China’s Quantum Encryption Advantage Poses Risks

China’s successful development of post-quantum cryptography techniques has profound implications for US businesses and national security. This critical advancement could confer China with a strategic advantage in cybersecurity, enabling the protection of its own data while potentially allowing China to access and decrypt information safeguarded by conventional cryptographic methods. This advantage could pose risks to national security as well as economic and technological competitiveness on a global scale. 

Chinese quantum computers are now equipped with post-quantum cryptography techniques to “effectively resist quantum computer attacks,” according to international media reporting on 12 April. If China were to achieve a significant breakthrough in this field, it could gain a strategic advantage in cybersecurity by being able to protect its own sensitive information while potentially enabling China to access and decrypt information protected by traditional cryptographic methods used by other countries or entities. China’s developments in post-quantum cryptography have raised concerns among foreign experts.

• The Australian Strategic Policy Institute (ASPI) stated that China’s research strengths in post-quantum cryptography could mean that “…intelligence communities, particularly Five Eyes, could lose important capabilities and suffer from diminished situational awareness.”
• The Center for Strategic and International Studies (CSIS) described post-quantum encryption as an “area of concern” because it is “armed with unparalleled computing power” and “an advanced quantum computer could break through existing conventional encryption methods that are used by individuals, banks, internet companies, governments, and militaries to secure data.”

China has marked quantum as a strategic task and priority as part of its goal in becoming a “manufacturing powerhouse,” allocating billions in funding ($15.3 billion as of 2022) and drafting policies to highlight the importance of this technology. According to a report by China’s Securities Times on 15 March 2024, as of 2023, China was the world’s largest investor in quantum technology with a total of more than $15 billion, way ahead of other countries like the UK ($4.3 billion), US ($3.75 billion), Germany ($3.3 billion), South Korea ($2.35 billion), and Russia ($1.45 billion). 

• China’s Made in China 2025 (MIC2025) states that it is China’s intent to master “core technologies…and actively promote the development of quantum computing and neural networks.”
• In 2021, quantum technology was added to China’s 14^thFive Year Plan (FYP) as a “priority in the coming years.”
• In 2017, the 13^thFYP included quantum communication and computing as a “priority strategic technology.”
• The Outline for Building a Powerful Country with Quality [质量强国建设纲要] issued jointly by the CCP Central Committee and the State Council in February 2023 called for breakthroughs in quantum technology. 
• The Implementation Directive for Promoting Innovation and Development of Futuristic Industries [关于推动未来产业创新发展的实施意见] jointly issued by seven Chinese government ministries and agencies in January 2024 made quantum computer one of 10 innovative benchmarkproducts that China must develop.

China has made significant progress in quantum computing, sensing, and communication, especially in recent years. According to ASPI’s Critical Technology Tracker, these advancements have enabled China to become a global leader in photonic sensors, post-quantum cryptography, quantum communications – including quantum key distribution and advanced optical communications – and quantum sensors. 

• In 2017, a 2,000-kilometer quantum-secure communication system was put in place between Beijing and Shanghai. At the end of 2022, China had built more than 10,000 kilometers of a national quantum-secure communication core network. 
• In 2019, University of Science and Technology of China (USTC) researchers were able to achieve a 12-qubit entanglement in a quantum computer and just four years later, in May 2023, the 176-qubit quantum computing cloud known as “Zuchongzhi’ developed by the Chinese Academy of Sciences (CAS) was put into service.
• In 2021, Tsinghua University researchers reported the development of a quantum radar capable of detecting stealth aircraft. 
• In January 2024, China’s 3^rd generation superconducting quantum computer, “Benyuan Wukong”, was put into operation. 

The US has expressed growing concerns over China’s quantum developments and has taken actions to counter these developments.

• The US National Institute of Standards and Technology, incorporated four novel encryption algorithms into its security protocols, aiming to bolster resilience against potential computer-based hacking.
• Beginning in 2018, the US federal budget allocation for quantum research across national laboratories and universities has increased significantly, more than doubling from approximately $400 million in 2019 to an estimated $900 million in 2022.

G20 countries have also taken actions to address concerns over China’s quantum advancements.

• In 2018, the EU initiated the Quantum Flagship, investing approximately €1 billion in quantum research over the next decade and aiming to establish a network of 5,000 quantum-related researchers across the EU. As of 2022, the EU has invested $8.4 billion in the development of quantum technologies.
• In 2023, Canada launched its National Quantum Strategy in 2023 with government investments totaling $141 million in research, $45 million in talent development, and $169 million in commercialization efforts.
• In 2020, Japan introduced its Quantum Technology and Innovation Strategy, which involved the establishment of eight new R&D centers. In 2022, Japan established its Vision of Quantum Future Strategy, which seeks to enhance the country's economic and societal resilience through the utilization of quantum technologies. As of 2022, Japan has invested $11.8 billion in the development of quantum technologies.

Author: Addison Marcum, Analyst, Pamir Analysis