Ahead of the revival of U.S. trade talks with China next week in Shanghai, lawmakers in both houses of Congress are pushing legislation aimed at tackling a key topic of the negotiations: Beijing’s theft of U.S. technology.
A CNBC poll released in March found that 1 in 5 North America-based corporations said China had stolen their intellectual property (IP) within the last year. And this type of espionage is not just a recent phenomenon—the United States has accused Beijing of stealing sensitive military secrets, such as technology on Lockheed Martin’s stealth F-35 and F-22 fighter jets.
As tensions between the two largest economic powers heat up over the trade dispute and China’s military buildup, a pair of bipartisan bills are looking to put additional safeguards in place to protect U.S. technology from Chinese espionage. The Senate legislation was introduced by Republican Sen. Josh Hawley, while the House version is co-sponsored by Reps. Mark Green, a Tennessee Republican, and Henry Cuellar, a Texas Democrat.
Both pieces of legislation, which have strong bipartisan support and are expected to pass once leadership brings them to the floor in the fall, would place certain technology on the U.S. Commerce Department’s export control list and impose sanctions on individuals who violate those controls.
Green sat down with Foreign Policy to discuss China’s aggressive espionage and the threat to U.S. companies.
Foreign Policy: What is the problem you are trying to solve?
Mark Green: China’s IP theft has cost the GDP in the United States something upwards of $600 billion a year. Our GDP is what allows us to build the military, what allows us to protect ourselves. For example, Motorola in 1997 had 80 percent of the cell towers in the world and networks to run those cell towers, 80 percent market share, and they were a $17 billion company. Then they did a deal with Huawei. Huawei stole their technology, turned around, and sold it subsidized to the Chinese government. In 2011, that $17 billion in 1997 was sold to Nokia for $900 million. That’s 50,000 jobs in America gone, billions of dollars off our GDP.
FP: What would your legislation do to protect U.S. technology?
MG: What we’ve done is created a bill that further restricts transfers of American technology to China. We basically put in—I don’t want to call it a speed bump—but a gate. Placing these items on the Department of Commerce’s export list tells these businesses, “OK, you want to sell this particular type of technology, maybe it’s AI [artificial intelligence], to a company in China. You have to get permission, basically a license, to do that.” It’s another way of looking at this before it goes to China.
FP: What are the core technologies that would be placed on the export control list?
MG: China’s “Made in China” strategy has a list that includes 16 or so of these categories that they want to lead technologically on. This includes: civil aircraft, turbine engines, advanced medical equipment, lithium batteries, semiconductors, computing—obviously AI is up there—biotech, robotics.
FP: What are the bill’s prospects?
MG: This is an interesting bipartisan issue, and there are very few places where in the Congress right now there is bipartisan work. This is one of the places, I think, we can get something done.
FP: Beyond changes to the law, what are other ways the U.S. government can prevent the theft of U.S. IP?
MG: When it comes to cyberspace and cybertechnology, we are leaning very far forward in the foxhole. The ultimate goal is to be able to function completely secure on untrusted networks. Most networks are built by the private sector. The federal government has to operate on those, so we have to figure out how to be secure on a 100 percent untrustable network.
There are all kinds of things we can do: There’s encryption, there’s volume—you can saturate people with volume, and you can adjust the volume, too, so that it’s not predictable. Another thing you can do is called masking. It’s a form of encryption, but you are making something look like something else, like a decoy.
FP: In what areas of critical technology is China closest to catching up to—or passing—the United States?
MG: Artificial intelligence, for one. They are also becoming a near-peer on some of the missile technologies. Those are two areas that I think are most vulnerable, the most concerning.
FP: How can U.S. companies help the government prevent China’s theft of IP?
MG: You know, Google set up an AI research facility in Beijing. It’s that kind of participation where we have to be very careful. My comment to Google is, “OK, if you’re going to go do business with them, you need to be able to get the United States government’s assurance that you’re a) not transferring technology to the Chinese military and b) that the Chinese military isn’t using your technology to go and commit human rights violations.”
If you look at what’s happening to the local population in eastern China, that’s a tragedy, and they’re using technology to do this, to monitor what’s going on in that population through cell-powered phones. Please, give us your assurance, Google, that you are not out there facilitating these human rights violations. That’s my message to that company.
FP: But Google and other U.S. companies see China as a huge market. What pushback are you seeing from these firms?
MG: They have a fiduciary responsibility to their stockholders. I get that. I ran a health care company. But at the same time, you have a higher obligation. Like in health care, I had a higher obligation to do the right thing for the patient and do no harm, and no matter whether we made profit or not, we had to take care of the patient. A company that lives in America has a higher obligation to take care of our country to protect our people. We want our businesses to make a profit, and we don’t want to give away the security of our nation to generally a country that has not been that friendly to us.
FP: Where does this conflict with China end? Do you think that there will be some kind of conflict, or do you think that we can coexist?
MG: The critical thing for us is to maintain our military, economic, and diplomatic strength, information, and influence globally. But layered over that is alliances. Having great relationships with India, a democracy, is really important. The Indo-Pacific, Japan, South Korea, Taiwan, and Australian alliances are important. Australia has actually been stronger on Huawei than even we have. Australia is leaning forward in the foxhole on this Huawei stuff, to put it in military terms.
FP: What are the downsides to provoking China?
MG: Very clearly, as we go forward and they transition to a much stronger nation with global influence, we don’t want to create an enemy. But they’re already doing things like stealing our technology, and that’s why I think President Donald Trump, he is the first one to really see this. China needs to know we see something going on because this has really been going on for years. And you’ve got the Defense Department sitting over there going, “Hey guys, hey guys.” You’ve got the State Department over there saying, “Hey, let’s do more business. Let’s do more deals.” And now the government as a whole is beginning to say, “Woah, this isn’t cool.”
So, if that’s confrontational to the Chinese, well too bad. Stop stealing our stuff.