China has an extensive system for acquiring foreign technology. However, as other countries become more cautious, this is becoming more difficult. As a result, China may turn more frequently to illegal methods, according to a report by FOI.

Most states engage in the pursuit of foreign technology. This takes place both legally and openly, such as through research collaborations, talent recruitment, and licensing agreements, or through illegal methods, such as industrial espionage or circumventing export controls.

China’s efforts to obtain foreign technology are therefore not unique, notes Tobias Junerfält, a researcher at FOI’s Department of Eurasian Security Policy and author of the report China’s Technology Transfer Ecosystem: Key Actors and the Case of China Electronics Technology Group Corporation.

“China stands out because it has developed a sophisticated technology transfer ecosystem involving actors from every part of the system, shaped by state policies over several decades,” says Tobias Junerfält.

Seeks to attract foreign experts

The risks associated with the transfer of critical technologies to China are a highly topical issue. Like the rest of the EU, Sweden has strong commercial and academic ties to China, but also to the United States, which is engaged in a geopolitical power struggle with China—one in which semiconductor technology has become a central point of contention. As a result, semiconductors are among China’s top priorities in its efforts to gain access to foreign technology.

In the report, Tobias Junerfält examines the actors involved in what he calls China’s technology transfer ecosystem and the methods they employ—both legal and illegal. The report is based on a comprehensive review of international sources, including Chinese ones.

“By ecosystem, I mean the broad spectrum of Chinese actors who, often under state control or support, participate in collective efforts to acquire and exploit foreign technologies for the benefit of domestic industry,” says Tobias Junerfält.

He categorises the ecosystem’s actors into five groups, all ultimately controlled by the Chinese Communist Party. The first category consists of China’s State Council and its various departments, including the national security apparatus. The second category is the military. The third category covers academic institutions such as universities, national science academies, and various research laboratories.

The fourth category comprises organisations linked to the United Front, the Communist Party’s strategy for extending its influence both domestically and internationally.

“The United Front is an old strategy aimed at political influence and infiltration in various forms. A key player is the United Front Work Department, a Party body that oversees United Front activities, one of which is facilitating technology transfers. In addition to Party organs, professional and academic associations abroad play an important role in this regard,” says Tobias Junerfält.

These efforts also support China’s extensive talent recruitment programs.

“They target foreign experts, including Chinese nationals abroad, whose knowledge they seek to exploit. Individuals may be invited to China or serve the United Front’s interests while remaining abroad—out of patriotism, in exchange for payment, or under coercion.”

The fifth category consists of commercial entities, particularly companies in the defence industry and sectors producing dual-use technologies—such as semiconductors—as well as various financial intermediaries.

Defence conglomerates use shell companies

Tobias Junerfält’s report contains a case study of China Electronics Technology Group Corporation (CETC), a vast state-owned defence conglomerate composed of both major research institutes and companies, including various defence laboratories. CETC is a key supplier to the Chinese military, providing everything from radar systems to navigation technology and UAVs.

“At the same time, CETC contributes to China’s system for military-civil fusion, for instance through investment funds and as a supervisory body for universities focused on defence electronics. CETC is a hybrid entity that acts as both a governmental, academic, and commercial actor, illustrating how these spheres are interconnected,” says Tobias Junerfält.

CETC engages in both joint research and commercial collaborations with foreign actors, spanning civilian technology as well as dual-use technologies. Examples include the production of solar panel components in Turkey, research on 5G technology with universities in England, and electronics manufacturing with defence companies in Russia.

“Various research institutes within the conglomerate have also been involved in circumventing export controls on military-grade semiconductors, for instance by exploiting shell companies in the United States,” says Tobias Junerfält.

More industrial espionage to be expected

China’s attempts to gain access to other countries’ technology have long been a focus of attention in the United States, but awareness of the risks is now increasing in Europe as well, according to Tobias Junerfält. On both sides of the Atlantic, initiatives are being introduced to strengthen export controls, investment screening, and research security.

“There are strong indications that China is facing growing restrictions on acquiring foreign technology through legal channels, such as imports, corporate acquisitions, and international partnerships. At the same time, China’s strategic objectives seem unchanged. It follows that illegal and dubious methods are likely to become increasingly important.”

China will likely make greater use of industrial espionage and front organisations, according to Tobias Junerfält. Actors such as the patriotic diaspora and the Ministry of State Security are also expected to play a larger role in efforts to obtain foreign technology. At the same time, he believes that certain mostly legal methods—such as talent recruitment and the collection and analysis of open-source information—will remain important for China.

Tobias Junerfält emphasises that China’s growing capacity for innovation does not contradict its continued efforts to gain access to foreign technology.

“This is especially true in certain technological fields where China remains heavily reliant on foreign sources, such as semiconductors. At the same time, creative adaptation—the process of refining and advancing foreign technology within China—remains a central part of the country’s approach to innovation.”