Arlington, VA

China’s ability to access critical technology, from intellectual property to microchip designs, could ultimately erode the technological superiority of the United States and its allies, particularly in the strategically significant Indo-Pacific region. In a new report, “Economic Statecraft: How China Legally Accesses Foreign Technologies to Build Military Capabilities,” CNA examines the legal methods China uses to obtain foreign technology in order to advance its own national security agenda — while undermining U.S. commercial and security interests.

China uses a series of legal yet problematic economic tools to gain access to the technology and intellectual property they use to increase their military and national security advantage.

According to the report, the use of these economic tools involves four key tactics:

  • Buy it (through legal arms purchase)
  • Bargain for it (via market access rules)
  • Bet on it (by investing overseas)
  • Boost human capital (through academic and professional exchange programs)

As detailed in the report, these methods all fall within legal bounds — but that doesn't make them any less troubling when it comes to bolstering China’s technological advantage. By benefitting China's position overall, these methods further have the potential to shift the global balance of power away from the U.S. and its allies. Closing the knowledge gap in the U.S. national security community about this issue is vitally important for addressing it effectively. Measures that policymakers can take to close that gap, such as partnering with industry and working with academia, are discussed in the report.

"Because China is in the news every day, we risk overlooking how their investment in a U.S. company or their talent acquisition programs supports their defense objectives," says lead report coauthor April Herlevi. Adds lead coauthor Rose Tenyotkin, "Additionally, since these methods are legal, and often subtle, we have observed a gap in awareness by the broader public. Many in the national security community are aware of these concerns but the analysis necessary to uncover these patterns will require the right tools and expertise."

The full report can be found at https://www.cna.org/centers/cna/cip/economic-statecraft.