China is positioning itself to supplant America as the world's next superpower through "economic aggression" and "relentless theft of US assets", the Trump administration has told a powerful Congressional committee.
Assistant Director of counter-intelligence Division, FBI E W "Bill" Priestap told lawmakers during a Congressional hearing on Chinese espionage activities that after the World War-II, the US and its allies created an international order that has led to greater peace, prosperity and human rights than at any other time in human history.
The Chinese government has been exploiting this order while simultaneously trying to challenge and replace it. The resulting double standards are everywhere, he said on December 12.
"China tries to dominate Internet governance to benefit Chinese telecom companies, yet China censors its own Internet and eliminates data privacy," Priestap alleged.
"It is alarming that the Chinese government's economic aggression, including its relentless theft of US assets, is positioning China to supplant us as the world's superpower," he alleged.
A Chinese police officer becomes President of Interpol, yet that official later disappears into China's opaque criminal system, accused of vague crimes and never seen again. China ratifies the UN convention on the law of the sea, yet builds artificial islands in disputed waters, he said.
"China claims to champion the developing world, yet China's loans create debt traps and undermine sovereignty. The Chinese government pursues its goals by any means necessary, some are clearly illegal like economic espionage and computer intrusions.
"Even those that appear legal often rely on deception, such as front companies or digital backdoors. Some are lawful but not reciprocal, exploiting the openness of free nations. That's why investigations and judicial actions are critical, but we need an even broader response to this threat," the FBI official said.
According to John Demers, Assistant Attorney General, National Security Division in the Department of Justice, China is driven by a desire to be at the forefront of 10 critical technologies laid out in its 'Made in China' 2025 plan.
"No one begrudges a nation that generates the most innovative ideas, and from them, develops the best technology, but we cannot tolerate a nation that steals the fruits of our brainpower, and that is just what China is doing to achieve its development goals," he said.
China has turned the tradecraft of its intelligence services against American companies, taking trade secrets and other sensitive commercial information through computer intrusions and by co-opting company insiders, Demers alleged.
"From underwater drones and autonomous vehicles to critical chemical compounds and inbred corn seeds, China has targeted advanced technology across sectors that align with China's publicly-announced strategic goals," he said.
"The playbook is simple: rob, replicate and replace; Rob the American company of its intellectual property, replicate that technology and replace the American company in the Chinese market and one day in the global market.
"It's no wonder that from 2011 to 2018, more than 90 per cent of the department's cases alleging economic espionage on behalf of a state involve China," Demers said.
Christopher Krebs, Director, Cybersecurity and Infrastructure Security Agency at the Department of Homeland Security, said the US advise companies on the risks of doing business in a complex and unpredictable environment like China that includes forced technology transfer, limited transparency and a lack of privacy. In a globally integrated world, what happens over there can quickly impact operations in Washington.
Demers said the challenges being faced are exemplified by the case of Micron, a Boise, Idaho semiconductor company.
Micron controls about 20 to 25 per cent of the USD 50 billion market for a basic kind of computer memory known as dynamic random access memory (DRAM). It's a critical component of a wide range of computer electronics. Until recently, the Chinese could not make DRAM; they had to buy it from companies like Micron, he said.
In 2016, the Chinese authorities set out to change that. First, at the highest levels, the Chinese government publicly identified the development of integrated circuit technology, which includes DRAM, as a national economic priority, he said.
Then it invested more than USD 5 billion to start up a company, Fujian Jinhua Integrated Circuit Company, for the sole purpose of designing, developing and manufacturing integrated circuit chips, specifically DRAM, Demers said.
And that same year, having never made a single computer chip, this company announced a partnership to manufacture DRAM with a Taiwan semi-conductor foundry known as UMC, he said.
"There was only one problem: According to our indictment that we unsealed last month, neither company had ever made advanced DRAM. So how could they possibly manufacture it together less than a year after Fujian Jinhua had been founded?"
"According to the indictment, by luring Micron employees to steal trade secrets from Micron and bringing them to UMC, who would then transfer the technology to the Chinese state-owned enterprise, pursuant to the company's technology cooperation agreement," Demers added.