The Chinese Communist Party (CCP) has, for decades, treated advancing China's industries and technological level as a key priority.
This began in earnest with the programme of ‘reform and opening up’ initiated by Deng Xiaoping in the late 1970s. China then lacked advanced industries, and the equipment, infrastructure and knowledge required to nurture them. In order to build advanced industries, China had to learn from more advanced industrial economies such as those of Taiwan, the United States, Japan and Germany.
The fruit of ‘reform and opening up’ and complementary initiatives has been a highly competitive programme of knowledge and technology transfer from which China has benefitted immensely.
Most knowledge transfer has been by consensual arrangements with foreign companies seeking to maximise their profits, however, there has also been systematic incorporation of dishonest dealing, including intellectual property theft.
Knowledge and tech transfer, coupled with enormous investment in education and energy and transport infrastructure, have now transformed China into the world’s foremost industrial power, with a lead in a large number of high tech areas. The authoritarian CCP seeks to further nurture and to wield this power in pursuit of its broader goals.
China’s technological and industrial programmes are constantly evolving. For example, the CCP’s Made in China 2025 strategy identified a number of key industries in which China, it was posited, ought to dominate by 2025; this strategy is shortly to be replaced by an updated one.
Through these programmes, the CCP has over the past two decades sought to extract knowledge and technology from various industries in which British companies are world leading. These include aerospace and defence, high-end automotive technology, information technology including cybersecurity, and life sciences including pharmaceuticals.
The UK is also host to important assets in emerging sectors such as in quantum computing and artificial intelligence, which are also targets of CCP attention.
The CCP’s industrial strategies incorporate many unobjectionable tactics – such as investment in education or infrastructure, state backing for strategic acquisitions, or the embedding of industrial experts in policy making – from which the UK might seek to learn but nonetheless guard against in as much as they might harm British companies or interests.
The CCP’s industrial strategies also systematically incorporate improper behaviour – including cyber espionage and the exploitation of insider threats – which the UK might wish to challenge and deter.
For example, CCP members inside Western companies rarely, if ever, declare their membership as a potential conflict of interest to their employer, in spite of CCP rules formally obliging party members to follow orders on command, including in total secrecy.
It is also important to note that CCP programmes are not limited to the straightforward direction of state-owned entities and resources, but also typically seek to incentivise non-state Chinese entities to behave semi-autonomously in ways that nonetheless support CCP goals.
The CCP’s industrial policies have had a significant impact on the economies and societies of advanced nations. They continue to do so, and have increasingly attracted enormous political attention as powers such as the United States and the European Union seek to protect their own industrial and technological competitiveness in response. Headlines about trade wars, sanctions and tariffs reflect this process. British policymakers too must understand and adapt if they wish to grow the British economy and safeguard our long-term security.
This is the context for UK-China Transparency’s work on strategic technology. We conduct research on takeovers of important British companies by Chinese actors, joint ventures set up in China by British companies, and other interactions between entities from the two countries, including the infiltration of CCP members into British companies.
We also study what the British government is doing in order to counteract threats, mitigate risks, and exploit opportunities presented by China. Finally, we are interested in broader questions about how the changing world order is affecting British business. For example, this may include how policies motivated by technological competition with China are shaping third parties’ policies towards Britain, an example being pressure placed on the UK by the United States with regard to the blacklisting of Huawei.
In all of these areas, UKCT’s focus is on collecting and analysing primary data, instead of regurgitating less specific general material produced by others. We are focused on conducting deep research to produce original case studies unknown to the public domain and push forward knowledge and understanding.
Case study: the British semiconductor industry
Over the past 10-15 years, Chinese state and non-state actors have had a major impact on the British semiconductor industry.
Much of Britain’s strength in this complex and important industry lies in companies that provide design IP, most prominently ARM and Imagination. (A useful analysis produced by the government in 2024 suggested such companies’ activity accounts for roughly 70% of the British semiconductor industry.)
Many British companies have faced issues relating to China in recent years, whilst simultaneously seeking to grow their sales in the country.
These issues include the asset stripping of Imagination Technologies, the UK’s second-largest seminconductor company, after the Chinese government bought the company; the ‘ARM China’ saga, whereby ARM’s China branch CEO appropriated the company seal for years and tried unilaterally to split the company; and allegations of Chinese efforts to transfer manufacturing and key knowledge away from Nexperia and Dynex sites in Manchester and Lincoln respectively.
UKCT has published the first part of an in-depth analysis of the Imagination case and continues to monitor and publish on the industry.
