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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00553R000100170001-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 17
• Document Creation Date: December 21, 2016
• Document Release Date: December 20, 2007
• Sequence Number: 1
• Publication Date: April 1, 1983
• Content Type: FORM

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STAT
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Directorate of Secret
intelligence
I* 2 )
Dimensions of China's
Technology Acquisition
Program
Secret
EA 83-10062
April 1983
Copy 418
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Directorate of Secret
Dimensions of China's
Technology Acquisition
Program
This report was prepared by of the
Office of East Asian Analysis. It was coordinated with
the Technology Transfer Intelligence Committee.
Comments and queries are welcome and may be
addressed to the Chief, Development Issues
Branch, China Division,
Secret
EA 83-10062
April 1983
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Secret
Overview
information available
as of 21 March 1983
was used in this report.
Dimensions of China's
Technolo Acquisition
Program
which are based outside of China in Hong Kong and the West.
Since 1978 China has substantially expanded its efforts to acquire Western
technology, establishing an increasingly sophisticated bureaucratic appara-
tus at home and abroad. Most technology is acquired through trade and
commercial dealings, which now are more diverse and numerous than at
any time since the founding of the PRC in 1949. The decentralization of
foreign trade has permitted China's localities to build on Beijing's national-
level programs to acquire technologies appropriate to their individual
needs. China has also entered into nearly 150 joint ventures, almost half of
In recent years, China has also signed science and tehnology agreements
with a dozen Western nations and has sent some 15,000 students,
researchers, and scholars abroad for study. Eventually these agreements
will pay considerable dividends in specific scientific and research fields,
such as nuclear energy and management.
China's technology acquisition efforts are heavily oriented toward the
United States. The science and technology agreement with the United
States is the broadest of those signed with Western countries since 1978.
Three-fourths of all the students sent abroad in the last four years have
come to the United States. China also maintains a major technology
acquisition effort in the United States involving its Embassy, three
consulates, and some 35 commercial operations, including 17 Sino-
American joint ventures.
States.
The Chinese are expanding their covert efforts to acquire restricted
technology from the United States. Beijing has established six joint Sino-
American enterprises in the United States to provide cover for covert
collection of technology and is attempting industrial espionage. Hong
Kong, however, as China's major trade entrepot, continues to be the most
important conduit for illegal acquisition of US technologies. The Chinese
use a broad network of official and quasi-official firms for such collection
in the colony. In addition, Japan is becoming increasingly important as a
source of technology that cannot legally be acquired from the United
This Research Aid identifies the various Chinese organizations involved in
technology acquisition and is based on reporting from a variety of open and
clandestine sources. The American Embassy and consulates in the PRC
and Hong Kong have contributed considerable information on Chinese
organizations.
iii Secret
EA 83-10062
April 1983
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Secret
Dimensions of China's
Technology Acquisition
Program
China's Domestic Bureaucracy
Since 1978, China's trade apparatus, much of which
is involved in the transfer of advanced technology
from Japan and the West, has proliferated. The
primary acquisition effort has moved from the Minis-
try of Foreign Economic Relations and Trade
(MFERT) to a variety of other government bodies (see
table 1). The establishment of new national-level
organizations engaged in foreign trade and technology
transfer such as the China Metallurgical Import and
Export Corporation or the China Electronic Technol-
ogy Import and Export Corporation has been replicat-
ed at provincial levels and below
A growing number of corporations specialize in the
acquisition of military and industrial technology (see
tables 2 and 3). The operations of these organizations
are coordinated directly by the National Defense
Science, Technology, and Industrial Commission,
which can task a wide range of Chinese commercial
and technology organizations to collect special tech-
nology.
Professional and Technical Societies
Prior to 1978, professional and technical societies
were the main conduits for technical data, literature,
and exchanges with foreigners. Over the past four
years, the number of such societies has grown from 75
years as consulates have opened in New York, Hous-
ton, and San Francisco. There are now some 132
Chinese diplomats and 228 support staff in the Em-
bassy and consulates. We estimate that as many as 20
percent of them could be involved in technical acquisi-
tion. A few Chinese officials posted at the United
Nations mission and the New China News Agency, as
well as those serving as military attaches, are also
active collectors of technical and scientific informa-
tion.
Chinese Commercial Operations in the United
States. Since 1979, Beijing has set up 18 commercial
organizations, subordinated to MFERT and other
Chinese governmental organizations, for operations in
the United States (see table 4). We believe at least six
of them are heavily engaged in technology acquisition.
A smaller number also are substantially involved in
illicit collection. For example, in September 1981,
Chinese embassy officers representing Techimport
arranged to purchase a residence in a Maryland
suburb of Washington from which they are attempt-
ing to acquire restricted technologies.
to 106.
To streamline the technology acquisition process, the
Chinese Association of Science and Technology has
become the primary coordinator for China's profes-
sional and technical societies, especially in their deal-
ings with foreign contacts. Since 1978, the Chinese
have joined or reactivated their membership in 60
international and technological organizationsr_~
Overseas Channels for Acquiring Technology
Embassies and Consulates. In most embassies and
consulates, commercial and scientific officers are
assigned to collect technical information. In the Unit-
ed States the number of diplomats involved in such
activity has grown substantially over the past three
China also has established 17 commercial operations
with sponsorship or assistance from US companies
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Figure 1.
China: Distribution of Export Cases
by Commodity Value, 1979-82
Total: 1,770,340,057
^ Transportation equipment
^ Metal working machinery
? Chemicals. metalloids, petroleum products, and
^ Electronic and precision instruments
^ General industrial equipment
ment imported between 1972 and 1980 embodies 2).
relatively advanced industrial technology. Since 1980,
US-Origin Technology. China's commercial opera- a growing proportion of China's machinery and equip-
tions in the United States clearly show the scope of ment acquisitions has had military as well as civilian
the US role as a source of advanced technology. Much applications and has been obtained through relaxation
of China's $23 billion worth of machinery and equip- of US export licensing restrictions (see figures 1 and
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Chemical and petroleum equipment
^ Miscellaneous
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Secret
Figure 2.
China: Disposition of US Export Cases, 1982
Total
? Approved
Returned without action
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Student and Scholar Exchanges. The Chinese have
sent more than 15,000 students and scholars abroad
to 54 countries since 1978. The Chinese Ministry of
Education reports that some 4,000 already have re-
Figure 3.
Chinese Students in the US
turned to China. Chinese officials have stated that the
number of students going abroad will continue at 12,000
about 3,000 per year through 1985. Most of these will
undoubtedly be sent to the United States for advanced
study (see table 6).
About 5,000, or less than half, of the Chinese students
coming to the United States are officially sponsored,
and most of those who are are in graduate programs
in the physical sciences. Chinese students coming to 8,000
the United States generally stay two years. The
number of Chinese students in the United States grew
from about 25 in 1979 when relations were normal-
ized to nearly 11,000 in 1982 (see figure 3). In 6,000
addition to receiving specialized academic training,
Chinese students are also sending or taking compo-
nents, technical manuals, and professional journals
back to China. The number of students and scholars 4,000
going abroad will decline after 1984 because Beijing
has initiated measures to restrict the number of
privately sponsored students.
The Chinese Academy of Sciences (CAS) also has
established cooperation agreements with 45 countries.
This involved some 2,311 exchanges in 1981, and
CAS alone sponsored 749 graduate students and
visiting scholars abroad in 1981. A total of 2,079
individuals in 235 disciplines have gone abroad during
the last four years. According to CAS officials, about
350 of these have returned to China.
Bilateral Government Science and Technology
Agreements
China has signed major science and technology agree-
ments with a dozen Western nations since 1978
I I I 1 1
1979 1980 1981 1982 1983a
(table 7). Prior to that time China was party to only a hydropower, health, metrology, basic physics, and
handful of such agreements, almost exclusively with management. (The United States and China jointly
"socialist" countries. From the Chinese standpoint, sponsor an executive training center at Dalian.)
one of the most active and productive pacts is the .
Scientific and Technical Agreement signed with the
United States in January 1979 containing 17 proto-
cols and annexes and providing for 31 working ex-
change programs. The most active programs are in
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Secret
Commercial and Trade Ventures in China
Licensing and technical agreements-basically con-
tracts for industrial know-how-provide China with
sharply focused applied proprietary technology. Beij-
ing has signed at least 50 such agreements. These
normally span five to 10 years and include consider-
able amounts of modern technology.
Joint Ventures.' An increasingly important, but as yet
minor, conduit for Western technology is through
joint ventures and contractual businesses (figure 4).
These bind the foreigner and Chinese partner together
technologically as well as commercially. Beijing is
establishing these at an increasing rate, particularly in
the United States, where 14 began to operate in 1982
(see table 8).
Of China's 70 joint equity ventures in manufacturing,
15 (10 in China and five abroad) are in highly
technical industries such as instruments, electronic
components, telecommunications, and computers (see
Service Centers. Foreign firms have contracted to
establish 35 service and maintenance centers in Chi-
na, primarily to facilitate commercial entry into the
China market (see table 10). Electronic instrument
makers are almost certainly transferring some propri-
etary technology through their centers. Most of the
maintenance and service centers provide Chinese with
advanced technical training.
Special Economic Zones (SEZs). China is using the
SEZs as investment magnets, but the zones have not
yet become major conduits for high technology. The
Chinese have contracted for 17 joint ventures in the
zones and claim that some 550 foreign investment and
coproduction projects worth $1.2 billion were signed
in 1982. However, of the seven joint-venture manu-
facturing operations located in the zones, there is only
one electronic components assembly plant. The others
are for metal forming and for industrial products such
as cans and aluminum frames.
The Joint Venture category includes both joint equity ventures and
contractual joint ventures. These differ from other contractual
arrangements because they share either investment (equity) or
Figure 4.
China: Technical and Licensing Agreements
by Country, 1982
Australia
France
^ Italy
. Japan
U Switzerland
US
West Germany
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Figure 5.
China: Locations of Joint Ventures
and Contracted Businesses
Inside China
Outside China
Major Covert Channels
Most of China's foreign trade and technology corpo-
rations also facilitate covert collection in the course of
their legal acquisition activities.
Some Chinese trading corporations, moreover, are
more actively engaged in covert collection than others
because of the uni
cies.
China is making increasing use of visitors to Western
countries to procure sensitive equipment and technol-
ogy. Chinese corporations also are growing more
adept at misrepresenting end users and at preparing
false documentation to finesse Western controls.
Secret 6
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Table 1
China: Expansion of the National
Foreign Trade Bureaucracy
MFERT corporations involved in trade
14
16
Other corporations under ministries and
state commissions
8
89
Total
22
105
MFERT corporations engaged primarily
in tech transfer
2
2
Other corporations engaged primarily in
tech transfer
2
24
Total
4
26
7 Secret
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Table 4
Official Chinese Organizations in the United States
Bank of China New York
China International Travel Service New York
China Interocean Company, Inc. New York
Sino-Am Marine Company, Inc. New York
China Ocean Shipping Company San Francisco
Chinatex America, Inc.- New York
Chinatex Cotton Commodity Watchers a Dallas
Ceroilfood New York, Inca New York
Sunry Import and Export Corporations Paramus, New
(Chinatuxu)a Jersey
China National Equipment and Machinery New York
Import and Export Corporationa
China Arts and Crafts USA, Inca New York
China National Chemicals Import and Exportsa New York
China National Technical Import Corporationa Techimport
Chinatuxu Lumber and Timber Officea Seattle,
Washington
China United Trading Corporationa New York
Beijing Book Company New York
China Aero-Technology Import and Export Arlington,
Corporation Virginia
Long Beach,
California
Fort Lee, New
Jersey
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Secret 8
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Table 6
China: Number of Students
Sent Abroad Since 1978 a
United States
11,000
Japan
1,000
United Kingdom
615
Canada
500
West Germany
500
France
200
Australia
100
Sweden
80
Italy
20
a The Netherlands, Switzerland, Norway, and New Zealand have 10
to 40 students in the country at any one time. Very few students and
scholars are in Eastern Europe or the Soviet Union.
9 Secret
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Table 7 Table 8
China: Science and Technology Agreements China: Joint Venture Partners
With Western Nations
France
Jan 1978
Nuclear, geological sciences
United States
Jan 1979
17 scientific areas
Italy
Oct 1978
Nuclear sciences
Nov 1981
Science
July 1982
Technical assistance, satellites
Federal Republic
of Germany
Oct 1978
Minerals, oil and gas, computers
Oct 1982
Coal development,
agricultural management,
quality control
.Sweden
Oct 1978
Industrial technology
Oct 1981
Industrial technology
United Kingdom
Nov 1978
Informational sciences
Dec 1981
Science and technology
Japan
May 1980
Nuclear fusion, computer'
sciences, oil and gas,
social sciences
Australia
Oct 1981
Science,
agriculture, forestry,
animal husbandry.medicine
EEC
Nov 1981
Energy management
Pakistan
Oct 1982
Arms and weapon technology,
nuclear cooperation
Total
Inside
China
Outside
China
Hong Kong
51
27
24
United States
44
24
20
Japan
18
9
9
Asian countries
14
11
3
European countries
17
13
4
Other
2
0
2
Total
146
84
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Table 9
Joint Ventures, 1982
Category Inside
China
Outside
China
Machine building 18
6
Consumer industries, textiles, 15
foodstuffs
3
Electronics and computers 10
5
Agriculture and fishery 5
4
Pharmaceuticals 5
0
Banking and financial services 0
3
Service and transport 1
9
0
31
Offshore oil and oil rigs 14
1
Hotels, offices, recreation centers 16
0
Total 84
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Table 10
China: Service and Maintenance Centers
by Sponsoring Country
Country
Centers
Products/Technology
Japan
11
Automobiles, watches,
motorcycles, construc-
tion equipment
United States
9
Electronic instruments,
construction equipment
West Germany
3
Automobiles, marine
equipment
Switzerland
United Kingdom
Hong Kong
Others
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