In 2007, when former Chinese leader Hu Jintao urged China to pursue “Military-Civil Fusion with Chinese characteristics,” few in the United States paid attention, much less anticipated the dilemma that this emerging Chinese strategy would pose to U.S. policymakers. Almost two decades later, as the U.S. government considers further restricting China’s access to the advanced semiconductors critical to the AI revolution, military-civil fusion — the Chinese Communist Party’s strategy to intentionally blur the lines between military and civilian sectors — lies at the heart of the drama. Previous controls, imposed in 2022 and expanded in 2023, came on the heels of the discovery of U.S. semiconductor technology in a supercomputer engineered to develop hypersonic missiles for the People’s Liberation Army. New evidence suggests that U.S. microelectronics technology has also aided Chinese advancements in nuclear weapons, torpedoes, and other military applications.
Through military-civil fusion, the party seeks to align the entire Chinese science and technology enterprise to strengthen the twin pillars underpinning all Chinese national strategies – security and development. By design, the strategy often implicates both Chinese and foreign firms and research organizations, facilitating the transfer of dual-use technologies across borders, sometimes without the knowledge or consent of the foreign entities involved. As a form of political-economic governance, the strategy is predicated on obfuscation and values hostile to a free and open society, as well as a range of “brute force” tactics that undermine the fabric of transparent, competitive markets. Perhaps most importantly, the strategy is ultimately designed to enable China to develop the world’s most high-tech military, meaning that its broader strategic significance cannot be understated.
Beijing’s deceptive and coercive approach to security and development challenges U.S. and other democratic policymakers seeking to counter China’s ambitions with narrowly targeted tools like export controls and investment screening measures. As more U.S. and allied firms become involved in the high-stakes cat-and-mouse game of technology protection policies and work-arounds, U.S. policymakers’ efforts to build what they describe as a “high wall and small yard” to protect American national security without disrupting commercial ties are under increasing strain. Decision-makers face a critical challenge: How do you regulate the flow of dual-use technology when your rival has systematically erased the boundaries between peaceful and military applications?
This problem is only getting more urgent as evidence of the strategy’s effectiveness mounts, when measured by the metrics that matter most for U.S. interests. It has enabled the People’s Liberation Army to develop and field asymmetric capabilities across warfighting and non-traditional security domains that could give it an advantage in a potential conflict. Moreover, the strategy has also helped Chinese enterprises, both state-owned and nominally private, to capture significant global market share in advanced industries, while also concentrating the party’s capacity to mobilize national resources in times of emergency and war. Addressing the challenge requires a fundamental shift in mindset and strategy. To maintain democratic advantages in the face of China’s growing military and economic power, the United States and its allies should recognize military-civil fusion as a core feature of the systems rivalry between the Chinese Communist Party and democratic nations, retool our institutions and policies to confront the challenge head-on, and reindustrialize our economies to offset China’s manufacturing advantages.
Evolution of the Strategy in the Party’s Rhetoric and Statecraft
China’s strategy to merge its military and civilian sectors is ambitious and unique, characterized by its large scale, wide scope, and systematic approach. Unlike America’s decentralized military-industrial complex in which private sector participation is voluntary, or the former Soviet Union’s highly centralized system, China’s military-civil fusion strategy effectively blends private sector innovation with centralized oversight, blurring the lines between top-down direction and bottom-up initiative.
Since the founding of the People’s Republic of China in 1949, Chinese leaders have sought to integrate security and development priorities. Although it has a long prehistory, military-civil fusion is primarily associated with Xi Jinping’s tenure as general secretary. Two years after elevating it to the status of a national strategy, Xi in January 2017 established and took charge of a new body, the Central Commission for Integrated Military and Civilian Development, to guide its implementation.
The 19th Party Congress in October 2017 marked a watershed moment for the party in connecting military-civil fusion to the achievement of China’s national goals. In his work report, Xi declared the party’s ambition for China to become “global leader in terms of comprehensive national power and international influence,” a high-level articulation of China’s overarching national objectives. Additionally, Xi emphasized the importance of developing a “deep pattern of military-civil fusion and building an integrated national strategic system and capabilities” (一体化的国家战略体系和能力) — the framework for achieving these goals. This term represents the party’s concept of a system that mobilizes all state and societal resources to enhance China’s comprehensive national power (综合国力). As keen observers have noted, party theorists made this connection between these two concepts even clearer a month later, stating, “The end goal of military-civil fusion deep development is to build up China’s unified military-civil system of strategies and strategic capabilities.”
Under Xi’s leadership, extensive bureaucratic structures and numerous plans, regulations, and guidance documents have been established to promote military-civil fusion throughout China. Greg Levesque notes that “almost every provincial and municipal government has formed local-level military-civil fusion development committees led by party officials and rolled out development plans.” Xi has also overseen the establishment of military-civil fusion demonstration bases: innovation clusters across the country designed to facilitate resource sharing across entities in strategic technology sectors, such as aerospace, aviation, advanced equipment manufacturing, new materials, electronics and information technology, energy systems, biomedicine, and automotive.
Evolution of U.S. Policy Response
U.S. analysts began taking note of military-civil fusion in the early to mid-2010s, but it garnered significant attention from senior policymakers starting in 2018. That year, a speech by then-Assistant Secretary of State for International Security and Nonproliferation Christopher Ford highlighted the challenges the strategy posed to U.S. export control policies. Several months later, the Department of Energy denied licenses to export civilian nuclear technology to China General Nuclear Power Group, a state-owned enterprise, citing military diversion and proliferation concerns. In May 2020, the Trump administration’s China strategy (which one of us co-authored) highlighted the strategy explicitly, emphasizing Beijing’s exploitation of foreign dual-use technology. Later that month, the administration suspended student and researcher visas for a very narrow set of Chinese applicants with known ties to the Chinese military, who were seeking to enter the United States undercover to collect sensitive technology know-how. Additional actions included export controls on Chinese companies linked to the strategy. The Biden administration has maintained these policies, though its public focus on military-civil fusion has lessened in favor of what some in the administration have articulated as a “narrow and targeted” approach to protecting foundational technologies and others have summed up as “a small yard and high fence” — terms that contrast starkly to military-civil fusion’s sweeping scope.
Beijing’s pursuit of “deep fusion,” meanwhile, has accelerated, even as Beijing downplayed public discussion of the strategy starting in 2019. Initially, this shift was a reaction to U.S. criticism of the strategy, but quieter Chinese rhetoric did not signal retreat of the concept. As the Department of Defense has noted, since 2022, occasional mentions of the strategy have returned but have largely been superseded by calls to “build an integrated national strategic system and capabilities.”
Evaluating Progress
Over the last several years, a large body of Western analyses have documented the strategy’s doctrinal and institutional features, evolution over time, and implications for the United States and other democracies. Given the strategy’s importance, it is striking that the China-watching community has so far been reluctant to make a judgment on the strategy’s overall success or failure, with some analysts concluding it is too early to tell. But nearly a decade has passed since Xi elevated the pursuit of military-civil fusion to a national strategy. A growing body of evidence indicates that the strategy has contributed to major technology breakthroughs, resulting in significant military and economic benefits to China. Central to these advances is Beijing’s longstanding emphasis on industrial production as a key source of comprehensive national power. China’s emergence as the world’s leading manufacturing superpower yields economic gains and dominance in a number of dual-use sectors, undermining U.S. deterrence and revealing supply chain vulnerabilities that could advantage Beijing in crises or conflicts. Several case studies are instructive.
Consider Chinese efforts to lead in global navigation satellite system technology. BeiDou, China’s homegrown challenger to the U.S.-designed global positioning system, has been hailed by Chinese commentators as a “model of military-civil fusion.” BeiDou emerged as a military system in the 2000s and has since overtaken the global positioning system to become the world’s largest global navigation satellite system constellation with 58 operational satellites. As a report from the Belfer Center makes clear, the Chinese government “recognizes that BeiDou’s commercial applications can enhance the [Chinese Communist Party’s] political, economic, and security goals.” The security implications of BeiDou’s growing global reach are especially significant, providing China with asymmetric advantages across space, cyber, and maritime domains and enabling it to provide military support to Russia and Iran.
China’s shipbuilding sector is another clear fusion success story, with the party leveraging all levers of state power — including laws that direct commercial Chinese maritime firms to support the Chinese military — to cement its advantages and transform China into a maritime power. China has vaulted from producing merely 5 percent of merchant tonnage in 1999 to becoming the world’s leading producer of both military and commercial hulls in 2023, with shipbuilding capacity roughly 232 times that of the United States. China’s shipyards have become illustrative of Xi’s call to accelerate the fusion of “infrastructure, key facilities, and resources based on essential requirements.” Those resources include foreign investment and know-how (technology transfer is a key pillar of the strategy and has aided China’s shipbuilding efforts in particular). China’s third and most capable aircraft carrier, the Fujian, shares assembly facilities with commercial hulls, including for foreign clients, while a number of China’s demonstration bases include a focus on shipbuilding. Moreover, Beijing has forged technical cooperation agreements with shipbuilding firms in Japan, South Korea, and Germany, which have provided access to advanced designs and technologies.
Beyond these core sectors, Chinese officials see a major role for the strategy in driving innovation in new technology domains and leading in future industries. The party has prioritized biotechnology as a strategic industry ripe for fusion development, especially as AI enables more capable manipulation of biological building blocks. This has raised concerns in Washington given that major Chinese biotech enterprises are working closely with the People’s Liberation Army. China’s achievements in supercomputing, enabled by military-civil fusion, are also notable. The Tianhe supercomputer series, developed primarily by China’s National University of Defense Technology, serves as a technology platform for civilian enterprise groups and is helping to position the Chinese military for future breakthroughs in military applications such as encryption breaking, secure communications, simulation, and navigation.
Whole-of-Nation Mobilization
Military-civil fusion has long sought to bridge the gap between the national defense mobilization system and the state emergency management system. Through the strategy, Beijing aims to ensure it is able to activate a coordinated response during a crisis, whether military or civilian in nature. Party commentators have praised China’s COVID-19 pandemic response as evidence of the effectiveness of their military-civil fusion system, reinforcing the party’s broader propaganda efforts to showcase its governance superiority. According to Xi and Chinese military scholars, the party’s mobilization of various entities, including military units, government agencies, the United Front, and individual companies validated China’s “People’s War” — a reference to Mao Zedong’s conception of revolutionary armed struggle — approach to solving major problems.
The implications of China’s COVID-19 response extend beyond crisis management. The party retained mobilized system features post-lockdown, with the party seizing on the politics of emergency to blur the lines between wartime and peacetime governance, potentially in preparation for conflict. This approach was exemplified by the party’s use of community-based surveillance systems — established during the pandemic but still in place as of mid-2024 — to strengthen social control. Additionally, the Chinese military’s use of “robo-dogs” (a technology originally developed for commercial use) to bark orders at residents during the pandemic represents a vivid example of military-civil fusion in the form of techno-authoritarian policing tactics that have outlasted the pandemic, despite domestic backlash against Beijing’s heavy handed controls.
Implications and Recommendations
Despite dramatic progress, Beijing’s military-civil fusion strategy faces two primary obstacles to further success: namely, deteriorating economic conditions and America’s growing lead in AI as of mid-2024. On the first, policies enacted by democratic market economies to “de-risk” from China have selectively limited China’s access to foreign technology, investment, and markets. At the same time, the United States is leading the AI revolution in many respects, potentially hampering China’s ambitious vision for AI-enabled “intelligentized” warfare. In addition, most advanced AI chips and the sophisticated tools required to manufacture them are designed and produced primarily by firms based in the United States or democratic nations, and U.S. and allied export controls have constrained supply, albeit imperfectly. These challenges are significant, but the party has set its sights on leading the world in AI by 2030, and its ability to direct resources within its system and leverage China’s scope and scale means the United States has no room for complacency. China’s efforts to develop indigenous technology alternatives and apply them for military use are likely to see continued progress, albeit more slowly than would be the case in the absence of foreign de-risking and U.S. controls.
Recognize. As a first step, addressing the challenge of military-civil fusion requires framing it accurately. Military-civil fusion, and the party’s framework for operationalizing it along with its broader goals — the National Strategic System and Capabilities — are core features of the systems rivalry between China, on the one hand, and the United States and its democratic allies, on the other. Both the Trump and Biden administrations have used “strategic competition” to describe the U.S. relationship to China, but a future administration should take a page from the European Union’s playbook, when it used the term “systemic rival” to describe China in a joint communication in 2019.
To tackle the challenge of military-civil fusion, adopting a systems rivalry mindset is crucial. “Rivalry,” compared to “competition,” implies higher stakes, unpredictability, and no assumption of a level playing field or shared rules, since the rivalry emerges from fundamental differences in governance systems and values. A systems rivalry mindset entails shifting from a defensive to an offensive posture, and actively identifying and exploiting the party’s vulnerabilities for democracies’ strategic advantage. To do so, analysts and policymakers must understand how the party conceptualizes the National Strategic System and Capabilities and its role in achieving its objectives through party, state, military, corporate, and overseas channels. This knowledge provides a critical foundation for identifying gaps in China’s system, such as information asymmetries and breakdowns and economic or technology chokepoints that the United States and its allies can exploit, particularly as the expression of these strategies becomes more nuanced in official documents. Also essential is to acknowledge the deep disparities between the two nations’ systems and reject moral equivalence. While many countries, including the United States, encourage cooperation between military and civilian sectors, the opaque, unaccountable, and coercive features of the party’s Leninist approach to governance sets Beijing’s approach apart.
Retool. The United States must adapt and retool its strategies and institutions to confront the challenge, adopting a philosophy of risk-based prioritization across the board. Leaders should prioritize limiting economic entanglement with China in areas that touch critical infrastructure, national resilience, and warfighting capabilities, recognizing the evolving nature of China’s strategic approach to these sectors. Second, there are areas where U.S. security and economic goals are misaligned. To drive alignment, the White House could appoint an economic security czar to lead the development of a national economic security strategy to set strategic objectives and coordinate the use of tools such as export controls and sanctions. The czar could also lead efforts to deepen collaboration with allies and partners to develop shared threat assessments and strategies for research, development, and investment in strategic technologies. Third, the United States and other democracies must address the critical gap in research security concerning the transfer of knowledge in fundamental research, which current policies focused on technology transfer often overlook. This oversight is particularly dangerous in the context of military-civil fusion, where seemingly benign scientific collaborations can contribute to China’s military capabilities. Partnerships and information exchanges among government, industry, and academia will be essential to addressing research security gaps.
Reindustrialize. China’s primary asymmetric advantage over the United States lies in its ability to manufacture goods across the industrial value chain at tremendous scale. Beijing’s progress entrenching asymmetries in industrial base capacity call into question the ability of the United States to competitively produce dual-use technologies and prevail in a protracted conflict. However, recent trends in manufacturing technology present the United States with a unique window of opportunity to reconstitute its industrial base and re-establish defense-industrial deterrence. A wide range of technologies, from AI to robotics and 3-D printing, are transforming manufacturing industries, with factories becoming increasingly software-defined. Given its advantages in software and AI, the United States has the potential to combine significant investments in production capacity — especially in strategic sectors — with efforts to accelerate the adoption of advanced manufacturing paradigms, positioning the nation to offset China’s advantages.
Conclusion
The time for equivocation is over. By the metrics that matter most for U.S. interests, military-civil fusion has been a success and presents serious challenges that must be addressed. A fundamental reckoning is overdue and will require the United States and its allies to retool policies, realign institutions, and revitalize the industrial base to address the challenge. Only through decisive action can the United States and other democracies maintain — or regain — strategic advantages and protect their interests in the face of China’s growing asymmetric military capabilities and economic power.
Liza Tobin is senior director for economy at the Special Competitive Studies Project (SCSP) and served previously as China director at the National Security Council during the Trump and Biden administrations. Addis Goldman is an associate director for economy at SCSP, and Katherine Kurata is a director for intelligence at SCSP.
This essay is adapted from the authors’ chapter for the 2024 NBR-INDOPACOM Conference on the People’s Liberation Army, which will be published by the National Bureau of Asian Research in summer 2025. The authors wish to thank former Deputy Assistant Secretary of Defense for China, Chad Sbragia, for insights on the National Strategic System and Capabilities.
Image: Wikimedia Commons
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