Should American companies give China access to advanced military technology?
The answer should be “no,” but surprisingly it’s legal and has occurred many times. Essentially, American companies are helping one of America’s adversaries catch up.
What’s the deal? China’s economy is booming but largely closed to foreign investment. So China dangles a lucrative carrot in front of American companies, offering access to business opportunities in China in exchange for the transfer of sought-after technology.
Officially, this is all for civilian projects. But China does not operate by the rule of law. As a communist country, the state controls nearly every aspect of civilian life. As such, the government exerts enormous influence and control over both “state-owned” and “privately-owned” businesses.
As a result, dual-use technology that has both civilian and military applications can easily be transferred to China’s military.
For example, GE formed a joint venture with state-owned Aviation Industry Corporation of China in 2011, sharing cutting-edge avionics technology. The primary supplier of Chinese military aircraft now has an enhanced ability to produce high-performance cockpit controls and displays, as well as communications and navigation systems.
Under a similar arrangement, IBM systematically transferred high-end computing technology to China. A working group of experts from the National Security Agency and Energy Department report that a “loss of leadership in HPC (high-performance computing, or supercomputing) will severely compromise our national security.”
This is all part of a strategic Communist Chinese strategy to become the world’s leader in science and technology. Chinese investment in the United States increased 900 percent from 2010 to 2016, with much of that investment targeted at critical American technology, infrastructure, and data.
Why isn’t the government doing something to stop this?
Chinese or other foreign investment that threatens America’s national security should be stopped by the Committee on Foreign Investment in the United States (CFIUS). This interagency committee is tasked with vetting foreign investments and recommending the President block those that threaten U.S. national security.
The problem is that CFIUS is a Cold War relic and unprepared to counter the threats posed by the modern global economy. CFIUS hasn’t been substantially updated since the Ford Administration.
Our adversaries, China in particular, are aware of CFIUS’ deficiencies and are actively exploiting them.
That is why Senate Majority Whip John Cornyn (R-TX) and I introduced landmark national security legislation to modernize and strengthen CFIUS to better protect America from “weaponized” foreign investment.
Our Foreign Investment Risk Review Modernization Act has received bipartisan support and is endorsed by The White House, Defense Secretary Mattis, Attorney General Sessions, Treasury Secretary Mnuchin, Commerce Secretary Ross, and hundreds of Generals, security experts, and major companies. A Congressional hearing on our legislation is scheduled for next week.
To be sure, we are not opposed to all foreign investment. The United States was founded on liberty, including free markets. Chinese investments in many non-critical sectors, including textiles and manufacturing, have benefitted our community.
However, the modern world and interconnected global economy present new challenges and threats. We must be smarter about what foreign investment we allow, giving more focus to the national security review and emerging threats. My bipartisan legislation focuses specifically on these threats, and gives our government agencies the necessary tools to fight back.
China doesn’t play by the rules, and for too long we’ve let them get away with it. Thankfully, President Trump has the resolve to fight back. Along with tariffs and an “America first” attitude in negotiations, my national security legislation is an important part of President Trump’s efforts to make China play fair.
Congressman Robert Pittenger (NC-09) is Chairman of the Congressional Task Force on Terrorism and Unconventional Warfare, Vice Chairman of the Subcommittee on Terrorism and Illicit Finance, and serves on the House Financial Services Committee, with a special focus on supporting small businesses, community banks, and credit unions.