China, science and technology: Advancing geopolitical aims

Executive summary

Context:

• Internally, when promulgating to its members the speeches of Xi Jinping, General Secretary of the Chinese Communist Party (CCP), party documents and instructions, the CCP speaks of an ideological struggle between systems in which the People’s Republic of China (PRC) will gain domination over the United States (US). Externally, its foreign propaganda system derides the notion of a new cold war, and speaks of ‘win-win’ or ‘a community with a shared future for mankind’;
• Xi is clear that dominating the new sciences and technologies is the main means by which the PRC can supplant the US in the world order and change global governance and values;
• The scope of this Report does not include a consideration of the possible effects of the second presidency of Donald Trump, President of the US. However, it is worth noting that a failure to adopt measures to protect the United Kingdom’s (UK) science and technology in line with the measures recommended – or variants of them – could lead to severe tensions with the US Government, with adverse effects on trade and other important areas of cooperation, for example under the Five Eyes intelligence sharing alliance.

Questions this Report addresses:

• Are the CCP’s objectives for science and technology development a threat?
• What are the dangers of allowing technology flow to and from the PRC?
• How can Britain mitigate these threats while maintaining a balance in economic and scientific cooperation?

Key findings:

• The CCP is clear that holding key core technologies in its own hands is the only way to guarantee economic and national security. Its ambitions for science and technology development constitute a threat to others. The party applies a ‘whole of state’ approach in using technology to advance its geopolitical aims. It matters not whether a company is state or privately owned, since both must serve CCP aims;
• The governments of free and open countries have yet to adjust to the threat of both the outflow of their technology to the PRC and the inflow of Chinese technology. The latter risks the use of Chinese technology in critical national infrastructure (CNI), which could be disrupted at a time of conflict. The outflow risks British technology being used for military or repressive purposes;
• Three factors have made it difficult for governments of free and open nations to react appropriately to the threat posed by the CCP’s objectives for science and technology:
  • There is an overestimation of the ‘punishment’ the CCP is able or willing to inflict if foreign countries take measures to protect themselves;
  • In advising or applying pressure on government, businesses, banks and their lobbyists sometimes place their short-term interests above longer-term and wider national security interests;
  • Chinese companies, aware of possible legislation coming down the track, are ‘metastasising’ by establishing foreign companies or joint ventures (but in practice whose ultimate ownership and technology are from the PRC) in order to get around future restrictions.

Recommendations:

• Trade, investment, and cooperation on global goods with the PRC should continue, but from a position where security has first been assured. This requires His Majesty’s (HM) Government to:
  • Produce and publish a PRC strategy, outlining a plan for increased research and intelligence in government (from central to regional) on the capabilities and direction of Chinese science and technology, and the ways they pose a threat, while also providing an outline for balanced engagement in other areas; 
  • Officially recognise within the government that the PRC is a threat and that more thorough implementation – and possibly amendment – of existing security and procurement laws is needed;
  • Establish a government scientific advisory board to advise on the appropriateness of technological collaboration or investment with the PRC. It would work closely with the existing, but reinforced, Research Collaboration Advisory Team. It would also advise on areas of technology where the concept of ‘trusted suppliers’ should be enforced;
  • Establish a coordinating body to oversee planning and implementation of protective measures across government. Currently, no such body has sufficient focus. The remits of the Joint State Threats Assessment Team (JSTAT) and the National Cyber Security Centre (NCSC) do not cover the waterfront of the science and technology threat;
  • Better resource the Investment Security Unit to ensure more thorough implementation of the National Security Investment Act (NSIA), including mandatory reporting for all cases involving the PRC, and improved government market monitoring. Strengthen other defences, such as the Academic Technology Approval Scheme and rigorous use of the ‘debarment list’ under the Procurement Act, in order to keep out Chinese technology which is a threat to national security;
  • Place the PRC on the ‘enhanced tier’ of the Foreign Interests Registration Scheme (FIRS) under the National Security Act, thereby requiring UK entities working with the PRC to declare such work;
  • Strengthen the powers of the Advisory Committee on Business Appointments (ACOBA), to ensure that after retirement, ministers and senior officials do not prejudice national interests by inappropriate use of information gained from their time in government. This would also help to ensure that while still in office, the decision making of ministers and officials would not be influenced by the effects on possible future job offers;
  • Reduce the need for hi-technology startups to sell themselves to Chinese entities by boosting the National Strategic Security Investment Fund, HM Government’s corporate venturing arm for dual-use advanced technologies. The government should take a golden share in at risk companies.