US warns that Beijing uses ‘wide variety’ of methods to steal trade secrets

The Chinese government’s aggressive push to dominate emerging technology such as artificial intelligence, quantum computing, and biotechnology make Beijing the “primary strategic competitor” to the U.S., the National Counterintelligence and Security Center said in a notice published Friday.

The threat from the Chinese government with respect to these technologies is particularly threatening to U.S. national security because of its “well-resourced and comprehensive strategy,” which employs “a wide variety of legal, quasi-legal, and illegal methods” in pursuit of both technology transfers and intelligence gathering, the notice warned.

This information transfer takes place in the shadows—through traditional intelligence activities, intellectual property theft, co-opted insiders, front companies—but also through less overtly nefarious activity such as science and technology investments, academic collaboration, mergers and acquisitions, and legal and regulatory actions, according to the NCSC.

The notice urged companies take steps to protect their “crown jewels,” with such measures as scrutinizing suppliers, partners, and investors, strengthening insider threat programs, and strengthening cyber security and hygiene. It urged individuals in these areas to beware of phishing attempts, and to better understand talent-recruitment objectives and methods.

Tension between the U.S. and China related to technology competition is not new. Huawei, a global telecommunication equipment company based in Shenzhen, was put on a U.S. trading blacklist in 2019 over national security concerns. Strains between the two countries have continued to tighten, with cybersecurity specialists warning that Beijing-aligned hackers have sought to breach American companies to steal a wide range of U.S. trade secrets.

The NCSC is “prioritizing its industry outreach efforts,” the notice said, to raise awareness of particular nation-state threats from the Chinese and Russian governments.

Along with A.I., quantum computing, and biotechnology, the notice also flagged threats associated with autonomous systems and semiconductors. While continued international collaboration and trade in these areas has some benefits, the notice warned, each has its own particular threats.

With respect to artificial intelligence for instance, the Chinese government “possesses the might, talent, and ambition to potentially surpass the U.S. as the world’s leader in the next decade if current trends do not change,” the notice warns. “A.I. is also deepening the threats posed by cyberattacks and disinformation campaigns that Russia, the PRC, and others are using to infiltrate our society, steal our data, and interfere in our democracy.”

Quantum computing also poses particular dangers with respect to the ability to decrypt most commonly used cybersecurity protocols, risking economic and national security communications, the notice states.

“Whoever wins the race for quantum computing supremacy could potentially compromise the communications of others,” it read. Competitor nations are “recruiting America’s human talent to advance their quantum programs,” and some “foreign nations spend substantially more than the United States on their quantum initiatives, putting them better positioned to recruit individuals.”

Quantum industry representatives urged more Congressional funding for the chips needed for quantum computing at a recent White House summit, arguing that “the availability isn’t there right now,” FedScoop reported Oct. 5. Friday’s notice warned that the U.S. is “heavily dependent on a single company in Taiwan for producing its leading-edge chips, and has significant dependence on China for mature node logic chips.” Disruptions to that supply chain risk both economic and security issues, it said.