METHODOLOGY: OVERT
- Many of the methods used by China to acquire UK technology, IP and data are entirely legal under UK law. Indeed, in October 2020, the Acting NSA made it clear that "there is much licit Chinese activity in this country that we welcome and that we want to continue … there is no way that we can cut ourselves off from China".[1]
- We have already considered China's overt use of Academia to acquire information at the 'front end'—i.e. at the research or development stage. Once technology has been developed, and is in use by a company, China exploits all possible avenues to acquire it by legitimate means—whether that be through licensing agreements, buying the company, obligations placed on foreign companies investing in China, opportunities offered by trade shows, or influencing standards-setting bodies to favour Chinese products. The DNSA told us in December 2020 that "[China] understand[s] the interdependencies between all of those things. So it's a very sophisticated joined-up programme of work that seeks to exploit whatever is the most expeditious route to the Intellectual Property that they're targeting."[2]
Licensing agreements
- In the past, China has made use of legitimate licensing agreements, entered into in good faith by UK companies, to advance its technological capabilities. Through such agreements, China pays for the technology and the skills, equipment and expertise it requires to produce the technology, without taking ownership of the IP itself.
- For example, in the 1970s, China entered into an agreement with Rolls-Royce to manufacture, under licence, the Rolls-Royce Spey Mk 202 jet engine. This gave China access to advanced technology that it could not, at that time, produce itself. In time, the Chinese produced their own variant of the Mk 202 engine, which was subsequently used in the JH-7 fighter-bomber aircraft used by the People's Liberation Army (PLA) (and produced for export, with the potential to undercut UK and other Western defence exports).[3]Thus, British technology is used today by the Chinese armed forces to advance the CCP's ambitions.
Foreign Direct Investment
- Notwithstanding a notable, more recent, hardening of the Government's rhetoric and action towards China,[4] it is likely that the UK Government—as well as the Devolved Administrations and local government—will continue to court investment from China to a greater or lesser degree. The (then) Prime Minister said in October 2021: "I am no Sinophobe—very far from it. I'm not going to tell you that the UK Government is going to pitchfork away every overture from China."[5] Indeed, it was reported in February 2022 that the (then) Prime Minister had asked the (then) Department for International Trade to set up a meeting
- ↑ Oral evidence—NSS, *** December 2020.
- ↑ Oral evidence—NSS, *** December 2020.
- ↑ Written evidence—HMG, 18 April 2019.
- ↑ In September 2020, we were told that the Government was "building a more comprehensive approach to our economic security in relation to China". (Written evidence—HMG, 14 September 2020.)
- ↑ 'Boris Johnson Says U.K. Doesn't Want to Turn Away Chinese Investment', Bloomberg, 18 October 2021.
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