1
CONTENTS
I. Overview ................................................................................................................................. 3
A. Background ...................................................................................................................... 3
B. China’s Technology Policies Persist ................................................................................ 7
II. China Continues Its Unauthorized Intrusions into U.S. Commercial Computer Networks and
Cyber-Enabled Theft of Intellectual Property and Sensitive Commercial Information ............... 10
A. Introduction .................................................................................................................... 10
B. Rising Incidence of Chinese Cyber-Enabled Theft against the United States ............... 11
1. The Increasing Frequency of Chinese Cyber-Enabled Theft ..................................... 11
2. Continuing Threat to U.S. Companies from China’s APT10 ..................................... 12
3. The Increasing Sophistication of Chinese Cyber-Enabled Theft ............................... 13
C. Major Criminal Indictments of Ongoing Chinese Government Economic Espionage
against U.S. Aerospace and High-Technology Companies ...................................................... 13
1. China’s Campaign to Steal Commercial Aerospace Technology .............................. 14
2. China’s Campaign to Steal Semiconductor Technology from the United States ....... 17
D. China Conducts a Global Espionage Campaign to Obtain Intellectual Property and
Sensitive Commercial Information ........................................................................................... 19
1. Australia...................................................................................................................... 19
2. Japan ........................................................................................................................... 20
3. The European Union and Member States ................................................................... 21
4. South Korea ................................................................................................................ 21
III. China’s Unfair Technology Transfer Regime for U.S. Companies in China ....................... 22
A. Introduction .................................................................................................................... 22
B. U.S. and Foreign Companies and Other U.S. Trading Partners Continue to Share U.S.
Concerns ................................................................................................................................... 23
1. Companies .................................................................................................................. 23
2. Other Trading Partners ............................................................................................... 24
C. China Has Made Only Incremental Changes to Foreign Investment Restrictions ......... 25
1. Changes to Foreign Ownership Restrictions .............................................................. 25
2. The Automotive Sector as an Illustrative Example of China’s Continued Use of
Foreign Investment Restrictions ........................................................................................... 27
IV. China’s Discriminatory Licensing Restrictions .................................................................... 29
V. Outbound Investment ............................................................................................................ 31
A. Introduction .................................................................................................................... 31
B. Actions by the United States and Other Trading Partners to Enhance Investment Review
Processes ................................................................................................................................... 33
1. Actions by the United States ...................................................................................... 33
2. Actions by Other Trading Partners ............................................................................. 33