Beijing's Trojan Yacht

The Trojans did not lose their city to a siege, they lost it to a gift they wheeled through their gates. Beijing understands this lesson better than we do. For decades the Chinese Communist Party strategy for acquiring Western military technology has run not only through espionage but also through economic leverage. China buys companies of strategic importance, learn what they know, and move the knowledge home. This approach worked in semiconductors, telecommunications and critical minerals. It is now being applied to one of the West's most sophisticated builders of high-performance naval craft.

Weichai owns 39.5 percent of Ferretti but was able to capture eight of nine board seats at the company's May board meeting. The vote passed with the support of a bloc of major Chinese shareholders, each holding under the 3 percent threshold that would have triggered additional disclosures. The second-largest shareholder is now in a Bologna court arguing that Weichai never made the national security filing Italian law requires. Anyone who has observed how Beijing operates in Western markets will recognize that this is all part of a pattern.

Weichai's longtime chairman said in 2023 that a priority was to transfer Ferretti's production technology to a marine hub in Qingdao, already home to a large Chinese naval base. Company literature describes the hub as a center for "public service vessels," Beijing's term for the coast guard fleet now ramming Philippine boats in the South China Sea. Ferretti's orders fell 27 percent in the first half of the year, giving Beijing a commercial pretext to move production to China. The only product line still growing is the one the Qingdao yard was built to make.

Sophisticated modern yachts are packed with technology that captures critical data, such as telemetry, location, and communications. Under China's National Intelligence Law any Chinese company can be compelled to hand that data to state intelligence. Italy's former chief of defense, Gen. Vincenzo Camporini, stated: "There's no need for espionage scenarios: the product's standard digital architecture is sufficient." China only needs to acquire the company and its existing technology to conduct espionage across Western harbors visited by Ferretti vessels, exploiting the unwitting owners who are often executives and a who's who of the rich and famous.

Section 1260H of the Fiscal 2021 National Defense Authorization Act directs the Pentagon to list Chinese military companies operating in the United States; it applied the law last year to the shipping giant COSCO, and it should apply this year to Ferretti. Sen. Jim Banks of Indiana has asked Secretary of War Pete Hegseth to add Weichai to the list. The Pentagon should act before the tooling and engineers are in Qingdao because a designation that arrives after the technology has left is practically empty.

Where I teach at the Institute of World Politics, we train the next generation of national security professionals, some headed for the maritime services. The lesson we try to impart is that in long-term political warfare, adversaries rarely announce their intentions with a bang. Instead, they arrive with a shareholder vote, a below-threshold stake, and a factory turning out yachts for spying.

The Chinese Communist Party has told us what it plans to do with the Ferretti Trojan Horse, but are policymakers in Washington listening?

James S. Robbins is Senior Vice President for Research and Business Development at The Institute of World Politics in Washington D.C, a Dean Emeritus at the Institute, and a former special assistant in the Office of the Secretary of Defense. He is the author of five books on military history and national security.