New U.S. rules would restrict dollars from being used to finance the development of advanced military technologies in China.
The Chinese spy balloon shot down by the U.S. military over the Atlantic Ocean was capable of collecting communications signals and was part of a fleet of surveillance balloons directed by the Chinese military that had flown over more than 40 countries across five continents, the State Department said Thursday.
The United States used high resolution imagery from U-2 flybys to determine the balloon’s capabilities, the department said in a written announcement, adding that the balloon’s equipment “was clearly for intelligence surveillance and inconsistent with the equipment onboard weather balloons.”
The agency said the balloon had multiple antennas in an array that was “likely capable of collecting and geo-locating communications.” Solar panels on the machine were large enough to produce power to operate “multiple active intelligence collection sensors,” the department said.
The agency also said the U.S. government was “confident” that the company that made the balloon had direct commercial ties with the People’s Liberation Army, the Chinese military, citing an official procurement portal for the army. The department did not name the company.
“The United States will also explore taking action against P.R.C. entities linked to the P.L.A. that supported the balloon’s incursion into U.S. airspace,” the State Department said, referring to the People’s Republic of China. “We will also look at broader efforts to expose and address the P.R.C.’s larger surveillance activities that pose a threat to our national security, and to our allies and partners.”
The department said the company advertises balloon products on its website and has posted videos from past flights that apparently flew over U.S. airspace and the airspace of other nations. The videos show balloons that have similar flight patterns as the surveillance balloons that the United States has been discussing this week, the agency said.
U.S. officials say the Biden administration has declassified information it has gathered on the balloon that traversed the United States last week and the Chinese military’s broader balloon surveillance operations in order to inform the American public and allied and partner nations of China’s espionage activities. The administration is hopeful the intelligence will counter China’s narrative of the balloon and put pressure on its government to curb some of its aerial surveillance, the U.S. officials say.
The U.S. government says it has discovered instances of at least five Chinese spy balloons in American territory — three during the Trump administration and two during the Biden administration. The spy balloons observed during the Trump administration were initially classified as unidentified aerial phenomena, U.S. officials said. It was not until after 2020 that officials closely examined the balloon incidents under a broader review of aerial phenomena and determined that they were part of the Chinese global balloon surveillance effort.
Divers from the U.S. Navy have pulled debris from the downed balloon out of the shallow waters off the South Carolina coast. They are examining the parts to see if the Chinese military or enterprises with ties to it are using technology from American or other Western companies, U.S. officials said.
U.S. intelligence agencies have assessed that China’s spy balloon program is part of a global surveillance effort designed to collect information on the military capabilities of countries around the world. With the flights, Chinese officials are trying to hone their ability to gather data about American military bases — in which it is most interested — as well as those of other nations in the event of a conflict or rising tensions, U.S. officials say. They add that the program has operated out of multiple locations in China.
China’s National University of Defense Technology has a team of researchers studying advances in balloons. And as early as 2020, People’s Liberation Army Daily, the main newspaper of the Chinese military, published an article describing how near space “has become a new battleground in modern warfare.” In recent years, the paper has been telling its officer readers in sometimes hyperbolic language to take balloons seriously.
The balloons have some advantages over the intelligence-gathering satellites that orbit the earth in regular patterns, U.S. officials say.
They fly closer to earth and drift with wind patterns, which are not as predictable to militaries and intelligence agencies as the fixed orbits of satellites, and they can evade radar. They can also hover over areas, while satellites are generally in constant motion. Simple cameras on balloons can produce clearer images than those on orbital satellites, and other surveillance equipment can pick up signals that do not reach the altitude of satellites.
U.S. Aims to Curtail Investment in Advanced Military Technology in China
The Biden administration is preparing new rules that would restrict U.S. dollars from flowing to China.
For months, the Biden administration has been preparing curbs on the investments that U.S. firms can make in China, particularly in areas like advanced computing.
Those measures are now largely complete and could be issued within two months. The Treasury Department has been reaching out to other governments, including the European Union, to try to ensure that they do not rush in to provide similar financing to China after the United States cuts it off, according to people familiar with the discussions.
The voyage of a spy balloon across the United States has set off newfound fears about the national security threats posed by the Chinese government. This week, lawmakers on both sides warned the White House that if the administration did not move ahead with investment restrictions, Congress would propose its own.
At a hearing on Tuesday aimed at publicizing the security threat from China, Representative Blaine Luetkemeyer, Republican of Missouri, said it was the “committee’s job to examine all interconnections between the Chinese and U.S. economy, specifically connections supporting China’s military and human rights abuses, and pursue options to eliminate U.S. capital flowing into those areas.”
Representative Maxine Waters, Democrat of California, said the United States needed to make sure that “hedge funds, private equity firms and Wall Street are not investing in ways that hurt our economy or funding the adversarial actions of the Chinese government.”
Members of the Biden administration spent much of last year weighing how broadly to apply investment restrictions, with officials reaching out to business executives to get their views on the impact that such a move might have.
Details of the pending executive order remain unclear, but it is expected to require companies to report more information to the government about their planned investments in certain adversarial countries. Several people familiar with the plans said the order would most likely prohibit outright investments in some sensitive areas, like quantum computing, advanced semiconductors and certain artificial intelligence capabilities with military or surveillance applications.
U.S. officials have also increasingly been concerned about China’s use of biotechnology, but several people said the administration had decided to exclude the sector, at least initially.
Supporters of investment restrictions say they would help fill in a significant hole in the economic barriers that the United States is setting up with China. The government already prohibits U.S. companies from directly selling certain advanced technologies to China, and it has long monitored the investments that Chinese companies make in the United States for potential security risks.
But the government has little control over or insight into money traveling from the United States to China, said Claire Chu, a senior China analyst at Janes, a defense intelligence firm. Support has been building for the government to take more oversight of these kinds of deals, she said.
“It’s not so much a matter of whether this will happen as when,” Ms. Chu said.
Some of the proposals have prompted resistance from industry groups, which argued that overly broad restrictions could overwhelm government officials in charge of oversight, creating big delays, and ricochet back on the U.S. economy, harming its competitiveness.
A broader proposal in Congress last year to review outbound investments in critical sectors including infrastructure and medicine prompted pushback from groups like the U.S. Chamber of Commerce and the U.S.-China Business Council.
“Industry is kind of united: We don’t want this,” said Antonia Tzinova, a partner at the law firm Holland & Knight who specializes in national security reviews of investments into the United States.
