CNBC.com:
WASHINGTON – U.S. intelligence officials have issued a stark warning: America’s status as a global superpower depends on maintaining a lead in five key technologies – and America’s rivals are trying to steal every one of them.
Officials said they are concerned that foreign theft of American technologies could not only rob the United States of economic leadership in the key sectors, but could threaten the country’s ability to even remain active in the industries at all.
The five technologies identified by intelligence officials are:
Officials cited legal and illegal activities, particularly those conducted by China, that have crippled competitiveness in sectors such as steel and solar panels. They also pointed to China’s wipeout of the Australian rail industry as an example.
“We don’t want what happened in those other industries to happen here,” said Michael Orlando, acting director of the National Counterintelligence and Security Center, which falls under the Director of National Intelligence. When asked what the impact would be if the U.S. loses supremacy, he said: “It could be severe. We’ve got to focus on these industries because we can’t afford to lose them.”
In a new report, the NCSC wrote that “these sectors produce technologies that may determine whether America remains the world’s leading superpower or is eclipsed by strategic competitors in the next few years.”
In each area, officials said, adversary nations have used a blend of legal and illegal methods – ranging from hiring talent to mergers and acquisitions to hacking and old-fashioned spycraft – to steal and replicate American technology.
Over the past several months, officials have briefed a small group of executives and academics on the dangers to their research. Now that the report is public, officials plan on a more aggressive outreach to industry and universities.
Officials said many private sector business leaders fail to appreciate that the outreach they get from Chinese and Russian entities for everything from joint ventures and partnerships to mergers and acquisitions is part of a national strategy by those governments to acquire those technologies and replace the American firms that are producing them.
Intelligence agencies fear that U.S. firms will not only lose their edge, but will be entirely pushed out of the technology sectors crucial to the 21st century.
“Its not just the loss of intellectual property, but the loss of a complete business model” said Edward You, NCSC’s national counterintelligence officer for Emerging and Disruptive Technologies. He said vulnerability is particularly acute in health technology. “Because of our short sightedness, we may wake up one day and discover that we have become health care crack addicts and China has become our pusher.”
Their goal is to explain to companies and universities that they are on the receiving end of a sophisticated, and often devious, effort by foreign governments to make off with valuable technology — and that some transactions that appear to be simple business deals are more dangerous to the country.
“People are having trouble understanding the bigger picture here and the ways that legal and illegal come together,” Orlando said. Any particular deal could be attractive on the individual merits, but American business leaders should recognize that these offers aren’t coming on the merits.
“It wasn’t just because it was a good investment,” he said. “It was because it was part of this larger plan.”
Intelligence officials, however, stopped short of recommending “decoupling” the U.S. and Chinese economies or of stopping the flow of students and employees from China and Russia, citing an awareness that collaboration can be mutually beneficial.
An overall area of concern is the United States losing its ability to develop and manufacture its own supply chain of biological and health care supplies — a vulnerability that became all too clear during the Covid-19 pandemic and could be even worse during the next one, according to You.
“We’re dependent on them,” he said. “They could develop a countermeasure before anybody else does. An effective defense is the equivalent of an offense. They can withhold supply like they did with masks. They have all the strategic advantages.”
Artificial intelligence
The report found that China “possesses the might, talent and ambition to potentially surpass the U.S. as the world’s leader in AI in the next decade if current trends do not change.” Officials cited the 2020 U.S. indictment of two Chinese hackers working with the Chinese Ministry of State Security for their part in a 10-year hacking campaign against a wide range of Western targets, including a UK-based AI firm.
Officials also expressed concern about Russia, citing MIT’s 2019 announcement that it would extend its partnership with Russia’s Skolkovo Institute of Science and Technology and the Skolkovo Foundation. MIT said the partnership would focus on “strengthening research collaborations between individual faculty members at the two institutions.”
American officials pointed out that the U.S. Treasury Department imposed sanctions on Viktor Vekselberg, who headed the Skolkovo Foundation, in 2018. (The university removed him from its Board of Trustees after the sanctions announcement.)
Quantum computing
The intelligence community report found that quantum computers — which can, in principle, use the unique properties of atoms and photons to solve certain problems much faster than ordinary computers — will pose national security and economic challenges.
“A large scale quantum computer could potentially allow for the decryption of most commonly used cybersecurity protocols, putting at risk the infrastructure protecting today’s economic and national security communications,” the report said.
In the race to develop practical quantum computers, the officials said, the winner will have a tremendous strategic advantage. The report noted that foreign competitors are recruiting American experts to advance their own quantum programs.
“Whoever acquires a quantum computer can break every encryption system we have here,” said Orlando. “And quantum radars can detect our stealth aircraft and submarines.”
Bioscience
Officials were particularly critical of China’s WuXi Biologics, which purchased Bayer’s manufacturing plant in Germany, Pfizer’s manufacturing plant in China and CMAB Biopharma Group in China. The Chinese company is also building manufacturing plants in Delaware, Massachusetts and Ireland.
Because of the company’s enormous manufacturing capacity, American bioscience companies that produce vaccines and other biotech products may find themselves using Chinese controlled plants by default. “They don’t have to steal our intellectual property anymore,” said You.
“If you want to scale manufacturing, we’re dependent on Chinese manufacturing, so we’re going to have to give them the IP [to produce the products].”
Semiconductors
The fragile nature of the semiconductor supply chain is well known, but the report found that the U.S. is heavily dependent on a single company in Taiwan. It also found that adversaries can get access to the supply chain and put compromised chips in U.S. commercial and defense systems.
Officials singled out a wave of Chinese acquisitions in the space, including Chinese private equity firm Wise Road Capital March purchase of South Korea-based MagnaChip for $1.4 billion.
Autonomous systems
The report concluded that autonomous systems also present a potential security threat, by expanding the type of target hackers will be able to go after in the future and by gathering an enormous amount of data on drivers in the Unites States.
Officials cited a September report that the Chinese had illegally purchased an Italian-based military drone company in an effort to gather autonomous technology. Officials flagged the 2019 arrest of a former Apple employee who was charged with stealing autonomous vehicle secrets from Apple with plans to pass them to a Chinese competitor.
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