China Bets on Sensitive US Start-Ups, Worrying the Pentagon

Chinese firms have become significant investors in American start-ups working on cutting-edge technologies with potential military applications. The start-ups include companies that make rocket engines for spacecraft, sensors for autonomous navy ships, and printers that make flexible screens that could be used in fighter-plane cockpits. Many of the Chinese firms are owned by state-owned companies or have connections to Chinese leaders. The deals are ringing alarm bells in Washington.

According to a new white paper commissioned by the Department of Defense, Beijing is encouraging Chinese companies with close government ties to invest in American start-ups specializing in critical technologies like artificial intelligence and robots to advance China’s military capacity as well as its economy. The white paper, which was distributed to the senior levels of the Trump administration this week, concludes that United States government controls that are supposed to protect potentially critical technologies are falling short, according to three people knowledgeable about its contents, who spoke on the condition of anonymity.