As U.S. policymakers increasingly discuss biotechnology—and specifically genomics—as a national security issue, the challenge of how to protect and promote this technology has come to the fore. However, given that some of these tools are early in development, and often include services that help research, existing technology protection tools are not designed for this challenge. Given the complexity, current regulations will not be enough. The United States will need a mix of policies that include funding and support for U.S. companies, as well as research infrastructure, in addition to traditional mitigation strategies.

What are China’s policies for biotechnology?

Over the last two decades, China has put in place policies to support biotechnology and the Chinese bio-economy, which are intended to foster “big science” facilities, national biomedical “champions” (i.e., favored state and private companies), talent recruitment, and basic research. China views biotechnology as the next industrial revolution and key to future economic development and comprehensive national power. State support goes far beyond the traditional industrial policies implemented in Europe and other parts of Asia. It is comprehensive and represents an alternative blueprint for the development of emerging technologies and industries—and the national champion companies in these areas. China’s all-embracing approach plays a key role in fostering technology areas that rely on longer timelines, multidisciplinary coalitions, or big science facilities—such as advanced computing, high-end gene sequencing, and colonies of non-human primates. These policies and programs include the following:

• China’s National Medium and Long Term Plan (MLP) for Science and Technology (S&T) Development (2006–2020).¹ This S&T blueprint lays out a development strategy that relies on overseas returnees, foreign collaboration, and the R&D laboratories that international companies have established in China to acquire needed skills.
• Precision Medicine Initiative. China’s Precision Medicine Initiative (精准医疗计划), launched in 2016, seeks to leverage the country’s sequencing capacity and access to biomedical data to design unique and tailored therapeutics for individuals, and explore diseases endemic to China.²
• 13th Five-Year Plan for S&T Innovation. The 13th Five-Year Plan (2016–2020) introduced the relevance of AI to biotechnology, experimental design, and precision medicine.³
• 13th Five-Year Plan for Military and Civil Fusion. This plan was established in 2017 and focuses on emerging technologies. It calls specifically for a cross-pollination of military and civilian technology in areas not traditionally viewed as “national security issues,” such as neuroscience and brain-inspired research, as well as biotechnology.⁴
• 14th Five-Year Plan. China’s latest Five-Year Plan (2021–2025) continues to emphasize interdisciplinary research and the use of AI for biological discovery and precision medicine.⁵
• Strategic emerging industries. China has designated several fields as “strategic emerging industries” (战略性新兴产业, SEIs) to foster a more entrepreneurial environment and grow indigenous companies. The effort began at the top, spearheaded in 2009 by Wen Jiabao and the State Council, and included preferential tax treatment, subsidies, and government procurement initiatives. AI and biotechnology are both considered SEIs and factor heavily into China’s efforts. In 2021, China doubled down on its SEI policy to emphasize “key investments in strategic areas,” create “industrial clusters,” and accelerate the pace of innovation and development in the biotechnology industry.⁶

China’s Hybrid Economy: The Challenge of BGI and China’s Other National Champions

BGI is a case study that demonstrates the complex world of China’s hybrid economic system that blurs private and public, as well as civilian and military, to meet the goals of the state. BGI works closely with CCP agencies and ministries, bringing China’s biotech ambitions to reality. This system creates market distortions and undermines the global norms of science by using researchers, and academic and commercial entities to further the goals of the state, not open collaborations that benefit both parties or fair commercial competition free from market distorting subsidies and market restrictions. This playbook includes R&D subsidies, export financing, diplomatic support and procurement rules for a guaranteed market in China—pushing out foreign competition because of an unfair market access environment.

Developing from a Chinese Academy of Sciences research institute to a global player in genomics and sequencing tools, BGI has become China’s biotech national champion, running its national gene bank, orchestrating bio-prospecting globally through China’s Belt and Road Initiative, and becoming the collaborator of choice for many due to its lower costs enabled by government support. Some key background on BGI include:

• Funding from the China Development Bank in 2010 allowed BGI to purchase 112 Illumina DNA sequencers, setting BGI up as one of the largest DNA sequencing facilities in the world.
• BGI received over $30 million in subsidies from Chinese state funds.
• BGI runs the Chinese National Genebank (CNGB). This partnership with the Chinese government leverages the sequencing capability of BGI to form a biorepository hosting tens of millions of samples for humans, plants, animals, and microorganisms, banking DNA to “support science and technology development.”
• BGI leverages its ties to the government to develop products for the global market. For example, the development of the prenatal NIFTY tests, were initially funded by the Key Laboratory Project in Shenzhen, with scientists from BGI, hospitals, and universities contributing to the project. In this study, participants were recruited from the local hospitals in Shenzhen.
• BGI has also been involved in more controversial activities for the Chinese government as well, such as the collection of genomic data from China’s ethnic minorities in Xinjian.

BGI Genomics is publicly traded on the Shenzhen stock exchange (SHE: 300676), and therefore provides public disclosures. An analysis of BGI’s yearly reports (年半年度报告 and 年年度报告) from 2019 through 2022 provided an initial subsidiary, branch, associate, and affiliate list. An analysis of the 2022 Prospectus of MGI Tech (深圳华大智造科技股份有限公司), a major affiliate of BGI Genomics—and parent company of Complete Genomics—which went public on the Shanghai stock exchange on September 9th 2022 (SHA: 688114) was also conducted for additional subsidiaries, associates and affiliates. These five documents served as the starting point for our analysis. Which includes the following:

• A majority of MGI and BGI’s shareholders have direct or indirect ties to the CCP.
• China’s Government Guidance Funds Are Directly Invested in Both BGI and MGI.
• Both BGI and MGI raise funding directly from the state as the primary means to fund their operations and global expansion.
• BGI has undertaken a number of other unusual capital markets activities, including pledging shares, accepting guarantees from executive officers, and engaging in unusual related party transactions, that make it look less like a regular public company and more like one operating in a grey area between privately held and state-controlled.
• Both MGI and BGI have expanded their market share at rapid rates despite their smaller scale versus global competitors, following a similar pattern of China’s other national champions that are supported by China’s central government policies.
• Company disclosures show both MGI and BGI carry effectively no debt, implying they fund day-to-day operations and any growth from elsewhere.

Policy Implications to Consider

Both BGI and MGI have benefited significantly from the Chinese government’s support including financing, subsidies, and diplomatic support. This initial study also highlights that there are certain characteristics of development that China can leverage, exploit, and support to take the lead in key emerging technology areas. They include the need for long-term investments, support for companies through both longer time horizons and global competition, the merging of national priorities with commercial priorities, and a willingness to do things that other countries will not. Finally, the following will have long-term implications for U.S. competitiveness and are important to consider in policy decisions related to BGI:

• BGI’s initial acquisition of sequencers allowed it to become a global player. Additional direct and indirect subsidies the Chinese government provides has allowed it to grow into multiple different fields. The longer time horizons necessary for advancements in genomics—and other emerging technologies—and the ability to make non-market decisions, provide a long-term benefit to BGI and future national champions. They also allow them to undercut their competitors.
• China uses market access to protect its global champion and disadvantage other global players. Data on sales / revenue in China highlight how MGI has grown from having almost none of the China market to significant growth in just five years. MGI is currently gearing up to compete—using Complete Genomics in the U.S. market—often obscuring Complete Genomics ties to MGI, BGI, and the Chinese government.
• U.S. and foreign companies have to explore partnerships and outright acquisition if they want to participate in the China market because of Chinese government policies.
• China’s laws create an uneven playing field because they are often vague, favor the domestic actor, and compel the sharing of data or other proprietary information. Key examples include: market certification/product review/licensing (disclosure of corporate secrets); antitrust; corporate structure and overlap of corporate, party, and state entities.
• China has shown a willingness to use genomic data and research in ways that the United States and its allies have not. This includes establishing a central gene bank, exploring the genomic basis of race, and the goal of using prenatal testing as a key pillar of its health policies to ensure the decrease in birth defects in the population.

What is seen in biotechnology today is not a new strategy for China—Beijing has already used it effectively to create Huawei and dominate 5G. Biotech and BGI is simply the latest version of Beijing’s playbook. It is just a matter of time where U.S. policymakers will be considering what to do about another of Beijing’s national champions. However, this can be a good news story. The race is not yet lost and there are steps the United States and other open liberal democracies can take to ensure that the research and tools of discovery reflect their values and are not controlled by a strategic competitor. A strategy that fosters the best of biology and provides support so that U.S. companies can compete in what has become an unequal playing field will have implications far wider than biology itself, but can provide a blueprint for fair and balanced technology competition in the future.

This blog post is related to forthcoming work from CSET’s Anna Puglisi on this subject matter. Please stay connected with CSET at cset.georgetown.edu for more.

1. State Council of the People’s Republic of China (PRC), “国家中长期科学和技术发展规划纲要(2006–2020年) ” [National Medium and Long-Term Plan for the Development of Science and Technology (2006–2020)], 2006.
2. Brian Wang, “China’s $9.2 Billion Precision Medicine Initiative Could See about 100 Million Whole Human Genomes Sequenced by 2030 and More If Sequencing Costs Drop,” NextBIGfuture.com, June 7, 2016; and David Cyranoski, “China Embraces Precision Medicine on a Massive Scale,” Nature 529 (2016): 9–10.
3. State Council (PRC), “国务院关于印发十三五国家科技创新规划的通知” [13th Five-Year Plan for S&T Innovation], 2016.
4. Ministry of Science and Technology (PRC), “十三五”科技军民融合发展专项规划” [13th Five-Year Special Plan for S&T Military-Civil Fusion Development], 2017.
5. National People’s Congress and Chinese People’s Political Consultative Conference (PRC), “中华人民共和国国民经济和社会发展第十四个五年规划和2035年远景目标纲要” [The 14th Five-year Plan for the National Economic and Social Development of the People’s Republic of China and the Outline of Long-Term Goals for 2035], March 2021, https://cset.georgetown.edu/publication/china-14th-five-year-plan.
6. National People’s Congress and Chinese People’s Political Consultative Conference (PRC), “中华人民共和国国民经济和社会发展第十四个五年规划和2035年远景目标纲要.”; Office of the State Council (PRC), “温家宝主持召开三次新兴战略性产业发展座谈会” [Wen Jiabao Hosted Three Emerging Strategic Industry Development Symposiums], September 22, 2009; and State Council (PRC), “国务院关于加快培育和发展战略性新兴产业的决定” [State Council Decision on Accelerating the Cultivation and Development of Strategic Emerging Industries], 2010.