Securing the Future With More U.S.-Taiwan Exchange Programs

Posted on Wednesday, December 7, 2016 by Project2049Institute

(Source: Flickr/Photo Phiend –American and Taiwanese flags at the Chinatown gate in Washington, DC)

By: Sebra Yen

Since the severing of official diplomatic ties between the United States and the Republic of China (Taiwan) in 1979, U.S. policy towards Taiwan has stayed relatively consistent throughout the past six administrations by adhering to the Taiwan Relations Act (TRA) and President Reagan's “Six Assurances.”  Although the TRA continues commercial, cultural, and public exchanges under a de facto relationship, significant gaps remain. Much more can be done to strengthen the partnership between the U.S. and Taiwan.

The world has increasingly become more interconnected. However, Taiwan continues to be pushed out of the international community. Recently, Taiwan was excluded from the International Civil Aviation Organization (ICAO), the International Criminal Police Organization (Interpol), and a U.N.-affiliated meeting in New York on rare diseases. The United States should consider deepening its exchanges with Taiwan. Public diplomacy efforts are inextricably linked with American national security. As such, the U.S. should place greater emphasis on its people-to-people exchanges with Taiwan. 

At a time when the People's Republic of China (PRC) exhibits increasingly assertive behavior in the South China Sea and East China Sea, the U.S. and its Asia-Pacific allies should highlight the positive role Taiwan plays in the regional architecture. U.S. strategy toward the region has taken a multifaceted approach that seeks to strengthen cooperation with like-minded nations to address shared challenges. In addition to commercial engagement, expanding people-to-people ties are essential for fostering goodwill and unity with our partners and allies.

In the absence of diplomatic relations, Taiwan has received diminished time and attention in Washington. Over the past ten years, the White House has not viewed it as a priority to support Taiwan and advance the unofficial bilateral relationship. This has affected the way everyday Americans and Taiwanese have come to view each other. According to survey results reported by the Chicago Council on Global Affairs in 2014, only 28 percent of Americans would support sending U.S. troops to Taiwan in the event that the PRC invaded the island.[1] In sharp contrast, a 2016 poll in Taiwan indicated that over 70 percent of Taiwanese people believe that America would come to Taiwan’s rescue in the event of a Chinese invasion. It can be interpreted that—in addition to having a case of ‘war fatigue’ from 13 years of on-going conflict in the Middle East—this perception gap may be the natural result of many Americans having limited understanding of the TRA and the political complexity of cross-Strait relations.

Following the recent Trump-Tsai phone call, the misinformed American media further demonstrated a lack of concern and understanding regarding the nuances surrounding U.S.-Taiwan and U.S.-China relations. More exchanges, not only on the governmental level but also on the educational level, will allow for more Americans to understand Taiwan and its people better. Currently, the United States is struggling to establish a proactive international education policy and failing to meet its goal of 1 million Americans studying abroad by 2017. New and creative exchanges with Taiwan will boost U.S. foreign policy and security goals, and ultimately garner more public support on both sides of the relationship for stronger U.S.-Taiwan cooperation.

Current Public Exchange Programs

Despite the fact that the U.S. and Taiwan both have visa waiver programs that contribute to tourism on both sides—which may see a record high of over 1 million visitors this year—these types of exchanges are mainly short and business-driven. Long-term exchanges that seek to deepen people-to-people relations must be pursued as well. On the U.S. side, government-sponsored public exchange initiatives that have a Taiwan component include a variety of programs funded by the U.S. Department of State (International Visitor Leadership Program, Fulbright, Critical Language Scholarship, National Security Language Initiative for Youth, Benjamin A. Gilman International Scholarship, etc.) and Boren awards for international study. The U.S. Department of Education also has 118 universities that offer the Foreign Language and Area Studies Fellowships (FLAS) to study abroad. Language exchange programs funded by nongovernmental organizations include the Blakemore and Freeman Foundations.

On the Taiwan side, the Ministry of Education (MOE) and the Ministry of Foreign Affairs (MOFA) provide generous scholarship opportunities for foreign nationals seeking language learning, degree programs, or research (Huayu Enrichment Scholarship, Taiwan Scholarship, and Taiwan Fellowship, respectively.) The Taiwan government also sponsors the Ambassador Summer Scholarship Program for the Taiwan-U.S. Alliance, known as TUSA, which is a non-profit organization that focuses on building international friendships on the student-to-student level. In 2014, MOFA launched an international youth leadership program called Mosaic Taiwan, which is committed to better informing future American leaders through a three-week program filled with workshops and seminars in Taiwan. Finally, a unique initiative is the Taiwan Tech Trek program, which recruits young people of Taiwanese ancestry for an eight-week summer internship or research program, allowing Taiwanese-Americans to learn about Taiwan and its well-known tech industries. These programs ultimately seek to promote and improve U.S.-Taiwan relations and counter China efforts to stop Taiwan from participating in the community of nations.

Challenges With Current Programs

The U.S.-Taiwan pursuit to seek partnerships through educational and cultural exchange programs is laudable. There are, however, significant challenges with U.S. programs, particularly with the International Leadership Visitor Program (IVLP), that inhibit more meaningful exchange. IVLP is a three-week tailored individual or group program sponsored by the State Department that brings mid-career professionals and emerging foreign leaders to the United States. Former presidents Ma Ying-jeou and Chen Shui-bian are both alumni of this program. These leaders are nominated by U.S. embassies overseas, and in this case the de facto embassy known as the American Institute in Taiwan (AIT), for meetings and opportunities to engage with Americans on global thematic issues. It is through collaboration with National Programming Agencies (NPA) that these projects are implemented. Due to fact that visits by Taiwanese officials in the U.S. are seen as highly political by Beijing (former President Lee Teng-hui’s visit to Cornell in 1995 sparked the Third Taiwan Strait Missile Crisis), it is protocol that Taiwan government representatives are barred from entering the Harry S. Truman Building of State Department, the White House, and the Eisenhower Executive Office Building. Another caveat with the IVLP is the small amount of funding available for Taiwan, in comparison to China. According to State Department statistics, the FY2016 budget only allowed for 16 visitors from Taiwan, while China had 112. The small amount of attention given to Taiwan negatively impacts U.S.-Taiwan relations. More can be done to support exchanges on the government and professional levels.  

In the educational realm, there are many U.S. exchange initiatives in place that give exposure to Taiwan. However, the amount of students that go to Taiwan pale in comparison to the number of those who go to the PRC. From statistics provided for the 2013-14 year, the Institute for International Education (which is an NPA) reported that 13,763 American students studied in the PRC, while only a diminutive 801 went to Taiwan. Many American students are naturally drawn to China’s rich cultural heritage, strategic importance, and economic power (something which relates to future career prospects). However, U.S. policies and officially-expressed attitudes toward Taiwan and the PRC influence the choices made by young Americans as well. Many do not see value in learning traditional Chinese characters and view Taiwan as only a subsidiary to the PRC.

China Factor
The Chinese Communist Party (CCP) has worked hard to win the hearts and minds of the American people through its vigorous overseas propaganda efforts. Its Confucius Institutes are but one example. Confucius Institutes, which are operated under the PRC Ministry of Education, are an extension of the CCP. They have nearly 100 partnerships in the United States, with the stated goal of promoting Chinese language and culture. These institutes provide attractive financial packages to universities seeking Chinese language learning resources.[2] However, their programs engage in censorship and only allow for Party-approved rhetoric and policies to be heard. In 2014, the University of Chicago ended its partnership with the Confucius Institute due to concerns regarding censorship and limitations to academic freedom.

All American students deserve the right to freely discuss issues like the Tiananmen Square Massacre, U.S.-PRC relations, and the futures of Hong Kong, Tibet, and Taiwan. Yet, a Government Accountability Organization (GAO) report found that 12 overseas American universities in the PRC have challenges operating in a restrictive environment. Internet censorship and self-censorship are listed as two main problems. While Confucius Institutes offer generous funding to American educational institutions, the continuation of these engagements perpetuate the CCP’s authoritarian interests and leads to further marginalization of Taiwan’s influence in the world. While education initiatives between the U.S. and the PRC are important to the bilateral relationship, they tend to impact and diminish opportunities for greater American understanding of Taiwan. U.S. relations between the PRC and Taiwan should not be viewed in zero-sum terms, but the reality is that they are.

Recommendations: Innovative Exchanges To Strengthen U.S.-Taiwan People-to-People Relations

More innovative solutions are needed to re-emphasize the importance of people-to-people exchanges with Taiwan. The Taiwan Travel Act, proposed by Senator Marco Rubio (R-FL), calls for more exchange between Taiwanese and American leaders at all levels. This could alleviate the protocol challenges for Taiwanese visitors. Additionally, some bottom-up approaches are needed to tackle the challenge of current institutional practices in place that continue to discourage American students from pursuing Taiwan exchanges, including the student-run Taiwan-America Student Conference (TASC). The program, currently making plans for its fourth annual conference, was founded on the premise that American students need to think critically about the strategic and cultural value of Taiwan, and Taiwanese students need to think globally and address where they fit within the international community. Every year, students come together at TASC for dialogue and discussions on ways to confront global issues facing their respective societies. These include issues such as environmental sustainability and modern issues in education, among others. This is an excellent model for more future citizen diplomacy exchanges, given the aforementioned constraints.

(Source: Taiwan-America Student Conference – Taiwanese and American students building mutual trust and understanding through an exchange program)

Another recommendation is the establishment of a foundation that seeks to strengthen U.S.-Taiwan educational and cultural exchanges, much like the U.S.-China Strong Foundation. The U.S.-China Strong Foundation is a nonprofit organization that seeks to strengthen U.S.-China relations by investing in the next generation of leaders. Its principal goals are to increase the number of American students in the PRC and to strengthen Chinese language learning opportunities in the United States. A U.S.-Taiwan Strong Foundation would be at the center of bilateral educational exchanges. It could house programs modeled off of TASC, establishing chapters in universities and high schools, and striving to increase the number of American students in Taiwan and vice versa.

Beijing's influence operations continue to drown out Taiwan’s voice in the United States. Taiwan's democratic society is full of Chinese culture and increasingly diverse. The island nation is a paradigm of pro-American progressive values. When it comes to learning Mandarin, the PRC is far from the only option.  Defense Secretary Ashton Carter stated that a more inclusive security architecture is needed. Emphasizing Taiwan’s role in Asia is smart policy. Advancing exchanges with Taiwan requires a willingness to employ all the available tools, especially the establishment of a new foundation dedicated to this mission. Doing so will add tremendous value to U.S. foreign policy and national security outcomes in the years ahead.

Sebra Yen is an Intern at the Project 2049 Institute. He is currently a Master's candidate at The Elliott School of International Affairs at The George Washington University, where he focuses on Taiwan and Asian politics and security.

[1] Americans Affirm Ties to Allies in Asia. The Chicago Council on Global Affairs. Pg. 2. October, 2014. <>

[2] Soft Power in a Hard Place: China, Taiwan, Cross-Strait Relations and U.S. Policy. Pg. 510. Fall, 2010. 

Seek Truth from Facts: The Chinese Communist Party’s War on History

Posted on Monday, November 7, 2016 by Sebra Yen

By: Sebra Yen and Rachael Burton

The phrase "Seek Truth from Facts" was introduced to the People’s Republic of China (PRC) as a hallmark slogan of Mao Zedong and the Chinese Communist Party (CCP). The CCP’s historical narrative is a critical component of its domestic and foreign policies, as it aims to legitimize its own power and supremacy. The slogan has been used throughout the PRC’s 66-year history, and served as a political tool in Deng Xiaoping’s 1978 speech, which allowed the Party to enact much needed reforms while maintaining its authority. The Chinese Communist Party thus utilizes political work groups and education to push its narrative of history to shape and define the discourse on the Party, rule of law, and foreign policy. However, to "Seek Truth from Facts," has tragically resulted in the revision of history, human dignity, and the pursuit of “adherence to the Party.”

Expert Conference on the CCP’s War on History

On September 20th, 2016, the Project 2049 Institute hosted a conference titled “Seek Truth From Facts: The Chinese Communist Party’s War on History.” The conference brought together two expert panels that identified and assessed the impact of the CCP’s war on history at home and abroad. The conference hosted two sessions with one focusing on the Sino-Japanese War and another on the Party’s historical narratives and its impact on the ‘rise of China.’

The Sino-Japanese War

Last year, the CCP commemorated the 70th anniversary of the Sino-Japanese War, highlighting the victory and sacrifice of the Party's Red Army and the Chinese people. While reflection and acknowledgement of history is important, allowing differing analysis and an accurate depiction of the circumstances surrounding the Chinese victory pays tribute to the complexities regarding the outcome of the War.  By comparing and contrasting Japanese sources, such as Memories of Shanghai―the memoir of Iwai Eiichi―with Chinese sources, evidence suggests the Chinese Communist Party (CCP) conspired with Japan in order to weaken the Chinese Nationalist Party (KMT) during the war.

This particular view was corroborated by the first panelist’s findings, which pointed to Mao ordering Pan Hannian, the most well known CCP spy, to infiltrate the local agency of the Japanese Foreign Ministry and the Japanese Imperial Army. Mao called for Pan, as well as other communist spies, to sell military intelligence attained from the Chongqing Government (led by Chiang Kai-shek) to the Japanese Imperial Army in order to incapacitate the KMT forces, which allowed Mao time to strengthen the People’s Liberation Army (PLA).

The implications of the CCP assisting Japan are monumental. The Party was engaged in a massive United Front Work campaign to weaken the KMT's ability to stifle its influence and amass public support for the CCP under a "united campaign" against Japan. If Pan Hannian's missions had come to light, it would directly contradict the Anti-Japanese United Front campaign, where Mao himself called upon "all political parties and groups and the people throughout the country to organize an anti-Japanese united army and a government of national defense for a common fight against Japanese imperialism."[1] Later, in 1955, Pan and other communist spies were arrested. The arrests can be interpreted as a means for the CCP to cover its covert actions; evidence that points to Mao's strategy to work with the Japanese Army to the detriment of KMT forces and inevitable CCP victory. These findings contrast with the negative and often volatile Sino-Japanese narrative that we see today. For instance, it was found that Mao never publicly celebrated the CCP’s victory in the Sino-Japanese War or allowed Chinese school children to learn about the Nanjing Massacre. Reason being, Mao did not want the Chinese people to learn that it was the KMT that mainly fought Japan during the brutal war – CCP forces fled. After the collapse of the Soviet Union, and the Tiananmen Massacre, the CCP sought to further consolidate and supplement communist ideology.  In 1994, the CCP launched the ‘Patriotic Education’ campaign, which highlighted the Party winning the war, along with an increase in nationalistic, anti-Western, and anti-Japan rhetoric. In addition, the significance of the review of the Sino-Japanese War is the emphasized fact that its result heavily influenced the Chinese democratic progress, ultimately changing China’s history.

(source: The Project 2049 Institute)

Historical Narratives of the PRC and its impact on the ‘rise of China’

The second half of the conference focused on the Chinese Communist Party’s historical claims to Tibet, and the Party's use of history to consolidate national identity and its relevance to the ‘rise of China.’ An expert panel discussed various CCP policies and assessed its impact on the Chinese people, students, and beyond. 

Land Reform and The Great Famine:

The effects of the 1950-53 land reforms and the 1959-61 great famine not only demonstrate the tight control the CCP employed on media and education but also the failures of socialist policy, as millions of lives were lost.  In an effort to jump-start the PRC's economic revival, the Party subverted agrarian traditions and exploited the grievances of the "working class" in a propaganda campaign that directed hatred and aggression towards landowners instead of the Party. Since 'opening up and reform,' the Chinese government has shifted away from socialist policies and tapped into newfound nationalism. The Chinese Communist Party has continued its narrative that the West is constraining and containing China's rise, as evident in the recent Pew Poll. The poll found that 52% of the Chinese public believes the U.S. is trying to prevent China from becoming an equal power and 71% believe the U.S. is unwilling to accept China’s rise.[2]  Moreover, the reliance of using nationalism to divert from domestic issues can be dangerous, as the PRC experienced during the years of land reform and the great famine.  

The Tibetan Memorandum:

Tibet has implications on human rights, the international community, and China’s rise. The issue of China-Tibet relations has been marred by disputes based on competing historical accounts. After the 2008 uprising, the international community pushed China to address the 'Tibet issue.' As a result, Beijing hastily organized negotiations between PRC representatives and envoys of the Dalai Lama. The PRC continued to maintain that there was only an issue regarding His Holiness the Dalai Lama's return to Tibet, and denied there was a broader "Tibet Problem" related to CCP rule. However, PRC negotiators did ask the Dalai Lama's envoys to provide a more detailed explication of their positions on issues such as "genuine autonomy." In response, the Exile Government drafted and submitted to their PRC interlocutors the Memorandum on Genuine Autonomy for the Tibetan People. In order to ground their positions in international law concepts, that the PRC recognized as valid, the Memorandum drew from the 2007 UN Declaration on the Rights of Indigenous Peoples (UNDRIP), which states that self-determination, autonomy, and protection of spiritual and religious traditions are fundamental rights. The CCP's response to the memorandum―that genuine autonomy was nothing more than covert independence― served as an important indicator that the CCP continues to use historical narratives to legitimize its rule and authority over Tibet. China has viewed Tibet as an inseparable part of China since ancient times. The Tibetan side on the other hand maintains that the historic relationship is more complicated, and includes periods where Tibetan areas were not subordinate to Chinese rule, or were parts of other empires. Even under Chinese accounts, there does not appear to be direct rule until the 1950s. In essence, the two sides can never agree on history.  Though the CCP has signed many agreements and declarations, such as the 17-point agreement, the PRC's national minority laws, and the signing of UNDRIP, the CCP refuses to recognize Tibetans as a group of indigenous peoples. The Party also continues to eschew negotiations or even engage in meaningful discussion with the exile-Tibetan government (the Central Tibetan Administration) and His Holiness the Dalai Lama regarding the "Middle Way" approach. If the CCP is sincere in its own laws and agreements, then a "2.0" China-Tibet discussion should occur with a negotiating mediator and the UNDRIP as a guideline. 

History’s Use in Nation Building:

Historical narratives are important to all states, especially for nation building and cohesion. With China, this tool is used to maintain its power, and is comprised of two faces: the shameful face, which is based on the century of humiliation, and the nationalistic face, which buys strength for the Party. For example, the opening ceremony of the 2008 Olympics boasted the Party’s achievements in bringing prosperity to the country. Moreover, President Xi Jinping’s ‘China Dream’ is based on a grand historical past and nostalgia for greatness, when China was the center of a tributary system.  For many years the CCP has worked to achieve this goal and does not want to be compromised, as seen recently with its assertive behavior in the region. Historical narratives are about the future just as much as it is about the past, and the PRC wishes to return to regional hegemony, when the international system was hierarchical, placed value on order over freedom, and elite governance over human rights.

The Changing Meaning of Patriotism:

In China, the meaning of patriotism has evolved, and Chinese people who voice critical views towards CCP policies or those who struggle for democracy in China have become the target of attacks by young Chinese with deep patriotism that entwines love of country with love of Party. After the June 4th military suppression of the Tiananmen protests, national sentiments framed on a Western conspiracy to weaken China have developed substantially. The CCP pursued a path that betrayed values in exchange for the development of the nation, and it included the implementation of  patriotic education.” This education process censored the violent crackdown and focused on devotion to the Party, which warped the cause of the Tiananmen events. For those involved with the Tiananmen protests, the movement was a culmination of love of country and a desire for the government to reform. To them patriotism included the betterment of the Chinese people, society, and government ― and in extension the Party. However, patriotism was subverted by CCP national sentiments that tainted a genuine desire for peaceful reform. When more people speak out against the CCP’s usage of historical narratives in consolidating legitimacy and national development, only then can the path of truth and reconciliation be pursued.


The two panels on the CCP’s use of historical narratives provided timely analysis, as China continues to place importance on its historical accuracy as it relates to its domestic and foreign policies. Randy Schriver, President of the Project 2049 Institute, noted that it is important to understand why historical narratives are so critical to China and why the Party continues to want its people to be more patriotic and devoted to them. A directive issued by the Communist Party organization of the Ministry of Education is an example of history being used as a tool to attain the CCP's political objectives. The directive called for more "patriotic education" at every stage and aspect of schooling, including textbooks, student assessments, museum visits, and the internet. Moreover, "patriotic education" is to extend past the boundaries of the PRC through "multidimensional contact networks linking the motherland, embassies, consulates, overseas student groups, and students abroad." Moreover, this year marks the 80th anniversary of the Long March, and the Ministry of Education required 200 million children to watch a TV show commemorating the Communist Red Army. The message was meant to encourage Chinese youth to "not get soft and to follow the Communist party" in order to achieve victory. All of these recent efforts and emphasis on "patriotic education" are in conjunction with Party propaganda injecting insecurity and fear of "China" being targeted and infiltrated by hostile forces. Yuan Guiren, the Minister of Education stated that Universities and College professors must cultivate future generations to "help develop socialism with Chinese characteristics and consolidate the guiding role of Marxism in ideology."  Since historical narratives undoubtedly shape national identity, its effect can be seen in how an individual or country views itself in the region and the world. Understanding the way in which the Chinese Communist Party controls the historical narrative, as well as education and media outlets will allow for better understanding of China―and by extension the Party's―external behavior.

Sebra Yen is an Intern at the Project 2049 Institute. He is currently a Master's candidate at The Elliott School of International Affairs at The George Washington University, where he concentrates in politics and security in East Asia.  Rachael Burton is a Research Associate at the Project 2049 Institute conducting research on the United Front Work Department who contributed to the article.

[1] see "Urgent Tasks Following the Establishment of the KMT-CCP Cooperation" (Sep. 29, 1937), Selected Works of Mao Tse-tung, vol 2, pg 35-46
[2] note original statistic: 29% believe the U.S. is willing to accept China's rise

The Need for Increased Scrutiny of PRC Acquisitions of U.S. Tech Firms

Posted on Tuesday, October 25, 2016 by Project2049Institute

(Source: South China Morning Post – Chinese anti-satellite missile)

By: Charles Emmett

An often overlooked consequence of the United States’ 13 years of war in the Middle East is the insights adversaries have acquired into the technological advantages the U.S. military holds over the rest of the world. The People’s Republic of China (PRC) has taken advantage of this opportunity to study U.S. military strategy and close the technology gap. The PRC has developed counter measures such as anti-satellite missiles to disrupt communications and GPS, thereby limiting battlefield awareness.  It has built sophisticated cyber capabilities to steal technology and critical information that the PRC sees as essential for gaining information dominance for informationized warfare. Most recently the PRC claims to have launched the world’s first Quantum Radar System, which can reportedly detect stealth aircraft and is highly resistant to jamming. 
According to the U.S.-China Security and Economic Commission (USCC), the PRC has increased investment in research and development by 10 percent over the last decade and has instituted several technology development plans focused on offensive capabilities.  The report goes on to say that PRC Generals in the People’s Liberation Army (PLA) have alluded to these capabilities being aimed specifically at the United States.  The Medium and Long Term Defense Science and Technology Development Plan was instituted in the early 2000s with the goal of surmounting the technology gap between the PRC and the world’s tech leaders by 2020.  The Plan expands the number of defense laboratories engaged in basic research and establishes closer connections with civilian universities.  The plan also aims to create a more favorable environment for technology companies to promote innovation and increase the scale and channels of investment in defense science and technology.  Most importantly, it improves the ability to leverage foreign sources of technology and knowledge transfer by finding opportunities for international research and development cooperation.   This includes encouraging defense enterprises and research institutes to set up joint research centers and laboratories.1  The second critical plan is the New High Technology Plan, also known as the 995 Plan.  This plan was instituted after the accidental U.S. bombing of the PRC embassy in Belgrade, a potential cause of the intensified development of strategic weapons systems.  One of the guiding principles of the plan put forth by then Chairman of the Central Military Commission Jiang Zemin was the need to acquire foreign technology transfers by “whatever means necessary.”2   The results of these plans have been the growth of precision strike systems, command and control systems and weapons allowing the PLA to strike accurately from a distance.3   In addition to these two plans, the aspirations set out in the 12th Five Year-Plan set goals for the PLA to match first-tier global military powers. Finally, the PLA’s 2015 Defense White Paper explicitly stated the intent to increase development in advanced weaponry equipment, and in depth civil-military integration, 
(军民融合), specifically in key areas like technology.

In response to the PLA’s increased technological capabilities, in 2014 then Secretary of Defense Chuck Hagel announced the Third Offset Strategy.  This new strategy is meant to address concerns that “our military’s technological advantage is being challenged in ways we’ve never experienced before.”  The strategy focuses on developing new technologies to allow the U.S. military to maintain its technological advantage going into the future.  It also looks at developing new, innovative ways to leverage current capabilities.   Under Secretary Carter, the Department of Defense (DOD) is attempting to further this initiative by building closer relationships with private technology firms in Silicon Valley.  To help with engaging tech innovators, the DOD established the Defense Innovation Unit Experimental facility (DIUx) with offices in Silicon Valley, Boston, and most recently Austin.  DIUx is meant to streamline the process so it is easier to do business with commercially-focused companies and seeks to introduce commercial technologists to national security challenges for potential military applications. Some of the innovative technologies DIUx and DOD are concentrating on include automation and artificial intelligence (AI).  The 2017 defense budget will include $12 billion to $15 billion for experimentation and demonstration of new technologies, including AI and deep learning machines.

The U.S. military is not the only one with an increasing interest in these new technologies. The same year Secretary of Defense Chuck Hagel announced the Third Offset Strategy, the PRC also began significantly increasing its investment in innovative technologies like AI. Just in the first half of 2016, PRC investors including Baidu and state owned enterprises invested $6 billion in AI startup firms.  The increase in investment is part of a government push to develop the technology industry.  According to PRC state media, the National Development and Reform Commission, Ministry of Science and Technology, the Ministry of Industry and Information Technology, and the Cyberspace Administration of China have formulated a three year plan to speed up the development of the AI sector. This will include projects on unmanned vehicles and robots.  Undoubtedly, the PLA is seeking to incorporate such technology into its systems.  In August Wang Changqing, director of the General Design Department of the Third Academy of the China Aerospace Science and Industry Corp (CASIC)4, announced that future cruise missiles will have a high level of AI and automation.  

Accompanying the increased investment has been an increase in mergers and acquisitions by PRC buyers in the United States.  According to the Rhodium Group, in 2006 there were seven completed mergers and acquisitions. In 2014 there were 100, an increase of 1,328 percent.  The Rhodium Group also found since 2013 the majority of deals have switched from the energy sector to technology.  However, the numbers of investigations performed by the Committee on Foreign Investment in the U.S. (CFIUS)  were found to be "disproportionately low" compared to the increased number of mergers and acquisitions that have taken place.  In its latest report CFIUS states, "There is an effort by foreign governments or companies to acquire U.S. companies involved with research, development, or production of critical technologies for which the U.S. is a leading producer."  This is worrisome as there are national security implications involved with the acquisition of U.S. technology firms.   

There are recent examples of attempted acquisitions by the PRC being ruled a threat to national security.  In 2012 Ralls Corporation attempted to buy wind farms near U.S. Navy airspace where drones are tested.  Last year a U.S. chip maker, Micron, turned down a $23 billion acquisition offer from the state-owned Tsinghua Unigroup because the deal would have likely been blocked by CFIUS.  Several months later Tsinghua Unigroup side stepped CFIUS and announced it had made a “purely financial” investment of $41.6 million in Lattice Semiconductor, giving it a six percent stake in the company.  Because it is only a financial investment it was not subject to CFIUS investigation.  This is the same Lattice Semiconductor that was targeted by two Chinese residents attempting to send sensitive technologies back to the PRC without an export license.  The two were indicted in 2012 for export and money laundering violations for attempting to acquire Programmable Logic Devices (PLD), which are designed to operate in extreme climates and can be used in missiles and radar systems.  Eight years before this incident, Lattice Semiconductor was accused of illegally exporting PLDs six times to the PRC between April 2000 and July 2001, and agreed to pay a $560,000 civil penalty to settle the charges.  

One possible explanation for the increase in technology company acquisitions is the increased focus on artificial intelligence.  Artificial Intelligence is much more difficult to steal through cyber theft.  According to the DOD, “China continues to leverage foreign investments, commercial joint ventures, academic exchanges, the experience of Chinese students and researchers, and state-sponsored industrial and technical espionage to increase the level of technologies and expertise available to support military research, development, and acquisition.”  The PRC’s increased efforts are paying off.  Whereas the U.S. used to be the leader in deep learning research, it was recently surpassed by the PRC. 

As the U.S. and the PRC are engaged in a long-term strategic competition, both sides are 
increasingly investing more in technologies like AI to achieve the advantage in the battlefields of the future.  The PRC knows the promotion of dual-use technology development in critical sectors like AI is essential to building modern armed forces. Keeping with the 2015 Defense White Paper, President Xi Jinping recently urged greater cooperation between the civilian and military sectors in order to build stronger armed forces.   He has also called for the Chinese Communist Party (CCP) to reaffirm its leadership in state-owned firms to ensure that they remain “a reliable force that the party and the nation can trust and an important force in firm implementation of the central leadership’s decisions.”  Decisions such as investing in and acquiring U.S. technology firms in order to help the PLA overcome the technology gap it currently faces against the U.S. military.  If the United States government wants the Third Offset Strategy to be successful and maintain the Department of Defense’s technological advantage over the PLA, it must increase its scrutiny of Chinese acquisitions of U.S. technology firms by these state-owned enterprises.

Charles Emmett is an Intern at the Project 2049 Institute. He is currently a Master's candidate at the Josef Korbel School of International Studies at the University of Denver, where he focuses on China and U.S. National Security.

1 Planning for Innovation: Understanding China’s Plans for Technological, Energy, Industrial, and Defense Development. U.S.-China Economic and Security Review Commission. Pg. 24. July, 2016.
< for Innovation-Understanding China's Plans for Tech Energy Industrial and Defense Development.pdf >
2 Ibid., Pg. 26
3 Ibid., Pg. 135
4 <中国航天科工集团第三研究院主研发部主任王长青> and Mark Stokes for more background on CASIC published 2009. < .>

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