William C. Hannas, Research Professor and Lead Analyst — Innovation in the Crosshairs: Countering China's Industrial Espionage

Summary

Written testimony of William C. Hannas, Research Professor and Lead Analyst at Georgetown University's Center for Security and Emerging Technology, before the U.S. Senate Committee on Small Business & Entrepreneurship, dated July 23, 2025, for a hearing on countering China's industrial espionage. The testimony describes China's foreign technology acquisition as a state-backed system and divides its transfer practices into legal, illegal and extralegal categories, with examples of each. It states that small businesses are especially vulnerable because of scarce research funds, shrinking talent pools and limited venues for redress. It proposes five measures, including sharing data on transfer practices with U.S. firms, clear guidelines on what is legally permissible, foreign agent registration for certain groups, and reporting of China contacts by recipients of U.S. government funding.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

    Testimony before the U.S. Senate Committee on Small Business & Entrepreneurship
                                           on
         “Innovation in the Crosshairs: Countering China’s Industrial Espionage”

                                       William C. Hannas
                              Research Professor and Lead Analyst
              Center for Security and Emerging Technology, Georgetown University
                                         July 23, 2025

Chair Ernst, Ranking Member Markey, distinguished members of the Committee and staff, I am
grateful for the opportunity to testify on this topic.

I am a founding member of Georgetown University’s Center for Security and Emerging
Technology, where I track technology threats posed by China. Prior to that, I was a Senior
Intelligence Service officer at CIA managing the same portfolio. These efforts led to two books
on Chinese industrial espionage in 2013 1 and 2021 2 and to other studies on the topic.

My interest in Chinese foreign tech transfer began as a graduate student preparing a thesis on
China’s cultural predisposition for holistic thought, which has served China well in practical
terms but hinders progress in basic science—and has plagued China since antiquity. I bring this
up to emphasize that China’s reliance on foreign ideas has historical roots not easily overcome.

Another factor that drew me to the topic was the discovery that China treats foreign technology
acquisition as an academic discipline—科技情报学 or “S&T intelligence study”—on a par with
other scientific fields, replete with degree programs, how-to manuals, academic journals, and
career positions, supported by legislation and some 100,000 “S&T intelligence operatives.” 3

So, the notion that China’s “informal” transfer of foreign technology is done by opportunistic
individuals is pure myth. This is a state-backed, soup-to-nuts system that has been running at the
central government’s direction since the 1950s and is not abating, even as China’s indigenous
accomplishments grow. 4




1
  William C. Hannas, James Mulvenon, and Anna Puglisi, Chinese Industrial Espionage. (New York and London:
Routledge, 2013).
2
  William C. Hannas and Didi Kirsten Tatlow, eds. Beyond Espionage: China’s Quest for Foreign Technology
(New York and London: Routledge, 2021).
3
  William C. Hannas and Huey-Meei Chang, “China’s STI Operations: Monitoring Foreign Science and Technology
through Open Sources,” Center for Security and Emerging Technology, January 2021,
https://cset.georgetown.edu/publication/chinas-sti-operations/.
4
  Ibid.
It's impossible to condense volumes of research into five minutes but here are the basics: China
uses three types of transfer practices: legal, illegal, and extralegal—the last category so named
because they occur without supervision and their legality is unknown.

Illegal transfers run from insider operations, patent infringement, and reverse engineering to the
hacking and clandestine exploits we read about in the press. China tech espionage cases are so
numerous that ODNI issues two annual reports: one on China, and one on the rest of the world.
Noteworthy examples include next-generation battery technology, composites for jet engines,
and self-driving technology.

Legal transfers done through China-based U.S. subsidiaries, start-up accelerators, targeted hires,
direct and indirect investment, mergers and acquisitions, and tech-for-trade agreements are easy
to spot but hard to counter because U.S. participants and oversight officials often confuse “legal”
with “in the U.S. interest.”

Finally, there are a dozen categories of “extralegal” venues that China uses, including front
organizations for deniability, paid short-term visits to state debriefing centers, overseas technical
support guilds, online recruiting and, of course, China’s human talent recruitment programs.

In a 2023 book on artificial intelligence 5 we gave examples of U.S. tech firms in China, such as
Microsoft, Intel, and IBM, working with China on AI development and credited by alumni of the
programs as critical to China’s success. In the same book, we named ten types of venues used to
effect transfers from foreign academics, such as school-to-school “partnerships,” co-authorship,
and a practice called “using foreigners to draw in foreigners” (以洋引洋).

These practices threaten U.S. businesses large and small. The latter are especially vulnerable
owing to a scarcity of research funds and investment capital, shrinking talent pools, fewer
opportunities to commercialize breakthroughs, inadequate due diligence, and limited venues for
redress. The impact on our proprietary technology, while not quantifiable, is obvious from the
importance China attaches to this exploitative enterprise—acknowledged by Chinese scientists,
policymakers, and business entrepreneurs.

So, what can be done? First, we must appreciate that the reason this is a problem at all is
because our lead has shrunk to the point where theft matters, whereas before we were so far
ahead it didn’t matter. Rebuilding U.S. research, entrepreneurship and productive capacity—
independently of whatever China is doing or stealing—is the only sure way out.

Meanwhile, we propose five commonsense measures. 6 They are:


5
  William C. Hannas and Huey-Meei Chang, eds., Chinese Power and Artificial Intelligence, (New York and
London: Routledge, 2023).
6
  See William C. Hannas and Huey-Meei Chang, “Unwanted Foreign Transfers of U.S. Technology: Proposed
Prevention Strategies.” Center for Security and Emerging Technology, September 10, 2021, for a more complete
list. https://cset.georgetown.edu/article/unwanted-foreign-transfers-of-u-s-technology-proposed-prevention-
strategies/.
1. Data on China’s transfer practices should be gathered and shared with U.S. firms and
academic compliance offices. Persistent, dedicated efforts are needed to track China’s activities
as they evolve and change to evade the sunlight.

2. Clear guidelines on what is legally permissible should be communicated to foreign actors
contemplating research in the United States, and to U.S. persons doing business in China.

3. Members of China’s overseas support guilds, talent recruitment programs, lobbying groups,
and other United Front operatives should register as foreign agents.

4. Recipients of U.S. government funding should report contacts with or travel to China to
minimize China’s ability to benefit from U.S. federal and state-level investment.

5. Finally, there are opportunities for U.S. authorities to stand China’s transfer apparatus on its
head by seeding these venues with persons disposed to support U.S. interests.

We are past the point where this problem can be ignored. The gap between tech breakthroughs
and consequences is measured now in weeks, which puts a premium on keeping what we invent.

Thank you for the opportunity to address this important issue.

Wm. C. Hannas
Professor
Georgetown University


File and source

File

Hannas_Testimony.pdf

Size

188,804 bytes

SHA-256

7e43d075b5732fba1b357e12d9089d1ab6620d1a915f6a78281c7e4922a1ed9f

Our copy

Hannas_Testimony.pdf

Original

No public link identified.