Amid the COVID-19 pandemic, global restrictions on foreign direct investments hit a global high in 2020, with countries across Europe, the Indo-Pacific region and the United States enacting greater restrictions on investments in strategic technologies. The pandemic exacerbated concerns of reliable and trustworthy supply chains. The US government is increasingly concerned about China’s attempts to acquire advanced technology from abroad, through illicit and legal activities such as foreign direct investment (FDI), joint ventures and intellectual property (IP) theft. In the Indo-Pacific, key US treaty allies with advanced technology of their own, including Japan, Australia and South Korea, are also grappling with China’s attempts to acquire emerging and advanced technology within their own countries. Similar to the US, these allies are taking measures to balance the benefits of economic cooperation with China while seeking to protect national security industries and interests. Finding the right balance is crucial to maintaining a robust alliance with Washington.
The US cannot continue to address the issue of countering Chinese advanced technology acquisition alone; it needs the assistance of and close policy coordination with Australia, Japan and South Korea. China’s technology acquisition strategies extend to these advanced technology countries, which are key US regional allies. Moreover, US allies have their own specific business interests with China, while simultaneously sharing Washington’s concerns about China’s technology acquisition strategy. As US treaty allies, cooperation among these three countries entails the sharing of data and very sensitive advanced technologies with national security and military applications. Much of this sharing involves civil and military technology research and development, co-production, co-development and joint ventures and partnerships. As such, the US should focus its defense and advanced dual-use technology policy objectives through increased close and continuous consultation and cooperation with its partners and allies in the region. By doing so, such efforts could reduce the potential for critical information and technology leakage and unauthorized transfer of critical technologies to China. This applies to dual-use technologies that can enable Chinese military programs that could ultimately degrade US and allied military advantage in the Indo-Pacific and beyond. A comparison of these three countries, all of which are at different stages in addressing this issue, can help provide insight on where each country is in the process and how multilateral initiatives can be most effective.
Japan appears to have taken the most proactive measures in the Indo-Pacific region to prevent Chinese acquisition of dual-use and military technologies. In January 2020, Japan’s Ministry of Economy, Trade, and Industry (METI) published a report that highlighted critical technologies of concern and enumerated the sophisticated ways in which “countries of concern” seek to acquire those technologies. Originally designed to promote Japan industries and export commodities internationally, METI focuses on preventing the diversion, exploitation or military-associated end-use of Japanese advanced technologies that could prove detrimental to Japan’s foreign policy priority of a free and open Indo-Pacific.Download full report
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- Publication Date: 3/1/2021