Sojeong Lee, Jackson Craig Scott, Krista E. Wiegand
This policy report examines the impact and consequences of the acquisition of science and technology research from the United States and South Korea to China by extra-legal and illegal means. China has strategically prioritized the acquisition of foreign technology through both legal and illegal means as part of its comprehensive strategy of increasing its competitive advantage in power. The Chinese government implements a “whole-of-society” approach to technology acquisition, leveraging multiple entities including the Ministry of State Security, state-owned enterprises, private companies, universities, and military organizations.
The consequences of Chinese technology transfers are far-reaching and significant:
- For the United States, economic damages include job losses, market share erosion, and lost profits were estimated in 2017 to be between $225–600 billion annually, with costs higher today.
- For South Korea, a technological powerhouse in semiconductors and other advanced industries, the threat is particularly acute. The most notable impact of Chinese technological espionage on the South Korean government is potential damage to South Korea’s national security and economic interests in national core technologies produced by South Korea, including semiconductors, shipbuilding, and electronics.
- Chinese science and technology acquisition targets three critical sectors in both countries:
- In government, China directly compromises national security by accessing classified information and military technologies, including US space capabilities. Even technology developed for civilian purposes has been applied to enhance China’s military capacity, which raises significant concerns if artificial intelligence, quantum computing, biotechnology, and other areas of development are applied to weapons systems.
- In private industry in both countries, China has employed both direct and indirect strategies to gain access to South Korean and US intellectual property. South Korea is particularly vulnerable to direct industrial espionage because it has deep economic and industrial linkages to the Chinese semiconductor industry and production. US industries are often most targeted by forced technology transfers through joint ventures and coercive business practices, which require US companies to turn over control of their technologies in exchange for market access in China.
- In academia, China has successfully recruited researchers from both countries, resulting in unauthorized technology transfers and, in the US, the use of federal funds for research and development whose products ultimately benefit China.