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China's National Day weaponry hits too close to home for US

Parade shows off military modernization aided, in part, by the West

China wants to "use this big killer to contain America," a retired People's Liberation Army colonel said. (Photo by Ken Kobayashi)

HONG KONG -- The show-stopping piece of technology on display in Beijing this week had -- despite its enormous size -- remained hidden from public view for years. Its existence had first been officially acknowledged back in 2014 in a cryptic mention on a provincial environmental website.

But there was nothing cryptic about the Dongfeng-41 missile that rumbled through the streets of Beijing on China's National Day. It was the centerpiece of the country's biggest ever military parade to celebrate the 70th anniversary of communist rule.

This monster missile can carry not one nuclear warhead but 10. It has the longest range of any intercontinental ballistic missile in the world, meaning that it has the capability to strike any target on the U.S. mainland. It travels at 25 times the speed of sound, enabling it to reach a target in the U.S. within around 30 minutes, defense analysts said.

And what is it for? "We want to use this big killer to contain America," Yue Gang, a retired People's Liberation Army colonel, was quoted in the Financial Times as saying. "Although we have no way to compete with you, we are now developing some unique equipment so that America does not dare to go first against us."

While the Dongfeng-41 is impressive, not to say scary, it is far from the only symbol of China's rapidly modernizing military. Xi Jinping, China's president, ordered a sweeping military restructuring four years ago and has pledged that the People's Liberation Army will become a "world-class military" within 30 years.

But as China upgrades its forces, it also creates acute dilemmas for civilian businesses from the U.S., Europe and Japan that trade with the world's second-largest economy.

Washington is ramping up its scrutiny over technology transfers to China, partly through an "entity list" that includes over 140 companies, organizations and people. The Chinese entities included on the blacklist are prevented by U.S. regulations from receiving exports of hardware, software and services from American manufacturers and from companies in third countries that include significant U.S.-made content in their products.

The issue that Western corporations increasingly face in China is that the dividing line between civilian and military technology is often fuzzy or virtually invisible. The key capabilities of artificial intelligence, semiconductors, software, robotics, satellites and other technologies can have both military and civilian applications.

Case studies set out in a report by C4ADS, a nonprofit consultancy on strategic matters, show how useful civilian technologies transferred from overseas have been to China's military modernization efforts.

In one case, technology from U.K.-based chip company Dynex helped China develop an advanced catapult system that could be used to launch warplanes from aircraft carriers, the report says.

In another example, Beijing Highlander, a leading contractor to the Chinese navy, partnered with Sweden's Consilium Group in 2004 to develop critical technology that could be used to record the data from a naval vessel's voyage, such as its position, physical status and command and control, according to the C4ADS report.

At times, it may be hard for a foreign company to understand whether the Chinese counterpart it is dealing with is simply a private player or an offshoot of China's sprawling military industrial complex. This may well have been the case with Xi'an Bright Laser, an ostensibly private company engaged in metal additive manufacturing and 3D printing, which has entered research partnerships with Airbus and Safran, two European aerospace manufacturers.

Bright Laser also has an alter ego. It has links to eight state-owned defense contractors and receives funding from Xi'an Capitech, one of six investment vehicles lauded by the Ministry of Industry and Information Technology for their contribution to Military-Civil Fusion, a state policy to use civilian technology to boost China's defense capabilities.

In its report, C4ADS quoted Michael Van Tran, Airbus Beijing's general manager, as describing an agreement with Bright Laser to further "the development of new technologies in the field of aviation and contribute to the development of the aviation industry in China."

This is all a long way from the Dongfeng-41. But the advanced military technology displayed by China on National Day will only intensify U.S. fears over tech transfers, sowing deeper suspicion toward trade and investment activities by Western companies in China.

James Kynge is editor of Tech Scroll Asia, a newsletter on technology in Asia that combines the best reporting from Nikkei and the Financial Times. He is also the FT's Global China editor, writing about China's growing footprint in the world, and won the Wincott Foundation award for the U.K.'s Financial Journalist of the Year in 2016. His prizewinning book, "China Shakes the World," was translated into 19 languages.

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