[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
      EFFORTS TO TRANSFER AMERICA'S LEADING EDGE SCIENCE TO CHINA

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 2, 2011

                               __________

                           Serial No. 112-74

                               __________

        Printed for the use of the Committee on Foreign Affairs


 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                 ______



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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California          BRAD SHERMAN, California
STEVE CHABOT, Ohio                   ELIOT L. ENGEL, New York
RON PAUL, Texas                      GREGORY W. MEEKS, New York
MIKE PENCE, Indiana                  RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina           ALBIO SIRES, New Jersey
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, California
TED POE, Texas                       BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida            BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio                   CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida                FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania             KAREN BASS, California
TIM GRIFFIN, Arkansas                WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New YorkAs 
    of October 5, 2011 deg.
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director
                                 ------                                

              Subcommittee on Oversight and Investigations

                 DANA ROHRABACHER, California, Chairman
MIKE KELLY, Pennsylvania             RUSS CARNAHAN, Missouri
RON PAUL, Texas                      DAVID CICILLINE, Rhode Island
TED POE, Texas                       KAREN BASS, California
DAVID RIVERA, Florida


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Frank Wolf (R-VA), chairman, Appropriations 
  Subcommittee on Commerce, Justice, Science, and Related 
  Agencies.......................................................     8
Mr. Thomas Armstrong, Managing Associate General Counsel, 
  Government Accountability Office...............................    17
The Honorable John Holdren, Ph.D., Director, Office of Science 
  and Technology Policy..........................................    35
The Honorable Charles Bolden, Jr., Administrator, National 
  Aeronautics and Space Administration...........................    44
Mr. Rick Fisher, senior fellow, International Assessment and 
  Strategy Center................................................    60
Adam Segal, Ph.D., senior fellow, Council on Foreign Relations...    75

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Dana Rohrabacher, a Representative in Congress from 
  the State of California, and chairman, Subcommittee on 
  Oversight and Investigations: Prepared statement...............     4
Mr. Thomas Armstrong: Prepared statement.........................    19
The Honorable John Holdren, Ph.D.: Prepared statement............    37
The Honorable Charles Bolden, Jr.: Prepared statement............    46
Mr. Rick Fisher: Prepared statement..............................    63
Adam Segal, Ph.D.: Prepared statement............................    77

                                APPENDIX

Hearing notice...................................................    92
Hearing minutes..................................................    93
The Honorable Frank Wolf (R-VA), chairman, Appropriations 
  Subcommittee on Commerce, Justice, Science, and Related 
  Agencies: Material submitted for the record....................    94


      EFFORTS TO TRANSFER AMERICA'S LEADING EDGE SCIENCE TO CHINA

                              ----------                              


                      WEDNESDAY, NOVEMBER 2, 2011

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 3:10 p.m., in 
room 2172, Rayburn House Office Building, Hon. Dana Rohrabacher 
(chairman of the subcommittee) presiding.
    Mr. Rohrabacher. This hearing will come to order. This is 
the Subcommittee on Oversight and Investigations of the Foreign 
Affairs Committee.
    Good afternoon, we are here to discuss the activities of 
NASA and the White House Office of Science and Technology 
Policy, OSTP, in regards to international cooperation, 
particularly in regards to cooperation with communist China.
    When personnel from either of these organizations travel to 
the People's Republic of China, collaborate on projects, share 
data or attend conferences, yes, there is ample reason for 
concern.
    The transfer of technology know-how is a serious national 
security problem. The Chinese communist party is aggressively 
using its military, economic and political power to extend its 
influence and diminish ours. Its government is the world's 
single largest human rights abuser, and its assistance to other 
countries is well-known, but the countries that it is assisting 
happened to be those countries which are run by governments who 
are oppressing their own people.
    The Chinese also facilitate the proliferation of weapons of 
mass destruction to our enemies, even as they expand their own 
offensive capabilities. Our conversation here today must be 
viewed within that context and any effort on our part to reach 
out to the communist Chinese, to engage them on matters of 
technology is, quite frankly, not just naive but dangerous.
    Today's hearing was inspired by a legal opinion by the 
Government Accountability Office released last month which 
states that, Despite clear legislative language, which passed 
both Houses of Congress and that President Obama signed, that 
accordingly, despite all of that, banning the OSTP and NASA 
from using appropriated funds for meetings with Chinese 
officials; the OSTP did so anyway.
    The GAO opinion states that by doing so the OSTP violated 
the Antideficiency Act and accordingly, ``should report the 
violation as required to the GAO,'' which they have done so.
    The OSTP cites a Department of Justice legal opinion that 
Congress has no authority to limit the executive branch from 
pursuing ``diplomacy'' in any way as they see fit. They can do 
whatever they want in terms of diplomacy, with whatever they 
see fit, with whatever funds that they see fit.
    My colleagues and I will fight this overreach, and as we 
have, in the past, when we have seen such power grabs from 
whatever administration. And we believe in maintaining the 
constitutional division of power between the first and second 
branches of government and the limits of executive privilege, 
but that is not today's purpose. Today's purpose is to discuss 
the inherent dangers of transferring America's leading-edge 
science to China. China is an increasingly hostile and 
disruptive force in the world.
    The idea that we are cooperating with them in any capacity 
is alarming. China has aggressively sought our technologies 
through legal and illegal methods for decades. Anything that 
allows China any access to our technology or planning brings 
forth some major counterintelligence issues. Let me remind 
everyone about the Communist Chinese party's 16-character 
policy, directing China to ``combine the civil with the 
military.''
    The Chinese Government does not separate civilian and 
military programs. The People's Liberation Army runs the 
Chinese space program, and the People's Liberation Army is 
loyal to the communist party that runs the Government of China.
    The Chinese National Space Administration is not like NASA, 
an independent civilian agency. Their space office is merely a 
public relations front under the command of the Commission of 
Science, Technology and Industry for National Defense. Thus 
China's space facilities are all manned and operated by the 
People's Liberation Army.
    I look forward to hearing from the OSTP exactly what was 
discussed at the meetings with Chinese officials and what was 
the purpose of those meetings. I understand that NASA 
Administrator Bolden, who we have as a witness today, also 
traveled to China and met with Chinese officials there, but 
this was prior to the law prohibiting that exchange. I would 
like to understand the reason for those trips and their 
meetings and to find out why those risks that we have 
recognized in Congress are not recognized by the executive 
branch.
    If Administrator Bolden and Director Holdren, if they 
believe in what the Communist Chinese are talking about in 
terms of space technology, if they believe that cooperating 
with these people, with their Communist Chinese counterparts 
can be beneficial to the United States, I would like to know 
how we will then, if we are cooperating with the Chinese, avoid 
a repeat of what happened in the 1990s with the Hughes and 
Lorall corporations, a scandal that advanced the Chinese 
missile program and put the entire world at risk.
    Now the stakes of technology transfer are even greater 
today than it was then, as China is now engaged in human space 
flight and intent on building a space station and a Moon Base 
in the coming years. Ten years ago we thought we could manage 
the Chinese Government and limit cooperation to only national, 
nonnational defense areas, but we were wrong.
    What happened in the 1990s and the transfer of technology 
to the Chinese was a major disaster for the national security 
of our country. And the fact that the Chinese today are as far 
ahead in their space program as they are--this is a regime that 
is the world's worst human rights abuser--the fact that they 
are so far advanced in their missile and rocket technology can 
be traced right back to the transfer of technology in the 1990s 
from American corporations. They did not have to do the tens of 
billions of dollars of research and development necessary to 
have this kind of power their hands.
    Why are we willing to give to that to them? Why are we 
willing to take the chance that they will become more powerful 
based on our investment in technology?
    Well, we were wrong then, and the access we gave the 
Chinese military, not just their space program but their 
military, was a huge leap forward, whereas they would say a 
great leap forward. And, of course, it saved them billions of 
dollars.
    So how can cooperating with China now, which is a vicious 
tyranny and a strategic rival, how can that be a smart policy 
when our experience tells us just the opposite? That's what 
this is about today.
    Mr. Carnahan, our ranking member, if you have an opening 
statement, I will get rid of this cough.
    [The prepared statement of Mr. Rohrabacher follows:]

    
    
    
    
    
    
                              ----------                              

    Mr. Carnahan. Thank you, Mr. Chairman, for holding this 
hearing today so we have an opportunity to review the issues 
that we expect to be raised.
    Respectfully, I have a different view on how we can 
positively engage with China and, at the same time, push 
aggressively for reforms.
    It is important that Congress exercise its oversight 
responsibilities seriously, over expenditure of U.S. taxpayer 
dollars. We need to ensure that all appropriations are expended 
in accordance with U.S. law. Regardless of what the 
administration may think, or what I may think of a certain 
provision, the administration should work with Congress to 
ensure that they are complying with all the requirements set 
forth in the appropriation bills passed by Congress.
    In addition to our oversight responsibilities, we should 
focus our time working on policies that grow and expand the 
U.S. economy. A strong engagement policy with China provides 
economic opportunities for both countries. It is clearly in our 
economic interest.
    Back home, the State of Missouri where I come from, we have 
worked for several years to establish a Midwest-China air 
freight hub in St. Louis as an example of the type of 
partnership that can exist between our two countries that is in 
both of our economic interests.
    As a result of working together, St. Louis is poised to 
become a major export hub for domestically manufactured 
products. As of 2010, China was the world's third largest buyer 
of Missouri products, with nearly 1 billion in sales last year 
alone Missouri-made products, export to China, are creating 
jobs here at home. With nearly 20 percent of the world's 
population, the Chinese market represents an opportunity for 
American businesses to create jobs here in the U.S. by making 
American products here at home and exporting them to an ever-
growing group of Chinese consumers.
    Strong relations and cooperation also create political 
space for progress in areas of disagreement, such as currency 
manipulation and intellectual property protection. Science and 
technology cooperation is an indispensable part of U.S. foreign 
policy and has been for decades, the growing belief that 
science diplomacy is a critical part of our tool case for 
advancing our diplomatic interests.
    Mr. Chairman, your former boss, President Reagan, was a 
great proponent of U.S.-China cooperation. In 1983, in his 
submission to Congress he stated, ``It is in our fundamental 
interest to advance our relations with China. Science and 
technology are an essential part of that relationship.''
    And on his trip to China in 1984, he stated that the U.S. 
and China needed to ``expand our economic and scientific 
cooperation, strengthen the ties between our peoples and take 
an important step toward peace and a better life.''
    Science and technology cooperation is a bipartisan policy 
that has been effectively used by many different 
administrations. We absolutely need to advocate for policies 
that offer the strongest protection for U.S. businesses and the 
best economic opportunities for our citizens.
    But we absolutely need to continue science and tech 
cooperation between our two countries. I look forward to 
hearing from our witnesses today as we address this important 
issue. I yield back.
    Mr. Rohrabacher. Thank you very much, and I think that 
demonstrates the respectful difference of opinion that people 
can have on these issues. I do want to note that you quoted me 
several times, whereas I was the one who worked with President 
Reagan on those very statements.
    What was left out was the little clauses that Ronald Reagan 
said. Of course, that will all disappear if liberalization of 
China ceases to happen.
    Go back and read the speeches. And I know, because I was 
assigned to work with President Reagan on those speeches, and 
it is very clear, very clear from what he said when he went 
there and before that we should not be sending technology 
transfers, and all of these--all of these great things that we 
are doing with trade and investment should not happen unless 
China continues liberalizing, which it was at that time.
    When China murdered and slaughtered the democracy movement 
at Tiananmen Square, that ended those statements for Ronald 
Reagan. Reagan would never have gone along with that policy. 
Unfortunately, his Vice President hadn't learned the lesson 
because President Herbert Walker Bush was President at the time 
and let the slaughter of Tiananmen Square go unanswered. We as 
Americans shouldn't have that type of value system.
    We have with us a champion of freedom, and Frank Wolf, who 
is a Member of Congress from Virginia, chairman of the 
Appropriations Subcommittee on Commerce, Justice and Science 
and is the chairman of the Tom Lantos Human Rights Commission.
    Congressman Wolf has been deeply involved in the issues of 
human rights issues and legislation, especially about the 
legislation that we are going to hear about today. He has 
admirably applied our shared desire for human rights to all 
areas of Congress' works, and he is a Member I deeply respect, 
and frankly appreciate you being with us here today.
    Could you shed some light on this particular part of the 
legislation, what it means and whether you believe the intent 
of Congress has been violated?

    STATEMENT OF THE HONORABLE FRANK WOLF (R-VA), CHAIRMAN, 
APPROPRIATIONS SUBCOMMITTEE ON COMMERCE, JUSTICE, SCIENCE, AND 
                        RELATED AGENCIES

    Mr. Wolf. Thank you, Mr. Chairman, for calling this 
hearing, and I think the American people would thank you also 
for calling this hearing.
    I have been very troubled by this administration's apparent 
eagerness to work with China on its space program, a 
willingness to share other sensitive technologies. I want to be 
clear the United States has no business cooperating with the 
People's Liberation Army to help develop its space program.
    We should also be wary of any agreements that involve the 
transfer of technology or sensitive information to Chinese 
institutions or companies, many of which are controlled by the 
government and the PLA.
    Space is the ultimate high ground that has provided the 
U.S. with countless security and economic advantages over the 
last 40 years. As a victor of the Cold War space race with the 
Soviet Union, the U.S. has held an enormous advantage in space 
technology, defense capabilities and advanced sciences 
generating entirely new sectors of our economy and creating 
thousands of private sector jobs.
    China has developed its own space program at a surprising 
pace, having gone from launching their first manned spacecraft 
to launching components for an advanced space station in just 
10 years. But the Chinese space program is being led, as you 
said, Mr. Chairman, by the People's Liberation Army, the PLA. 
And to state the obvious, the PLA is not a friend, as evidenced 
by their recent military posture and aggressive espionage 
against U.S. agencies and firms and actually against this 
Congress and against this committee.
    That is why I was troubled to learn from the press last 
fall about NASA Administrator Charlie Bolden's imminent 
departure for a week-long visit to China to discuss areas of 
cooperation between NASA and the PLA space program.
    I was more concerned to learn that Dr. John Holdren, head 
of the White House Office of Science and Technology Policy, had 
spent 21 days in China on three separate trips in 1 year, 3 
weeks, 1 year, one China, one visit, 3 weeks, more than any 
other country. Very little information about these cooperative 
agreements with China were being provided to Congress and to 
the American people.
    So I included language in section 1340 of the Fiscal Year 
2011 continuing resolution preventing NASA and OSTP from using 
Federal funds to develop, design, plan, promulgate, implement 
or execute a bilateral policy program, order or contract of any 
kind to participate, collaborate or coordinate bilaterally in 
any way with China or any Chinese-owned company.
    The provision in the omnibus appropriation bill was agreed 
to by Republican and Democratic conferees. It passed both 
Houses with bipartisan support and was signed into law by the 
President. The provision was clear, unambiguous and 
noncontroversial.
    However, less than 1 month after its enactment, I learned 
that Dr. Holden and OSTP had defied the provision. Even more 
troubling is that he withheld information about his intention 
to do so during an appearance before the House Commerce, 
Justice, and Science Appropriations Subcommittee when we 
discussed, among other things, the implementation of section 
1340 and Dr. Holden's participation in the U.S.-China strategic 
and economic dialogue from May 2010.
    It is almost like not telling the truth by omission because 
if he never said anything there, and then sent a letter up the 
next day after his hearing.
    This is why I asked the Government Accounting Office to 
investigate this violation and issue an opinion. I also asked 
GAO to determine whether the Office of Legal Counsel opinion 
provided by the Justice Department was legitimate. In an 
October 11 opinion, GAO found,

        ``The plain meaning of section 1340 is clear, OSTP may 
        not, may not use as appropriations to participate, 
        collaborate, or coordinate bilaterally in any way with 
        China or any Chinese-owned company.''

    Further, GAO found that, ``OSTP's participation in 
innovation, dialogue and S&ED contravened the appropriation 
restriction'' and added, ``OSTP does not deny that it engaged 
in activities prohibited by section 1340.''
    The GAO finding also rebuts a September 11 memorandum 
prepared by the Justice Department OLC on the constitutionality 
of the provision. GAO stated,

        ``In our view, legislation that was passed by Congress, 
        signed by the President, thereby satisfying the 
        Constitution's bicameralism and presentment requirement 
        is entitled to a heavy presumption in favor of 
        constitutionality.''

    Finally, the GAO finding clearly notes,

        ``As a consequence of using its appropriation in 
        violation of Section 1340, OSTP violated the 
        Antideficiency Act by using its Fiscal Year 2011 
        appropriation in a manner specifically prohibited, OSTP 
        violated the Antideficiency Act. Accordingly, they 
        should report the violation as required by law.''

    I also wrote Attorney General Eric Holder asking him to 
hold Dr. Holdren to full account for his violation of the 
Antideficiency Act by ensuring that it complies with all the 
reporting requirements and provisions of the law.
    I take the GAO findings very seriously, following the law 
is not voluntary for the administration officials. That is why 
Dr. Holdren should commit today to full compliance with section 
1340 and publicly acknowledge his error in participating in the 
bilateral conference with the Chinese Government.
    Now, Mr. Chairman, I would like to take a few minutes to 
put the administration's posture toward China in the broader 
context of the Chinese Government, and I say government.
    The Chinese people are wonderful people. The Chinese people 
yearn for freedom. So when I say today, I am talking about the 
Chinese Government and their grave human rights abuses, 
espionage efforts and detrimental economic policies.
    In June 1989, peaceful prodemocracy demonstrators gathered 
in Tiananmen Square. They were met with a brutal crackdown. As 
events unfolded, the world was captivated with the now-famous 
image of the tank man, a lone, brave, brave student protester 
who stood his ground in the face of the advancing Chinese tank, 
and to this day his fate is unknown.
    During my first trip to China in 1991 with Congressman 
Chris Smith, we visited Beijing Prison Number 1 where 
authorities informed us and we saw them that approximately 30 
Tiananmen Square demonstrators were behind bars. They were 
making these socks for export to the United States. They were 
making socks, Tiananmen Square demonstrators, and these socks 
were held up on the floor when we got back by Senator Moynihan 
at that time. We left with a pair, and they are the socks.
    Tellingly, the image of the tank man, while famous around 
the globe, is virtually unknown within China, thanks to the 
great firewall, which censures so-called offensive speech. It 
is estimated that China employs 30,000 to 50,000 special 
Internet police. Shockingly, the country has a thriving 
business of harvesting and selling for transplant kidneys--and 
we can furnish all the members of all the videos that cover 
this in detail, corneas and other human organs from executed 
prisoners.
    The image here, and I have the one picture over there, the 
image here shows the PLA, the same PLA that runs the space 
program, the PLA offers in preparing to execute prisoners, 
later footage from the same story shows an unmarked van driving 
toward the prison to harvest the organs. When you watch the 
video, it will make you sick.
    Like many repressive regimes, the Chinese Government 
maintains a brutal system of labor camps. The Soviet, the State 
Department's annual Human Rights Report found ``forced labor 
remained a serious program.''
    Famed Chinese dissident Harry Wu spent nearly 20 years in a 
Chinese gulag. In congressional testimony earlier this year he 
said, ``When I finally came to the U.S. in 1985, although I was 
already 48 years old, that was the first time in my life I felt 
truly free.''
    He concluded by urging ``President Obama and the U.S. 
Congress to be bold and take a firm stand against China's human 
rights abuses, exactly the way that President Reagan did with 
regard to the Soviet Union.'' And he did it in a very 
appropriate way, and I know you were at his funeral--if you 
will recall, he said tear down the wall, he said. Evil empire. 
And Gorbachev came to his funeral.
    But boldness is hardly the order of day when it comes to 
U.S. policy. That same could be said of some companies.
    Congressman Chris Smith, and the late chairman of this 
committee, Congressman Tom Lantos--himself a Holocaust 
survivor--convened a hearing in 2006 in which they publicly 
challenged Yahoo to look behind the bottom line and consider 
the moral implications of their complicity, their complicity in 
imprisoning Chinese dissidents.
    New York Times columnist Nicholas Kristof--and I appreciate 
he is been very good on these issues--authored a piece after 
the hearing writing, ``Suppose that Anne Frank had maintained 
an email account while in hiding in 1944 and that the Nazis had 
asked Yahoo for cooperation in tracking her down.'' It seems,'' 
he said, ``based on Yahoo's behavior in China that it might 
have complied.''
    Yahoo isn't the only U.S. company to come under fire for 
pursing business interests at the expense of human rights. A 
May 22 New York Times article reported that Cisco, customized, 
``customized its technology to help China track down members of 
the Falun Gong spiritual movement.''
    There are multiple suits now against Cisco.
    These allegations reflect a worrying trend. American 
companies ought to represent American values. Instead, it seems 
that time and again major U.S. corporations are embracing the 
Chinese Government's policies that are completely at odds with 
what America stands for.
    China, in turn, exports its repressive technology to like-
minded governments. In October 27, a Wall Street Journal piece 
reported that the Chinese telecom giant Huawei, now operating 
in the United States, Now dominates Iran's Government-
controlled mobile phone industry. It plays a role in enabling 
Iran state security network, the same people that killed all 
the people in Iran when we watched last year.
    It seems that not only is the U.S. failing to change China, 
but rather China is changing us. Is it any surprise considering 
what China is spending on high-powered lobbying firms in this 
town?
    According to a January 9 Washington Post story, in recent 
years China has tripled the amount it spends on lobbying firms. 
But well-heeled lobbyists can't explain away China's abysmal 
human rights records.
    Thousands of political and religious prisoners languish in 
prison. According to the Cardinal Kung Foundation, Cardinal 
Kung was a Catholic cardinal, currently one of approximately 25 
underground bishops of the Catholic Church is either under 
house arrest, in jail or under strict surveillance or in 
hiding. Congressman Chris Smith took holy communion from Bishop 
Zhu, he has never been seen since.
    According to China in 2010, 2010, 336 Protestant House 
church leaders were arrested and persecuted.
    Since March 10th, 10 Tibetan Buddhist monks and nuns have 
set themselves aflame, aflame in desperation. I was in Tibet, 
the desperation. What drives nine Buddhist monks and a Buddhist 
nun to set themselves aflame? Every monastery in Tibet has a 
public security police in the monastery. It would be like in 
your church or your synagogue, the FBI would be in there.
    What sets them aflame like that to drive them--and the 
Buddhist monks and nuns are a very, very peaceful people.
    Chinese authorities continue to use Uighur, Muslim activist 
Rebiya Kadeer, her children and grandchildren as pawns, as 
pawns and to silence her. And her two sons are serving a length 
in prison. And the Chinese public security police sent people 
to Fairfax County to spy on her, Fairfax County.
    We have now seen that the Chinese Government is unmoved 
and, in fact, emboldened in its ongoing repression, while at 
the same time, experiencing an explosive economic growth. We 
have seen our own short-sightedness in making the protection of 
basic liberties and the advancement rule of law secondary to 
unfettered market access and normal trade relations.
    These flawed policies, Mr. Chairman, have strengthened the 
oppressors. They have strengthened the oppressors and enabled 
China to advance economically at our expense.
    Every member here and every Member in the Congress has 
constituents whose livelihood have been negatively impacted by 
China's blatant economic espionage, predatory and protectionist 
and illegal activity, every single district.
    Meanwhile, U.S. companies are increasingly sending American 
jobs to China. General Electric's health care unit, their 
health care unit. You have seen their ads almost every Sunday 
on the Sunday news. Their health care unit recently announced 
it was moving its headquarters of 115-year-old X-ray business 
to Beijing.
    Ironically, the president of--the head of President Obama's 
Council on Jobs and Competitiveness, GE Chairman Jeffrey 
Immelt, they are leaving the United States and they are 
creating jobs in China.
    According to a March 24 New York Times article--and we will 
submit it for the record--GE paid zero taxes in the U.S. in 
2010. Meanwhile, the Congressional Research Service found that 
the Chinese State Tax Administration and China Tax Magazine 
recently jointly released a number of lists of the top 
taxpayers, taxpayers in 2007 and GE featured prominently. The 
Beijing subsidiary of GE was number 32. GE pays taxes in China, 
does not pay tax in America.
    There is something wrong with that.
    It is noteworthy that GE, which pays no Federal taxes in 
its home country, is honored, is honored for being a 
significant source of tax revenue in China.
    Now engagement with China has not only empowered the 
government and failed to change their political system, 
undermine their economic security, it has fueled China's 
military apparatus. Again the President's job czar is at the 
center of these concerns.
    An October 28 Defense News piece reported that ``U.S. air 
space companies may unknowingly be helping China's military.''
    Specifically the article wanted to ``last January's 
announcement by General Electric and the Aviation Industry 
Corporation of China, the government, that they would launch a 
joint venture for integrated avionics.''
    And cited the soon-to-be-released report of the 
Congressional-Executive Commission on China which indicated, 
that ``China has a robust, largely military space program,'' 
with all but 13 of its roughly satellites--70 satellites in 
orbit controlled by the military.
    And NASA wants to work with a PLA killing people for their 
organs, spying against them, doing this and a direct threat to 
the American military.
    And in a May 17 article in Wired.Com, it reported that 
Chinese troops had begun using a first-person shooter video 
game called ``Glorious Mission'' backed by the PLA, which 
simulates basic training in which the enemy is apparently the 
U.S. military.
    On April 11, Aviation Week reported, ``The PLA''--the 
people who run this space program--``has made great strides 
toward implementing a strategy to deter or defeat U.S. forces 
in the western Pacific.''
    The 2010 annual Pentagon report cited earlier found ``In 
the case of key national security technologies, controlled 
equipment and other materials not readily obtainable through 
commercial means or academia, the PRC resorts to a more focused 
effort, including the use of its intelligence services and 
other than legal means in violation of U.S. laws and export 
controls.''
    Let's be perfectly clear about China and how its advancing 
militarily. They are using ``other than legal means.'' They are 
spying. They are stealing.
    The FBI has come before our committee approps, they have 
got the most aggressive spying program of anybody in the 
history this Nation, much more aggressive than the KGB. The 
report also highlighted cyber China's espionage efforts.
    The U.S. intelligence community notes that China's attempt 
to penetrate U.S. agencies are the most aggressive of all 
foreign intelligence organizations. According to a 2008 FBI 
statement, Chinese intelligence services ``pose a significant 
threat both to the national security and to the compromise of 
U.S. national assets, i.e., you are losing jobs,'' you are 
losing jobs, 9 percent unemployment and you are losing jobs. 
Their espionage isn't limited to government agencies.
    An October 4 Washington Post article, Representative Mike 
Rogers, chairman of the House Intelligence Committee remarked

        ``When you talk to these companies behind closed doors, 
        they describe attacks that originate in China and have 
        a level of sophistication and are clearly supported by 
        a level of resources that can only be a nation state 
        entity.''

    These breaches in our national security infrastructure are 
rampant and pose a very real threat. A May 14 Reuters story 
indicated

        ``North Korea and Iran appear to have been regularly 
        exchanging ballistic missile technology in violation of 
        U.S.--U.N. sanctions according to a confidential U.N. 
        report. The report said the illicit technology transfer 
        had transferred shipments through a neighboring third 
        country, China.''

    China is also a major arms supplier and source of economic 
strategy to the regime in Sudan, in Khartoum, Sudan. According 
to Human Rights Watch, first during the years of the worse 
violence in Darfur, China sold $55 million worth of small arms 
to Khartoum. I was the first Member of the House to go to 
Darfur. Sam Brownback was with me.
    We heard the stories of rape, and killing and displacement 
and America gave guns to them, America's giving food to 
Chinese, the weapons. The Janjui circulate around the camps. 
And when the women go out in the morning to collect wood--and 
China is the number one supporter--the largest Embassy in 
Khartoum is the Chinese Embassy.
    And they are aiding them and meanwhile, Beijing, right 
there, that picture of Beijing, rolled out the red carpet this 
year for Sudanese President Omar al-Bashir, an internationally 
indicted war criminal. Bashir's crimes are not just things of 
the past, Bashir's crimes are going on today.
    In the Nuba Mountains, we have reports they are going door 
to door pulling black people out and killing them. We had a 
hearing before the Tom Lantos committee, the number one 
supporter is China. They are blocking the U.N. missions that go 
there. I mean, they have been--and Bashir is indicted by the 
International Criminal Court.
    Why did we go after and help get Milosevic, which we should 
have, and get Radic, which we should have, and get Karadzic, 
which we should have. And yet we close our eyes and do nothing 
with regard to Bashir who goes to China.
    They had an obligation that they wanted to be part of the 
world nation to arrest Bashir when he landed and to keep him 
on. He is an indicted war criminal.
    Speaking of the red carpet, President Obama, the 2009 Nobel 
Prize winner, welcomed Chinese President Hu Jintao, who was the 
author of the crackdown in Tibet, crackdown in Tibet and is 
pushing what is taking place to a Nobel--to a dinner in the 
White House when the 2010 Nobel Prize winner, Xiaobo was in 
jail, his wife was under house arrest and nobody could even go 
to Oslo to pick up the prize.
    In closing, and I am closing, there will come a day--I 
think the Chinese Government has got to hear this--there will 
come a day when the Chinese Government will fall. Repressive, 
totalitarian regimes always do because the good efforts of 
President Reagan, and God bless him, and Pope John Paul and 
Margaret Thatcher, the Soviet Union collapsed. Many people in 
1986 never thought it would collapse.
    This Chinese Government, they have taken Ceausescu's 
playbook. And where it led Ceausescu it will lead this 
government. They will fall and books will be written about who 
helped sustain this government in their final days.
    Will U.S. companies feature in that narrative? Will U.S. 
Government officials feature in that narrative?
    In 2001, a book was published, every member ought to read 
it, entitled ``IBM and the Holocaust.'' A New York Times book 
review describes how IBM had ``global control over technology 
that was enormously helpful, indeed, indispensable to the Nazi 
machinery of war and annihilation.''
    The New York Times review quotes the author of the book as 
saying that many companies did what IBM did. He then said they 
``refused to walk away from the extraordinary profits 
obtainable from trading with a pariah state.''
    Arguably that assessment rings today. Only the pariah has 
changed. Those in position of leadership, be they in the 
private sector or in government, do our country a disservice 
when they gloss over or ignore the actions of the Chinese 
Government. They put us, quite frankly, squarely on the wrong 
side of history.
    The Chinese Government brutally represses its own people. 
It persecutes people of faith, Catholic, bishops, protestant 
pastors, Buddhist monks and Buddhist nuns, Muslims. It censors 
the Internet. It maintains labor camps. The Chinese Government 
is actively engaged in a cyber espionage. It steals state 
secrets. It aligns itself with the countries directly at odds 
with U.S. interests. It supports genocidal governments and 
buttresses regimes that should not be in power.
    There is a legal term for this: It is called willful 
blindness, that aptly describes the dealings to date with 
China.
    Faced with these painful truths, blindness is no longer an 
option. In the words of British abolitionist, William 
Wilberforce he said, ``Having heard all of this, you may choose 
to look the other way but you can never again say that you did 
not know.''
    Mr. Rohrabacher. Thank you very much, Mr. Wolf, and 
obviously the chair agrees with everything that you just said, 
so I would leave it to my ranking member, if you have some 
questions for Mr. Wolf.
    Mr. Carnahan. No, just, again, I want to--you raised a 
number of serious questions, I think that we need to be 
contemplating. I appreciate your work on the Human Rights 
Commission, and I do believe we need to--personally, I believe 
our approach should be one of engagement but also pushing for 
reforms in many of these areas that you have brought forth here 
today.
    So--but I think this is a very important conversation that 
we are having here today, and I appreciate you taking the time 
to be here.
    Mr. Rohrabacher. Mr. Wolf, let me just note for the record 
that while--what brought about the change in the world when the 
Soviet Union collapsed and Democratic Russia was born--and it 
is not quite totally matured yet and it is still struggling to 
be a free country--but they have made great strides since the 
1980s.
    But what brought the Communist party to the point where it 
collapsed and spared the world, an incredible Holocaust where 
military exchange between the Soviet Union and the United 
States would have caused millions of lives, it would have been 
horrible--what saved us from that was a lack of engagement.
    The fact is that we did not give the Soviet Union any of 
the economic rights that you have just outlined that we have 
given China. We have permitted China basically a one-way free-
trade policy. We have permitted--we have turned our backs and 
they manipulate the currency. We have turned our backs when 
they steal technology. We actually have invested huge amounts 
of our technology and our capital in building up their economy.
    We didn't do any of that with the Soviet Union. The people 
would have been laughed at if they would have said, well, why 
don't we turn GE loose in Russia when Russia was controlled by 
the Communist party to work out a good relationship with their 
industry that produces jet aircraft?
    We, I don't believe that by this current strategy that we 
have permitted our country to move forward with China despite 
these atrocities that you have outlined, I don't believe that 
is going to lead to a free China, and I would hope that we, in 
our lifetime, can see the Chinese people break their chains, 
and we can be proud that we helped and sided with the Chinese 
people rather than the dictatorship.
    So, thank you, one last question before you go. You are 
then convinced that the law, as written, as you actually helped 
put it into the law, was violated by these exchanges with OSTP?
    Mr. Wolf. I do believe that we are going to continue this 
issue and stay with it until the very, very end. But I do 
believe, and, also, the GAO also believes.
    And the comment is, I think you are exactly right. No 
company or law firm would have ever represented or dealt, 
represented to the Soviet Union during the days of President 
Reagan. I remember there was someone talking about doing 
something for a bus company and Reagan spoke out.
    Reagan, President Reagan said the words in the Constitution 
were our covenant with the rest of the world. The students in 
Tiananmen knew those words and Reagan, one party called him in 
1983, said tear down that wall, and yet he did it in the 
appropriate way. But our Government, when they would go to 
Moscow, as you know, George Schultz would--the Embassy was a 
island of freedom and they would meet with the dissidents and 
everything else. We are not seeing that today, you are exactly 
right.
    Mr. Rohrabacher. An amendment to this question, the last 
question is, if this is a violation of law or not, do you 
believe that the executive branch is immune from these types of 
restrictions that you placed, they helped place in the law and 
that we all placed in the law when we voted on that piece of 
legislation? Does the legislative branch have a right to limit 
what the executive branch does in foreign policy?
    Mr. Wolf. Under the Constitution it does, yes, sir.
    Mr. Rohrabacher. Thank you very much, and thank you for 
your testimony.
    On panel number II, we have Thomas Armstrong, who is the 
managing associate general counsel at the U.S. Government 
Accountability Office and is one of the leading attorneys 
working on the budget and appropriations group. He is 
responsible for the controller general's appropriations law 
opinions that the GAO issued to Congress.
    Mr. Armstrong joined the GAO Office of General Counsel in 
1978 and is a member of the bar in Virginia.
    Mr. Armstrong, you just heard a long bit of testimony, but 
we will get now to some of the specifics. I think it is 
important for us to realize that we aren't talking about some 
esoteric situation where people's lives are not at stake, that 
there is just a difference in trade policy or something. No, we 
are talking about a fundamental historic perception and the 
laws that go with those perceptions in terms of an adversary of 
the United States or someone who could be a friend of the 
United States.
    You may proceed with your testimony.

 STATEMENT OF MR. THOMAS ARMSTRONG, MANAGING ASSOCIATE GENERAL 
           COUNSEL, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Armstrong. Thank you, Mr. Chairman, and I do appreciate 
this opportunity. I am here to talk about the law. I am here to 
talk about the prohibition that was enacted to serve the 
Congress' constitutional power of the purse. I have a short 
written statement to submit for the record, if I may,
    Mr. Rohrabacher. So ordered.
    Mr. Armstrong. Thank you. A copy of our October 11 legal 
opinion that Mr. Wolf mentioned and that you mentioned in your 
opening statement is included as an appendix to that written 
statement.
    In the opinion, we determined that OSTP violated a 
statutory provision prohibiting the agency from using its 
appropriations for bilateral engagements with China. That 
provision, enacted on April 15, 2011, in the Full-Year 
Continuing Appropriations Act for Fiscal Year 2011 prohibited 
OSTP, as well as NASA, from using appropriations to ``develop, 
design, plan, promulgate, implement or execute a bilateral 
policy, program, order or contract of any kind to participate, 
collaborate or coordinate bilaterally in any way with China or 
any Chinese-owned company.''
    Because OSTP had no funds available for that purpose, 
OSTP's actions also violated the Antideficiency Act. The 
Antideficiency Act is a fiscal statute that is central to 
Congress' constitutional power of the purse.
    Between May 6 and May 10, 2011, OSTP, as they told us, 
participated in a series of meetings with Chinese officials as 
part of two events here in Washington, DC: The U.S.-China 
Dialogue on Innovation Policy, and the U.S.-China Strategic and 
Economic Dialogue. OSTP also hosted a dinner for Chinese 
dignitaries.
    OSTP did not deny that it engaged in these prohibited 
activities. Rather, OSTP asserted that the prohibition, as 
applied to these activities, is an unconstitutional 
infringement on the Executive's conduct of foreign affairs.
    As we stated in our opinion, it is not GAO's role to 
adjudicate the constitutionality of legislation that has been 
enacted into law. That role is properly reserved for the 
judiciary, not an agency like GAO that is part of the 
legislative branch.
    Legislation like this, which was passed by both Chambers of 
Congress and signed into law by the President, thereby 
satisfying the Constitution's requirements of bicameralism and 
presentment, is entitled, in our view, to a heavy presumption 
of constitutionality until a court indicates otherwise or until 
Congress changes that law. In other words, in our opinion, and 
in opinions like this, we at GAO apply the law as written to 
the facts before us. By using its appropriations in violation 
of that prohibition, the OSTP also violated that Antideficiency 
Act.
    In addition to audits and investigations, GAO serves an 
important function by providing legal opinions to Members of 
Congress and Federal agencies on matters of appropriations law, 
that is to say, those laws, including the Antideficiency Act, 
that governed the proper use of Federal funds, and that help 
protect Congress' constitutional power of the purse.
    The Antideficiency Act is a funds-control statute designed 
to impose fiscal discipline on Federal agencies. Under the Act, 
an officer or an employee of the United States Government may 
not make or authorize an obligation or an expenditure exceeding 
the amount of an available appropriation. Simply put, agencies 
may not spend more than Congress gives them.
    When OSTP used Federal funds to engage in the Innovation 
Dialogue, the Strategic and Economic Dialogue, and the dinner 
to host Chinese dignitaries, OSTP spent funds in excess of the 
amounts available, in excess of the amount Congress gave them 
for this purpose. Congress, with the prohibition, had made 
clear that OSTP had no funds available for this purpose. OSTP, 
therefore, violated the Antideficiency Act.
    In order to emphasize sound funds control and to advance 
oversight of agencies' fiscal activity, the Antideficiency Act 
requires that executive agencies report violations to the 
President and Congress and transmit copies of their reports to 
GAO. In the opinion, we advised OSTP to report its violation as 
required by law. Late Monday afternoon, OSTP provided us with 
its Antideficiency Act report. In the report OSTP disagreed 
with GAO's conclusion.
    Thank you, Mr. Chairman. Thank you, Mr. Carnahan. I am 
happy to answer any questions you may have.
    [The prepared statement of Mr. Armstrong follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Rohrabacher. Thank you very much for that succinct 
testimony, and you stated then that there is, when something is 
put, wording is put into legislation, that is very clear, 
specific wording, that your--that you have a heavy presumption 
of constitutionality. Maybe you could tell me is there a 
difference between what is legal and is constitutional?
    Mr. Armstrong. No, not really because all of our laws are 
derived the Constitution.
    We have a long history at GAO in serving Congress' 
constitutional power of the purse to presume, accept the 
constitutionality of any law that is enacted via the 
constitutional legislative process, any law that is passed by 
both Houses of Congress and signed by the President, which is 
what happened in this case.
    Mr. Rohrabacher. Okay. Is there a constitutional 
restriction on the legislative branch from putting limits to 
which money can be spent concerning American foreign policy?
    Mr. Armstrong. The Supreme Court and other Federal courts, 
lower Federal courts, have long recognized that Congress does 
have the right to impose restrictions on the Executive's use of 
public funds. It all relates to Congress' constitutional 
prerogatives of the purse.
    Mr. Rohrabacher. So this is, the power of the purse is a 
supreme constitutional prerogative of the legislative branch, 
and that if the restrictions that we put on the power of the 
purse affects foreign policy, that is within the jurisdiction 
of the legislative branch?
    Mr. Armstrong. We didn't look specifically at OLC's, Office 
of Legal Counsel over at the Department of Justice, at the 
arguments that they presented to OSTP. We felt we didn't need 
to go beyond the fact that this law was enacted via the 
constitutional legislative process.
    Mr. Rohrabacher. Okay, so it was a constitutional 
legislative process, but they were actually asking about the 
constitutionality of the outcome of the process and not 
necessarily the process itself, which is interesting.
    You have stated very clearly that the OSTP spent funds in 
excess to what the government, meaning what the legislative 
branch had declared was legal for them to spend. Thus it was in 
violation of that particular law.
    And, again, I guess I am looking for and I will discuss 
with the administration later on this theory that they can do 
whatever they damn well want to do if it has to do with foreign 
policy, and dealing with China has some--is by its nature 
dealing with foreign policy.
    All right, you have given us some insights.
    Mr. Carnahan.
    Mr. Carnahan. Thank you, Mr. Chairman. Welcome, Mr. 
Armstrong.
    Mr. Armstrong. Thank you.
    Mr. Carnahan. I want to jump right into this question that 
you have raised and what I understand your earlier testimony in 
that GAO did not make an assessment of constitutional claims 
put forth by the Justice Department, has GAO made 
determinations in other instances where an administration has 
made constitutional claims and, if so, how did GAO handle that?
    Mr. Armstrong. We have--we do steer clear of addressing 
constitutional issues. We do have a long history since our role 
here in the appropriations law decision writing function is to 
serve Congress and Congress' oversight of the Executive's use 
of public money.
    Mr. Carnahan. So just to be clear, steer clear, you mean 
they never have addressed any constitutional issues or they 
generally don't, and that is what I am trying to get down to.
    Mr. Armstrong. I have been at GAO for 33 years now, and I 
have been involved in the appropriations law function for about 
20, 21 of those years, and I have never been involved in 
addressing a constitutional issue in the context of Congress' 
power of the purse.
    Mr. Carnahan. And again, just to be specific, you have 
never been involved with that. Has GAO ever been involved in 
addressing a constitutional issue to your knowledge?
    Mr. Armstrong. I am not aware of it, no.
    Mr. Carnahan. So----
    Mr. Armstrong. In the context of appropriations law.
    Mr. Carnahan. So in other context you are aware, but not 
with regard to appropriations?
    Mr. Armstrong. I can tell you that I am not aware of it, 
but I am not necessarily in a position to have been aware of it 
because of my focus on appropriations law and my responsibility 
with regard to the appropriations law decision writing 
function.
    Mr. Carnahan. I think I understand that, Mr. Armstrong. Let 
me move on. Since the administration submitted its report to 
GAO, has it fully complied with the requirements pursuant to 
the Antideficiency Act?
    Mr. Armstrong. We do consider that report to be satisfying 
the reporting requirement of the Antideficiency Act.
    Mr. Carnahan. And describe that for the committee, please.
    Mr. Armstrong. When an agency violates the Antideficiency 
Act, as it did here, the Act requires that the agency report it 
to Congress, the President and to GAO.
    Mr. Carnahan. And that was done?
    Mr. Armstrong. And that was done, yes.
    Mr. Carnahan. And can you describe that report just in 
brief?
    Mr. Armstrong. Yes, I can. They did acknowledge GAO's 
conclusion. OSTP reported its disagreement with GAO's 
conclusion. OSTP summarized Justice Department's advice to 
OSTP. The report fairly short, about four or five pages, didn't 
go further than that. But it did serve to put the matter before 
the Congress in Congress' oversight capacity, which is the 
point of the Act.
    Mr. Carnahan. In bottom line dollars, how much money are we 
talking about?
    Mr. Armstrong. OSTP told us that they spent about $3,500.
    Mr. Carnahan. Okay. Well, with regard to an Antideficiency 
Act issue such as this, what is the enforcement mechanism once 
the reporting requirements are met and what is the typical 
resolution in a case like this?
    Mr. Armstrong. The enforcement mechanism is really 
Congress' enforcement in how Congress wants to respond, react, 
to the Antideficiency Act report. The Act is there to serve 
Congress in Congress' oversight of agency activities. So it 
really is up to the discretion of this committee, of the 
appropriations committees, of the Congress.
    Mr. Carnahan. Very good. Thank you.
    Mr. Rohrabacher. When did the OSTP actually provide you a 
report to this violation?
    Mr. Armstrong. It was late Monday afternoon this week.
    Mr. Rohrabacher. Are you talking about this Monday?
    Mr. Armstrong. Yes. Today is Wednesday. The day before 
yesterday, yes.
    Mr. Rohrabacher. So this Monday after this hearing had 
already been scheduled was when they saw fit to comply with 
this request. I think that has to be taken into consideration. 
And we just--the ranking member just asked several questions I 
thought were important. And you suggest that if there are any 
penalties, Congress must be the one to provide some reaction to 
this violation. But you are suggesting that the money we spent 
that was illegally spent and now it is up to Congress to act, 
is that it?
    Mr. Armstrong. Yes. That is the way the mechanism is 
designed under the Antideficiency Act.
    Mr. Rohrabacher. Okay. And there is no criminal penalty to 
this?
    Mr. Armstrong. Well, the Act does include criminal 
penalties for knowing and willful violation of the Act. That is 
in the Justice Department's discretion. My understanding is 
that the Justice Department has never prosecuted anyone for a 
knowing and willful violation, so we don't have any clue from 
their case law and their activity what Justice would consider 
to be a knowing and willful violation.
    Mr. Rohrabacher. Okay. And one last question about, if a 
piece of legislation like this is signed into law, which it was 
by the President of the United States, President Obama signed 
the bill, do we then presume that President Obama agrees with 
the constitutionality of the restriction that has been placed 
upon him by the bill?
    Mr. Armstrong. I am really reluctant to make a presumption 
about what the President might think.
    Mr. Rohrabacher. Well, are we presuming if a President 
signs a bill into law and there is a restriction in that law, 
the executive branch, that the President is signing that bill 
into law and thus any President that does that is reaffirming a 
constitutional acceptance of the law?
    Mr. Armstrong. There are occasions when a President, in 
signing a bill into law, might question the constitutionality 
of provisions. In the President's signing statement, the, 
President may make a point about his concerns about the 
constitutionality of a provision. We did look at the signing 
statement for this law and there was nothing in this signing 
statement that raised any concerns about this provision.
    Mr. Rohrabacher. So in the past, if the President did have 
a concern about constitutionality of any restriction to law and 
he wanted to sign it anyway because of other provisions, that 
would be in his statement upon signing the bill?
    Mr. Armstrong. There is a tradition there. That doesn't 
mean that we can presume, I think, that because the President 
did not make a point in his signing statement, that he accepts 
the constitutionality of it. But I can tell you that there was 
no point made in the signing statement for this law about this 
provision.
    Mr. Rohrabacher. Mr. Carnahan. 
    Mr. Carnahan. Just one more question. I am going to put 
this in context. Has in your experience, and you have been 
doing this for a number of years over a number of 
administrations, has this issue come up with prior 
administrations?
    Mr. Armstrong. Not with GAO. But I can tell you, although I 
am not a constitutional law scholar, as a lawyer, I am well 
aware that there has been tension over the years between 
Presidents and Congress over the conduct of foreign affairs. 
But that is not something that we have looked at, it is not 
really in GAO's purview.
    Mr. Carnahan. I appreciate that. Thank you.
    Mr. Rohrabacher. Thank you for joining us today. And our 
third panel will be Charles Bolden, Administrator of NASA.
    Mr. Armstrong. Thanks very much.
    Mr. Rohrabacher. We have our next panel seated. And I guess 
we are going to have Holdren and Bolden together. I was 
noticing that their names, there is a similarity there between 
the names of all the witnesses today. That is interesting.
    So we have--our first witness will be Charles Bolden who is 
currently Administrator of NASA and has served at post since 
2009. So we can say the Honorable Charles Bolden, but I would 
prefer to call him General Bolden. My father was a pilot in the 
U.S. Marine Corps, and as I have said many times would be very 
proud to know that we have a Marine pilot now heading up NASA. 
And I think he has done a great job since he has been there 
under very, very strenuous circumstances. He graduated from the 
U.S. Naval Academy and went on to fly over 100 combat missions 
in Vietnam. Afterwards he joined NASA and flew four space 
shuttle missions, two of which he commanded.
    And we also have with us Dr. John Holdren who is director 
of the White House Office of Science and Technology Policy and 
co-chairman of the President's Council of Advisors on Science 
and Technology. Dr. Holdren went to the White House from his 
post at Harvard University where he was a professor. And he 
holds a degree from MIT and Stanford and has a long and 
distinguished record of service in scientific bodies and is one 
of the more respected scientists in the United States of 
America. And we appreciate the service that both of you are 
providing to our country. That doesn't mean we don't have our 
disagreements, which is what this is all about today, but that 
does not diminish the gratitude that we should have toward 
people like yourselves who are willing to take on these kind of 
responsibilities. You both may proceed with your opening 
statements and then we will go into questions and answers.
    Mr. Holdren. Mr. Chairman, do you have a preferred order 
for those statements?
    Mr. Rohrabacher. Yes. I can see that the General is giving 
us a direction over there. You go first.

   STATEMENT OF THE HONORABLE JOHN HOLDREN, PH.D., DIRECTOR, 
            OFFICE OF SCIENCE AND TECHNOLOGY POLICY

    Mr. Holdren. I will proceed. Thank you very much. Chairman 
Rohrabacher and Ranking Member Carnahan, I do appreciate the 
opportunity to testify today on U.S.-China Cooperation in 
Science and Technology.
    Mr. Rohrabacher. Put the microphone a little closer. There 
you go.
    Mr. Holdren. In general, the United States benefits from 
science and technology cooperation with other countries when 
the sharing of facilities or expertise and costs speeds up 
discoveries that can be applied in this country to address 
economic and other challenges that we face. We also benefit 
from such cooperation when it enhances the understanding of and 
access to foreign markets by U.S. firms enabling them to sell 
more abroad. We benefit as well when such cooperation 
accelerates innovation in other countries in ways helpful to 
U.S. interests, such as by reducing their pressure on world oil 
supplies and their emissions of greenhouse gases.
    And we benefit when science and technology cooperation 
provides a set of positive interactions and incentives with 
countries with which we have difficult relations. Those general 
benefits of cooperating with other countries in science and 
technology all apply with particular force to the case of 
China, as my written statement explains. Of course the benefits 
of cooperating with other countries in science and technology 
have to be weighed against the costs and the risks. Those risks 
include theft of intellectual property and classified 
information and loss of economic or military advantage. And 
just as the benefits of science and technology cooperation 
apply with particular force in the case of cooperation with 
China, so do the risks.
    The relations of the United States with China are complex 
overall. The two countries behave as partners in some arenas, 
as competitors in some and as potential adversaries in some. 
This administration strongly objects to China's human rights 
abuses, its theft of intellectual property and much else that 
goes on there. But we in this administration do not believe 
that the solution to these challenges is to cut off our science 
and technology cooperation with China.
    On the contrary, we believe that U.S.-China science and 
technology cooperation benefits both countries and strengthens 
our hand in the effort to get China to change the aspects of 
its conduct that we oppose. And we believe that the overall 
benefits to our country of properly focused and managed science 
and technology cooperation with China outweigh the costs and 
risks. That proposition was the reason that the Carter 
administration concluded the U.S.-China science and technology 
cooperation agreement within weeks of the normalization of 
relations with China in January 1979. And it is the reason that 
that agreement has been renewed by every administration since, 
Republican and Democratic alike.
    My written statement describes some of the ways that U.S.-
China science and technology cooperation under this framework 
has benefited United States interests. The only one I will 
mention here is how the ongoing U.S.-China dialogue on 
innovation policy, which I co-chair on the U.S. side, has led 
to the Chinese Government's rolling back aspects of Chinese 
innovation policy that discriminate against U.S. businesses 
active in Chinese markets. As has already been pointed out by 
earlier witnesses, section 1340(a) of the Continuing 
Appropriations Act of 2011 contains language intended to bar 
OSTP from continuing to engage in bilateral interactions with 
China.
    I am a scientist and not a lawyer, so I am only going to 
state here very briefly why OSTP has not complied with that 
prohibition. For the details I refer you to the formal opinion 
issued on September 19th of 2011 by the Office of the Legal 
Counsel in the Department of Justice, and I ask that that be 
added to the hearing record as an addendum to my testimony.
    Mr. Rohrabacher. Without objection.
    [Note: The information referred to is not reprinted here 
but is available in committee records.]
    Mr. Holdren. OSTP sought the Department of Justice's 
guidance on Section 1314(a)'s legal effect because of the 
extent and the importance of OSTP's role in bilateral diplomacy 
with China on science and technology issues. The Department of 
Justice advised us that the activities that OSTP has been 
carrying out in connection with that role fall under the 
President's exclusive constitutional authority to conduct 
foreign diplomacy, and thus are not precluded by the statute.
    Let me conclude by referring once more to President Reagan. 
As Congressman Wolf pointed out, President Reagan did call the 
Soviet Union an evil empire. He also continued, throughout his 
two terms, the extensive U.S. cooperation on science and 
technology with the Soviet Union that had begun in 1958 under 
President Eisenhower and that continued until the Soviet Union 
disintegrated in 1991. I very much hope that the value to this 
country on balance of appropriately focused and managed 
cooperation with China on science and technology is something 
about which this administration and this Congress can also come 
to agree. I am happy to try to answer any questions you may 
have. Thank you very much.
    [The prepared statement of Mr. Holdren follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Rohrabacher. Thank you very much, Dr. Holdren. And 
General Bolden.

STATEMENT OF THE HONORABLE CHARLES BOLDEN, JR., ADMINISTRATOR, 
         NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    Mr. Bolden. Chairman Rohrabacher and Ranking Member 
Carnahan, thank you very much for the opportunity to appear 
here today. This is a critical time for our Nation's space 
exploration program. We have embarked upon an ambitious plan 
agreed to by President Obama and the bipartisan majority in 
Congress to maintain U.S. leadership in space for many years to 
come. Private U.S. companies will soon be taking over 
transportation of cargo and crew to the international space 
station. A deep space exploration vehicle and crew capsule to 
take humans farther into the solar system than we have ever 
gone before is in development. Science missions to Jupiter and 
asteroid, the moon and Mars are getting underway. Our 
technology development efforts are getting closer to 
demonstration, and our air aeronautics research is helping to 
advance cleaner and safer air travel.
    For 50 years now, America has led the world in space 
exploration. Under the plan we have committed to as a nation, 
we will continue to do so for the next 50 years. It is 
important to note that our national success has been achieved 
in part thanks to international cooperation. Strategically we 
have entered into agreements that advance our national 
objectives and furthered the causes of science, space 
exploration and discovery. Currently, we have over 500 active 
agreements in place with 120 nations, excluding China. The 
United States has always led, but we also work with other 
countries when it serves our national interests. Having the 
flexibility to enter into these partnerships has been an 
important part of America's success in space exploration. Over 
the last decade NASA has had a very limited bilateral 
cooperation with China entities due to U.S. law and policy. In 
fact, NASA has only signed one agreement with the Chinese 
Academy of Sciences for the exchange of data for geodynamics 
research related to the prediction, monitoring of and response 
to natural disasters.
    Additionally, joint working groups on earth and space 
science were established in 2007 under the Bush administration, 
and there have been reciprocal visits of NASA and People's 
Republic of China officials to facilities in each nation. I 
would like to emphasize that support for cooperation with China 
has spanned multiple administrations. NASA's bilateral 
cooperation with China was initiated under President George W. 
Bush and continued under President Barack Obama. Following a 
summit between President Bush and Chinese President Hu Jintao 
in 2006, it was agreed that the NASA administrator, one of my 
predecessors, would travel to China to begin exploratory 
discussions on space cooperation with Chinese officials.
    Subsequent to that successful visit in 2007, NASA and China 
established working groups focused on earth and space science 
cooperation. In their November 2009 joint statement, President 
Obama and President Hu noted that they look forward to 
``expanding discussions on space science cooperation and 
starting a dialogue on human space flight and space exploration 
based on the principles of transparency, reciprocity and mutual 
benefit.''
    As a result, I traveled to China in October 2010 to 
continue and expand our discussions on potential space 
cooperation. In response to limitations enacted by public law 
112-10, NASA immediately suspended all activities under NASA's 
agreement with the Chinese Academy of Sciences. The suspension 
of this agreement precludes NASA from directly receiving a 
global navigation satellite system, satellite laser ranging and 
very long baseline interferometry data from stations in China.
    In addition, NASA cancelled all plans for reciprocal visits 
and bilateral activities. NASA employees and contractors 
continue to participate in multi-lateral activities through 
such multi-national organizations as the U.N. Committee on the 
Peaceful Uses of Outer Space in which representatives of the 
PRC organizations or companies may also participate.
    In closing, let me assure this subcommittee that any NASA 
engagement with China entities will be conducted in a manner 
that is consistent with all existing U.S. laws and regulations. 
I believe, however, that some level of engagement with China in 
space-related areas in the future can form the basis for 
dialogue and cooperation in a manner that is consistent with 
the national interest of both our countries when based on the 
principles of transparency, reciprocity and mutual benefit. 
Initial discussions in areas such as orbital debris mitigation 
and disaster management can provide benefits to the United 
States and perhaps eventually form the basis for a continued 
dialogue in other areas of space exploration.
    Mr. Chairman, I thank you very much for your continued 
support of NASA. I would be pleased to respond to any questions 
you or other members of the committee may have.
    [The prepared statement of Mr. Bolden follows:]

    
    
    
    
    
    
    
    
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    Mr. Rohrabacher. Well, thank you both for your testimony. 
And we appreciate you coming here today to have this 
discussion. Let's get right down to some of the details here. 
Dr. Holdren, who was it who suggested to you that only things 
like this in terms of your interaction with foreign governments 
is only based on Presidential authority and that thus, I say 
the only word means the legislative branch does not have 
jurisdiction.
    Mr. Holdren. Mr. Chairman, I wouldn't formulate it in that 
particular way, but I have been advised by the Department of 
Justice, and I have suggested that their written opinion to 
this effect on September 19th be added to the record. And they 
were very clear in their language that section 1340(a) is 
unconstitutional as applied to certain activities undertaken 
pursuant to the President's constitutional authority to conduct 
the foreign relations of the United States. That is an exact 
quote. And they went on to say that OSTP's officers and 
employees therefore may engage in those activities as agents 
designated by the President for the conduct of diplomacy with 
the People's Republic of China.
    I am not a lawyer. The White House asked that a Department 
of Justice lawyer be provided here to answer those legal 
questions. I can't debate the law with you. But our request was 
unfortunately not granted.
    Mr. Rohrabacher. It wasn't granted by us or by the 
Department of Justice?
    Mr. Holdren. My understanding it was not granted by the 
committee. That is my understanding.
    Mr. Rohrabacher. All right. I probably would have granted 
that had I known personally about it because I think that that 
proposition certainly deserves a great deal of discussion. And 
you are saying that this was the position of the Department of 
Justice, but it is not necessarily your position, is that what 
we are hearing today?
    Mr. Holdren. Mr. Chairman, I am not qualified to reach 
positions on matter of constitutional law. I am advised by the 
Department of Justice that their opinion is binding on me as an 
officer of the executive branch, even if their opinion is in 
conflict with that of the General Accounting Office. That is 
what I have been advised by the Department of Justice.
    Mr. Rohrabacher. All right. So let's just note that when--
let me ask you this then. This came from the Department of 
Justice. This did not come from your superiors at the White 
House?
    Mr. Holdren. I don't generally talk about the content of my 
conversations with the President, who is my superior----
    Mr. Rohrabacher. Well, conversations don't have to be 
personal conversations.
    Mr. Holdren [continuing]. In the White House. But the 
Department of Justice opinion represents the administration's 
view of this matter. And as I say, it is binding on me in the 
judgment of the Office of the Legal Counsel in that department.
    Mr. Rohrabacher. So if indeed Congress was to pass a law 
that said that government employees could not do certain 
actions as long as they were involved with, as long as these 
government employees were under the command of the executive 
branch, then that would be meaningless, right?
    Mr. Holdren. I think that is a more general statement than 
the one the Department put out. And I, again, would refer you 
to the statement they put out. I am not going to speculate on a 
broader interpretation.
    Mr. Rohrabacher. It is an interpretation, but let me note 
it is a principle, and I think that that is--I will tell you 
that if any of the--and let me just acknowledge what both you 
and General Bolden said. This is not a partisan issue. These 
discussions about cooperation with China have certainly been 
Republican and Democratic administrations have both taken the 
position that you have in terms of the cooperation is worth the 
benefits, it is worth getting those benefits. We understand the 
risks, but it is worth the benefits, obviously which I disagree 
with, and Congressman Wolf and others. And obviously to the 
point that those who disagree with that were able to get that 
enacted into law.
    The only question now is whether or not the executive 
branch feels compelled to obey that law. And what we are 
getting now is that--which is not bipartisan. If this was a 
Republican administration, believe me, there would be, and the 
Democrats were in charge of Congress, this would be a 
holocaust, I mean, it would be an uproar beyond imagination 
having an administration saying that really, Congress doesn't 
have the right to say where appropriated funds will be spent as 
long as it deals with foreign policy.
    Let's go into some of the--before we get more into that, 
let's go into the benefits and the risks, which is what both of 
your basic testimony is. Do you believe that the cooperation 
that we had during the Clinton administration bore any 
similarity to the cooperation that is now being advocated by 
this administration in terms of space and technology 
cooperation?
    Mr. Bolden. Mr. Chairman, I would say that every 
administration has advocated reasonable cooperation with China. 
The former Soviet Union, now Russia. And you can see where that 
decision has borne the fruits of the decision, though it may 
have been controversial at the time. And the greatest example I 
can give you is the benefit of the international space station, 
which orbits today and has been for 11 years. And had we 
followed the philosophy of those who believed that engagement 
is not the proper course of action we would not have the 
international space station today.
    Mr. Rohrabacher. And at the time of that cooperation, what 
was the level of the Russian space program as compared to the 
MACE space program as compared to back in those days the 
American space program versus the Chinese space program?
    Mr. Bolden. When the cooperation began, which was with the 
Apollo Soyuz test project in 1975, and it was the Soviet Union, 
we had already been to the moon, as you know, we had 
demonstrated that we were better than everybody else in the 
world, much more technically capable.
    So I would say that we were at the same position we are 
today where we are the number one space-faring nation in the 
world and intend to stay that way.
    Mr. Rohrabacher. Okay. But you don't recognize that the 
Chinese missile and rocket capabilities at that time were very 
limited, and in fact, as was the task force reported after this 
whole crisis and scandal emerged, that we had dramatically 
improved a rocket-missile technology?
    Mr. Bolden. Mr. Chairman, I think you may misunderstand 
what I said. I was comparing where we are today with China with 
where we were in 1975 with the Soviet Union.
    Mr. Rohrabacher. Right.
    Mr. Bolden. And at that time we were engaged, heavily 
engaged in the Cold War, and both nations had nuclear missiles 
poised at each other. And so I think we were in much more dire 
stress then than we are today.
    Mr. Rohrabacher. General, let me point this out to you, 
that the Russian rockets that were available then were very 
capable and at the same level as our own rockets now. Whether 
or not they were able to get to the moon is another issue. The 
Chinese rockets, when we began cooperating with them during the 
1990s, the Long March rocket had a huge failure rate until, of 
course, Americans cooperated by them and their failure rate was 
diminished dramatically, meaning they became very, going to 
like nine out of 10 would be, couldn't make it up because they 
didn't have the right stage separation or the right bearings, 
or they could carry one payload.
    Do you think it is a good thing that now that the Chinese 
were able, after our cooperation to carry more than one payload 
on their rockets and that now nine out of 10 of their rockets 
succeed rather than blow up on a launch pad?
    Mr. Bolden. Mr. Chairman, I can only speak as the NASA 
administrator. And my number one job is as to facilitate is to 
ensure the success of our crews as we go to and from space, as 
we fly through the atmosphere in aeronautics and as we conduct 
the international cooperation that we do. And I can only say 
that from the standpoint of NASA, as far as I know, since our 
engagement with China, Russia, any other nation began, there 
are no documented cases of transfer of technology that gave 
advantage to any other nation. Not from NASA arrangements, NASA 
agreements. We have guarded our technology and kept it from 
being transferred.
    Mr. Rohrabacher. Let me just suggest that you have not read 
the task force, the congressional task force on technology 
transfer to China that was done and voted on and unanimously 
voted in a bipartisan fashion that totally contradict your last 
statement. I am not saying you are lying or anything, I am just 
saying that you haven't read that or you wouldn't have made 
that statement. Because there was a major investigation into 
the transfer of technology because of this cooperation, a 
bipartisan task force, was the Cox report was issued, and it 
was unanimously accepted by both parties, which goes, which 
concluded that there had been great damage to our security 
based on that cooperation.
    Dr. Holdren, have you read that report, that task force?
    Mr. Holdren. I have read a summary of it, I have not read 
the report. And I think the question that is not clear from the 
summaries so far is whether that was NASA cooperation or the 
cooperation that went on between a private company and China at 
the time.
    Mr. Rohrabacher. Correct. And that is a very good 
distinction. And let me note that when NASA cooperates quite 
usually what happens and follows is there is cooperation by 
major high tech corporations in the United States. And that is 
what usually is the purpose of the NASA cooperation, is to 
further that direct contact.
    I don't think that the people that I know would agree with 
you, either one of you, in terms of the benefits outweigh the 
risks. I am not sure what the benefits to the American people 
are. We know that the Chinese have now been producing major 
consumer items in the United States with capabilities that our 
companies, major corporations involved in technology, have been 
able to ship there. I don't understand how that benefits the 
American people.
    Maybe it is good for American workers to have those jobs 
earning a little bit more money rather than having the Chinese 
produce these products which they have not developed and that 
our companies have. And let me just note as far as your last 
statement, I personally investigated this issue in the 1990s. I 
was here and I spent a considerable amount of time in the field 
going to the actual companies and seeing exactly how they were 
cooperating back and forth. And one of the things the Chinese 
did not have was state separation at the time. After this 
cooperation, there was stage separation among their rockets and 
nine out of 10 worked. Before, nine out of 10 didn't work. That 
is not good.
    I don't know if that, in and of itself, says that is--how 
does that stack up to us being able to get certain things 
manufactured there at a cheaper price, especially when the 
other thing that we gave them was the ability to have more than 
one payload on their rockets, meaning merving in the military 
sense. We provided that to the Chinese.
    Now, providing the world's worst human rights abuser which 
is now building up its military and making, and being 
demonstrably hostile to the United States in the South China 
Sea and elsewhere and making alliances with every other vicious 
gangster regime in the world, I do not understand what benefit 
we get by perfecting their rockets and giving them the ability 
to merve and to throw three nuclear weapons at us per rocket 
rather than one. But that is what this is all about, that is 
what this hearing is all about. That is why that was written 
into the law.
    It was written into law because Frank Wolf, who is a Member 
of Congress, who also went through that same investigation and 
Dana Rohrabacher and others who have been watching this issue 
for a long time are aware of the specifics. And we are, we 
convinced our friends in the legislative branch to put that 
into law. The President then signed it into law without a 
reservation stating that there is a constitutional question 
here whether or not the legislative branch has a right to limit 
the expenditure of money that is used by the executive branch 
in determining foreign policy relationships. So this issue 
seems to be--please feel free to answer those points.
    Mr. Holdren. Yes, I would, Mr. Chairman, like to respond on 
a couple of points.
    Mr. Rohrabacher. Yes, sir.
    Mr. Holdren. First of all, I certainly don't dispute that 
there have been instances of technology transfer to China that 
we did not wish and should not have welcomed. That is part of 
the cost in liability that has to be traded off against the 
benefits. I think it is possible to exaggerate the importance 
of any one technology transfer by assuming the Chinese would 
never have figured that out on their own if they hadn't gotten 
it by technology transfer. Usually what happens is these 
technology transfers accelerate by some amount but not always a 
great deal the acquisition of a capability that is important to 
a country. But I don't dispute there was a loss there. But 
there have been many benefits.
    And I point out on pages 5 and 6 of my written testimony a 
number of them. I will mention a few more. We have cooperated 
with China in the domain of public health and disease in ways 
that have greatly increased our capacity to respond to 
epidemics that originate in China, which many influenzas do, 
and have enhanced our capacity to deal in the biological regime 
with invasive species with pests that originate in China. Our 
cooperation with China on nuclear safety has reduced the 
chances that a Chinese nuclear reactor will suffer an accident.
    If a Chinese nuclear reactor suffers a big accident, as 
reactors in Fukushima, Japan recently did, that puts in 
jeopardy our own capacity to operate our nuclear reactor 
system. It puts in jeopardy the consent of the public to 
operate this important component.
    Mr. Rohrabacher. You have just given us good examples of 
mutual benefit.
    Mr. Holdren. Exactly.
    Mr. Rohrabacher. But can you give us an example of just 
benefit? I mean, this is--yeah, I can understand why they would 
want us to come in and help make sure that they don't have 
epidemics and I can understand why they would be happy to have 
us perfect their nuclear program.
    Mr. Holdren. Yes, I would be happy to give you an example 
of a straight benefit. Again, in the dialogue on innovation 
policy, which was a negotiation, the Chinese were persuaded to 
relinquish policies they had put in place which discriminated 
against American businesses. And I can tell you that the 
American business community that works in China is very 
grateful for the effort we made and for the benefit we got.
    Mr. Rohrabacher. So the benefit, you are saying now, is we 
persuaded them, the Communist Chinese Government, to quit 
restricting our American businessmen who want to put our 
technology in China? That is a benefit to us?
    Mr. Holdren. No. Our businessmen who want to sell products 
made in America----
    Mr. Rohrabacher. Okay. Sell products.
    Mr. Holdren [continuing]. In the Chinese market. And that 
is a benefit to American workers, it is a benefit to our 
economy, it is a benefit to our balance of payment.
    Mr. Rohrabacher. Okay. So the benefit is that there were 
certain things that we were not permitted to sell in China, and 
you weren't saying that we eliminated their restrictions on 
actually putting things into China, meaning technology that 
would permit them to have greater manufacturing capabilities, 
things like that?
    Mr. Holdren. First of all, Mr. Chairman, I would not 
guarantee that in some of the forms of cooperation, including 
joint ventures between U.S. companies and Chinese companies, 
there will be some transfer of technology. The key issue there 
is one of intellectual property rights and that that transfer 
of technology be compensated at the satisfaction of the owners 
of the intellectual property. But I would assert that among the 
benefits of the agreements we secured from the Chinese on their 
innovation policy was increased access to Chinese markets for 
American products made in America by American workers.
    Mr. Rohrabacher. Well, we have read it differently because 
the read that I have had of American access to their markets 
has been that they have continued to have major restrictions on 
our ability to sell finished goods, but they are perfectly 
willing to permit us to go to their market and sell them what 
is necessary to, the technology necessary to build up their own 
manufacturing capabilities. We may be talking about the same 
thing.
    Mr. Holdren. I think we have more to do in these 
negotiations. That is one of the reasons why I am eager to 
continue them. We haven't gotten everything that we need in 
terms of access to Chinese markets and nondiscrimination 
against American firms. But we are making progress. We need to 
make more. It will be to the benefit of American firms, 
American workers and the American economy when we do.
    Mr. Rohrabacher. All right. And we will have a second 
round, but I have been taking up too much time already. Mr. 
Carnahan, would you like to, or Mr. Cicilline?
    Mr. Carnahan. Thank you, Mr. Chairman, and to our witnesses 
for being here today. You have given us, I think, a fuller 
picture of this bigger debate. Certainly the give and take tug-
of-war between Congress and the administration on foreign 
affairs is not new. That has been going on probably since the 
very beginning of this country. But--and I appreciate Dr. 
Holdren, you know, you very succinctly and simply described the 
relationship with China as complex. That is probably an 
understatement.
    But, you know, I, too, am of the belief that it is 
important that we look for ways to maximize the benefits of 
engagement, while at the same time minimizing those risks and 
that certainly engagement outweighs any of those risks. And I 
appreciate also the fact that in the context of the executive 
branch, that you sought the appropriate legal advice in 
pursuing this meeting. Folks in Congress may disagree with 
this, and I think this is a legitimate issue for us to be 
talking about here today, but I wanted to really get into an 
area that really gets to the heart of this matter in terms of 
what protections are in place to ensure that as we engage in 
this dialogue at all levels, that we are maximizing those 
benefits and minimizing those risk. And let me start with Dr. 
Holdren.
    Mr. Holdren. Sure. There are a wide variety of protections 
in place that apply to these interactions and other 
interactions. We have a variety of restrictions on the kinds of 
technologies that can be transferred to China and appropriately 
so in our export restrictions. We have a variety of programs in 
place, including under the Committee on Foreign Investment in 
the United States, CIFIUS, that tracks acquisitions by Chinese 
and other foreign entities of businesses in the United States 
that could have adverse impacts on our national security 
through technology transfer or by other means.
    OSTP, by the way, is a voting member of the Committee on 
Foreign Investment in the United States and reviews all of 
these matters. In the domains of cybersecurity which have been 
alluded to by some of the previous witnesses, we have a very 
wide and robust interagency set of measures that address the 
cybersecurity threats associated with China and other 
countries. When we travel to China, we take extensive 
precautions in interaction with the appropriate U.S. 
intelligence agencies to ensure that no sensitive or classified 
information is compromised. We are very well aware in this 
administration, as previous administrations have been, of the 
liabilities and the risks associated with these kinds of 
interactions, and we are taking every step that we can think of 
to minimize those risks and liabilities. Some of those 
measures, of course, fall in the classified domain. We would 
not be able to discuss them here. But I would be happy, in a 
suitable venue, to provide more detail.
    Mr. Carnahan. Thank you. And General Bolden, the U.S., 
China and Russia are the only three countries with manned space 
flight capability. We recently ceased operating our shuttle 
fleet. What risks are posed to the U.S. space program if we are 
not cooperating with China and Russia and with the broader 
international coalition that we work with in terms of our space 
program?
    Mr. Bolden. Mr. Carnahan, what risk we take is that we lose 
our position of leadership in the world. And it is tenuous even 
as we speak today because we are the only one of the 
international partners involved with the international space 
station that does not have a working relationship with China. 
But again, I would say in my case, I am responsible for the 
space agency and not science and technology advice to the 
President, as is Dr. Holdren. So my area of expertise and my 
area of responsibility is very limited. When we did have 
bilateral dealings with China, they were in the area of 
geodynamics research, which was essentially talking about how 
can we predict earthquakes and then what do we do after it 
occurs, areas like orbital degree mitigation. And so there is 
not my concern that NASA will be subjected to providing 
technical information as the chairman is concerned. And we 
limit it that way.
    We have an agency-wide export control board that determines 
what we can do in terms of export control, and we are part of 
the interagency process, as Dr. Holdren described. NASA is very 
limited in what we do in terms of the concerns that are 
expressed by the committee.
    Mr. Carnahan. And finally, I want to get your comment. You 
describe limitations in suspending or canceling certain 
bilateral activities with China pursuant to the law, but of 
course, you are authorized to continue multi-lateral engagement 
in activities with China. Does this make any real practical 
difference that that engagement has to be done in a 
multilateral setting that you cannot do in a bilateral setting?
    Mr. Bolden. Let me make sure I understand your question. 
Are you saying that by not being able to do it in a bilateral 
setting, does it limit my ability to carry out what NASA is 
supposed to do?
    Mr. Carnahan. Right. To really continue the mission of 
NASA.
    Mr. Bolden. To date or right now it does not limit my 
ability to do the three primary things that the Congress of the 
United States and the President have designated for us, the 
three priorities that we have right now, which is the 
formulation of an exploration program consisting of a heavy 
lift launch vehicle, a crew module, expansion of the 
utilization of the international space station by bringing 
about the vibrant commercial industry that can provide us 
transportation to and from space so that I can stop having to 
pay our Russian partners to do that as I do right now, and then 
thirdly focusing in the area of science on the James Webb Space 
Telescope as the dominant science project, but also in the area 
of earth science where we did cooperate with the Chinese. But 
we have other entities that provide us that information so it 
is not critical right now. Cessation of multi-lateral 
participation would put us on the outside looking in.
    We would not be able to participate in things like UN-
COPUOS. I can go on and on with international conferences, 
congresses, the U.N. again. NASA would just be on the outside 
looking in and we would serve no purpose for the Nation.
    Mr. Carnahan. Thank you. I am going to wrap up my time 
because I know we have got a colleague that wants to engage in 
this as well. I am going to yield at this point.
    Mr. Rohrabacher. Wait a minute now. I want to know 
specifically how to pronounce your name.
    Mr. Cicilline. Cicilline.
    Mr. Rohrabacher. Cicilline. Mr. Cicilline, you take as much 
time as you would like.
    Mr. Cicilline. Thank you, Mr. Chairman. Thank you General 
Bolden and Dr. Holdren for being here. As I reviewed both the 
testimony that you just provided as well as the written 
testimony that was provided and reviewed by me last evening, 
certainly the subject of the dangers of engagement with China 
was the subject of a lot of this material. But what struck me 
in reviewing this is that there is another danger, which I 
would really like to ask Dr. Holdren about. And it really stems 
from an intention by the Chinese to really invest in innovation 
in a very, very serious way. In February 2006 China's state 
council issued the national medium and long-term program for 
science and technology development which we often refer to as 
MLP. And in that, they committed to changing China within 15 
years from a major manufacturing center to a major global 
source of innovation.
    And by 2050, to make China a global leader in innovation. 
And the plan further says that by 2020 gross expenditures for 
research and development would rise to 2.5 percent of GDP from 
1.3 percent in 2005, so nearly doubling it. And when you look 
at sort of that kind of a serious investment in innovation and 
research and development in a time when we are being, when some 
of my colleagues in the Congress of the United States are, in 
fact, making strong arguments for reducing investments in 
research and development and innovation, and it struck me as I 
reviewed this that that poses a great danger to our innovation 
economy and to the long-term economic prosperity of our 
country.
    And I would like to know some of your thoughts generally 
about what sort of policies we should be pursuing so that we 
remain competitive, particularly when faced with that sort of 
investment by the Chinese. And then I have a second part to the 
question, but I would like you to go to that part first.
    Mr. Holdren. Well, thank you Congressman for that question. 
Certainly, the Chinese intend to be our competitor in high 
technology. They are already our economic competitor in a 
variety of regimes. I noted that in my testimony. And they 
intend to do better. We still have the best colleges and 
universities in the world, we still have the best research 
laboratories in the world, we still out-innovate everybody in 
the world. In order to maintain that lead, we are going to need 
to continue to make the investments in research and 
development, the investments in our research universities and 
our national laboratories, and the investments in our education 
system, particularly science, technology, engineering and math 
education, that the President is calling for, and which again, 
have historically been a matter of bipartisan agreement.
    The need to make these investments in the basis of our 
future in science, technology, innovation and their application 
to the economy, to our security, to the environment, this is 
something in which we have been the best. We need to continue 
to be the best. But the notion that China intends to compete 
with us does not mean the solution is to disengage from them. 
Germany competes with us; England competes with us; Russia 
competes with us; increasingly, countries in South America want 
to compete with us.
    We do not generally conclude that the solution to 
competition is disengagement. The solution is intelligent 
engagement measured, focused, appropriately managed so that we 
get the benefits for our own innovation system, that we help 
other countries get particular benefits that are in our 
interest and that we stay engaged with the best minds and the 
best facilities in the world, wherever they may be. The 
President has said very clearly that to win the future, we need 
to out-educate, out-build, and out-innovate everybody else. We 
plan to continue to do that. But part of doing that is also 
staying engaged with everybody else.
    Mr. Cicilline. Thank you, Doctor. And the second issue, and 
I apologize if you addressed this, I had to step out for a 
minute. If you did, I apologize. But I wonder if you could just 
comment on how effective the strategic and economic dialogue 
has been or any other dialogues that have been, that have been 
engaged with between the United States and China over the theft 
of intellectual property and forced technology transfer of 
policies. Particularly, I am interested to know whether China 
has followed through on its commitments to delink indigenous 
innovation policies from public procurement at all levels of 
government. I represent a State that has a long history of 
manufacturing and have heard from a number of manufacturers in 
my home State about experiences they have had with the theft of 
intellectual property and the challenges they face.
    And I think we all agree that in a level playing field, we 
have the greatest innovators, the greatest innovators and the 
greatest workers in the world, but the theft of intellectual 
property and this opportunity for public procurement only to 
come about as a result of the transfer of intellectual property 
remains an issue. And I just wondered what your thoughts are on 
where we stand and whether the dialogue has been helpful in 
protecting American workers and American manufacturers in that 
regard?
    Mr. Holdren. First of all, it does remain an issue. We have 
made progress. But as I said a moment ago, we need to make much 
more. One of the interesting things to which the Chinese have 
agreed is the result of our interaction in the dialogue on 
innovation policy and the strategic and economic dialogue, is 
to have a bilateral team of technology experts set up that 
actually goes out into the field, into the provinces, into the 
cities to find out whether the new instructions from the 
Central Government about eliminating some of these 
discriminatory policies and being unattentive to the theft of 
intellectual property, to see whether that is really happening. 
And this is extraordinary. I mean, this is the equivalent of 
accepting on-site verification in arms control, which was 
always a great challenge to achieve. The Chinese have accepted 
this. The President of China in the summit in January announced 
that China was abandoning these particular policies, and they 
are committed to make stronger efforts to protect intellectual 
property. I might just add that probably no American company 
has suffered a greater loss of intellectual property to China 
than Microsoft. And we have the chief strategy officer of 
Microsoft as a member of the President's Council of Advisors on 
Science and Technology, Craig Mundie, and he is participating 
energetically and enthusiastically with me as part of the U.S. 
delegation to the dialogue on innovation policy as a member of 
PCAST because he believes that we are making progress and of 
course that we need to make more and therefore we need to 
continue it.
    Mr. Cicilline. Thank you. Thank you, Mr. Chairman.
    Mr. Rohrabacher. Well, I want to thank the witnesses. I 
know I took a long time, and the chairman's prerogative. It 
took me a long time for me to be chairman so I could actually 
take that time. But I was hoping that Mr. Carnahan would have 
another chance if he had anything else to ask. Just a couple of 
thoughts. And that is, I think, number one, that we were 
talking about an issue of legality, the constitutionality which 
these witnesses have made sure that they are--we understand 
that you are not the definers of what is constitutional and 
what is not, and you are part of an administration and will 
take direction from your President, which is appropriate.
    I think there is a major constitutional issue here. After 
hearing the testimony, I believe there is a major 
constitutional issue to be determined about whether or not 
Congress does have the rights to limit you and your jobs and 
what your personnel can do in the area, that steps in the 
foreign policy arena.
    Are we permitted then, as Congress, to say that you cannot 
expend those funds. Thus, you cannot have your people doing 
these things. And the Department of Justice obviously has said 
that, no foreign policy belongs to the executive branch and 
that will have to be determined. And I appreciate you coming 
here realizing that is the core of the dispute, an issue, I 
also appreciate both of you coming here in order to argue your 
case for the benefit of the policy itself, and not the 
constitutionality, necessarily, of it.
    And I think on that, we have some major disagreements, and 
I would think that the great investment--the only thing I know 
personally is, well, you know, I was working with the Reagan 
administration for 7 years. And, again, I noted earlier that 
when Reagan increased the level of cooperation with the 
Chinese, it was predicated in those very agreements and 
statements that he made that this is based on a liberalization 
continuing in China that has led to a very robust democracy 
movement, which after Tiananmen Square was slaughtered and 
China actually has less democratic rights now than they had 
then, although they have had a lot of economic progress.
    I am not convinced that making a dictatorship more 
efficient and providing more wealth will lead to 
democratization, but I understand there are people who honestly 
believe that if we increase the level of wealth of a country, 
you will eventually eliminate the ghouls and the goons and the 
gangsters who run some of these countries.
    I did not see that in Russia. Ronald Reagan did agree that 
there was some cooperation going on, would never have agreed to 
most-favored nation status, and, in fact, ratcheted up the 
other types of confrontations that we had with Russia which 
actually bankrupted their system.
    It was not benevolent acts that won them over that led to 
the destruction of the Communist Party dictatorship in Russia, 
it was just the opposite. And so with that said--at least that 
is in the chairman's opinion.
    And I want to thank you again for coming today, and there 
will be, if there is any written questions that we have, we 
will submit them to you and hope that you can get them back to 
us in a timely manner.
    And so this part of the hearing is over and, again, thank 
you to the witnesses.
    Mr. Rohrabacher. For our final panel, we have Rick Fisher, 
who is a senior fellow at the International Assessment and 
Strategy Center and an expert on Chinese military development. 
He has previously served as a senior fellow for the Center or 
Security Policy and editor of the Jamestown Foundation's China 
Brief and as a senior fellow with the White House Republican 
Policy Committee.
    Adam Segal is the Ira Lipman Senior fellow at the 
Counterterrorism and National Security Studies for the Council 
on Foreign Relations.
    Before going to the council on foreign relations Dr. Segal 
was an arms control analyst for the China Project at the Union 
of Concerned Scientists and has recently written a book 
entitled, ``Advantage: How American Innovation Can Overcome the 
Asian Challenge.''
    We appreciate both of you being here, and you may proceed 
with your testimony. Mr. Fisher.

  STATEMENT OF MR. RICK FISHER, SENIOR FELLOW, INTERNATIONAL 
                 ASSESSMENT AND STRATEGY CENTER

    Mr. Fisher. Thank you, Mr. Chairman. It is an honor to 
appear before this committee to assist your deliberations on 
this very important issue.
    Mr. Chairman, I very much appreciate your leadership in 
working tirelessly to alert the country to the dangers emerging 
from the People's Republic of China and the need to protect 
ourselves, defend ourselves. I am also very grateful for the 
leadership of Congressman Wolf. I am grateful for his testimony 
today.
    I am also grateful for your mentioning of the Cox report. 
As you mentioned, I had the opportunity briefly to work for 
Chris Cox just after his report was released. And at that time, 
I remember the crisis in our relationship with the PRC. We were 
discovering the espionage, the military potential was very 
great.
    One of my favorite stories that emerged from that period 
was about the Martin, former Martin Marietta Corporation and 
how a Chinese engineer explained to me one evening how solid 
fuel rocket technology from a kick motor that Martin Marietta 
had sold or had used on a U.S. satellite revealed to the 
Chinese how to perfect their own solid fuel rocket motors.
    Well, that rocket motor became the basis for the DF-21 
medium range ballistic missile. The DF-21 became the basis for 
the anti-satellite system used successfully in 2007, and is 
also the basis for the new anti-ship ballistic missile, the DF-
21(D) that is a revolutionary weapon targeting our aircraft 
carriers and other large ships in Asia.
    So what I stressed in my written testimony was the real 
dangers that can emerge from uncontrolled and unmonitored 
cooperation with China in space. I have been studying the 
People's Liberation Army, writing about its modernization for 
about 15 years. A large part of that time, I have spent focused 
on monitoring China's space program.
    And there are two fundamental observations that one must 
make. The first is that the Chinese space program is controlled 
by the People's Liberation Army. They are the ones that set the 
priorities, they control the programs.
    The second, an obvious conclusion that I have drawn, is 
that China's space program is nearly entirely dual use.
    Everything that the Chinese put into space, including their 
manned space program, is designed to produce military benefit 
for the People's Liberation Army and the conduct of military 
operations on Earth.
    All of the first seven Shenzhou missions, their first 
manned space capsule, conducted some form of military mission 
and I have listed those in my testimony.
    Shenzhou 7 in 2008, September 2008 did something completely 
different, though, it flew to a point about 27 miles from the 
International Space Station. Just before it reached that point, 
though, it launched a micro satellite so you essentially had 
this body moving 17,000 miles an hour with a projectile out in 
front of it and there was two Russians and an American on the 
International Space Station.
    I have written that this raised the possibility of real 
danger to those on board the ISS. But, Mr. Chairman, I cannot 
find a single statement by a U.S. Government official 
questioning this incident or reacting to it.
    And so this will continue. The space lab that was launched 
on September 29 has surveillance capabilities. The future space 
station that will be launched in about the 2020 timeframe will 
be easily configured for military missions. Space claim, the 
same thing. In my opinion this dual-use character will continue 
with the PLA's space program to the moon and beyond.
    So to help illuminate these dangers, I have suggested in my 
testimony three questions that the administration should answer 
to try to satisfy the many concerns that have been expressed 
today and for many years by the Congress.
    The first question is does the vast difference in PRC and 
U.S. space transparency mean that any level of contact between 
official, corporate or university sectors could pose a 
disproportionate threat to the United States?
    All individuals that we could possibly invite to the United 
States from China to cooperate in space programs, how do we 
know who they really worked for?
    A second question, does the clear dual-use nature of the 
PLA, Chinese space program, mean that potential Chinese space 
cooperation will never produce the same mutual benefit for the 
United States?
    Whatever China learns from our space program will be 
applied to assist military goals. Our space program is 
civilian. It is not producing military benefit, at least 
directly for the U.S. military.
    Third, does the PRC's aggressive pursuit of pervasive 
espionage also dictate that the benefits of U.S.-PRC space 
cooperation will never be mutual?
    And, finally, I ask, does the proposition that U.S.-PRC 
cooperation in space can improve their relations on Earth 
really stand up to historical examination? We have heard in the 
testimony today reference to the 1975 U.S.-Russia Soyuz 
mission. Well, that was all fine and good after, but after 
1975, China--Russia, the Soviet Union, proceeded to build a lot 
greater and more dangerous weapons to put into space. And they 
would have done so had the Soviet Union survived past 1990.
    I think the proposition is simply not backed up by history 
and those who feel that we can advance terrestrial relations 
with China by cooperating in space have really got it 
backwards, and I will stop there.
    Mr. Rohrabacher. Thank you, Mr. Fisher.
    [The prepared statement of Mr. Fisher follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Rohrabacher. Dr. Segal.

   STATEMENT OF ADAM SEGAL, PH.D., SENIOR FELLOW, COUNCIL ON 
                       FOREIGN RELATIONS

    Mr. Segal. I want to thank the chair and the other 
distinguished members of the committee for the invitation to 
speak here today. It is a real honor.
    While I share many of the committee's concerns about 
China's rise as a scientific technology power, I respectfully 
differ on the means for addressing that challenge.
    One of China's great strengths has been a laser-like focus 
on shaping foreign interactions to serve its national 
innovation goals. By comparison, the United States is greatly 
handicapped as it lacks the ability to gather a comprehensive 
picture of science and technology exchanges with China and to 
coordinate its response to some of the most malevolent aspects 
of China's rise.
    The solution is not to cut off all exchanges with China. 
What is needed is a more comprehensive approach. And so instead 
of limiting funding for the Office of Science and Technology 
Policy, the more strategic response would be to actually expand 
support for the OSTP. To be sure, there are challenges in how 
China is pursuing its objectives in scientific technology and 
how it might use the results for economic and military power.
    It is clear that China's goals are ambitious. As the 2006 
Medium-Long-term Plan states, China's goal is to become an 
innovation nation by 2020 and a global scientific power by 
2050. Investment in R&D has grown by 20 percent a year since 
1999, and it is expected to top $153 billion by this year.
    China, as is well-known to this committee, has adopted 
mercantilist policies to foster indigenous innovation. 
Procurement strategies, competing technologies, standards and 
the failure to protect IPR have all been adopted in order to 
create new barriers and force technology transfer.
    U.S. intellectual property is now widely targeted by cyber 
hackers and industrial spies. Since 2010, Google NASDAQ, 
DuPont, Johnson & Johnson and General Electric, RSA and at 
least a dozen others have had proprietary information stolen. 
And on Monday, Symantec released a new report tracing attacks 
on 48 chemical and defense industries back to China.
    China has also leveraged the globalization of scientific 
technology to improve the technological capabilities of its 
defense sectors. Shifting research centers to China and 
developing collaborative business relations with Chinese 
companies inadvertently involves American institutions in the 
diffusion process, speeding Beijing's military modernization.
    The shipping and telecommunications industries, for 
example, have made steady improvements in R&D through their 
engagement with the international economy, and this has 
resulted in quieter subs and more advanced C4ISR capabilities.
    But the rise of new science powers China, but also India 
and Brazil, presents an extremely viable opportunity for the 
United States. For the last 50 years, we have assumed that the 
scientific dominance of the United States will continue. This 
assumption is now in question as scientific capabilities will 
be more widely distributed in the future.
    From 2002 to 2007, for example, developing countries, 
including China, India and Brazil, more than doubled their 
expenditures on R&D, increasing their contributions to world 
R&D spending from 17 to 24 percent.
    The United States has been one of the major beneficiaries 
of globalization and science and technology. An American 
society is probably better positioned than any other to tap 
into these new sources of discovery.
    The dominance of the American computer industry was built 
on the ability to develop global design and manufacturing 
networks. Immigrant scientists and entrepreneurs have been a 
major source of dynamism in our universities and our start-up 
culture.
    The globalization of science and technology has also played 
a role in American military dominance. American universities 
and private companies, not Federal labs, provide much of the 
technology required for the U.S. military to keep its 
qualitative lead over potential challenges.
    These same universities and private companies need access 
to talented markets and developing economies, especially China, 
to remain competitive. Abandoning S&T exchanges is not a 
strategy.
    The United States needs a strategy that is not just whole 
of government that entails the numerous views of department and 
agencies, but a whole of society strategy that includes the 
companies, entrepreneurs, scientists and universities that 
drive the globalization and scientific technology.
    While parts of that strategy are clear, and I include 
reinvigorating the U.S. innovation system and pressing China 
broadly on indigenous innovation and other predatory policies, 
much of it remains uncertain because China is opaque in the 
bilateral relations that are so complicated.
    The OSTP should be well positioned to help develop that 
strategy to provide insight into Chinese motivations and plans 
and into a larger context of how global science and technology 
is evolving.
    For most of the last 36 years, the bilateral science and 
technology relationship was basically an afterthought in U.S.-
China relations. Though it was often a source of stability in a 
relationship that has often seen its ups and downs over Taiwan, 
trade and human rights.
    Today, science and technology plays an increasingly central 
role in economic and national security interests and relations 
with China. These interests are better served by a more capable 
OSTP, one that has access to more information and is better 
able to coordinate a U.S. response than one that is severely 
limited.
    Thank you very much, and I will take any questions.
    [The prepared statement of Mr. Segal follows:]

    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Rohrabacher. Thank you both, and just a couple of 
questions here.
    So, Mr. Fisher, you, when people talk about cooperating 
with or actual investment by American companies that was 
described by Dr. Holdren there, that technology, that 
investment that we have, you know, when we are going over there 
selling those products, you are suggesting that there is almost 
always a dual use to those products?
    Mr. Fisher. Well, in many cases, yes, Mr. Chairman. When 
we, when General Electric proposes to help develop a new turbo 
fan engine with China, that definitely has a dual use. The 
engine that will emerge from that cooperation will inform, 
significantly, an indigenous Chinese engine that will power 
transport aircraft, that will power bombers, that will be 
taking troops around the world.
    Mr. Rohrabacher. Okay, so let me be real clear here about 
what we are talking about because when we were discussing the 
benefit that all this China trade had had to the United States, 
we were saying that we would had some great progress and that 
we have convinced the Chinese to permit us to sell some of our 
technology products over there.
    General Electric might be one of those examples that where 
they now--they are permitting us to sell our technology over 
there, which will then permit them to have an aerospace 
industry that will put our people out of work. Is that the sort 
of----
    Mr. Fisher. It is a painful character, Mr. Chairman. For 
decades, we have been complaining about the trade imbalance 
with China. The Chinese invariably always respond, well, you 
could sell us some more of your technology. We will buy that 
and, of course, they want that technology because of the dual-
use implication.
    Mr. Rohrabacher. Right. So we end up creating their 
manufacturing base by selling them things that, technology, 
what a great victory it is. They have agreed to buy our 
technology that will make them better at producing things that 
eventually can be sold here but also can be used to upgrade 
their military capabilities like jet engines and things such as 
that.
    And the PLO--or, excuse me, the PLA, owns many of these 
companies that are partnering with these American companies, 
isn't that right?
    Mr. Fisher. Well, the companies are controlled by 
government. The PLA exercises control. I wouldn't so much call 
it ownership but control. The PLA controls the money that funds 
them, funds their programs. The PLA sets the priorities that 
then are carried out in terms of research, development and 
production.
    Mr. Rohrabacher. Dr. Segal, you mention in your testimony 
that tens of thousands of Chinese students have come to the 
United States to learn, and you see, and have returned home. 
And you see this as a good thing, that we have now taken 
Chinese students, Ph.D level, which we have spent millions if 
not billions of dollars developing the technology and the 
science that we now are imparting to them and then they go home 
and use it to develop their country to be more competitive?
    Mr. Segal. Actually, my preference would be that they would 
stay here quite honestly, that we encourage Chinese PhDs, 
engineers, other graduates with scientific and engineering 
degrees to stay here, to start companies and be involved in the 
U.S. innovative capabilities. And that, I think, is what we 
should be trying to do.
    We should be trying to promote them. That is what 
traditionally has happened. In fact, we have only started 
seeing an early phase of some scientists going back.
    Mr. Rohrabacher. Of course, your preference is they stay 
here, but how many do, and you want to say something to that, 
Mr. Fisher?
    Mr. Fisher. When you are finished.
    Mr. Rohrabacher. Okay. I was just going to suggest that, 
number one, we have a limited number of Ph.D. Programs. We have 
a limited number of students that we are going to permit into 
our major universities at this high level, we are now talking 
about tens of thousands a year, I think we are probably talking 
a couple thousand a year.
    For us to try to suggest that we should fill those ranks 
with as many Chinese students as we can, as compared to filling 
the ranks with, say, American students that were A-minus 
students rather than A-plus students, I think it might be more 
beneficial to our country to have those Americans--by the way, 
those Americans might be Chinese Americans too, and they might 
be, you know, Afro Americans or Irish Americans, but they are 
Americans, as compared to Chinese nationalists.
    Mr. Segal. I think the problem has been, is, as you have 
said, over the last two decades that American universities at 
the Ph.D. Level have been very dependent on overseas students 
to fill Ph.D. and master's programs.
    That has been because American-born students, no matter 
what their ethnic or other heritage, have chosen not to go into 
the sciences, mainly for economic incentive reasons, right. If 
you are a smart young American, you are going to look at what 
the financial sector was making versus what it was going to be 
for a Ph.D. for 10 years.
    Mr. Rohrabacher. Well, the Chinese actually said we are 
going to pay all of your experience if you go over and to that 
university and get that Ph.D. And come back. And the Americans 
have been told, if you get this Ph.D. You are going to be able 
to graduate and have a $200,000 debt to pay back the rest of 
your life.
    Mr. Segal. Well, that is why I think, you know, the answer 
to that solution is to make science and engineering degrees 
more attractive to American University students.
    In fact, you know, the widespread assumption is that 
Americans aren't interested in science and math. But if you do 
most surveys of freshman classes, about a third of them in fact 
say, yes, I am interested in science and math.
    Mr. Rohrabacher. Well, I think that is true that we should 
be encouraging our students, our schools to be taking American 
students and we should be making it easier for them. But that 
still doesn't really get to the point where you have--we are 
now bolstering China's capabilities and bolstering China's 
capabilities, this is the debate.
    I mean, people, some people, and I think the title of your 
book does suggest that innovation in itself is a good thing, 
but maybe you are just suggesting--the innovation on the 
American side would be what would make this a better world, not 
necessarily a general innovation that encompasses the 
dictatorships of the world as well.
    Mr. Segal. The book is focused on how to improve American 
innovation capabilities. But historically those students that 
you are talking about have stayed, right. We look at Chinese 
and Indians in Silicon Valley and Route 128 and all those 
others places that have stayed. We are now starting to see 
people going back.
    But, again, most of those people are maintaining 
connections to the United States, right. They are in the 
language of Anneliese Aksidian from Berkeley, argonauts, right, 
travelling in space all of the time back and forth between the 
U.S. and China. That, I think, is a better outcome, right, than 
them just going back to China.
    Mr. Rohrabacher. I would think that anything is a better 
outcome when after a 10-year period you can show that the 
standard of living that the American people has been increased 
and improved because of that and the safety of our people has 
been improved and the prosperity of our country has been 
improved, as compared to what I see, which is our relationship 
with China has led to an improvement in their situation but not 
ours.
    It seems to me that there is wealth being transferred here 
via the knowledge that goes into producing wealth that we have 
taken, the intellectual property that we have invested, 
hundreds of billions of dollars in, and it now is working for 
the benefit of other people, and worst of all, the other people 
happen to be run by a government that is the most vicious anti-
human rights government in the world.
    Mr. Segal. But, again, I think if you just look at the 
numbers again on immigrant entrepreneurship, right, those 
people are starting companies in the United States. They are 
hiring locally, they are developing locally and they are 
innovating locally. So that is, I think----
    Mr. Rohrabacher. I am not against legal immigration in the 
United States and making it targeted toward people who want to 
invest from there.
    But when they send people over here so that they can be 
educated and then they go home with billions of dollars worth 
of information in their head that the American people have paid 
for, that is not in our benefit.
    Mr. Fisher, and then we will go on to our colleagues.
    Mr. Fisher. Mr. Chairman, I just wanted to comment that for 
many years, I have been hearing from colleagues that the 
counterintelligence challenge of monitoring Chinese students, 
graduate students that come to the United States to learn very 
specific technical skills, which they take back to China, is 
one of the most, one of the greatest unaddressed 
counterintelligence challenges that we face.
    In my testimony on page 11, I describe an example of how a 
Chinese student actually gained a visiting fellowship in a 
laboratory connected to the former Lewis but now John Glenn 
Research Center of NASA in Cleveland, Ohio, and got a head 
start in creating China's competency in ceramic matrix 
composite materials, which are used for re-entry and for other 
things like missile warheads, nose cones.
    Professor Zhoan Latong was able to come to Cleveland in--I 
believe it was April 1989. Despite the Tiananmen embargo she 
was able to remain at these NASA laboratories until 1991 and 
her biographies, her Chinese biographies are all glowing about 
how she took her foreign research back home to China to create 
China's competency in ceramic matrix composites.
    Just this last January, she was featured on a Chinese 
television show that was about how her laboratory was 
contributing to China's first small experimental space plane.
    Mr. Rohrabacher. I think that speaks for itself.
    Thank you. Mr. Cicilline.
    Mr. Cicilline. Cicilline.
    Mr. Rohrabacher. Cicilline, I am going to get that right, 
yes, sir.
    Mr. Cicilline. Thank you, Mr. Fisher and Dr. Segal for your 
thoughtful and informative testimony.
    I want to just pick up on, first on this issue of 
innovation and entrepreneurship and the great universities of 
America, because one of the things that was interesting during 
our orientation for new Members of Congress at the Kennedy 
School at Harvard University, the President of Harvard 
University spoke to us and actually challenged us to focus on 
what she saw as one of the biggest challenges facing our 
country, and that was the loss of this great intellectual 
capacity that is graduating out of the world's best 
universities here in America, and that the challenge is that it 
is not that they come here to study at the great universities--
the greatest universities in the world like Brown University in 
my district--and then they choose to leave, but we actually 
kick them out. They are not free to stay.
    So I think one of the challenges we have to look at is how 
do we encourage people from all over the world to continue to 
see America as a great beacon of intellectual development and 
innovation so that they not only come to study at our great 
universities, but they remain here to start companies, hire 
Americans, locally, innovate and build companies, and rather 
than lose that capacity, go back and do the same thing in 
another country.
    And so I think we lose that.
    The second part is that I think we lose the opportunity to 
show people all over the world the power of democracy, to be a 
student here and study and see how America functions as the 
world's best and strongest, the most productive democracy, has 
huge value. It changes students forever and they become very 
often ambassadors to democracy back in their own home.
    So I just wanted to--I think you, Dr. Segal, have made that 
point, and I think it is an important one.
    What I would like you to address, as I reviewed your 
testimony today, in your written testimony what really struck 
me was that you--I would just like to point out a couple things 
that you mentioned, and that is first the importance of the 
United States maintaining its scientific strength here at home, 
that the United States remains the world leader in science and 
technology, but that there are some developing nations like 
China and India and Brazil who have more than doubled their 
expenditures on research and development in 2002 to 2007.
    And China, in particular, has grown its investment by 20 
percent a year since 1999 and is expected to exceed $153 
billion of investment this year alone.
    And what I think is really alarming is China is producing 
an enormous number of scientists and engineers from their 
graduate schools in excess of 2 million in 2009 alone.
    And so I think when we look at what do we do, what are the 
policies we should put into place as a country, they obviously 
include investments in science and research and particularly 
focusing on STEM education, to ensure that we have the 
workforce and the ability to compete successfully.
    But one of the challenges we face is even if we make all 
the right investments, the science and research and innovation 
and higher education, we end up with an uneven playing field 
because of the theft of intellectual property and because of 
Chinese practices of requiring the transfer of intellectual 
property.
    So while I am going to keep advocating for what we need to 
do to compete successfully and win. If at the end of the 
process, the Chinese or others simply get to steal what we, you 
know, the results of that investment, you know, from pre-K-12, 
to Head Start, to Pell Grants, and all of the infrastructure 
that is necessary, I am going to continue to advocate for that. 
But at the end of it, if we haven't protected our investment by 
successfully protecting American intellectual property, then it 
is hard to kind of keep advocating for it.
    And so what I would like to know is what do you think we 
should be doing, why aren't we doing more enforcement at the 
WTO?
    What tools could we make better use of to protect this huge 
investment we are making in order to be sure at the end of this 
process we are competing successfully and winning?
    Mr. Segal. Thank you very much for your question. I totally 
agree that there is no way we can continue innovating and have 
the Chinese completely tip the table toward them, right. The 
free trade system is based on comparative advantage. Our 
comparative advantage is innovation. And if they are going to 
undermine that, then you can't have that system continue to 
work.
    So besides doing things at home, I think we have to keep 
pressuring China on indigenous innovation and intellectual 
property rights. The fact that it was now at the top of the 
list for this strategic and economic dialogue I think was an 
important step--it's only the first step, right. What we have 
to see, as your earlier question to Dr. Holdren suggested, we 
have to see how they are going to follow it through.
    But we know what works, right. There have been specific 
instances with either IPR or with indigenous innovation where 
the Chinese have backed away. That has primarily happened when 
both U.S. companies and foreign countries all push in the same 
position, right. What has typically happened in other cases is 
you get a lot of detection, right.
    U.S. companies don't want to be seen as the one who 
publicly embarrassed China because they know that the Chinese 
Government is going to punish them sometime in the future with 
safety inspection or other types of interference with their 
business.
    And the Chinese are often very good at splitting countries, 
right. The EU may have this position, we may, and the Japanese 
may be somewhere else. So in those instances where everyone is 
in a row, the Chinese have backed down. We saw this with the 
WAPI standard for WiFi. Everybody stayed together and didn't 
back down.
    So I think in those kinds of instances where you can get 
that type of thing, that is what we should be working for, then 
we can push the Chinese.
    The other thing to do, of course, is that R&D is mobile. 
And so what you see is that if a U.S. company takes the 
benefits from a grant from the NSF or something at a U.S. 
university and then scales it up in China, that doesn't serve 
our purpose, right? So we have to think about how do we tie 
that scaling up side to local, right? How do we improve 
manufacturing jobs, how do we get those people?
    And I think part of the way to do that is to make those 
grants collaborative, right, to insist that companies work with 
other U.S. companies, that they work with U.S. universities and 
tie them locally. Those are the two ideas.
    Mr. Cicilline. And it would seem to me another approach 
would be to repeal existing tax incentives and tax breaks to 
give to American companies who do that kind of scaling up in 
China rather than here in the U.S.
    Mr. Segal. Yeah, that would also be one.
    Mr. Cicilline. Thank you, Mr. Chairman.
    Mr. Rohrabacher. I want to thank the witnesses. Mr. Fisher, 
did you have a final comment that you would like to make and 
Mr. Segal, did you have a final comment?
    Let me then close this hearing by saying and emphasizing 
something that was said by Mr. Wolf, Congressman Wolf when he 
was here at the beginning of the hearing, and that is don't 
mistake any of the criticism that we have made of China with a 
criticism of the Chinese people. China is a dictatorship in 
which the people do not choose their own leaders. The political 
leadership in China suppresses the people. It is--the 
relationship is different than here.
    Our Government reflects the will of the people, at least it 
should, and, there, that is just not the case.
    So, who are our greatest allies in correcting a bad 
situation that is developing between China and the United 
States? Our greatest ally are those people in China who want to 
live in freedom and in peace and want prosperity for their 
families as we do.
    And so nothing in this hearing should be interpreted as 
being anti-Chinese. This is anti the Beijing dictatorship. This 
is all these things that we are talking are based on the fact 
that you have a militaristic human rights abusing government in 
Beijing that is oppressing their own people as much as they are 
threatening the stability of the rest of the world. We have 
seen, with that regime a transfer, a major transfer of wealth, 
perhaps the most historic transfer, voluntary transfer of 
wealth from one country to another in the history of the world. 
We have seen money and wealth that would be in the United 
States transferred to uplift the people of China.
    Now I happened to have been there in the beginning when 
Reagan made this, and again, let me assert when people are 
talking about Ronald Reagan, he was very clear the reason why 
he was agreeing, and the American establishment agreed to 
permit this type of policy establishing itself, everything was 
established during that time period, was that there was a 
liberalization going on in China that would have resulted in a 
more democratic country that was at peace with its own people 
and at peace with the world.
    At that moment, that is what was evolving into place. Had 
Ronald Reagan been the President at Tiananmen Square, I have no 
doubt that he would have sent a telegram to the leadership of 
the Communist Party and said if you unleash the party on the 
army on the democratic movement in Tiananmen Square, the deal 
is off. No more technology transfers, no more investment, no 
more of the United States turning around and letting this theft 
of our technology and investment go there. It is all over. All 
of our credits, it is done, the economic deal--that is what he 
would have said in this telegram. I would have written it for 
him.
    And, guess what. He wasn't President. Herbert Walker Bush 
was President. And do you know what the telegram that Herbert 
Walker Bush said that he sent to the Communist Party 
leadership?
    That is it, nothing.
    And when they slaughtered those people and they turned 
China back on course to dictatorship and they kept China on a 
course of belligerency toward the western world and toward 
massive repression of their own people, they didn't pay any 
economic price whatsoever. They benefited from it and our 
witnesses were correct.
    This is not a partisan issue. It was bipartisan governments 
here in the United States, both Republican and Democrat, have 
permitted this transfer of wealth and power to go on to this 
vicious dictatorship which rivals, certainly rivals the 
monstrous behavior of the Hitler regime who, of course, we 
shouldn't forget that IBM and a lot of American companies did 
business with Hitler too, didn't they? Did that make that any 
more peaceful in the world? No.
    And Germany, let us remember, was a very advanced economic 
country. So it is not out of poverty you have this 
dictatorship, no. What you have got is evil forces in this 
world. And then you have a lot of wonderful people who populate 
this planet, where wonderful people should work together and 
side with each other when they see someone being oppressed and 
someone--and we have a government in China that takes people in 
the Falun Gong, and their crime is that they believe in 
meditation and yoga, and that is, in a religious way, and that 
is appealing to the Chinese and the Communist Party is 
arresting them by the thousands, murdering them and selling 
their organs.
    I don't even think that we can get past the corporate 
people who are backing China here. I don't think we can get a 
law passed that even says that you can't buy organs from China 
as long as they keep taking them from prisoners who they have 
executed because a lot of their prisoners are political 
prisoners and religious prisoners.
    When we lose sight of the moral underpinnings of our 
policy, our country will go down and is going down in 
relationship to its influence and power to a vicious 
dictatorship by a dictatorship that does those sort of heinous 
deeds to their own people and bolsters the strength of gangster 
regimes around the world.
    I hope that this has been interesting to those people who 
are reading the Record and who are watching on C-SPAN. And I 
want to thank my fellow colleagues here, especially on the 
Democratic side of the aisle, because they showed up, and I 
hope that I have given, I know I have spoken longer than 
others, but I wanted my colleagues to know that they have just 
as much time as I would ever use, and I usually try to be fair 
about that.
    Mr. Cicilline. I thank the chairman for his accommodation.
    Mr. Rohrabacher. So with that said, thank you to the 
witnesses, and this hearing is adjourned.
    [Whereupon, at 5:47 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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     Material Submitted for the Hearing RecordNotice deg.





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 Material Submitted for the Record by the Honorable Frank Wolf (R-VA), 
 chairman, Appropriations Subcommittee on Commerce, Justice, Science, 
                          and Related Agencies















                                 
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