From Espionage to Diplomacy: Understanding and Confronting China’s Multifaceted Threat

Guest post by Antonio Graceffo

For decades, Western democracies, including the United States, believed that as the People’s Republic of China (PRC) liberalized its economy and citizens experienced an improved standard of living, both the government and the people would embrace the advantages of democracy. The anticipation was that China would open up to the world, transform its internal political system, and actively participate in the rules-based international order. Simultaneously, there was optimism that the growing interdependence in trade and economy between the United States and China would diminish the threat from the PRC, thereby reducing the likelihood of war.

Since China’s WTO accession in 2001, the expected transformation hasn’t occurred. Under Xi Jinping’s leadership, the country has grown more closed and restrictive. Xi’s explicit goal is for China to emerge as the world’s dominant power by 2049, extending dominance to cyberspace and outer space with the development of space weapons. He has repeatedly expressed the determination to resolve the Taiwan issue, even using force if necessary, escalating the likelihood of U.S.-China war more than ever.

China employs a comprehensive whole-of-government approach and military-civil fusion, integrating private enterprise and government entities to pursue its strategic policy objectives against the U.S. and its allies. This multifaceted threat manifests across various domains, including military, space, economic, cyber, espionage, and diplomatic. Beijing’s central planning ensures that these domains complement and support each other.

In their recent report, the U.S. Congress Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party highlighted that the People’s Republic of China (PRC) employs a complex network of industrial policies, including subsidies, forced technology transfer, and market access restrictions. This intricate web distorts market behavior, fosters global market dominance, and increases U.S. dependency on PRC imports. A concrete example of the collaboration across multiple domains is evident in China’s pursuit of funds and technology to elevate the People’s Liberation Army from third to first in overall firepower. Consequently, Beijing has actively encouraged Chinese companies to list on U.S. stock exchanges, securing funding from American investors. Notably, money from U.S.retirement funds and investment banks is now directed towards supporting research and development in China, thereby contributing to the modernization of the People’s Liberation Army (PLA).

China employs its intelligence agencies, state-backed hackers, and graduate students in conducting industrial espionage to acquire crucial technology and intelligence for the People’s Liberation Army (PLA). Article 7 of the National Intelligence Law of the People’s Republic of China explicitly mandates that “All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of.” This legal obligation implies that every Chinese company, graduate student, and researcher in the U.S. is bound by Chinese law to engage in espionage for the Chinese Communist Party (CCP).

Furthermore, Chinese technology used by U.S. citizens, government agencies, and companies can act as a Trojan horse, facilitating data collection. This prompted the U.S. Congressional report to express concern, stating, “The widespread adoption of certain PRC-developed technologies in the United States poses a significant risk to U.S. national security and data protection concerns and threatens long-term U.S. technological competitiveness.”

On the diplomatic front, the PRC seeks to challenge U.S. dominance by fostering coalitions through initiatives like the Belt and Road Initiative (BRI),BRICS, and the Shanghai Cooperation Organization (SCO). These groupings aim to undermine U.S. primacy and reshape the international order in a manner more favorable to China. This strategic approach involves disregarding international court rulings on sovereignty in the South China Sea, redefining the term genocide to exclude China’s actions in Tibet and Xinjiang, and ignoring patent and international property protections. Additionally, it entails diminishing transparency in international investment, aid, and even securities listings.

China’s diplomatic alliances are notably characterized by close ties with heavily-sanctioned and questionable actors. These include Russia, marked by a “no limits partnership,” North Korea with a mutual defense agreement, Pakistan under the banner of the “Iron-Clad Brotherhood” Iran in a comprehensive strategic partnership, Cuba as “comrades and good brothers,” and Venezuela as an “All-weather Strategic Partnership.” Additionally, China maintains diplomatic connections with the Palestinian Liberation Organization (PLO) and the Taliban government in Afghanistan, exchanging ambassadors with the latter.

Highlighting the extent of these alliances, in July of the previous year, China, Russia, and Iran jointly participated in a naval exercise named “Security Bond-2023” in the Gulf of Oman. Furthermore, plans for this year include the three nations conducting drills in the Persian Gulf.

The threat posed by China’s coalition building is not a distant hypothetical but a current reality. North Korea has dispatched 100 containers of munitions and military equipment to Russia for potential use in Ukraine. Russia has also received drones from Iran. Iran is actively supporting groups such as Hamas, the Houthis, and Hezbollah.

There are suspicions that China is assisting Iran’s nuclear program, and Chinese weapons have been identified in Gaza.

To effectively counter the threat posed by China, it is imperative to first acknowledge its existence—a point that some Americans reject due to concerns about perceived illiberality in singling out a specific country or group. However, considering the intelligence-gathering activities of Chinese companies and entities in the U.S., they qualify as enemy agents under the Foreign Agent Registration (FARA).

The U.S. Congress Select Committee has put forth several recommendations to address the China threat. Notably, the Committee suggests providing increased funding and authority to the Committee on Foreign Investment in the United States (CFIUS) and the Commerce Department’s Bureau of Industry and Security (BIS). This is crucial for preventing the Chinese Communist Party (CCP) from gaining access to U.S. technology through investments in the U.S. or funding from U.S. entities investing in Chinese companies.

Furthermore, measures should be implemented to prohibit the U.S. military, government, and contractors from installing Chinese tech. The existing chip ban, export bans, and prohibitions on advanced technology sales to China should be expanded. This expansion should encompass preventing the CCP from acquiring artificial intelligence, supercomputing, quantum technologies, biotechnology, advanced materials, optics and sensing, advanced energy research, and space-based technologies.

By cutting off China’s financial resources and thwarting its access to new technology, we can curtail its capacity to form coalitions and advance the development of the People’s Liberation Army (PLA). This, in turn, is pivotal for safeguarding U.S. national security in the long run.

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