Chinese Industrial Espionage

Technology Acquisition and Military Modernisation

William C. Hannas, James Mulvenon, Anna B. Puglisi

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781135952617
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Intelligence & Espionage
• Index: Politics & International Relations

This new book is the first full account, inside or outside government, of China's efforts to acquire foreign technology.

Based on primary sources and meticulously researched, the book lays bare China's efforts to prosper technologically through others' achievements. For decades, China has operated an elaborate system to spot foreign technologies, acquire them by all conceivable means, and convert them into weapons and competitive goods—without compensating the owners. The director of the US National Security Agency recently called it "the greatest transfer of wealth in history."

Written by two of America's leading government analysts and an expert on Chinese cyber networks, this book describes these transfer processes comprehensively and in detail, providing the breadth and depth missing in other works. Drawing upon previously unexploited Chinese language sources, the authors begin by placing the new research within historical context, before examining the People's Republic of China's policy support for economic espionage, clandestine technology transfers, theft through cyberspace and its impact on the future of the US.

This book will be of much interest to students of Chinese politics, Asian security studies, US defence, US foreign policy and IR in general.

1
China’s History of Relying on Western Technology

In the 21st Century, if a particular country fails to be in the lead in science and technology, it will be difficult for it to maintain its economic activities and international standing.

Qian Xuesen

¹

Despite early advances in technology, modern China² has struggled to regain its technical prowess in the midst of political upheavals, outside interventions, civil war, and bad policies. In the late Qing to early Republican era, Chinese leaders began efforts to import technology and send promising students abroad to “learn from the West.”³ Many of these students came back to lead aspects of China’s development and reform, and many in the later waves went on to play critical roles in China’s nuclear, space, and missile programs.⁴ The concept that best captures the focus of the earlier phase, put forth in 1878 by Zhang Zhidong

in his essay Quan Xue Pian

, is the principle of ti-yong or “keep China’s style of learning to maintain societal essence and adopt western learning for practical use.” While much has changed since the late 1800s, this formula of using skills learned from the West to make China strong has colored not only the post-Qing period but survives to this day, as it is a focus of China’s 2006 to 2020 Plan for S&T development and the foundation for much of what this book is about.

Although not stated as such, the founding leaders of the People’s Republic of China did not reject the ti-yong concept. China’s post-1949 development, for example, depended critically on Soviet aid, scholars, and designs. Reforms to its S&T infrastructure during this period reflected Beijing’s closer ties to the Soviet Union and emphasized central funding, a centralized academy, and five-year plans. The subsequent Soviet “betrayal” in the late 1950s and early 1960s substantially shaped the way in which foreign support was to be sought, as many in Beijing blame the Soviets for their setbacks, despite the upheavals brought about by their own disastrous policy choices. None of these upheavals had as profound an impact on China’s development – or lack thereof – as the Cultural Revolution (1966–1976), which brought science and technology to a halt, with the exception of a few military programs such as nuclear weapons and missiles. This last and most grandiose of Mao’s “struggles” closed the universities and left China in technological shambles to compete with the West at its zenith of development. This “lost decade” as it is called⁵ is still felt today as China tries to rebuild its university system and import Western-trained talent to re-create its scientific infrastructure.

This chapter provides the historical context for our discussion of China’s technology transfer practices. We will show that while each time period is unique, with its own set of challenges, a common factor throughout has been the importance of foreign technology in China’s strategic vision, implemented in large part by students and scholars, who use the skills, knowledge, and goodwill afforded them while abroad to bring foreign technology “back” and transform China’s universities, companies, and defense industries into direct competitors of the United States.

“Self-strengthening” and reaching out towards the West⁶

Defeated by a technologically superior West in the Opium Wars (1842, 1860) and, far worse, by a Japan that had learned from these same Western powers (1895), China embarked on a cautious path to engage the West, not to become a full member of the world community but as a way to protect itself from further humiliation.⁷ This engagement was characterized by a quest to “save” China through science. Because the focus of China’s exam system was on literary and classical texts, there was no venue – and no incentive – in the traditional system for Chinese students to study modern science and technology. Any exposure to science took place at missionary schools set up by foreigners throughout the country which, while lambasted as vanguards of imperialism, played a transformative role in the evolution of Chinese attitudes toward education.⁸

During this period, the efficacy of the exam system was questioned and its role in holding back the development of modern science debated. The exam system was eventually abolished in 1905. However, while the promotion of “Western” science and educational reform continued, there remained an ingrained belief in Chinese cultural superiority and that the two – science and culture – could be put into separate bins.⁹ John Fairbank, the great historian of China, perhaps described it best as China’s leaders of the time clinging to the idea that the country could “leap half-way into modernization,” using Western science and technology to support traditional Chinese society.¹⁰ The same idea is evidenced in PRC science and technology policy literature even today.

This dualist approach was captured by Zhang Zhidong in the term tĭ-yòng (simplified Chinese:

, traditional Chinese:

), a concept framed during the reform era at the end of the Qing Dynasty (1644–1912). The term is made up of two Chinese morphemes: tĭ, meaning “essence”, and yòng, meaning “practical use.” It came to describe a method of self-strengthening whereby China would maintain its own style of learning to keep the “essence” of society, while at the same time using Western learning for “practical application” in developing its infrastructure and economy.¹¹ While probably not the original intent, China’s own press today often describes the adoption of foreign systems, technologies, or ideas as being “X with Chinese characteristics”

which retains the core notion of cultural separateness.

Another outcome of the debate was the formation of the Chinese Educational Mission in 1872, which altogether sent 120 students aged 12–15 to the United States to study.¹² They were placed with local families, with some attending prep schools to learn English before attending universities. Their “mission” was to learn Western science and engineering, in the hope that some would attend the US Military Academy at West Point, then return to China and pass on the knowledge and skills they acquired.¹³ By 1881, changes in both China and the US¹⁴ – including the passing of the Chinese Exclusion Act – prompted the Qing government to discontinue the program and the students returned home, many without having graduated. By some accounts, the reason for the change of heart was concern that the students were “losing touch with the Chinese culture and becoming completely westernized.”¹⁵

Despite the important knowledge they acquired while studying overseas, upon return to China these students were excluded from higher level official positions and their loyalty was questioned.¹⁶ Their experience forecast the fate of returnees in more recent times, who complained initially of being shunned by establishment colleagues. Professionalism eventually spoke for itself and many veterans of the mission went on to contribute to China’s development. Their numbers included the first presidents of Qinghua and Tianjin universities, the first Prime Minister of the Republic of China and 17 naval officers. Some 13 of the group served in other diplomatic positions and 14 were chief engineers or managers on the railroads.¹⁷

Benefiting from Western support during a period of transition

In terms of our topic, we identify the period from the fall of the Qing Dynasty (1912) through the warlord era (1916–1927), the Republican era (1927–1937), war with Japan (1937–1945), and the founding of the People’s Republic in 1949, as ...