China’s rapid military expansion, state-directed technological advancement, and integration of civilian industries into the People’s Liberation Army (PLA) have placed Beijing at the center of some of the most pressing security challenges facing the democratic world. In response, PSSI has launched the “Preventing the Funding of China’s Military-Industrial Complex” project to expose how Western capital markets, institutional investors, and global index providers inadvertently underwrite the advancement of China’s military capabilities and its authoritarian strategic ambitions.

A defining element of China’s national strategy is the fusion of civilian and military sectors, commonly known as “Military-Civil Fusion.” This policy ensures that any technological or industrial advance achieved by Chinese companies, including those operating globally, can be weaponized for PLA use. Numerous Chinese firms benefiting from Western financing are deeply implicated in the development of advanced missile systems, surveillance architecture, cyber-warfare capabilities, and dual-use technologies that empower Beijing’s coercive diplomacy across the Indo-Pacific and beyond. Despite mounting evidence of human rights abuses, espionage activities, support for Russia’s war effort, and the militarization of the South China Sea, China relies on sustained inflows of Western investment to fund and modernize its defense industrial base.

Leading index providers and asset managers have generally failed to screen for military affiliations, human rights violations, or national security threats – allowing billions of dollars in Western savings to flow, largely unknowingly, into entities tied to the PLA. This initiative seeks to illuminate these profound shortcomings of current Western financial regulatory frameworks and the absence of meaningful due diligence of Chinese publicly listed firms, ensuring that democratic capital does not continue to fuel the rise of China’s military power.