The Fusion Delusion: China’s Military-Civil Union
By N. MacDonnell Ulsch, Skytop Contributor / August 18th, 2022
Mr. Ulsch is Founder and Chief Analyst of Gray Zone Research & Intelligence—China Series, a research initiative focused on unraveling China’s technology driven strategy of global economic supremacy. He is a well known international advisor on cybersecurity, operational risk, technology and geopolitical risk. He periodically advises the US Senate Committee on Foreign Relations on the China cyber and technology transfer threat. A former Senior Managing Director of PwC’s cybercrime practice, he has led incident investigations in 70 countries.
His research on the China threat covers the impact of legal and illegal technology transfer on China’s economic development strategy, US corporate regulatory risk pursuant to the China threat, China’s supply chain penetration, food processing and transport, technology investment, equity investment, Military-Civil Fusion as a cyber threat, and space-based revenue generating initiatives. More than 500 companies around the world read his LinkedIn China Polls, including every major bank in China.
His LinkedIn China Polls have received more than 200,000 views since June 2021 and he has more than 25,000 risk, audit, lawyers, and security followers on LinkedIn.
Mr. Ulsch is a strategy advisor to an East African presidential cabinet-in-exile on a counter-China Belt & Road Initiative, intended to increase the US presence and commitment to this transitioning nation-state.
Previously he was with the National Security Institute and under the Foreign Intelligence Surveillance Act he served as a cyber threat advisor to the US Central Intelligence Agency. His work there involved developing perspective on key US cyber adversary capabilities and attacks on the US commercial sector and the Defense Industrial Base. He served on the US Secrecy Commission, and worked with a well known US Senator on information security issues. Mr. Ulsch advised a US presidential campaign on cybersecurity issues.
He is Guest Lecturer on Cyber Warfare at the US Military Academy at West Point. He has also lectured at numerous university graduate and law schools. One of his books, Cyber Threat!, is used in a number of universities and law schools. Mr. Ulsch is a Research Fellow in the Master’s in Cybersecurity program at Boston College, which he helped establish and where he remains on the advisory board.
Mr. Ulsch has spoken internationally at events and is the author of two books: Cyber Threat: How to Manage the Growing Risk of Cyber Attacks (John Wiley & Sons, 2014) and Threat! Managing Risk in a Hostile World (The IIA Research Foundation, 2008). For many years, Mr. Ulsch has been a Distinguished Fellow of the Ponemon Institute. He is a Director of the Near East Center for Strategic Engagement and Contributor to the inteliscopx.com program Homeland Security Off the Record. His videos are posted on YouTube and other social media venues.
Mr. Ulsch is an Independent Director of a financial services company, serving on the audit and risk committee, with particular focus on cybersecurity and privacy issues.
The Chinese Communist Party has set in motion dramatic, controversial changes intended to create the most technologically developed military in history.
Imagine this. In an era of massively transformative technological revolution in which the pathway to the war machine of the future is enabled, a sitting President of the United States declares that all technology barriers between civilian business and the military are now being eliminated. Period. Every string of computer code: equal access by civilian business and the military. Every structured and unstructured AI program: equal access. Every academic institution, every research center, every think tank, every political initiative: commandeered to move in unison toward the same goal.
It is a race to develop the next-generation socio-military architecture of geopolitical and economic command and control!
Democrat, Republican, conservative, or liberal, all would reel from the shock of such an outrageous move.
What The World Would Say
This extreme measure of forced militarization from the Office of the President would fundamentally change the United States; it would refashion the world’s perspective of this country’s nearly 250 year history; challenge the Constitution. From the United Nations to the 163 US Embassies and 93 Consulates, astounded diplomats would demand explanations: what has happened to America, the land of freedom and opportunity?
What the United States is Planning
The roar of disapproval would be deafening, heard from virtually every corner of every continent. The print and electronic press would thrive, with dramatic gains in the 24-hour news cycle. Artificial intelligence algorithms applied to social media broadcasts would be trying to decide on what to publish and what not to publish. The courts would be flooded with filings that would challenge the presidential proclamation, caustically criticizing the flagrant violations of due process. Both houses of Congress would argue over the Constitutional legitimacy. Boards of directors and investors and shareholders would question not only the legality and contractual impact of the proclamation, they would examine the ethical and governance violations of such an improbable shift in government. Protesters would fill the streets, and talk of insurrection would leech into the fabric of daily life in America.
The Military-Civil Fusion
But then consider that it was not the United States that made this frightening announcement. It was the Chinese Communist Party of the People’s Republic of China. It has already made this declaration. It is called the Military-Civil Fusion (MCF) program, an initiative so striking and so critical that none other than President Xi Jinping is personally overseeing this ground-shaking transition. Yet, for such a grandiose and unsettling concept, we see little about it, a topic largely ignored in the popular press of the West. Perhaps the reason it has failed to ignite the popular imagination is that its impact is not fully understood. Perhaps the concept is so huge that its impact is much like that of a glacier. Its actual movement is hard to discern, but its path is unalterable and its effect undeniable.
Barely a Whimper from the West
With the stroke of a pen, with barely an acknowledging whimper from the West, China has set in motion a force that will alter the global military and political dynamic well into the future. MCF is a huge step in the CCP’s quest for extreme militarization on earth and space. The silence around the world is deafening—but not unexpected. China is on a roll. Many Western allies, from the NATO alliance to South Korea and Japan, envision a future in which China’s economy will outpace that of the United States. But even if these countries remain staunch allies, the lure of economic incentives in a China-dominated future are too hard to ignore. The more quietly spoken concern is that a strong Chinese military will forcefully drive economic expansionism. If the China economy and the China military in the future eclipse or even achieve parity with the United States, what allied nation of the United States will not have that China conversation and then act upon it.
Two Primary Programs
China’s MCF initiative is ultimately intended to reinforce two primary—and numerous subsidiary—programs that are architected to lead China’s quest for global economic supremacy. The first is China’s satellite-based e-commerce program for developing nations. This is a multi-trillion dollar business model that will create sustainable financial and economic development and link have-not countries to a powerful, growing China. By 2035, the CCP projects that its constellation of 13,000 communications satellites deployed in low earth orbit will fully enable this initiative.
The second is China’s energy from the space program. A grand strategic concept developed in the United States in the 1970s, China has cracked the code on how to economically deploy massive solar arrays in geostationary orbit and beam uninterruptible solar rays to massive receiving stations situated on land and at sea. By 2050 the CCP envisions producing its first gigawatt of electricity from solar satellites. By 2065 it projects a fully deployed program.
Enormous Implications
The implications here are enormous. With these two highly sustainable programs, China sees not only the economic tsunami of an economic future born in space, but a hard won geopolitical windfall. China will enable the countries that currently have the least, leading them down the path of economic restructuring and reform, nourishing the many corrupt regimes on its target list. Not only will China build these e-commerce and energy infrastructures, it will do so through debt financing and thereby gain access to rich mineral deposits and petroleum reserves in many of these nations. From the increased yield of farm animals, food processing and distribution to the control of lithium, cobalt and nickel for its electronic vehicle battery development, the CCP sees a significant win for itself and the China-bloc of nations. This is the perfect example of a strong military enabling a strong economy.
Acceleration
MCF will accelerate this capability. MCF is, in the words of the United States Department of State, “an aggressive, national strategy of the Chinese Communist Party.” The “goal is to enable the PRC to develop the most technologically advanced military in the world.” This should concern every nation member of the free world. The militarization of earth and space is a critical element of the CCP strategy. In a new world order (which the CCP absolutely envisions), the CCP will accomplish the following.
Dominance
It is the CCP’s belief that it will achieve social, political, and economic dominance. That dominance will translate into enforced domestic tranquility, a Blue Water Navy projection around the world, regional prominence in key strategic areas such as Asia and the Middle East, and in developing nations. The CCP’s view of the future is not one of global economic competition—rather, it sees a future in which the balance of power shifts from the United States and its alliances to a China-bloc that is dependent on China for its very survival and presumed evolutionary prosperity. For these have-not nations, this is magnetic. Each will enter into the CCP agreements believing that it is better to stand with this huge military and economic force than to stand alone. The heads of the majority of these bloc-nations also believe that their projected personal wealth, a reflection of the CCP’s embodiment of corruption, is worth whatever risk must be taken.
A Bridge of Empowerment
As China looks to its bridge of empowerment for future development, a range of technologies has been identified as crucial to its terrestrial and space agenda. The original list of technology requirements was conceived by the CCP in March 1986, known as Project 863 (for March 1986). Project 863 identified six specific categories and 20 technologies that their CCP forecasted would be needed to successfully integrate China into mainstream geopolitics and economies. As time has passed, technology has evolved, and the list of technologies now includes the following:
Quantum Computing
Big Data
Semiconductors
5G & 6G Communications
Advanced Nuclear Technology
Aerospace Technology
Artificial Intelligence
An Enduring Problem
But for China, there is an enduring problem, a problem that haunts both China and the United States. That problem is technology innovation. China openly acknowledges this deficit, and this deficit is detrimental to MCF. Li Keqiang is a powerful figure in the CCP. He is the seventh Premier of the People’s Republic of China. At a 2019 meeting of the CCP he stated, factually, that, “Our capacity for innovation is not strong and our weakness in terms of core technologies for key fields remains a salient problem.”
Haunts
This haunts China because, for many reasons, it has lacked an innovative approach to the discovery and development of the technologies that would change the world, giving China the economic and geopolitical empowerment it so aggressively pursues. It haunts the United States because what China has learned to do so well is to overcome its technology innovation deficit and replace it with technology acquisition. Legal and illegal acquisition.
Acquiring Innovative Technologies
How will China acquire these precious technologies? In a variety of ways. As the United States and allies have made it tougher for China to actually acquire technology through the implementation of CFIUS (Committee on Foreign Investment in the United States) and FIRMMA (Foreign Investment Risk Review Modernization Act), China has responded with aggressive creativity. While it still pursues mergers and acquisitions, and equity investments and cyber espionage, China pursues other, more nefarious methods that are proving to be unsettlingly successful.
Human Capital Assets and “Mystery Funds”
The insertion of human capital assets into its growing portfolio of influence in technology companies around the world through various CCP and intelligence organizations is one method of information acquisition. China also uses secret or so-called “mystery funds” to acquire equity positions in companies. While the investments are made by a China Sovereign Wealth Fund (SWF), for example, it is believed the funds are actually from the military and intelligence community. Take Japan, for example. These”mystery funds”acquired equity positions in approximately 170 public companies.
These funds, which have obscure names and are registered in Australia, are interesting because of the method and level of investment. The SWF limited investments to less than five percent of total corporate equity. This avoids the regulatory trigger requiring disclosure of the actual fund owners. While the CCP SWFs have liquidated many investments, new undisclosed SWFs are showing up in very strategically placed investments, in Japan and elsewhere.
China Exploits Openness and Transparency
In acquiring innovative technologies, the CCP also utilizes talent recruitment programs, directing academic and research collaboration for military gain, forced technology transfer, intelligence gathering, and outright theft. The CCP’s MCF strategy allows a growing number of civilian enterprises and entities to undertake classified military research and development and weapons production. “The CCP also exploits the open and transparent nature of the global research enterprise to bolster its own military capabilities through bodies like the China Scholarship Council, which requires academic scholarship recipients to report on their overseas research to PRC diplomats,” according to the United States State Department.
Spotlight on the CCP
The spotlight on the CCP sometimes suggests that civil war could break out in China. Others speculate its debt-financing program with more than a hundred companies will ultimately bankrupt the CCP, that its financial future will spiral downward, out of control. Some believe its military cannot compare with that of the United States. Others believe that it soon will be competitive with the United States military capability, at least in some aspects.
Expansion and Supremacy
But everyone should realize that the CCP sees things differently. Failure is not in their strategy. They know full well what their vulnerabilities and efficiencies are. They are working in an extraordinarily orchestrated fashion to overcome their inherent weaknesses. They are, by and large, all rowing in the same direction, from its State-Owned Enterprises to its military and intelligence entities. The CCP fully expects to dominate a future that may have started on land but will expand into space. It seems these investments in technology are enablers of its expansion and supremacy.
Revolutionizing China
Let’s make no mistake. The Military-Civil Fusion program is revolutionizing China. It may be hard to see on a day-to-day basis, but it is happening. And if it is as successful as the CCP believes that it will be, there is much for the United States and allied nations to consider and act upon. Now!