments on costs, see AEIVideos. “Gen. Alexander: Greatest Transfer of Wealth in History.”
YouTube. July 09, 2012. https:// www​. youtube​. com​/ watch​? v​= JOFk44yy6IQ.
5 ​All analysis and data are taken directly from the official Thousand Talents Program website: http:// www​
. 1000plan​. org​.
6 ​“The Recruitment Program of Global Experts.” Thousand Talents. http://www​.1000plan​.org​/qrjh​/section​/2​
?m​=rcrd.
7 ​All analysis and data are taken directly from the official Thousand Talents Program website: http:// www​
. 1000plan​. org​.
8 ​See Triway International website: http:// www​. triwayinc​. com. Note that the term “S&T” is missing from
the site’s English-language version.
9 ​Northern California Global Trade Assistance Directory, 2000–2001. About 10 percent of SCEA’s members
are from Taiwan.
10 ​“China-US Joint Research Center for Ecosystem and Environmental Change.” University of Tennessee
Knoxville. http:// jrceec​. utk​. edu​/ about​. html.
11 ​Ibid.
12 ​Ibid.
13 ​Zhou, Wei ( 周偉 ). “ 我国企业对外直接投资战略分析 ” (“Analysis of China’s Strategy for Corporate Foreign
Direct Investment”). 科技进步与对策 . Science & Technology Progress and Policy. 2004.11. 56.
Section 8
130
14 ​With gratitude to Robert Skebo Sr. (personal communication) for pointing this out.
15 ​Zeng, Zhaozhi ( 曾昭智 ), Niu Zhengming ( 牛争鸣 ), and Zhang Lin ( 张林 ). “ 利用专利文献促进科技创新 ”
(“Using Patent Resources to Promote Scientific and Technological Innovation”), in 技术与创新管理 .
Technology and Innovation Management. 2004.6. 46–48.
16 ​Cai, Meide ( 蔡美德 ), Du Haidong ( 杜海东 ), and Hu Guosheng ( 胡国胜 ). “ 反求工程原理在高职课程体系创新中的应用 ” (“Using the Principle of Reverse Engineering for Innovation in High-Level Knowledge Processes
and Systems” ). 科技管理研究 . Science and Technology Management Research. 2005.7.
17 ​Peng, Can ( 彭灿 ). “ 基于国际战略联盟的模仿创新 ” (“Imitative Innovation Based on International
Strategic Alliances”). 科研管理 . Science Research Management. 2005.2. 23–27.
18 ​Zhang, Ying ( 张莹 ) and Chen Guohong ( 陈国宏 ). “ 跨国公司在中国的技术转移问题及对策分析 ”
(“Analysis of the Problem of Technology Transfer of Multinational Corporations in China and Measures for
Dealing with It”). 科技进步与对策 . Science & Technology Progress and Policy. 2001.3. 134.
19 ​For example, see Kingstone, Brett. The Real War Against America. Specialty Publishing/Max King. 2005.
20 ​Wei, Lingling and Bob Davis. “How China Systematically Pries Technology from US Companies.”
Wall Street Journal. September 26, 2018. https://www​.wsj​.com​/articles​/how​-china​-systematically​-pries​
- technology​- from​- u​- s​- companies​- 1537972066.
21 ​“US Competitiveness Ranking Continues to Fall; Emerging Markets Are Closing the Gap.” World
Economic Forum. September 7, 2011. http://www​.weforum​.org​/news​/us​-competitiveness​-ranking​
- continues​- fall​- emerging​- markets​- are​- closing​- gap.
22 ​“Foreign Agents Registration Act.” US Department of Justice. https://www​.justice​.gov​/nsd​-fara.
23 ​See 18 US Code § 209, available at: https://www​.law​.cornell​.edu​/uscode​/text​/18​/209.
24 ​“Homeland Security: Performance of Information System to Monitor Foreign Students and Exchange
Visitors Has Improved, but Issues Remain.” General Accounting Office. GAO-04-69. June 2004. http:// www​
.gao​.gov​/new​.items​/d04690​.pdf. SEVIS was mandated by the Illegal Immigration Reform and Immigrant
Responsibility Act (IIRIRA) of 1996 and augmented by the USA Patriot Act of 2001, Enhanced Border Security
and Visa Entry Reform Act of 2002, and the Cyber Security Research and Development Act of 2002.
25 ​“Student and Exchange Visitor Information System General Summary Quarterly Review.” US Immigration
and Customs Enforcement. April 1, 2011. https://www​.ice​.gov​/doclib​/sevis​/pdf​/quarterly​_rpt​_mar2011​.pdf.
26 ​Gruchow, Matthew, “FBI Gets Access to SEVIS.” Minnesota Daily. September 22, 2004. http:// www​
.mndaily​.com​/nuevo​/2004​/09​/22​/fbi​-gets​-access​-sevis.
27 ​“Homeland Security: Performance of Information System to Monitor Foreign Students and Exchange
Visitors Has Improved, but Issues Remain.” General Accounting Office. GAO-04-69. June 2004. http:// www​
. gao​. gov​/ new​. items​/ d04690​. pdf.
28 ​For the authoritative FAQ on deemed exports, see “Deemed Exports FAQs.” US Department of
Commerce. https:// www​. bis​. doc​. gov​/ index​. php​/ policy​- guidance​/ deemed​- exports​/ deemed​- exports​- faqs.
29 ​“Deemed Export Controls May Not Stop the Transfer of Sensitive Technology to Foreign Nationals in the
US.” US Department of Commerce Office of Inspector General. Final Inspection Report No. IPE–16176—
March 2004.
30 ​“Revisions and Clarification of Deemed Export Related Regulatory Requirements.” Federal Register.
May 31, 2006. https://www​.gpo​.gov​/fdsys​/pkg​/FR​-2006​-05​-31​/pdf​/E6​-8370​.pdf.
Technology and Research
131
31 ​“Export Controls: Agencies Should Assess Vulnerabilities and Improve Guidance for Protecting Export-
Controlled Information at Universities.” General Accounting Office. GAO-07-70. http:// www​. gao​. gov​/ new​
. items​/ d0770​. pdf.
32 ​“Export Control Reform Initiative: Strategic Trade Authorization License Exception.” Federal Register.
June 16, 2011. https://www​.bis​.doc​.gov​/index​.php​/documents​/product​-guidance​/231​-sta​/file.
33 ​Ibid.
34 ​“President Obama Announces First Steps toward Implementation of New US Export Control System.”
White House Office of the Press Secretary. December 9, 2010. https:// obamawhitehouse​. archives​. gov​/ the​
- press​- office​/ 2010​/ 12​/ 09​/ president​- obama​- announces​- first-steps-toward-implementation-new-us-expor.
35 ​Ibid.
36 ​Ibid.
37 ​Jackson, James K. “The Committee on Foreign Investment in the United States.” CRS Report RL33388.
Congressional Research Service. July 29, 2010. http://www​.fas​.org​/sgp​/crs​/natsec​/RL33388​.pdf.
Section 8
132
Technology and Research
APPENDIX 1
Chinese Influence Operations
Bureaucracy
While recent months have brought increased attention to the United Front Work
Department, or “United Front activities,” it is important to emphasize that this is
but one of many institutions within the Chinese party-state involved in influence
operations. As the accompanying graphic illustrates, the bureaucracy involved in
extending China’s global influence is large, complex, and specialized in function.
Generally speaking, there are three types of bureaucratic organizations included in
the chart: (1) policy coordination; (2) policy formulation and implementation; and
(3) organizations with specialized functions.
As a Leninist party-state, CCP organizations have higher political status than
government institutions. This has become even more pronounced under the Party’s
general secretary Xi Jinping and following the bureaucratic reorganization announced
after the March 2018 meeting of the National People’s Congress. Generally speaking,
Party organs make policies, which are then implemented by state bureaucracies. There
is no single organization overseeing the entirety of the country’s influence operations
abroad. The most important CCP organizations in the diagram are the Foreign Affairs
Commission, the External Propaganda Leading Group/State Council Information
Office, the CCP Propaganda Department, the CCP United Front Work Department,
the CCP International Liaison Department, and United Front departments inside the
People’s Liberation Army. Critical policies related to foreign affairs are formulated
in these bodies. The same organizations are also involved in coordinating the
implementation of these policies.
The Policy-Making Process in the Chinese Party-State
The process is driven both by top leadership and functional bureaucracies. Policy
formulation, which involves the generation of ideas and proposals, typically
takes place in functional bureaucracies and specialized departments within these
bureaucracies. In the process of policy formulation, one bureaucracy specializing
in the functional or issue area (for example, propaganda) may take charge, but it
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also consults with other bureaucracies that may have a stake in the issue. The draft
policy proposals are then forwarded to the Leading Small Groups ( 领导小组 ), which
deliberate, vet, and sign off on the policy proposals before sending them to the
Politburo and the Politburo Standing Committee for a final decision. These leading
small groups, which range in size from five to a dozen members, are normally
chaired by a Politburo member and include a range of ministerial-level officials
relevant to that functional policy area. Some meet at regular intervals (biweekly),
whereas most convene on an ad hoc basis when necessary. In this formal, ministryor
department-initiated process, the ultimate decision-making authority lies with the
Politburo Standing Committee.
At this level of policy formulation, of particular relevance to China’s international
influence activities are the External Propaganda Leading Group ( 对外宣传领导小组 ),
which has a dual bureaucratic identity as the State Council Information Office ( 国务新闻办公室 ); the Central Committee Propaganda Department ( 中共中央宣传部 ); the Central
Committee United Front Work Department ( 中共中央统战部 ); the Central Committee
Foreign Affairs Commission ( 中共外事委员会 ); 1 and the Central Committee Education
Leading Small Group ( 教育部 ). Although bureaucratically ranked slightly lower, the
Ministry of Culture and Tourism, the Ministry of Education, the newly created Voice
of China, and the Xinhua News Agency all exercise policy formulation and oversight
roles in their functional domains.
There is also a parallel top-down policy process initiated by one of the top leaders
on the Politburo Standing Committee. As a rule, Xi Jinping, the CCP general
secretary, has broad authority and may issue a brief directive on a matter he
believes should receive extra attention or priority. (Typically, such directives are
short comments he writes on reports that come across his desk.) Otherwise, only
a Politburo Standing Committee (PBSC) member overseeing a particular portfolio
can issue such directives on matters that fall into his area of responsibility. Such
comments are then related to the functional bureaucracies and can lead to the
formulation of a new policy, the modification of an existing policy, or other
actions.
On the Politburo and its seven-member PBSC, several members have direct
responsibility for external affairs. As the chair of the Foreign Affairs Commission, Xi
has overall authority on all aspects of China’s foreign relations. Wang Huning, the
Standing Committee member responsible for Party affairs, ideology, and propaganda,
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is the top official with oversight of China’s overseas propaganda ( 外宣 ) efforts, while
Politburo member and director of the CCP Propaganda Department Huang Kunming
oversees all media organs and has day-to-day oversight of the entire propaganda
system. Wang Yang, another PBSC member and the chairman of the Chinese
People’s Political Consultative Conference (CPPCC), has overall responsibility for
the United Front portfolio, although Sun Chunlan (the only female member of the
twenty-five-man Politburo and former director of the United Front Work Department
from 2014 to 2017) may also continue to have some residual responsibilities as well,
since her current portfolio includes education and culture. Additionally, You Quan, a
member of the Politburo Secretariat, is now the new head of the UFWD, and he is in
charge of the day-to-day work of the department. These leaders’ views on particular
issues carry a great deal of weight and can often result in significant policy
initiatives or modifications.
Besides issuing brief policy directives via their comments on documents (known
as 批示 ), top leaders can also communicate their ideas or orders in conversations or
meetings with the ministers in charge of functional bureaucracies. Such ideas or orders
can lead to actions at the implementation level or to the formulation of a new policy or
the modifications of an existing policy.
Policy Coordination
The Foreign Affairs Commission, which used to be called the Foreign Affairs
Leading Small Group (est. 1956), is by far the most important. The role of the
Commission is similar to that of the interagency “principals committees” in the
US system. Its chairman is Xi Jinping, while Premier Li Keqiang and Vice President
Wang Qishan serve as vice chairmen. Other PBSC members Wang Huning and
Han Zheng are members. Le Yucheng, a vice minister of Foreign Affairs, is deputy
director. Other members of the Commission include the most senior leaders
of the Chinese government: Yang Jiechi, and the ministers of Foreign Affairs,
State Security, Defense, Public Security, Commerce, the CCP’s International
Liaison Department, Taiwan Affairs Office, Hong Kong and Macao Affairs Office,
Propaganda Department, External Propaganda Office, and Overseas Chinese Affairs
Office.
The Commission also has an attached “office,” known as the Central Foreign Affairs
Office ( 中央外办 ), which has a dedicated staff of approximately fifty (many of whom are
seconded from the Ministry of Foreign Affairs, International Liaison Department of the
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CCP, other ministries, and the military). The director of this office is currently Yang
Jiechi—a Politburo member, former state councilor, and veteran diplomat. This body is
the central coordinating body for China’s foreign affairs—across all bureaucracies—on
a daily basis.
While the Foreign Affairs Commission is the principal organization in the making
and coordination of China’s overall foreign policy, the United Front Leading Small
Group and the External Propaganda Leading Small Group also have important—but
somewhat lower—status in the Chinese hierarchy. They are led, respectively, by the
Politburo Standing Committee member in charge of ideology and propaganda and
the head of the United Front Work Department. The Leading Small Group for United
Front Work is located inside the CCP’s United Front Work Department and draws on
UFWD personnel for staff work. The Leading Small Group for External Propaganda
is subordinate to the CCP Leading Small Group for Propaganda and Ideology and
is required to seek guidance from the Foreign Affairs Commission, and it draws on
the State Council Information Office (with which it has a dual role) for staff work.
Both groups play an important role in the formulation of policy and coordination of
implementation in their respective sectors.
Conferences
Another important instrument in the coordination of policy is the Central or National
Conferences that are convened to formulate and announce new policy objectives
and mobilize the bureaucracy to implement these policies. Some of these conferences
are convened more frequently and are more important than others. Four central or