Investments

China’s Silicon Valley Investments Spark Concern

Pentagon officials have issued a warning about the rapidly increasing investments in U.S. companies that Chinese companies have made “under-the-radar.”

According to The New York Times, the Pentagon is worried about America’s most promising technologies being accessed by China through its investments in startups that focus on advancing areas of expertise, such as artificial intelligence, self-driving vehicles and robotics. The new report titled, “How Chinese Investments in Emerging Technology Enable a Strategic Competitor to Access the Crown Jewels of U.S. Innovation,” lays out the concerns of sensitive technologies being transferred to China through startup investments.

“If we allow China access to these same technologies concurrently, then not only may we lose our technological superiority, but we may even be facilitating China’s technological superiority,” the report said.

As Chinese firms continue to become significant investors in U.S. startups, there is a concern that the technological gap between the two countries will quickly close. According to the report, the main driver behind the investments is to help push China ahead in its ongoing strategic competition with the U.S.

The most troubling factor is that the U.S. government doesn’t have adequate restrictions on foreign companies investing in American startups, making it easy for the companies to avoid oversight from the Committee on Foreign Investment in the United States.

“For example, V.R. for gaming is at a similar level of sophistication as the V.R. used in simulators for our armed forces,” the report explained, in reference to virtual reality.

“Facial recognition and image detection for social networking and online shopping has real application in tracking terrorists or other threats to national security,” the report continued.

The report, which was commissioned by former secretary of defense Ashton B. Carter, revealed that many U.S. companies are unaware of Beijing’s efforts when investments are made, especially when it comes to deals that finance emerging technologies that have military applications.

“The U.S. government does not have a holistic view of how fast this technology transfer is occurring, the level of Chinese investment in U.S. technology or what technologies we should be protecting,” the report stated.

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