Today Senator Josh Hawley introduced the China Technology Transfer Control Act of 2019 to stop the Chinese military’s acquisition of sensitive American technology and formally admonish China for its predatory trade practices.

In recent years, China has aggressively acquired sensitive U.S. technology through intellectual property theft and unfair trade practices. Once China has the technology, it invariably finds its way to the Chinese military.

“It’s time to acknowledge that China acts more like an adversary than a friend,” said Senator Hawley. “For too long, China has exploited American innovation to undermine our values and threaten our security. This legislation is an important step toward keeping American technology out of the hands of the Chinese government and its military.”

Background

In recent years, China has aggressively acquired sensitive U.S. technology to advance its military capabilities through intellectual property theft and unfair trade practices. China seeks to surpass the U.S. in high tech manufacturing through its state-sponsored “Made in China 2025” initiative and has exploited American technology to advance its military capabilities in two major ways:

  • “Trade-Technology-for-Market:”
    • The “Trade-Technology-for-Market” policy requires American companies to form joint ventures Chinese state-owned partners and share strategic technology in order to gain access to the Chinese market. This strategic technology inevitably finds its way to the Chinese military.
    • A prominent example of this is Google attempting to gain access to the Chinese market by building a censored search engine in partnership with a Chinese company.
  • Working around U.S. laws designed to confront China’s military buildup:
    • China has worked to find and exploit loopholes in American laws designed to protect sensitive American technology from falling into the hands of the Chinese military.
    • A prominent example of this is a Chinese state-controlled entity renting bandwidth on American satellites that it would be forbidden from purchasing under U.S. law. These satellites could be used to aid China in a military conflict.

The China Technology Transfer Control Act of 2019:

  • Formally admonishes China for intellectual property theft and manipulation of lawful transfer and uses of technology in ways that directly support its military objectives and threaten the United States.
  • Places all “core technologies” from China’s “Made in China 2025” strategy on the Department of Commerce’s Export Control List.
    • Once a technology is placed on the Export Control List, companies must obtain licenses to export that technology to China.
    • “Core technologies” include nearly 15 different technologies such as artificial intelligence, robotics, semiconductors, advanced construction equipment and lithium battery manufacturing.
  • Imposes sanctions on foreign entities and individuals that violate these export controls through transfer of these “core technologies” to China.