U.S. Tech Companies Partner with Firms Linked to Chinese Military

Businesses including Microsoft, IBM work with Chinese firms pursuing ‘civil-military integration’

Xi Jinping, Harry Shum
Harry Shum, right, Microsoft Executive Vice President of Technology and Research, demonstrates Micosoft's HoloLens device to Chinese President Xi Jinping / AP
November 5, 2015

U.S. technology companies are increasingly forming partnerships with firms that sell advanced equipment to the Chinese military, raising concerns among analysts that American businesses are indirectly aiding Beijing’s defenses as it assumes a more aggressive posture in regional disputes and threatens U.S. security.

In one recent example, Microsoft announced a partnership with the China Electronics Technology Group in September while President Xi Jinping visited the tech giant’s offices. The agreement will provide Windows 10 operating system technology to "Chinese users in specialized fields in government institutions and critical infrastructure state-owned enterprises," a press release said.

The technology group, a colossal state-owned entity in China with dozens of subsidiaries and research institutes, said on its website that it is contributing to an "important national project to build large military and civil use of electronic information systems" and that it is pursuing a "military and civilian integration path of development." Security analysts say that China’s Communist Party has prioritized the development of dual-use information technology with both commercial and military applications, blurring the line between the two sectors.

The Microsoft partnership with the Chinese technology group, ostensibly an agreement to provide computer systems for civilian purposes, could thus also benefit the Chinese military. While the group produces civilian products such as washing machines, it also develops laser and radar technology for the Chinese military and supervises research institutes that helped to complete China’s first nuclear bomb and guided missile.

The electronics group additionally states on its website that it "will bear in mind the sacred mission of national defense and national economy construction, adhering to the ‘national interest above all else.’"

Microsoft did not respond to multiple requests for comment. U.S. companies have said that they follow all U.S. export laws in their dealings with China and that they treat all foreign partners equally.

A recent report from Defense Group Inc., a security firm that provides analysis to the Department of Defense, also expressed concerns about agreements between IBM and several Chinese companies that provide technology to Beijing’s government and military, the New York Times reported.

"IBM is endangering the national and economic security of the United States, risking the cyber security of their customers globally, and undermining decades of U.S. nonproliferation policies regarding high-performance computing," the report said.

Edward Barbini, an IBM spokesman, disputed the report’s findings and told the Times that it "wholly mischaracterizes IBM’s initiatives in China."

"All IBM sales and technology licensing agreements comply with U.S. export regulations and require that partners in any country do so as well," he added.

However, Rick Fisher, a Chinese military expert at the International Assessment and Strategy Center, said that current U.S. laws are not sufficient to prevent China’s People’s Liberation Army from taking advantage of commercial agreements involving American businesses.

"Right now we simply do not have the means to protect Americans from China's large and growing exploitation of its deep commercial ties with the United States and other countries, to gather technology to fuel its military growth," he said.

Defense officials have previously accused China of stealing sensitive data from U.S. weapon systems through cyber attacks, including the Lockheed Martin F-35 stealth fighter jet. More partnerships between U.S. tech companies and their Chinese counterparts, which have close ties to Beijing’s military, could enable even more access to American technology.

At an exhibit in July, the Chinese government promoted its goal of "civil-military integration" by showcasing commercial companies that also produce products with military applications, Fisher said.

A new Chinese aerospace company that produces commercial aircraft, A-Star, also "revealed a line of military aircraft optical sensors, one of which looked like it was copied from the Lockheed Martin F-35’s Electro Optical Targeting System," he said. "A famous Chinese cyber theft raid against Lockheed in about 2009 may have gathered information on their EOTS."

"Perhaps A-Star was given that information to reproduce the Lockheed system," he added. "We don't know for sure but this is plausible."

Fisher recommended that the U.S. government consider restarting the Coordinating Committee on Multilateral Export Controls, a multinational body that previously controlled U.S. and NATO exports to the Soviet Union and China for security reasons.

"As all Chinese companies are ultimately controlled by the Communist Party and are increasingly being tasked to serve the Party's demands for enhanced military power, it is time for the U.S. government to build far better tools to protect American intellectual property and security," he said.

The U.S. government has previously halted some exports to China due to security concerns.

The Commerce Department blocked Intel earlier this year from exporting technology to four technical centers in China that run a supercomputer and were found to be acting contrary to U.S. national security.

The agency said the computer system is "believed to be used in nuclear explosive activities," though members of the project have claimed that it is mostly used for scientific research. One of the Chinese companies that helped build the computer, Inspur, now has a partnership with IBM.

The Defense Group report also noted that a former Chinese rear admiral superintends the transfer of IBM technology to its partner, Beijing Teamsun Technology, underscoring the close relationship between the Chinese military and civilian technology companies.

Critics say that the U.S. government and companies are neglecting the current security environment in the Asia-Pacific region and Beijing’s aggressive actions, including its construction of military facilities in the South China Sea and cyber attacks that have stolen sensitive information from millions of U.S. workers.

"The Chinese companies are required to do the best for their government. American companies say they are only answerable to their shareholders," James McGregor, chairman of the greater China region for the consulting firm Apco Worldwide, told the Times. "So who is looking out for the United States?"

Published under: China , Military