You’ve seen us report on Chinese advancements in technology and the Chinese strategic long game. A major requirement for both? Money. Money. Money. Some members of Congress are now seeking to make it harder to open the U.S. technology piggy bank.
Senator John Cornyn (R – TX), the second most senior GOP Senator is sounding the alarm on Chinese attempts to undermine US security saying the PRC is using its “tentacles” across multiple vectors and that its efforts have “altered the strategic landscape” further noting they are “not playing by the same set of rules.”
What the Senator is referring to is how China has effectively weaponized investment and insinuated itself into the US defense industrial base. The result of those efforts, along with several decades worth of successful illicit tech transfer activities, manifest in the constant stories coming out on their fighter, stealth, carrier, cyber and other technological advancements.
In an effort to halt the continued progress, Cornyn co-authored the Foreign Investment Risk Review Modernisation Act (FIRRMA), with California Democrat, Dianne Feinstein.
Cornyn said: “As [China] acquires US firms and technology and intellectual property, as well as the know-how to put it to use, the risk is that the Chinese government, which has its tentacles not just in state-owned Chinese companies, but also in so-called private Chinese firms, that it will get its hands on these capabilities and use them against us.”
If the bill passes the President’s desk, it would expand foreign investment review procedures overseen by the Committee on Foreign Investment in the United States (CFIUS), which is chaired by the US treasury secretary and seeks input from the departments of defence and homeland security, among other federal bodies.
If CIFIUS sounds familiar, you likely heard it in regards to the scandal involving the Clinton Foundation and a highly questionable Uranium One deal.
Cornyn’s warning echoes sentiments from the Trump White House, which gives China far less of a pass than previous administrations. Where Russia and the cast of characters in the Middle East have been Marcia Brady – China has usually played the part of Jan.
During his first national security strategy speech, Trump noted that “China and Russia challenge American power, influence and interests, attempting to erode American security and prosperity.” Even before the President’s consistent calling out of the PRC, inside the Defense Department they’ve been on the radar for quite a while.
An ongoing DoD study titled– “China’s Technology Transfer Strategy: How Chinese Investments in Emerging Technology Enable a Strategic Competitor to Access the Crown Jewels of US Innovation” –landed on Trump’s desk in the early days of his administration contending that China’s investment activity in the US “will directly enable key means of foreign military advantage”.
Enter Cornyn and Feinstein’s proposed response in FIRRMA, which would give CFIUS the authority to review ALL “non-passive” investments by foreign entities. To date, CFIUS only reviews transactions that give foreign entities majority control of a US company that develops, sells or licenses advanced technologies with potential military applications.
CFIUS would also be able to suspend pending transactions and impose new conditions, retroactively, on completed transactions. CIFIUS’ current charter was created to halt the transfer of dual-use technologies to adversary nations — dual-use are those technologies deemed to be adaptable to military uses. FIRRMA wants to expand that to also cover transactions that give Chinese companies control over large pools of personally identifiable information (PII).
PII could make government officials, defense contractors, and active members of the US military vulnerable to blackmail and recruitment for espionage. Forget OPM data breaches–this information would be legal and open for the taking.
“Major US companies are starting to recognise the risks here as well, and several have stepped up and endorsed this bill,” Cornyn said.
But not everyone is willing to shut down the buffet just yet. “There’s a very small group of other U.S. firms that are actively opposing CFIUS’s modernisation, having decided their bottom line is more important than our nation’s security.” Silicon Valley owes a lot to Chinese investment interest.
According to the Defense Department report referenced above, China’s four largest internet companies, Baidu, Alibaba, Tencent and e-commerce company JD.com, have invested $5.6 billion in the US tech sector since 2015–further citing “In 2015, these companies participated in 34 deals worth $3.4 billion, up from seven deals in 2012 worth $355 million.”
Additional changes proposed by FIRRMA would extend the period for CFIUS initial review from 30 to 45 calendar days, affording more time for the Intelligence Community to assess any threats to national security.
**Featured image courtesy of Pixabay