Chinese espionage has taken on an entirely new face with Beijing now encouraging Chinese firms to invest in American tech start-ups, especially those whose technology or products have to do with weapons and weapons systems.

A report commissioned by the U.S. Department of Defense during the Obama administration confirms China has been encouraging Chinese companies to invest in American startups. It said Chinese firms, either state-owned or with state investments, are investing heavily in cutting-edge American tech companies, and many of these start-ups' technologies have military applications.

American media said U.S. government controls meant to protect key technologies are ineffective in countering this new form of Chinese espionage. These technologies include rocket engines; sensors for autonomous Navy ships and artificial intelligence or AI, among many others.

The main concern is China is a military competitor and that dealing with a competitor like China, which exploits free market rules by investing in companies of its enemy, (in this case the U.S.) is treading a fine line between entrepreneurship and state control.

Media reports revealed Chinese firms invested $9.9 billion in startups in 2015, four times the amount invested in 2014. Details of the deals Chinese investors made with startups are unclear since companies are under no obligation to disclose them.

With the increase in Chinese investments came an increase in the number of cases involving Chinese companies before the Committee on Foreign Investment in the United States (CFIUS). Complaints involving Chinese companies before the CFIUS increased to 68 in 2015 compared to 39 in 2011.

Experts expect China's portion of the caseload at the CFIUS is expected to remain high since deals involving Chinese are receiving more scrutiny from CFIUS.

Any investment resulting in control of businesses in the national security sector by China is going to be reviewed by CFIUS.

CFIUS is an inter-agency committee of the United States government that reviews the national security implications of foreign investments in U.S. companies or operations.