[Joint House and Senate Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                  CORPORATE COMPLICITY: SUBSIDIZING THE PRC'S 
                             HUMAN RIGHTS VIOLATIONS
=======================================================================

                                HEARING

                               BEFORE THE

              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 11, 2023

                               __________

 Printed for the use of the Congressional-Executive Commission on China
 
 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


              Available at www.cecc.gov or www.govinfo.gov

                               __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
53-486 PDF                  WASHINGTON : 2023                    
          
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              CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

                    LEGISLATIVE BRANCH COMMISSIONERS

       House                                     Senate

CHRIS SMITH, New Jersey, Chair       JEFF MERKLEY, Oregon, Co-chair
JAMES P. McGOVERN, Massachusetts     MARCO RUBIO, Florida
BRIAN MAST, Florida                  TOM COTTON, Arkansas
JENNIFER WEXTON, Virginia            STEVE DAINES, Montana
MICHELLE STEEL, California           ANGUS KING, Maine
SUSAN WILD, Pennsylvania             TAMMY DUCKWORTH, Illinois
ANDREA SALINAS, Oregon               DAN SULLIVAN, Alaska
ZACHARY NUNN, Iowa
RYAN ZINKE, Montana

                     EXECUTIVE BRANCH COMMISSIONERS

               DANIEL K. KRITENBRINK, Department of State

                  MARISA LAGO, Department of Commerce

                   THEA MEI LEE, Department of Labor

                     UZRA ZEYA, Department of State

                   ERIN BARCLAY, Department of State

                      Piero Tozzi, Staff Director

                   Matt Squeri, Deputy Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Statements

Opening Statement of Hon. Chris Smith, a U.S. Representative from 
  New Jersey; Chair, Congressional-Executive Commission on China.     1
Statement of Hon. Jeff Merkley, a U.S. Senator from Oregon; Co-
  chair,
  Congressional-Executive Commission on China....................     3
Statement of Robert Silvers, Under Secretary for Strategy, 
  Policy, and Plans, U.S. Department of Homeland Security; Chair, 
  Forced Labor Enforcement Task Force............................     5
Statement of Enes Kanter Freedom, human rights advocate and 
  former NBA basketball player...................................    17
Statement of Shi Minglei, wife of Chinese human rights activist 
  Cheng 
  Yuan...........................................................    19
Statement of Isaac Stone Fish, Visiting Fellow, Atlantic Council.    20
Statement of Aynne Kokas, C.K. Yen Professor, Miller Center, 
  University of Virginia.........................................    22

                                APPENDIX
                          Prepared Statements

Silvers, Robert..................................................    47
Freedom, Enes Kanter.............................................    50
Shi, Minglei.....................................................    53
Stone Fish, Isaac................................................    54
Kokas, Aynne.....................................................    57
Smith, Hon. Chris................................................    66
Merkley, Hon. Jeff...............................................    67
McGovern, Hon. James P...........................................    68

                       Submissions for the Record

Letter to Co-chair Merkley regarding implementation of the UFLPA, 
  from Robert Silvers, Under Secretary, U.S. Department of 
  Homeland Security..............................................    69
Letter to Steve Richman, Group President of Milwaukee Tool, from 
  Chair Smith and Co-chair Merkley...............................    73
``Forced Organ Harvesting and Corporate Complicity in China,'' by 
  Maya (Maisam) Mitalipova, Ph.D., Director of the Human Stem 
  Cell Laboratory, Whitehead Institute for Biomedical Research, 
  MIT, submitted by Chair Smith..................................    75
``United Nations Experts' Action on Chinese Human Rights 
  Defenders: the `Changsha Three,' '' submitted by Chair Smith...    77
Wisconsin Watch article on Milwaukee Tool, by Zhen Wang, 
  submitted by Chair Smith.......................................    85
Statement of Roger W. Robinson, Jr., Chairman, Prague Security 
  Studies Institute, and former Chairman of the U.S.-China 
  Economic and Security Review Commission, submitted by Chair 
  Smith..........................................................   102
``Emerging Pressures on U.S. Businesses and Risks of Complicity 
  with Beijing's Censorship and Propaganda,'' by Sarah Cook, 
  Senior Advisor for China, Hong Kong, and Taiwan, at Freedom 
  House, submitted by Chair Smith................................   117
CECC Truth in Testimony Disclosure Form..........................   121
Witness Biographies..............................................   123

                                 (iii)

 
  CORPORATE COMPLICITY: SUBSIDIZING THE PRC'S HUMAN RIGHTS VIOLATIONS

                              ----------                              


                         TUESDAY, JULY 11, 2023

                            Congressional-Executive
                                       Commission on China,
                                                    Washington, DC.
    The hearing was held from 10:05 a.m. to 12:34 p.m., in room 
2020, Rayburn House Office Building, Washington, DC, 
Representative Chris Smith, Chair, Congressional-Executive 
Commission on China, presiding.
    Also present: Senator Jeff Merkley, Co-chair, and 
Representatives Salinas, Wexton, Wild, and Nunn.

 OPENING STATEMENT OF HON. CHRIS SMITH, A U.S. REPRESENTATIVE 
 FROM NEW JERSEY; CHAIR, CONGRESSIONAL-EXECUTIVE COMMISSION ON 
                             CHINA

    Chair Smith. Good morning, everybody. We will be joined in 
a few moments by Senator Merkley, who is on the Senate side, of 
course, and will be here for his opening--we're going to delay 
a little bit, but we do have two panels. And as soon as he does 
come, obviously, we'll recognize the distinguished senator and 
co-chair.
    Today's hearing, ``Corporate Complicity: Subsidizing the 
PRC's Human Rights Violations,'' will come to order. Since the 
Tiananmen Square massacre in 1989, and for some, even before 
that date, far too many elite leaders of America's most 
profitable corporations and like-minded government enablers 
here and around the world have embraced and welcomed the 
Chinese Communist Party with open arms. The predictably false 
hope that robust trade would somehow help China matriculate 
from a dictatorship to a functioning democracy had no 
compelling precedent in history, especially a country that's 
owned lock, stock, and barrel by force, by a brutal Communist 
Party.
    That false hope has been further exposed every single year 
since the early 1990s by China's ever-worsening abuse and 
violence against its own citizens--the pervasive use of 
government-sanctioned genocide, torture, rape, forced abortion, 
involuntary sterilization, forced organ harvesting, human 
trafficking, sex trafficking, and labor trafficking, religious 
persecution, kangaroo courts (particularly for political and 
religious prisoners), free speech and assembly violations, and 
the atrocities they have committed in Hong Kong after making 
solemn promises to protect basic rights and abide by the Sino-
U.K. agreement. And of course, there's so many other crimes 
against humanity. They attest to an absolutely shameful record 
of wanton cruelty.
    Tragically, the abuse and violence has only gotten worse 
under Xi Jinping. You know, with his famous executive order of 
May 26th, 1994, President Clinton abolished the requirement 
that the Chinese Communist Party achieve ``significant 
progress'' in protecting human rights as the condition for 
extending most favored nation status; in other words, the 
elimination of import tariffs by the United States. A few 
months earlier in 1994, before President Clinton's 
capitulation, I traveled to Beijing and met with foreign 
ministry officials and argued that President Clinton wasn't 
going to back down or back off his promise to end MFN unless 
China reformed its barbaric practices.
    I even conveyed to the CCP officials a bipartisan letter 
signed by 100 members of Congress, left and right. Nancy Pelosi 
was on that. Frank Wolf was a cosponsor--cosigner, and many 
others. And we said, We stand with President Clinton. And we 
stand for human rights. While there, I also met with the U.S. 
Chamber of Commerce in Beijing, who thought that we were wrong 
to link MFN with human rights. After a spirited exchange over 
breakfast, I came away with the inescapable conclusion that no 
human rights violation by the CCP would disrupt lucrative 
business deals.
    A few months later, to my shock and dismay, President 
Clinton delinked human rights from trade. He did it on a Friday 
afternoon, after almost everybody in this building had left to 
go back to their districts. I was lingering--doing some work in 
the office when the story hit. I ran over to the press gallery. 
I did a press conference impromptu. If you go to C-SPAN, you 
can see it. I wasn't the only one. Nancy Pelosi ended up doing 
her own press conference. We were shocked that he delinked. 
Clinton had accused, and rightfully, President George Herbert 
Walker Bush of coddling dictatorship. And I agreed with that, 
after Tiananmen Square. Then he coddled like no other.
    The symbiotic U.S.-China trading relationship that emerged 
in the 1990s and continues to this day allowed many to become 
incredibly rich and powerful, while conveying to the CCP extra-
ordinary industrial capacity and know-how for both consumer 
goods and, ominously, military products and capability. That 
CCP military capability today poses an existential threat to 
Taiwan, numerous nations in the region, and to the United 
States of America ourselves. Today it is deeply discouraging to 
see the ongoing complicity of American companies in aiding and 
abetting the Chinese Communist Party's heinous crimes against 
humanity, and genocide.
    Many are complicit in concealing the PRC's abuses. Many are 
complicit in the PRC's restrictions on freedom. Many are even 
complicit in amplifying the Chinese Communist Party's 
propaganda across our country, spreading political and 
ideological stances that are completely contrary--
antithetical--to what the United States stands for. American 
companies and consumers should not be subsidizing tyranny.
    In January, I introduced--I should say re-introduced--the 
China Trade Relations Act of 2023, to end MFN, now called 
normal trade relations, to China. Actually, it's almost a 
carbon copy of what we were talking about in 1993. I did press 
conference after press conference thanking President Clinton 
for linking human rights and trade, only to see that he 
delinked it one year later.
    Every single person here testifying has done an enormous 
amount of work and provided leadership, and we're so grateful 
that you're here. One of our distinguished witnesses today has 
paid an enormous price, the loss of his amazing 11-year 
basketball career in the NBA, for his courageous stand for 
human rights, especially for the Uyghurs, the victims of Xi 
Jinping's ongoing genocide.
    He will testify today that after he got released, about 
three weeks later--released means fired, of course--China put 
the games back on television that had been barred from Chinese 
TV because he wore basketball shoes that said ``free the 
Uyghurs.'' ESPN did an investigation and found out that 49 NBA 
owners have $10 billion tied up in China. Money talks and human 
rights go right out the window. The Chinese Communist Party 
ordered the NBA to sanction--to fire--Enes Kanter Freedom, and 
like cowards, they obeyed.
    I'd like to yield to my good friend and colleague, the co-
chair of our Commission, Senator Merkley.

STATEMENT OF HON. JEFF MERKLEY, A U.S. SENATOR FROM OREGON; CO-
       CHAIR, CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA

    Co-chair Merkley. Thank you very much, Mr. Chairman, and 
welcome. It's good to have you with us. I'm glad we're 
continuing to dig into the issue of corporations' connection to 
the Chinese Communist Party's human rights abuses in China and 
elsewhere. This has been an intense interest--a bipartisan and 
bicameral interest of this Commission. With so many of the 
issues that we monitor, the CCP's abuses are sometimes 
amplified or even abetted by the actions of actors closer to 
home.
    When products, from cotton to car parts, are made on the 
backs of Uyghur slave labor, companies seeking to get those 
products into the U.S. market subsidize the economic machinery 
of genocide. When authorities crush Hong Kong's cherished 
freedom, they count on multinational corporations to continue 
business as usual. When mass surveillance and biometric data 
collection target repressed populations, some American 
companies provide the technology, the services, or the data 
that bolster the surveillance state.
    Our commissioners have taken an interest in these issues 
because it's unacceptable to us if any American business props 
up genocide, enables censorship, or legitimizes actions that 
trample on basic universal freedoms. That's why last Congress I 
chaired hearings focused on the message leading American 
companies were sending by lending their prestige to the 2022 
Beijing Olympics. And we focus on the way the PRC leverages 
technology for deeply repressive purposes, and the coercive 
economic dynamics that too often lead companies to self-censor, 
or even parrot propaganda.
    We sent letters to some of the most respected brands in 
America when their actions put them at risk of complicity in 
human rights abuse, companies like Apple, Hilton, Amazon, 
Airbnb, NBC, the NBA, and more. This Commission's signature 
initiative to guard against corporate complicity has been the 
Uyghur Forced Labor Prevention Act. Representative McGovern, 
Senator Rubio, Representative Smith, and I spearheaded that 
legislation to protect American consumers and hold corporations 
trading in the products of forced labor accountable. At our 
April hearing, we heard from experts about the initial 
implementation of this law and the difficult road ahead to make 
sure we enforce it effectively. I'm grateful that Under 
Secretary Silvers, the chair of the Forced Labor Enforcement 
Task Force, is with us today to help us grapple with those 
challenges.
    As we heard at the April hearing, businesses should now 
consider themselves on notice that protecting their supply 
chains from being tainted by forced labor must be a top-tier 
issue of corporate compliance, because it is for the U.S. 
Government. But that's only the start of the paradigm shift 
that we need. We need businesses across the economy to 
diversify their supply chains to be less susceptible to Chinese 
coercion, to avoid complicity with human rights abuses. We need 
greater transparency about businesses' data practices, exposure 
to the pressures coming from China, and more. And defenders of 
freedom need to speak out so businesses know that there will be 
reputational costs for abetting human rights abuse.
    Thank you to all of our witnesses for your role and 
speaking out. And I appreciate you sharing your expertise and 
personal stories with us. And I look forward to your testimony.
    Chair Smith. Thank you so very much, Senator Merkley.
    We're joined by Commissioner Salinas. Thank you. I yield to 
you.
    Representative Salinas. I have no comment, thank you.
    Chair Smith. OK. Well, thank you.
    With the one-year anniversary of the Uyghur Forced Labor 
Prevention Act's implementation just last month, we're grateful 
to welcome the Honorable Robert Silvers, Under Secretary for 
Policy at the U.S. Department of Homeland Security. Under 
Secretary Silvers is responsible for driving policy and 
implementation plans across all of the Homeland Security 
missions and enforcing all forced labor laws under its purview. 
The Uyghur Forced Labor Prevention Act, drafted and spearheaded 
by this Commission, is one of the most important pieces of 
legislation passed by Congress in the last two decades.
    As I expressed at our hearing just a few months ago, it is 
my hope that the legislation will prick the consciences of 
corporate actors and then it will be my further hope that 
companies will determine that the bottom-line concerns will 
motivate them to do the right thing. And indeed, I believe 
there are shared hopes of all of us today; Under Secretary 
Silvers, as chair of the Interagency Forced Labor Enforcement 
Task Force, is making eliminating forced labor from tainting 
U.S. and global supply chains a top priority. When our 
Commission wrote to him about our concerns about the 
implementation, he echoed our sentiments and detailed his plans 
on how the Forced Labor Enforcement Task Force will continue 
expanding the entity list and fine-tuning its important efforts 
to best hold violators accountable. Thank you, Under Secretary 
Silvers, for joining us today. And on behalf of our entire 
Commission, I welcome you and look forward to your testimony. 
And I yield you such time as you may consume.

  STATEMENT OF ROBERT SILVERS, UNDER SECRETARY FOR STRATEGY, 
POLICY, AND PLANS, U.S. DEPARTMENT OF HOMELAND SECURITY; CHAIR, 
              FORCED LABOR ENFORCEMENT TASK FORCE

    Under Secretary Silvers. Thank you, Mr. Chairman, Co-
chairman Merkley, and distinguished commissioners. Thank you 
for the opportunity to discuss the work of the Department of 
Homeland Security and the Forced Labor Enforcement Task Force 
to combat forced labor in global supply chains. The U.S. has 
long condemned the People's Republic of China's ongoing 
genocide and crimes against humanity against Uyghurs and other 
minority groups, including the systemic use of forced labor. 
U.S. laws that prohibit importation of these illicit goods 
reflect our values. They honor human rights. They protect 
American workers and legitimate businesses. At DHS, we are 
proud to enforce our nation's forced labor laws. It is the 
right thing to do.
    Congress charged the task force with leveraging the 
authorities of our member agencies across the executive branch 
to ensure that the U.S. Government is doing everything in its 
power to eradicate forced labor. I am honored to chair the task 
force, and under the leadership of Secretary Mayorkas we are 
facilitating the flow of legitimate trade while working across 
the public and private sectors to keep goods made with forced 
labor out of U.S. commerce. We applaud the commitment of the 
Commission and members of Congress who, on a bipartisan basis, 
secured the passage of the Uyghur Forced Labor Prevention Act, 
the UFLPA. This law has brought a sea change to the way we 
approach the eradication of forced labor.
    Our implementation of the UFLPA has been speedy, strong, 
and surgical. Speedy, because we implemented ahead of the 
aggressive schedule required by the law. Strong, because we 
devote the full weight of our resources to enforcing the law. 
And surgical, because our enforcement is based on risk 
assessment, intelligence, and data-driven targeting. Since the 
UFLPA took effect in June of 2022, Customs and Border 
Protection has targeted more than 4,200 shipments valued at 
over $1.4 billion, sending a clear message to importers that we 
take our mandate seriously.
    We continue to improve our operations with innovative 
technology, such as artificial intelligence and machine 
learning, and scientific testing that can help us determine the 
true origin of goods. Our early enforcement has been strong, 
but we do face challenges, including the risks posed by de 
minimis shipments and the need for further resources to fulfill 
our mandate. We welcome the opportunity to work with this 
Commission and Congress to address these challenges together in 
a bipartisan way.
    In addition to the rebuttable presumption that the UFLPA 
established for goods coming from Xinjiang province, the UFLPA 
has other important components, including the public 
identification of illicit actors through the UFLPA entity list. 
The task force is committed to expanding the UFLPA entity list, 
as demonstrated by the recent addition of two new entities, 
extending the list to a current total of 22 entities. There is 
an active pipeline of referrals we are examining, and we 
anticipate more additions to the list in the coming months. Our 
partnership with the NGO community is critical, as is their 
research and monitoring efforts to identify forced labor 
schemes.
    Our engagements with the trade community focus on ensuring 
that they have information and guidance to support their 
compliance efforts, including best practices for supply chain 
tracing and risk management, and statistics on our enforcement 
from CBP's digital dashboard. We engage industry leaders, 
including C-suite executives and board directors, to emphasize 
that eradicating forced labor from their supply chains must be 
a top-tier compliance issue. They must address this issue with 
the same vigilance with which they address foreign corrupt 
practices, export controls, sanctions, privacy, anti-money 
laundering laws, and other pillars of modern corporate 
compliance.
    We are still in the early stages of quantifying the impact 
of the UFLPA on private sector behavior, but early data show 
promise. One respected supply chain mapping company, Altana AI, 
reports that transactions from entities potentially subject to 
enforcement under the law decreased by approximately 40 percent 
between June 2022 and March 2023. The same period also saw the 
overall value of transactions decrease by approximately 50 
percent. Another supply chain mapping company, Sayari, has 
informed us that it has similar data. We are seeing similar 
trends from other providers, and these all support extensive 
anecdotal reporting that industry is taking UFLPA compliance 
seriously and taking steps to ensure that it comes into line 
with the law's requirements.
    The UFLPA is a testament to the impact that Congress and 
the executive branch can have when they work together. This new 
enforcement regime is a significant step towards justice, 
accountability, and fair competition. There is much more work 
to do, and we are all-in on this mission. I thank the 
Commission and Congress for their support in the fight against 
forced labor. Thank you for the opportunity to appear. I look 
forward to taking your questions this morning.
    Chair Smith. Thank you so very much, Mr. Secretary, for 
your testimony and, again, for the work that you're doing each 
and every day.
    Let me ask you, at our hearing just a few weeks ago, we 
heard some very disturbing testimony about the de minimis 
loophole, which you mentioned in your testimony, that so much 
could be coming into the U.S. from Xinjiang that goes 
undetected, and an $800 threshold. How do you know--how do we 
know when we're not checking packages coming in because there's 
an assumption that it is part of the de minimis?
    One estimate was that there's three million packages a day 
coming. I thought that was very high. I don't know if that's 
accurate. But that came out of that hearing. And I'm wondering 
if you have any thoughts on what we should be doing to maybe 
close that loophole--do a more robust checking of those 
packages? Because it seems to me, if the Chinese Communist 
Party and the businesses that are working there could find a 
way to skirt any kind of sanctions, they will do it. And 
they're masters at that.
    Under Secretary Silvers. Thank you, Mr. Chairman, for the 
question. I share your concerns and your questions about the 
effect of the de minimis exception and what it means for our 
forced labor enforcement. To be clear, the UFLPA does apply to 
de minimis shipments. We conduct our risk-based targeting and 
our other approaches on de minimis shipments. However, there 
are challenges. We get less data for de minimis shipments than 
we do for shipments valued at over $800. And that makes the 
targeting and the enforcement work more difficult. We do 
receive into this country somewhere between two and three 
million de minimis shipments per day.
    Chair Smith. Per day?
    Under Secretary Silvers. Per day. And so the numbers I've 
heard are something around 700 million or so per year. And so 
it is an extremely high volume. I should note, this doesn't 
just challenge our enforcement as to our forced labor laws. It 
challenges our enforcement as to a whole host of important 
issues; for example, our ability to detect narcotics that may 
be shipped in, fentanyl, other contraband counterfeit items, 
and products made with forced labor. Recognizing the 
challenges, I have worked very closely together with the 
terrific team at Customs and Border Protection to develop 
short-, medium-, and long-term strategies to work on this 
issue.
    In the short term, we are adopting software enhancements 
that will improve our ability to target de minimis shipments 
and enforce our laws. In the medium term, we are looking at 
regulatory changes that can enhance our data collection. And in 
the long term, we would like to work with Congress. You're 
going to be hearing a lot over the coming months about what we 
are calling our 21st Century Customs Framework. This is an 
attempt to modernize the way we process cargo into this country 
so that it is both efficient and has integrity and security. 
And we would like to work with Congress on those issues, 
because it will have a lot of positive impact for our ability 
to enforce forced labor laws, including the de minimis 
environment.
    Chair Smith. Mr. Secretary, about a year ago I chaired a 
hearing on the outrageous practice by the Chinese Communist 
Party of exploiting children. In the Democratic Republic of 
Congo, they have pretty much captured the entirety of the 
cobalt mining. Something on the order of 35,000 to 40,000 
children are being exploited every day, and maybe upwards of 
200,000 adults. When those mines were owned by United States 
companies, arguably, they were better in terms of their 
treatment, their payment of salaries, and more humane 
conditions. But that has all gone the wrong way with Chinese 
leadership.
    Now, we were told at that hearing--and I introduced a bill 
just a few weeks ago that would look to enforce our trade 
sanctions against forced labor and child labor, whether they 
find themselves in an EV or for some other purpose--cobalt 
obviously has multiple purposes. And I'm wondering your 
thoughts on that. I think the bill is an idea whose time has 
come. How dare we build cars--whether it be Tesla or any 
others--with child labor, kids who are dying.
    And what came through with that hearing, and we have 
followed up very vigorously, the Democratic Republic of Congo 
leadership, it would seem, is just simply looking the other way 
or getting paid off by the Chinese Communist Party. We know 
there's no Foreign Corrupt Practices Act, so that's a very easy 
thing to do. So all this cobalt is going into China. It's being 
refined and then put into use in EVs and in other applications.
    And I'm just wondering what your sense is about that. You 
know, we'll send you the bill. I hope you'll take a look at it 
and give us any thoughts you might have on it. But, you know, I 
see Teslas all over the road, I mean, especially in this area. 
And every time I see one now I say, that was built on the backs 
of some African child, or some African adult, who may be dead 
now--certainly often sick, and many of them do die in those 
mines or from the sicknesses garnered from breathing in those 
vapors or that dust. Your thoughts on that.
    Under Secretary Silvers. Thank you, Mr. Chairman. We are 
going to enforce our forced labor laws wherever the facts lead, 
whether they lead to China or whether they lead to other 
countries where China may be exporting its forced labor 
practices. And no place, or industry, or supply chain is off 
the table when it comes to our zero-tolerance approach for 
forced labor. I would look forward to reviewing the bill and 
working with you on the issue.
    Chair Smith. Can I just ask finally, then I'll yield to my 
distinguished colleagues, what is being done by DHS to address 
the use of prison labor at Chishan Prison, where a supplier for 
Milwaukee Tool employs political prisoners for labor, making 
them work seven days a week, 13 hours a day, to meet their 
quotas?
    Under Secretary Silvers. Thank you, Mr. Chairman. We are 
quite concerned about the significant amount of reporting that 
we receive about abusive labor practices in PRC prisons. Our 
Homeland Security Investigations Agency, including through 
their presence at our embassy in Beijing, investigate and look 
into those kinds of issues. And if there is a link found 
between forced labor in Chinese prisons and product that is to 
be shipped to the United States, we will fully enforce.
    I will say, it is difficult work because it is so difficult 
to get facts about what is happening in China, not least of all 
within a Chinese prison. The lack of transparency into the 
Chinese system is a challenge that we have to penetrate. It's a 
challenge that companies that want to do the right thing have 
to penetrate, because it makes due diligence difficult. I think 
that's part of the reason why you've seen a number of companies 
working to pull their supply chains out where they cannot 
obtain the transparency that they need and that the law that 
you passed requires.
    Chair Smith. I appreciate that. Without objection, I ask 
unanimous consent that a letter from Senator Merkley and me be 
included in the record. It's a letter to Steve Richman, who's 
the president of Milwaukee Tool. We lay out the problem as we 
see it, particularly since Wisconsin Watch did an investigative 
report on this, and the findings are very, very damaging. And 
Milwaukee Tool gloves continue to be sold at Home Depot, as 
well as on Amazon. And we need to get to the bottom of this. So 
without objection, this will become part of the record.
    Senator Merkley.
    Co-chair Merkley. Thank you, Mr. Chairman.
    And, Mr. Secretary, I'll try to be brief in my questions 
because I have a lot of them. And if you can be succinct in 
your responses, it would be helpful. First, we see that a lot 
of shipments that are being questioned are really being shipped 
through Malaysia and Vietnam. Are you getting cooperation from 
the governments of Malaysia and Vietnam?
    Under Secretary Silvers. We are. We engage with both those 
countries. And that is correct. The two countries that have the 
most enforced shipments under the UFLPA are actually Vietnam 
and Malaysia. And it shows the distributed nature of supply 
chains and that things that are made in Xinjiang may end up 
elsewhere before being shipped to the United States. And we 
understand that and we enforce on it.
    Co-chair Merkley. And I think it also reflects an effort to 
launder the products out of China, to try to make it more 
difficult for the U.S. to intercept them under this bill. So 
I'm glad you're paying a lot of attention to that.
    Under the UFLPA dashboard, about 16 percent of the 4,200-
plus shipments that were targeted were denied entry into the 
U.S. When they are denied entry into the U.S., is the 
manufacturer or the shipper able to then transport those goods 
to another country?
    Under Secretary Silvers. Under the law, they are--if we 
deny entry they are permitted to re-export or destroy the 
goods.
    Co-chair Merkley. I just want to note that that's an area 
we should pay attention to, because if it simply means they're 
stopped in the U.S., but they're shipped across the border to 
Canada, we really haven't achieved much. Which brings me to my 
next question, how much cooperation are we getting with Canada 
and Mexico in terms of creating a more united regime in regard 
to forced labor?
    Under Secretary Silvers. Senator, I agree 100 percent with 
you that we won't have achieved our common goal of eradicating 
forced labor if the goods just go elsewhere. That is why we are 
putting such a priority on international cooperation. The USMCA 
trade agreement requires the U.S., Mexico, and Canada all to 
have forced labor enforcement regimes. We are working with both 
those governments towards that end.
    Co-chair Merkley. Great. And Europe?
    Under Secretary Silvers. We engage with European partners 
as well. I think there are huge benefits to harmonized laws. 
The UFLPA--I think the Commission can take great pride--is the 
most forward-looking, aggressive law in the world right now on 
this subject. And I've seen interest in a number of other 
governments in adopting similar legislation, which I think is 
all to the good.
    Co-chair Merkley. So in the last year, the task force has 
only added two new companies to the entity list. And you 
mentioned the entity list. Are there roadblocks to expanding 
the entity list? Why only two?
    Under Secretary Silvers. Senator, we did add two very 
recently; there's now a total of 22 that were listed in the 
first year of enforcement, though the first 20 came much 
earlier in the enforcement period. We are placing a very high 
priority on populating the entity list. When the new law was 
passed, it did not come with resources for the Forced Labor 
Enforcement Task Force. We aggressively pulled resources and 
people from other mission spaces. Over the course of the months 
we had to build an entirely new process for an entity list that 
did not exist at all. That is now up and running. And I am 
placing a very high priority on naming additional entities. We 
have a very active pipeline of cases, and more will come soon.
    Co-chair Merkley. Do we see companies really starting to 
respond, saying, Hey, this is real. We either have to establish 
our safe harbor, like, very clear documentation, or we need to 
move our production that has been tied to forced labor into a 
different country or a different part of China, so on, so 
forth. Are companies starting to take this seriously?
    Under Secretary Silvers. Yes. We have significant data and 
significant anecdotal evidence that companies are hearing this, 
that the message is well received in terms of congressional 
intent, as well as through our strong enforcement in year one. 
And so, for example, the AI-driven supply chain management 
software company Altana noted that suspicious shipments from 
Xinjiang--or, related to Xinjiang, to the U.S., declined by 50 
percent over the first year of enforcement based on its trade 
data.
    Co-chair Merkley. Are we seeing a fair amount of that being 
bifurcated supply chains? That is, Well, we have a factory in 
Vietnam. We'll send those products to the U.S., while sending 
the Xinjiang factory's products somewhere else that doesn't 
have this enforcement?
    Under Secretary Silvers. I think--and that goes to our 
prior discussion--I think there is always the risk, Senator, 
that goods that we won't let in, manufacturers will try to send 
elsewhere. That's why we place such a premium on having like-
minded countries introduce similar enforcement regimes. We are 
also very mindful of the risk of transshipment, that is of 
companies trying to obscure the provenance of goods by shipping 
them through third countries or shell companies. We are very 
attuned to that in our enforcement.
    Co-chair Merkley. So Congress appropriated funding for 
innovative technology to help with enforcement, such as supply 
chain mapping, supply chain traceability, DNA testing. Do you 
have any pilot projects that have started utilizing that money? 
Is the rubber hitting the road?
    Under Secretary Silvers. The rubber has already hit the 
road, Senator. We are using several AI-based software supply 
chain mapping tools. We see tremendous pickup in the importing 
community, the private sector, of those same kinds of tools. We 
are also looking very closely at scientific testing, such as 
DNA testing, that can help determine the provenance of goods. 
In particular, DNA testing that can tell you whether cotton 
comes from Xinjiang province. And we're likewise seeing uptake 
in the trade community. CBP hosted a technology expo a couple 
months back. I think that I saw a number of staff members from 
the Commission attended. And to showcase the range of 
technologies that can help with due diligence and supply chain 
visibility.
    Co-chair Merkley. Another challenge is growing direct-to-
consumer apps, like Shein and Temu. How do you intend to handle 
those direct-to-consumer strategies?
    Under Secretary Silvers. I think this raises issues about 
what is happening with de minimis shipments, that is shipments 
that are valued at less than $800 and which, pursuant to 
statute, receive an expedited process for coming into the 
country. Look, first, when we receive reports that any shipping 
channel may be infected with forced labor products, we are 
going to look into that, and investigate, and take enforcement 
action as appropriate. And as I was discussing with Chairman 
Smith earlier, we have developed strategies for addressing the 
challenges of UFLPA enforcement in the de minimis contexts, 
including enhanced software that we are procuring, and 
potential regulatory and statutory changes.
    Co-chair Merkley. Thank you.
    Under Secretary Silvers. Thank you.
    Chair Smith. I will now yield to Commissioner Salinas.
    Representative Salinas. Thank you, Mr. Chair. And thank you 
to both co-chairs for this hearing today.
    Secretary Silvers, a goal of the Inflation Reduction Act as 
well as the CHIPS and Science Act, is to build up our domestic 
manufacturing capacity and reduce our reliance on China. This 
could make it far easier to avoid some of the challenges we 
discussed earlier around mineral supply chains, but it also 
makes me wonder what we might lose by building a more arm's-
length economic relationship with China. Is there evidence that 
Chinese entities actually respond to American import 
restrictions by improving their labor practices?
    Under Secretary Silvers. Thank you very much, 
Congresswoman. We do strongly support supply chain resilience 
initiatives such as the CHIPS Act, building up a domestic 
supply chain and manufacturing base for things like 
semiconductors. That's just critical to our future. We believe 
we can do that while still maintaining our leverage to shape 
practices within China to the extent we can. But as important, 
perhaps, shape the practices of importers and where they decide 
to source from.
    I think the last decades have shown that we may not have 
complete leverage in terms of shaping how China intends to run 
its system, but what we do have a lot of leverage over is what 
products we allow into this country. And I think what we have 
seen is Congress on a bipartisan basis pass laws like the 
UFLPA. And we have significant reason to believe that that is 
causing a lot of companies to pull their supply chains out of 
Xinjiang province. And so I think we can pursue the really 
important domestic supply chain and manufacturing resilience 
strategies that you mentioned, while also keeping enforcement 
strong to keep these kinds of forced labor products out of our 
system.
    Representative Salinas. Thank you. I think we can do both 
as well. Thank you. I yield back.
    Chair Smith. Thank you.
    Commissioner Wexton.
    Representative Wexton. Thank you very much, Mr. Chairman. 
Can you all hear me OK?
    Chair Smith. Yes, we can. Perfectly. Thank you.
    Representative Wexton. Good. Wonderful. Thank you so much 
for being here today. Thank you so much, Mr. Secretary for 
being here as well. Before I get started with my questions, I'm 
going to tell you I have an illness which affects how I speak, 
which makes it kind of hard for me to speak in a way that is 
understandable. I'm sorry if I do that. And please do not 
hesitate if I say something you have trouble understanding. 
Please do not hesitate to let me know, and ask me to repeat the 
question, or repeat the question yourself to make sure you got 
it right, OK? Can you do that for me, please? [Laughs.]
    Under Secretary Silvers. I will. Thank you.
    Representative Wexton. Thank you so much.
    I represent Virginia 10, which is a Northern Virginia 
district. And it had till very recently one of the highest 
populations of Uyghur Muslims in the United States. And it's 
still--we have a very big population here in Northern Virginia. 
So this is something that is really important to a lot of my 
constituents. I commend the work that the DHS and the Forced 
Labor Enforcement Task Force have been doing on this issue. 
I'll admit I was kind of skeptical when we had the sense that 
the administration was slow-walking with passage of this bill. 
Now it's been passed, you guys are doing a really fantastic job 
getting everything done. So I really appreciate that and just 
thank you. So, really thank you for that and the work you've 
been doing.
    But there are methods and models for human rights to do due 
diligence. And we're not seeing companies demonstrating that 
they know how their operations and supply chains affect human 
rights. So it's a problem. The companies don't--I don't know 
that they actually know how their supply chains are affecting 
human rights, or whether they're just being deliberately blind 
to how they're affecting them. Sorry about that, my dog wants 
to come in. [Laughs.] I'll let her in in a minute.
    But anyway, so the CDP--is the CDP giving clarity on what 
it will ask if companies--how companies can demonstrate they're 
not causing, contributing to, or benefiting from human rights 
abuse in the PRC? Do you approve giving training and telling 
people how they should be avoiding contributing to human rights 
abuses in the PRC? Are you telling companies about what they 
should be doing?
    Under Secretary Silvers. Thank you very much. Thank you 
very much, Congresswoman. We are indeed speaking regularly 
through engagements, as well as guidance that we have published 
to companies about what we expect from them. We have published 
guidance and we speak directly with C-suite executives and 
board directors and compliance teams at companies to tell them 
what we expect of them when it comes to supply chain 
transparency and due diligence. I think that is really one of 
the incredible features of the UFLPA--that it turns the system 
around so that importers are responsible for knowing their own 
supply chain. They have to take the steps. They need to own the 
issue.
    We have published through the multi-agency Forced Labor 
Enforcement Task Force that I'm honored to chair, substantial 
guidance for what the best practices are for achieving that 
supply chain transparency, conducting that supply chain due 
diligence, and managing risk when it comes to forced labor in 
very complex supply chains. And we have emphasized repeatedly 
that forced labor is now, in 2023, a top-tier compliance issue 
for companies that they have to own and take responsibility 
for. And I think that message has been clearly received.
    And I think it's been received based on the data I shared 
and the anecdotal evidence. And then I think if you look at our 
enforcement data, over $1.4 billion in shipments detained for 
inspection across a range of sectors--I think it speaks for 
itself. And the importing community has heard it and is 
responding. But there is more work to do.
    Representative Wexton. Thank you, Mr. Undersecretary. I 
really appreciate that.
    Do you feel that you have the resources that you need in 
order to be able to do this work? Do you feel like you have 
enough resources? I know you said something about having to 
pull resources from other places in order to have the resources 
to get the committee up and running. And do you feel like you 
have to have the resources that you need? Or do you need more 
resources to do this work?
    Under Secretary Silvers. Thank you for that question. We do 
need more resources to support both CBP's operations at the 
ports as well as for the Forced Labor Enforcement Task Force to 
maintain the entity list and do the other work that Congress 
charged it with doing. We very much appreciate the resources 
that Congress appropriated to CBP for forced labor enforcement 
recently, but more is needed both for CBP and the Forced Labor 
Enforcement Task Force. In the meantime, though, we are pulling 
resources from elsewhere in the department, because bottom 
line, this is a high priority area for us. And we are going to 
resource it to get the job done. But we would look forward to 
working with Congress to get us more so that we can do more, 
more quickly.
    Representative Wexton. Thank you very much, Mr. Secretary. 
One other question for you. I very much appreciate you talking 
about the de minimis system, because we've all seen companies 
popping up that are using this exclusively as their way of 
exporting. So the goods come directly from the factory, they 
didn't go through customs, they don't go through the regular 
channels, and it makes it really hard to be able to determine 
whether they were made by--sourced by forced labor. So it makes 
it really hard to be able to enforce the UFLPA. And so I want 
to make sure how we can best manage Section 321 to ensure that 
companies like Shein, which stand credibly accused of exporting 
products sourced from forced labor, are prohibited from 
exploiting the de minimis loophole. How can we amend Section 
321 to make sure that we don't have this problem anymore?
    Under Secretary Silvers. Thank you, Congresswoman. I share 
your concerns about potential abuse of the de minimis exception 
for packages valued at under $800. The UFLPA does apply. We do 
enforce in that context. But there are a lot of challenges to 
our enforcement given the volume of packages, and the limited 
data received as to those packages. We are procuring software 
that is helping us to better target in the de minimis 
environment. We are looking at regulatory and statutory changes 
that can help us procure better data and enforce more 
meaningfully in the de minimis context. But I do want to 
emphasize that de minimis is subject to UFLPA, and we take the 
issue quite seriously and are doing everything in our 
administrative ability to do it.
    Congresswoman, I do just also want to address--you 
mentioned that in the 10th congressional district in Virginia 
you have a very large Uyghur community. I just want to say that 
engaging with Uyghur communities across the United States has 
been one of the more fulfilling parts of my job. It is 
absolutely horrific what is happening to them and their family 
members in Xinjiang province, but it is also inspiring to see 
their resilience and their advocacy. And we appreciate the 
chance to honor them and be their champions through our 
enforcement of these laws.
    Representative Wexton. Thank you very much, Mr. Secretary. 
I'm afraid I don't know how much time I have left, but I have 
one more question. Which is that, without getting into sources 
and methods, could you please tell us a bit about how you've 
actually been able to enforce the UFLPA with the de minimis 
exception? Do you do spot checks with the carriers? Or how do 
you determine what's actually being shipped?
    Under Secretary Silvers. Thank you, Congresswoman. We 
conduct data-driven targeting across the vast volume of trade 
that comes into this country every year. And we enforce based 
on our analysis of trade data, based on our use of technologies 
like supply chain mapping tools, based on referrals that we 
receive from nongovernmental organizations, civil society 
organizations, which so often are our ears and eyes on the 
ground, and we so value our partnership with them. Their 
activities have led to numerous enforcement actions by the 
Department of Homeland Security. And we act on other 
intelligence and data that we receive to make sure that any 
cargo that is coming into this country where we have a 
suspicion that forced labor might be involved, is inspected 
thoroughly.
    Representative Wexton. Thank you very much, Mr. Secretary. 
Mr. Chairman, I just want to quickly make a comment, which is, 
we also need to make sure that we do work about the mutual 
pairing assistance program, because that's another way that 
they're getting around that whole Xinjiang issue. But anyway, 
we can deal with that another day. Thank you so much, Mr. 
Secretary, for being with us.
    Thank you, Mr. Chairman. I yield back.
    Chair Smith. Thank you very much, Commissioner.
    Let me just ask one final question. I have others that 
we'll submit for the record. But Enes Kanter Freedom makes an 
excellent point about how China has absolutely silenced the 
NBA. He points out that one of his friends, Daryl Morey, who 
tweeted ``Stand with Hong Kong''--on his efforts with regard to 
Free Tibet, and then he did Free the Uyghurs. And he says, 
``Enes, don't give up. When I tweeted about Hong Kong, the NBA 
made me take down my tweet and made me apologize. They made me 
put statements out which I didn't want to put out.'' He then 
encouraged Enes to continue on, because he felt so bad about 
what the NBA had done to him.
    Well, we have written--our Commission--to the National 
Basketball Association's Players Association. And we asked them 
to inform and to help NBA players terminate contracts with 
Chinese sportswear companies, like Anta, Li-Ning, and Peak, 
that all pledged to continue using cotton and rayon from 
Xinjiang. They are still selling those products on their 
websites as well as on Amazon. Again, you know the story of 
Enes Kanter Freedom and what a heroic man he is. He has lost 
his entire career because he said ``Free the Uyghurs.''
    I can't believe--and I'll use the word again--the cowardice 
of the NBA in kowtowing to Xi Jinping and company, the Chinese 
Communist Party, to silence every single player. Well, now 
these individuals were trying to say, How do we help any NBA 
player get out from under being part of sportswear using cotton 
and rayon, like I said, from Xinjiang? In your opinion, should 
goods from these companies be banned from import into the U.S. 
market?
    Under Secretary Silvers. Mr. Chairman, President Biden gave 
an interview on CNN a few days ago. And he was asked whether he 
would let up on criticizing the human rights situation in China 
as part of the administration's China policy. And he, and I'm 
paraphrasing, but he said something like, When it comes to 
slave labor we're not staying quiet. That's just who we are. 
And at the Department of Homeland Security, and on behalf of 
all the member agencies of the Forced Labor Enforcement Task 
Force, zero tolerance policy. Wherever the facts lead, we are 
going to enforce our forced labor laws strictly. And we have 
done so in year one. And we are only accelerating in our 
efforts. And I think that message has been received loud and 
clear from the importing community.
    Chair Smith. In your opinion, is Anta, Li-Ning, and Peak 
violative of the Uyghur Forced Labor Act?
    Under Secretary Silvers. I'm not going to speak to 
particular companies and enforcement actions.
    Chair Smith. Would you take that back, and really take a 
hard look at that?
    Under Secretary Silvers. I will take it back. And I will 
also say, just at a more general level, that we can, and have, 
and will continue to enforce our forced labor laws when it 
comes to Xinjiang cotton. That is a prioritized enforcement 
area for us. We have taken enforcement actions with respect to 
Xinjiang cotton, regardless of who the apparel company is or 
what kind of label is on the product. And we're going to 
continue to do so because it's the law and it's the only right 
thing to do.
    Chair Smith. Thank you. I appreciate it. And I really look 
forward to continuing working with you and your department. So 
thank you.
    Under Secretary Silvers. Thank you, Mr. Chairman. Thank 
you, Co-chair.
    Chair Smith. We're going to now move on to our next panel. 
I know Commissioner Wild, you had no questions, right?
    Representative Wild. No questions.
    Chair Smith. Okay, thank you. I'd like to now welcome to 
the witness table our second panel and thank them in advance 
for their tremendous leadership on these issues.
    We have Mr. Isaac Stone Fish, who is a visiting fellow at 
the Atlantic Council and author of the book ``America Second: 
How America's Elites Are Making China Stronger.'' The book 
highlights how the PRC and Chinese Communist Party has 
leveraged its economic clout to demand political and 
ideological compliance across American corporations, Hollywood, 
and academic institutions. He has extensive insight on the 
Chinese Communist Party's pernicious influence in the U.S., and 
how it impacts our daily lives. In addition, Mr. Isaac Stone 
Fish is an adjunct at New York University's Center for Global 
Affairs, a contributor to CBS News, a columnist on China risk 
at Barron's, and founder and CEO of the Strategy Risks 
Corporation.
    We will begin however, with Mr. Enes Kanter Freedom. As a 
professional basketball player, he had a celebrated career in 
the National Basketball Association, having played for the Utah 
Jazz, New York Knicks, Oklahoma City Thunder, and Boston 
Celtics over 11 years. In 2021, leading up to the Beijing 2022 
genocide games, Mr. Freedom became the most outspoken athlete 
both on and off the basketball court about the PRC's human 
rights violations and the NBA's willingness to acquiesce to the 
dictates of the Chinese Communist Party. His commitment has led 
him to being ousted from the NBA. They fired him simply because 
he spoke truth to power.
    Just to give you some context of how good a player he was--
what a good player at the time of his banishment--his player 
efficiency rating among NBA players all-time ranking was 61, a 
metric that basketball fans will absolutely recognize. Rather 
than buckling under and yielding, Mr. Freedom continued to 
stand tall and firm. In fact, social media app TikTok, which is 
owned by the Chinese company ByteDance, even banned his account 
because of his posts about Chinese human rights violations. His 
account was reinstated, however, when the TikTok CEO was 
questioned about it before Congress. Well, Mr. Enes Kanter 
Freedom, I hope you will post about this hearing today to boost 
awareness of this important topic.
    We will then hear from Ms. Shi Minglei, a Chinese Christian 
who also goes by the beautiful name of Hope. She became a human 
rights advocate after her husband, Cheng Yuan, was arrested by 
the Chinese National Security Bureau in July of 2019. Cheng 
Yuan was a prominent leader who championed health rights for 
the Chinese people. His work was so influential that the 
tyrannical regime in Beijing grew scared and accused him of 
subversion of state power. Cheng Yuan is currently languishing 
in a Chinese prison located in China's Hunan province.
    This is a prison where political prisoners were found to be 
subject to forced labor, sewing gloves for American tool 
manufacturing company Milwaukee Tool. Gloves that are still 
sold on Amazon and at Home Depot locations across the United 
States. And I would note parenthetically that yesterday the 
Commission wrote a letter to the leadership of Milwaukee Tool--
the one I put into the record a few moments ago--to address 
this very issue. Ms. Shi Minglei, motivated by her Christian 
faith and love of her husband, aims to expose and end the 
forced labor of Chinese political prisoners. Thank you so much 
for being here and joining us today.
    Finally, we will be joined by Dr. Aynne Kokas, who brings a 
wealth of knowledge on today's topic, on corporate complicity. 
She's the author of ``Trafficking Data: How China is Winning 
the Battle for Digital Sovereignty,'' which dives into how the 
Chinese government is essentially refining the art of gray-zone 
warfare by influencing and exploiting the U.S. tech sector in 
Silicon Valley. Dr. Aynne Kokas is also the author of the 
award-winning book, ``Hollywood--Made in China,'' detailing how 
investment from China has shaped Hollywood. She is currently 
associate professor of media studies at the University of 
Virginia, focusing on China, U.S. media, and technology 
relations. And, again, thank you for being here.
    What a panel of leaders, amazing leaders, and experts. 
Thank you for your collective wisdom. And this is the book. So 
thank you for giving me a copy. [Laughter.] I will read it in 
August, when I read all my books. I'd now like to turn to Mr. 
Freedom for his testimony.

  STATEMENT OF ENES KANTER FREEDOM, HUMAN RIGHTS ADVOCATE AND 
                  FORMER NBA BASKETBALL PLAYER

    Mr. Freedom. Yes. Chairman Smith, and Co-chairman Senator 
Merkley, and the members of the Congressional-Executive 
Commission on China, thank you all for having us, and having me 
here today.
    I want to start with--I'm a basketball player. I love going 
out there, competing with my teammates and trying to win a 
championship. But some of the things that have happened in my 
life obviously made me take a very different route. So for the 
last 10 years I have been talking about the problems that are 
happening in Turkey. There are lots of human rights violations 
and political prisoners over there. And, you know, my family 
had to publicly disown me because they were getting affected so 
much. They put my dad in jail. They raided my house. And just 
recently they put a bounty on my head. They put my name on the 
Interpol list, and I have 12 arrest warrants.
    When the topic was Turkey, the NBA was very supportive, 
especially the commissioner, Adam Silver, and my teammates, and 
the coaches, and the five different organizations that I played 
for. That actually gave me so much hope and motivation to fight 
against the dictatorship in Turkey. And just three years ago, I 
was actually doing a basketball camp in New York with 
Congressman Hakeem Jeffries. And after the basketball camp I 
was taking pictures with the kids one by one. And I remember 
taking a picture with this kid, and his parents called me out 
in front of everybody, and said: How can you call yourself a 
human rights activist when your Muslim brothers and sisters are 
getting tortured and raped every day in concentration camps in 
China?
    So I turned around, I was like, I promise I'm going to get 
back to you. So that day, I canceled everything. I went back to 
my hotel, and I called my manager. I was like, I need you to 
find me a concentration camp survivor. He found a lady. You 
know, we sat down and had a one-hour conversation. And I 
remember she was telling me about all the torture methods and 
all the forced sterilization, and abortion, and stuff. And I 
was like--at the end of our conversation, I asked her: What can 
I do to help? She said, nothing. I was like, so we just had 
this one-hour conversation for no reason? I was like, no. She 
said, I'm in America. I can do whatever I want. I can say 
whatever I want. And I can eat whatever I want. Help those 2 to 
3 million Uyghurs who are in concentration camps.
    So I wanted to bring an awareness and I wanted to do it in 
a very unique way, because I remember when I was a kid whenever 
I watched an NBA game the first thing I was watching was the 
shoes. What color they are, if they are comfortable. And the 
next day I was telling my dad, please buy those shoes for me. 
So we decided to reach out to artists around the world, you 
know, and who've been oppressed by their government, and we 
created the shoes. This is non-slave labor. And we put all 
these messages on our shoes--there was no rule against this 
because three years ago when we were in the NBA bubble all the 
players were putting on their shoes, Black Lives Matter, Black 
Revolution, George Floyd, which I'm not against.
    So my first topic was ``Free Tibet.'' Our first game--I was 
playing for the Boston Celtics, and our first game was against 
the New York Knicks, our biggest rivalry. And I remember 
putting on these ``Free Tibet'' shoes. I went out there, I 
started to warm up. A minute before the game, two gentlemen 
from the Boston Celtics came to me and said: Take your shoes 
off. I was like, excuse me? Your shoes have been getting so 
much attention internationally. You've got to take your shoes 
off. It was the perfect moment for me because I was just 
getting ready for my citizenship test. So I closed my eyes. I 
was like, OK, there are 27 amendments. My First Amendment, 
freedom of speech. I turn around and I said, no, I'm not taking 
them off. [Laughter.]
    So they're like, What are you talking about? I said, I 
don't even care if I get fined. I'm not taking them off. They 
said, We're not talking about a fine. We're talking about 
getting banned. So at halftime, I went back to my locker room. 
I played zero minutes. I looked at my phone. There were tons of 
notifications. I clicked on the one that my manager sent me. He 
said every Celtics game is banned in China. Really. It took 
them 24 minutes--first quarter, 12 minutes second quarter, 12 
minutes--to ban every Celtics game on television. So that game 
I played zero minutes, and I had played every game before that. 
We lost the game, obviously. [Laughter.]
    And after the game, there was a media storm. And I told my 
manager, I don't want to do any media because I don't want my 
teammates to think that I'm doing it for attention. So actually 
after the first game, the NBPA, the Players Association, called 
me and said: Do you know what you did? You can never wear those 
shoes again. I was like, am I breaking any rules? They said, 
no, but you cannot wear them ever again. I talked about the 
problems that were happening in Turkey for the last 10 years, 
and all I got was support. But when the topic was China, one 
day and my phone was ringing once every hour.
    So they were pressuring me and my manager so much. I was 
like, you know what, I promise I'm not going to wear ``Free 
Tibet'' shoes ever again. They said, promise? I promise. I hang 
up the phone. For the next game, I wore ``Free Uyghurs'' shoes. 
[Laughter.] So they called me after the game. They said you're 
a liar. You lied to us. I was like, first of all, I never lied 
to you. I never said I'm not going to wear ``Free Uyghur'' 
shoes. I just said I'm not going to wear ``Free Tibet'' shoes. 
So after the third game one of my teammates walked up to me and 
said: You know this is your last year in the NBA, right? You're 
never going to get another contract after this because when you 
criticize the NBA and Nike, it's over for you.
    And that pretty much happened. You know, February came and, 
you know, I got released and it was over for me. You know, I 
want to say I love basketball. My job is not--I'm not a 
politician. I should be on a basketball court working out and 
getting ready for the season, but unfortunately because of the 
things that I said it's not going to happen. But, you know 
what? It's bigger than myself. It's bigger than basketball. 
It's bigger than the NBA. And I will continue to be, you know, 
a voice of all those innocent people out there who don't have a 
voice. And thank you all for, you know, organizing this 
beautiful hearing to be our voice. So this definitely means a 
lot to us. Thank you so much, guys.
    Chair Smith. Mr. Freedom, thank you so very much for your 
courage, but also for--what a sense of humor, despite all that 
you have----
    Mr. Freedom. You've gotta laugh. You know, if you lose your 
smile, you lose hope.
    Chair Smith. Well, thank you.
    Mr. Freedom. Thank you.
    Chair Smith. Ms. Shi, Hope herself. [Laughter.]

               STATEMENT OF SHI MINGLEI, WIFE OF
            CHINESE HUMAN RIGHTS ACTIVIST CHENG YUAN

    Ms. Shi. Yes. Thank you, Mr. Chairman. Thank you, Senator 
Merkley and the Congressional-Executive Commission on China for 
convening this hearing.
    My name is Shi Minglei. I'm the wife of a famous Chinese 
human rights activist, Cheng Yuan, who is currently serving a 
five-year sentence at a facility called Hunan Chishan Prison. 
There, as I will discuss in more detail later, prisoners are 
forced to work making gloves for a famous American brand, 
Milwaukee Tool.
    But first, I'd like to tell you about my husband. In 2008, 
Cheng Yuan left a job in finance to found an NGO called Nanjing 
Based Justice For All, which was initially focused on combating 
employment discrimination against persons with hepatitis B, 
which is a significant issue in PRC. From there, he expanded 
his work to other areas of social justice, including advocating 
for an end to the PRC's one-child policy and standing up for 
the rights of laborers and Chinese human rights lawyers after 
the 709 crackdown, by founding NGO ChangSha Funeng. This work 
led PRC security agents to arrest him on July 22nd, 2019. And I 
haven't seen him since. He was arbitrarily detained, tortured, 
charged with subversion of state power, and secretly tried and 
sentenced to five years' imprisonment. That's how he ended up 
at Hunan Chishan Prison.
    Another activist who was imprisoned there is Lee Mingche, a 
Taiwanese human rights activist who was arrested by the PRC 
government in March 2017 and released in April 2022. After his 
release, Lee revealed that while he was imprisoned at Hunan 
Chishan Prison, he was forced to produce gloves, including 
gloves bearing the Milwaukee Tool logo. One of Lee's jobs was 
to cut materials into the shape of a glove. Another of Lee's 
jobs was sewing the cut materials into actual gloves.
    I am told my husband is currently forced to do a 
significant amount of sewing as well. Lee said that if 
prisoners refused to work or to meet the quota, they were 
subject to a variety of punishments, including being forced to 
stand for several hours straight, having their contact with 
family members cut off, and, in some cases, being subjected to 
beating, including with electric batons. Lee has attested to 
many of these facts under penalty of perjury and is willing to 
testify to them under oath as well.
    Another recently released prisoner, whom I will refer to 
using pseudonym Xu Lun, as he is still in the PRC, has 
similarly reported being forced to produce gloves bearing the 
Milwaukee Tool logo while imprisoned at Hunan Chishan Prison. 
Xu confirmed that failure to meet the production quotas was met 
with punishments like being forced to stand and being beaten 
and shocked with electric batons. Xu also confirmed workdays of 
about 11 hours, at least six days a week, with minimal breaks, 
and being paid only $3 per month. That works out to an hourly 
wage of one cent.
    Due to the lack of rule of law in the PRC, however, it is 
extremely dangerous for former prisoners located there to speak 
publicly to these issues. That is precisely why big companies 
like Milwaukee Tool are able to get away with benefiting from 
forced labor in the PRC. They know that the lack of human 
rights protection in the PRC means it's difficult, if not 
impossible, for victims to hold them accountable.
    Meanwhile, it's extremely beneficial to Milwaukee Tool's 
bottom line if those who are actually making their gloves are 
paid only one cent per hour. Of course, they would prefer to 
have their gloves manufactured in the PRC rather than in the 
States, where they would have to pay workers several thousand 
times more, and where the kinds of abuses people like Mr. Lee 
and Mr. Xu suffered would not be tolerated. In this way, 
American workers can also be considered--counted among the 
victims of Milwaukee Tool's disregard for human rights.
    As for my husband, I'm deeply concerned about his 
wellbeing. In recent visits by other family members, he has 
confirmed that he is forced to work 11 to 12 hours a day, 
hunched over a sewing machine. He was also put in solitary 
confinement for three months, tortured, forced to stand for 
hours, deprived of sleep and food, and forced to drink water 
from the toilet. Thus, Mr. Chairman, Senators, Representatives 
and CECC representatives, I'm calling on you to stop American 
companies like Milwaukee Tool from using forced labor in the 
PRC now. I'm looking forward to taking questions, but may be 
not able to answer all these questions due to safety concerns 
and contemplated litigation. Thank you.
    Chair Smith. Ms. Shi, thank you very much for your 
testimony, and for your courage as well. And for your great 
love for your husband.
    Ms. Shi. Thank you.
    Chair Smith. We'll all continue to work for his release.
    I'd like to now yield to Mr. Stone Fish.

   STATEMENT OF ISAAC STONE FISH, VISITING FELLOW, ATLANTIC 
                            COUNCIL

    Mr. Stone Fish. Commissioners, I appreciate your focus on 
these issues, and issues that we ignore at our peril. I'd like 
to talk about business complicity both in the present and 
issues I'm worried about in the future. And the major one is 
lack of transparency. Congressman Smith, you talked about Anta 
earlier. I don't know if folks realize that Anta also owns 
Louisville Slugger, a beloved American brand, and Wilson. And 
Anta itself has very clear ties to forced labor. I do wonder if 
Major League Baseball, tennis associations, understand how 
they're being complicit with forced labor by using those 
brands--storied American brands.
    On the issue of transparency, American corporations for 
decades have been very entwined with China and the Chinese 
Communist Party. And as corporations have become more vocal in 
the United States, they've become more quiet about what they're 
doing in China. And we have wonderful laws and tools that push 
that. The UFLPA I think is a fantastic one. I worry right now 
about how easy it is for American corporations to support the 
Chinese military. There's a focus on civil-military fusion, but 
frankly it's a lot simpler than that. The People's Liberation 
Army, the military in China, is the armed wing of the Communist 
Party. It's not a separate organization. So any SOE is part of 
the same organization as the PLA--Bank of China, ICBC, a lot of 
these major companies are just part of the same organization 
that is the Chinese military and may at some point soon be 
killing Americans.
    The other issue I want to talk about is the way that major 
American military companies have deep ties to China. Boeing, 
Raytheon--I'm quite worried about the fact that the most 
important defense corporations have major markets in China, 
Boeing especially. And in China, there are no private airlines. 
Every plane that Boeing sells in China, it sells to the 
Communist Party. And so we're in a situation where we're 
facilitating not only the growth of the Chinese economy and the 
Chinese military, but also making it so American corporations 
have different interests and incentives then a lot of the 
people in this building.
    I want to continue with that and talk very concretely about 
the risks of war. We are at a very perilous time right now. And 
I worry that we're not having the national conversation about 
what would happen if China invades Taiwan. What does that mean 
for major American corporations who not only may be acting 
against the interests of the American people, but also, 
frankly, are putting a lot of their Chinese staff in danger? 
This Commission so wonderfully focuses on vulnerable people in 
China, and I don't think we really think through, Oh, if China 
invades Taiwan, so many people who have worked for Apple, and 
Microsoft, and Boeing will be seen by the Chinese Communist 
Party potentially as enemy combatants. And they will be 
harassed, and they will be rounded up, and potentially worse 
things will happen.
    And it's unfortunate that I have to speak this way, but we 
are in a scenario--again, I can't predict the future, but we 
are in a scenario where World War Three might be upon us and 
there'll be massive, massive ethical concerns for that. I'm 
also quite worried about the treatment of Chinese Americans 
here. We have a horrible history in this country of rounding up 
people who are citizens or, worse, citizens of countries that 
we were fighting. Germans in World War One. Japanese in World 
War Two. And we need to have a national conversation about how 
we're going to ethically protect our own, going to protect 
Chinese Americans.
    It's something that really, really worries me, and it's 
something that I think we need to talk about. The solutions are 
already in our wonderful political tool book. It's open and 
raucous debate. It's more transparency for American companies. 
Most American companies don't break out their China revenue, so 
we have a very difficult time of knowing what exactly they're 
doing in China. The more we can learn, the more we can 
understand, the better it is. So I'll stop there. Thank you 
very much.
    Chair Smith. Thank you, Mr. Stone Fish, so much for that 
testimony and your leadership.
    Ms. Kokas.

         STATEMENT OF AYNNE KOKAS, C.K. YEN PROFESSOR, 
             MILLER CENTER, UNIVERSITY OF VIRGINIA

    Ms. Kokas. Thank you so much. Thank you, Chairman Smith, 
Co-chairman Merkley, and distinguished members of the 
Congressional-Executive Commission on China. It is an honor to 
present my testimony.
    As the U.S. grapples with how to approach China's expanding 
digital influence, fragmented U.S. laws interact with expansive 
Chinese government oversight in a way that pressures 
corporations to prioritize compliance with Chinese laws and 
policies. Drawing from my recent books, ``Trafficking Data,'' 
and ``Hollywood Made in China,'' I recommend enhanced data 
oversight in the U.S. to reduce digital rights violations by 
tech corporations from both the U.S. and China. More 
comprehensive U.S. digital oversight would align the U.S. with 
its allies and partners and countervail against pressure 
companies face from Chinese regulations. I look forward to the 
discussion and would be happy to expand on any of these points 
during questioning but let me highlight the key points of my 
testimony.
    First, U.S. technology oversight assumes corporations have 
the capacity to track and mitigate harm, which we've seen time 
and again is not actually the case in many situations. Second, 
most Chinese corporate data oversight laws have 
extraterritorial scope and nontransparent enforcement. The 
opacity of these laws obscures which firms are exploiting data 
and generating other harms in the normal course of their 
operations, not just in China but in the U.S. and with our 
allies and partners. Number three, limited U.S. data protection 
and the potential for financial, civil, and criminal penalties 
in China incentivizes following Chinese laws where there are 
not U.S. equivalents. So by not regulating within the U.S., 
it's not that we're creating more freedom for our companies, 
it's that we're incentivizing them to follow Chinese laws. 
Number four, similar pressure encourages firms to modify 
content to adhere to Chinese laws.
    In the absence of comprehensive data privacy over 
oversight, the patchwork of sector-based and state-based 
oversight in the U.S. fails to keep pace with evolving 
technologies. I'm thinking about things like the Health 
Insurance Portability and Accountability Act, which does not 
cover key technologies like commercial DNA testing and smart 
health monitoring, or COPPA, the Children's Online Privacy 
Protection Act, which does not account for the ways that 
children's data is accessible on devices like Amazon's Alexa or 
Google Home, and how increasingly savvy users under the age of 
13 are able to access that user data anyway. And finally on the 
mental health impact on teens who are over the age of 13, many 
of whom we see at the University of Virginia.
    States offer different protection for their citizens, 
different access for corporations to user data, biometric data, 
financial data, and access to different state networks and 
devices. This creates a very difficult environment for any sort 
of compliance and, as a result, companies have an incentive to 
choose to go to different states rather than to comply with 
data oversight. But corporate and user data oversight form the 
foundation of a wide range of emerging information and 
communication technologies, like generative AI. So therefore, 
long-term competitiveness depends on good U.S. data protection 
laws.
    Now, by contrast, in China what we see is uneven 
enforcement and forced data localization. China's 2017 
cybersecurity law requires critical infrastructure data to be 
stored in China. The personal information protection law 
expands data localization requirements to make the transfer of 
data overseas subject to a security assessment by the 
Cyberspace Administration of China, very broadly defined. 
Similarly, opaque enforcement encourages corporations to comply 
with the most conservative interpretations of the law. For 
example, China's national security data audit system 
established by the data security audit, which has 
extraterritorial implications, so applies to companies that 
operate in China and in the U.S., can review any data that 
might influence national security. Similarly opaque are the 
oversight mechanisms of the 2020 Hong Kong National Security 
Law, which I know this Commission has dealt with in great 
depth.
    So corporations in the United States that are subject to 
Chinese laws face significant pressure to comply with Chinese 
laws in the absence of U.S. data protection in areas like the 
connected device industries, precision agriculture, gaming, 
payment, mobility, communication sectors, and beyond. I talk 
about these in my book, ``Trafficking Data,'' and I'm happy to 
talk about them in the Q&A as well. So the pressure--we also 
see that pressure for Chinese market access interacts with U.S. 
laws to shape content. Now, this is an area that I talk about 
in my book ``Hollywood Made in China.'' We had the recent--in 
2019 ``Abominable'' contained a map of contested Chinese 
maritime claims. I know some of you may have heard about the 
discussions of the ``Barbie'' movie over this past weekend. If 
you want to talk about that, I'm happy to discuss it further. 
We also saw the recent case with ``Top Gun: Maverick.''
    Now my recommendations are as follows--and I focus 
primarily on the digital sector because I think this is an area 
where Congress needs to act and where this Commission's 
leadership is essential. First of all, working with allies and 
partners to establish standards for international data 
transfer. Aligning adequacy standards for cross-border data 
transfer with the European Union and Japan, and other allies 
and partners. Join or rejoin key trade agreements that enhance 
transparency and cross-border data transfers. Enhance U.S. 
oversight to prevent international data trafficking, through 
things like the bipartisan RESTRICT Act, which we just heard 
Senator Warner discussing, and which was subject to--I think he 
mentioned $100 million of TikTok lobbying money.
    Regulate the data broker industry. We also see the UPHOLD 
Privacy Act of 2023 and the Protecting Military Service Members 
Data Act of 2023 offering first steps in this direction. 
Enhancing SEC reporting of data storage practices by publicly 
traded firms, and then building out a national security data 
privacy monitor to mitigate data trafficking. Finally, and this 
is what I say as the director of the East Asia Center at the 
University of Virginia, fund Chinese Area studies. A lot of 
companies don't necessarily know what they're doing because 
they don't have people who work in those companies with this 
expertise. This is of crucial national security importance, and 
I look forward to the Commission's leadership on this.
    Thank you so much for your time and attention, and I 
welcome your questions.
    Chair Smith. Thank you so very much, Ms. Kokas.
    Senator Merkley has a vote pending in the Senate, so I 
certainly yield to our distinguished co-chair.
    Co-chair Merkley. Well, thank you very much, Mr. Chairman. 
And I want to turn right away to the NBA. And I believe before 
the experience you went through, Mr. Freedom, Daryl Morey, the 
general manager of the Houston Rockets, had tweeted in support 
of Hong Kong. And I think he suffered immediate backlash as 
well. So I just want to make the point that this is not just 
one vignette. This is an absolutely broader challenge because 
of the amount of money the NBA seeks to make in China. Did you 
have conversations with any of the NBA players who were 
considering or had endorsement deals with the Chinese 
sportswear companies? And did you get any kind of feedback from 
them, or did you get any support from players for the stand you 
were taking?
    Mr. Freedom. You know, when I started to talk about the 
problems that were happening in China, it was the perfect 
moment because it happened right before the Beijing Winter 
Olympics. People call it The Genocide Games. So forget about 
the NBA. I tried to reach out to the NFL, MLB, MLS, the NHL, 
WWE. I even tried to reach out to Olympians. I was, like, 
listen, you know, while we are dribbling a ball, on the other 
side of the world there's a genocide happening. You know, we 
can come together, and we can actually bring so much voice for 
these innocent people.
    You know, they all said the same thing. They said, listen, 
I think what you're doing is so courageous, so inspirational. 
Keep doing what you're doing. We love you. We support you. We 
just cannot do it out loud. I asked them a simple question. You 
know, I was like--I asked them, why? They said, well, you know, 
we live on deals. We want to get another contract with the 
league that we play with. And then my following question to 
them was, put yourself in their shoes. If your mother, if your 
sister, if your daughter was in those concentration camps 
getting tortured and raped every day, would you still pick 
money and business over your morals, values, and principles?
    They usually turn around and leave the room, you know. And 
the one thing that broke my heart, I played 11 years in the 
NBA, I had hundreds of teammates, hundreds of coaches, I had so 
many friends who I used to call my brothers because I used to 
see them more than my family, which I haven't seen in over 10 
years. After I got released, not one of them texted me and said 
good luck with whatever is coming your way next. Not one of 
them called me. I was shocked. I started to ask myself, am I 
doing anything wrong? You know, I don't talk about politics, 
because human rights is above politics. I don't care if you're 
from the right, from the left, whatever party you cheer for, 
whoever you vote for. You have to care about human rights.
    So they were just scared about--If I do an interview, or if 
I ever talk about--if I do a podcast, they just didn't want me 
to mention their name because they knew that if I ever said, 
Oh, this player supported me, this player said this and that, 
all their endorsement deals would be gone. So it was a very 
lonely road for the last year and a half. But I still check 
their stats. I still see if they're healthy or not. I still 
cheer for the Celtics, cheer for the teams that I played for. I 
just hope they understand at the end that, you know, what we 
are doing is--what I'm trying to do is bigger than basketball, 
bigger than the NBA, bigger than everything that that we ever 
have done.
    Co-chair Merkley. Well, we all greatly appreciate your 
stand on behalf of human rights.
    Mr. Freedom. Of course.
    Co-chair Merkley. And I personally, and Congressman Salinas 
coming from Oregon, we also appreciate greatly your time with 
the Portland Trailblazers. [Laughter.]
    Mr. Freedom. Oh, thank you so much. I had an amazing time 
there.
    Co-chair Merkley. Ms. Shi, has Milwaukee Tool acknowledged 
the problem, or their involvement with prison forced labor in 
China?
    Ms. Shi. No. We sent several letters. And we also requested 
a conversation. But they refused to meet me in person.
    Co-chair Merkley. Are there other American companies in a 
very parallel position to Milwaukee Tool that you've had any 
contact with?
    Ms. Shi. Yes. I also found another American company 
involved in this case. We can hand over the details later.
    Co-chair Merkley. And we----
    Ms. Shi. By the way, we also contacted Walmart, Home Depot, 
and Amazon, because they are the major channels on Milwaukee 
Tool. Fortunately, Walmart took action after I sent a letter to 
their CEO, and they deleted Milwaukee Tool gloves on their 
website. And they also promise they won't sell them anymore in 
the store. But Home Depot and Amazon are still selling 
Milwaukee Tool gloves made with forced labor.
    Co-chair Merkley. One of the things that we've discussed a 
lot on this Commission is transnational repression, in which 
those who stand up for human rights here in America, their 
families are threatened. Obviously, your husband's already 
suffering in prison. Has anyone walked up to you on the street 
and said: We know where other family members are in China and--
or intimated that there would be further consequences of your 
speaking out?
    Ms. Shi. Until now, I think I'm safe in the States. But 
actually, when my husband was arrested, I was suddenly put 
under home arrest for half a year. And they also accused me of 
subversion of state power, even though my job is just global 
Ecommerce in the business area.
    Co-chair Merkley. OK. Thank you. And, Mr. Stone Fish, are 
there examples of U.S. companies that have been challenged by 
China who have stood up to China that we can celebrate in a 
more positive way?
    Mr. Stone Fish. It's a great question. And unfortunately, 
the companies that do that don't want to get credit for it. We 
work with a lot of these companies. And reporters will come to 
me and say, Hey, I'd love to do a positive piece on a company 
that's reducing its exposure to China. And so I'll talk to our 
clients, and they'll say: Absolutely not. And I do hope that 
that changes because I think it's a very important trend. And I 
do think people need to know, especially people in the business 
community, that there is a way to reduce your exposure to 
China, to reduce your reliance on the Communist Party, and 
still make money and succeed. But unfortunately, all of the 
companies that I know that would fit that qualification would 
much prefer to be silent. And I think that's a shame.
    Co-chair Merkley. Thank you. My time is up but I'll submit 
some questions for the record about whether we should have 
disclosure requirements for U.S. companies doing business in 
China, and if so, what those should look like, and other issues 
related to companies facing penalties for violating PRC laws. 
Thank you very much.
    Chair Smith. Thank you, Senator. Thank you so much, again, 
each of you, for your testimony, your leadership. And I'm 
looking forward to reading your book during the August recess, 
so-called. District work period, as we really refer to it as.
    I do have a number of questions. You know, let me just say 
for the record, we will invite the NBA and the NBA Players' 
Association to testify. Obviously, they're free to turn us 
down. I hope they won't. I hope that they realize that the 
courage that Enes Kanter Freedom has provided is something that 
they all ought to aspire to. You know, injustice need not be 
forever, and I would argue cowardice need not be forever. You 
know, money should not trump standing up for people, as you 
pointed out, Mr. Freedom, who are being raped every day, who 
are being so horribly mistreated, children.
    I mean, it is genocide, and genocide--``who remembers the 
Armenians''-- many, many years back; you remember Lemkin? He 
coined the term genocide. Same goes for the Holocaust. We 
really do need to be much more vigilant and strong. And you 
have done that at great cost to yourself. I'm in awe of that 
kind of courage. And the fact that the others have not--and I'm 
sure in their heart of hearts, many of your fellow players do 
have strong concerns about what is going on in all of China, 
but also in Xinjiang with the genocide. And so thank you for 
that leadership.
    We will invite them. We'll invite Milwaukee Tool to come, 
and others. And I would point out that we had a number of 
hearings, and so did the Lantos Commission. I chaired one with 
our distinguished chair at the time, now Co-chair Senator 
Merkley, before the Olympics. And we had companies come and 
testify. And I remember Coca-Cola, I asked them specifically 
about the genocide. And it was like he lost his voice. Wouldn't 
say a word because of fear of losing market access. And again, 
the more that we enable the Chinese Communist Party through our 
acquiescence to those bullying tactics, the more that they will 
use them.
    I even remember when Liu Xiaobo got the Nobel Peace Prize--
there were threats made against the Peace Prize Committee and 
others. And it was like that was the last we heard of it after 
that. I was there. I'm the one who led the effort in Congress 
to have him and two others named as Peace Prize recipients. And 
it was forgotten so quick because China was threatening whole 
countries about their support of Liu Xiaobo. They wouldn't even 
let his wife accept the Nobel Peace Prize.
    But again, Senator, I do thank you. You had those 
corporations here at that hearing. And it was very telling how 
fearful they were of saying just one word about the genocide 
and about all things human rights-wise with China. We had 
argued, just for the record, very vigorously. Senator Marco 
Rubio and I had written letters to the Olympic Committee 
because they got these bogus assurances from the Chinese 
Communist Party, that they would adhere to human rights. It was 
like, are you kidding me? It's deeds, not words. Their words 
are very deceptive, if not outright lies. So in this case, they 
were.
    And the issue of having the Olympics--you know, it's too 
bad that the genocide Olympics did occur there. I'm all for the 
Olympics, but not there. As we all are. So I do thank you, 
again, for all of that. We will invite the NBA. I hope they say 
yes, sooner rather than later. Because I think if a few others 
follow your courageous lead, it could have a very cascading 
positive effect on human rights, because now they know they--
OK, so they barred the Celtics TV coverage in China for a 
while. Big deal! I mean, is money everything? I hope not.
    And you know, it was discouraging to watch Bill Gates as he 
met with Xi Jinping the other day. You know, he's done some 
work on health and the like, but Microsoft and others have been 
enablers in the most egregious ways for decades. I had a 
hearing back in 2006, in which I invited Microsoft, Yahoo, 
Cisco, and Google to talk about how they were censoring and 
providing personally identifiable information on users to the 
Chinese secret police. So I swore them all in. I asked, Why are 
you following that? Yahoo had given up all this information 
that put Shi Tao into prison for 10 years about the Tiananmen 
Square remembrances. Ten years, for just conveying to a human 
rights group in New York how they were being censored about 
what they could say about Tiananmen Square.
    We had Google during that hearing, the Google that you 
would get in China, that showed Tiananmen Square--not a single 
mention of the massacre, of the bayoneting. All part of the big 
lie. The bigger the lie, the better, I think, from the Chinese 
Communist Party perspective. And they're all part of it. I 
pointed out that IBM--I read a book on IBM and the Holocaust, 
very well footnoted--and IBM then called my office and 
complained--about how they helped the Gestapo go after 
individuals because they had very, very good capabilities. They 
shared it all with the Nazi Party and the Gestapo, and they 
found Jewish people and others who were unmentionables and, 
obviously put them into concentration camps.
    So it was really--what a telling. And here we have it being 
repeated now, as it was in 2006 at this hearing. So we need to 
learn from it. And big corporations in tech really need to do 
far more to be on the side of freedom and democracy and not on 
the side of human rights abuse. Let me also just ask, Ms. Shi, 
to you. Are you in any kind of contact with your husband? How 
is he doing?
    Ms. Shi. Yes. Since January this year, my family members 
can visit him. But before that, for three and a half years we 
couldn't visit him. But still, my letters to him through my 
sister-in-law were all seized by the prison. And even a photo--
even some photos of me and my seven-year-old daughter, and they 
just deprive him from seeing the photos. And so it's really 
hard for me to contact him.
    Chair Smith. Okay. Mr. Stone Fish, you know, one of the 
issues of the transference of military capability and know-how, 
dual-use items which they have picked up almost with impunity 
to turn into a force that we may face someday, that Taiwan may 
face sooner rather than later, sadly. There was--you might 
recall the Cox Commission; Christopher Cox, a member of 
Congress from California, did an amazing job. A bipartisan 
commission that looked at all of that and said: We're arming 
China. We're making them a first-rate, capable, militarily 
speaking, courtesy of making money off of them. Hughes Aircraft 
and all these others were more than accommodating to give them 
everything they possibly want.
    You mentioned an issue that I haven't focused enough on. 
And that is especially the Chinese nationals who are working 
for U.S. corporations. Should the balloon go up and there is 
fighting, God forbid, but there could be, how at risk they will 
be. And when you mentioned Boeing, I immediately thought of 
McDonnell Douglas and Boeing, and all of the airlift capability 
that gives their troops. You know, in the United States--
whether it be American Airlines, or United, should we go to war 
they get pressed into service to move troops and materiel. 
Well, what do you think the Chinese will do with our aircraft 
that we sold them?
    And, you know, this myopic view that so many have here that 
just sell and, you know, make a buck and move on, well, that 
could be used to move troops as well. So you might want to 
speak to that issue because the Cox Commission was in the 
1990s. Why haven't we learned? And, again, on the data, I look 
forward to reading your book. Your testimony was excellent. 
Your leadership is excellent. Maybe you could just elaborate a 
little more on what we could be doing to mitigate the damage. 
Because it's, you know, is it too far gone? You know, I was 
sickened by the Gates interview with Xi Jinping.
    Xi Jinping ought to be at The Hague for crimes against 
humanity, not having Americans, business leaders in that case, 
and American politicians--you know, I look at this in a 
bipartisan way. When Brent Scowcroft traveled to Beijing right 
after the Tiananmen Square Massacre to assure the Chinese 
Communist Party, ``No problem here,'' I was shocked. He's a 
Republican, and I spoke out then. I feel similarly about the 
kowtowing that's going on by some in our government. 
Thankfully, our first witness is not in that group. Mr. Silvers 
is standing up strongly. But not enough people are. So maybe I 
could start with Mr. Freedom. If you just wanted to comment 
further.
    Mr. Freedom. Yes, of course. Thank you. I think even just 
bringing awareness is very important. But more than awareness, 
you know, when we are in the locker room, we always say let's 
play hard, let's play smart, let's have fun. And the coach 
comes in and says: Well, don't just talk about it, be about it. 
So it is important to just talk about and bring awareness, but 
I think we need to figure out what we can do to help those 
people over there. And like you said, Chairman, this is a non-
political issue. This is a human rights issue. So every part of 
the country needs to just help those people over there, because 
while we are living comfortably in this country, on the other 
side of the world people are losing their lives, losing their 
homes, and losing their loved ones. So we've got to do whatever 
we can to help those people over there.
    So, like I said, again, I'm not a politician. I'm an 
athlete. I still consider myself an athlete. You guys know 
better than me what we can do or not. But those people over 
there can't even breathe anymore. So we've got to do whatever 
we can to help them.
    Chair Smith. I do hope you will inspire other NBA players, 
including the NBA Players Association, to stand with you. And 
you ought to be invited back based on your skill and your 
ability and not the fact that you----
    Mr. Freedom. Of course. Many, many athletes over there, you 
know, sign contracts. Not only NBA, but companies like Nike. I 
mean, just look at Nike. Nike stands with Black Lives Matter in 
this country. They stand with the LGBTQ community. They stand 
with No Asian Hate, the Latino community. But everybody knows 
about the slave laborers and sweatshops. You know, they keep 
preaching about how important the social justice issues are, 
but when it comes to using slave labor they're one of the 
biggest companies that uses slave labor. So we've got to do 
whatever we can to put pressure on these companies.
    Chair Smith. Thank you.
    Mr. Freedom. Of course.
    Chair Smith. And we will invite Nike to our hearing as 
well.
    Mr. Freedom. I love it. I love it.
    Chair Smith. Ms. Shi.
    Ms. Shi. Last Saturday, we went to Home Depot, brought our 
kids. I have one daughter. She is seven years old. Every time 
she goes to Home Depot with me, she will look around and see 
whether the Milwaukee gloves are still sold there. She even 
knows exactly the three models made in the Hunan Chishan 
prison. And last Saturday, Daniel, a kid whose father is 
Chinese human rights lawyer Chang Weiping--also detained in 
China, they just moved to Minnesota, and we hosted them. And he 
went to Home Depot along with us. And he said, Auntie Shi, if 
you fail in the lawsuit against Milwaukee Tool, when I grow up 
I will be a lawyer and I will do the lawsuit for you.
    You know, he's only 10 years old. We pass this information 
on to the kids, My daughter knows ``Don't buy Nike'' because 
they are using slave labor, because their fathers are good 
human rights activists in China. So I really encourage them to 
continue to think positively and continue, know that God loves 
us, and God has justice. But every time, it's just 
heartbreaking--you know, talking about the hard issues with our 
kids. So we need to take some action now. And we hope that all 
products made by forced labor in China will be banned 
immediately. And also we hope the companies will be held 
accountable for that. Thank you.
    Chair Smith. Thank you. Mr. Stone Fish.
    Mr. Stone Fish. Thank you. That was an excellent point--the 
military companies complain about regulations, but sometimes 
they love them because they can hide behind them. And so having 
a regulation or a law that restricts the ability of American 
companies to support the PLA, or to enter into joint ventures 
with the PLA, or to source from PLA-owned factories will be a 
massive compliance headache but will also allow major U.S. 
companies to say: Listen, I still want to do business in China, 
I just have to follow U.S. laws. So I have to reduce my 
investment in the PLA. I have to move out from all of these 
issues. And it's a compromise. And it's a way to work. And I 
think the UFLPA is a very excellent model for that.
    I'll make another point about Scope 3 emissions, which are 
basically emissions that a company makes throughout its 
lifecycle. You brought up the great example of cobalt mining in 
the Democratic Republic of Congo. For so many companies, Scope 
3 is just China. They have such a massive manufacturing 
presence there. So regardless of which side of the aisle you 
are on on climate change, forcing more environmental 
transparency forces companies to disclose how exposed they are 
to China and the Chinese market. And it's another way of both 
increasing transparency and raising the cost of investment in 
China.
    Chair Smith. Thank you, Mr. Stone Fish. Ms. Kokas.
    Ms. Kokas. Thank you so much, Chairman Smith, and thank you 
for that excellent question.
    To your final question of whether we're too far gone, I 
teach a class called ``The Data Ethics of TikTok'' at the 
University of Virginia. And I have our students read the TikTok 
terms of service. And they read it, and they get very 
depressed, but then they still stay on TikTok. [Laughter.] And 
their question is, What can we do? And one of the answers is, 
we need systemic regulation so that these are not decisions 
that 18-year-olds have to make by themselves while reading 
terms of service ad nauseam.
    And also, one of the things we talk about is the importance 
of mitigation strategies. So no, we're not going to solve the 
issue of data trafficking and international data transfers. 
It's probably just like in the forced labor context--we were 
just talking about the de minimis issue, and how it's very 
difficult to resolve it. But does that mean we don't try to 
mitigate? No, we keep working. And so some things--some low 
hanging fruit includes joining or rejoining trade agreements 
like the CPTPP which China is trying to join, and Taiwan is 
trying to join, and has data transfer agreements. Enhancing 
reporting requirements for companies through existing 
mechanisms like the Securities Exchange Commission. Where are 
they storing their data? How are they transferring it?
    National security data privacy--we've had some movement in 
this direction. The American Data Privacy and Protection Act 
was introduced last year. And there were, admittedly, problems 
with it, but it's a step forward. And right now, the U.S. is so 
far behind our allies and partners on a lot of these issues in 
terms of data privacy and protection that we can't even come to 
consensus with the people that we normally agree with on 
things. So I think that this is a really important area that 
Congress can move on. And not just for me, not just for the 
people on this panel, but for all of the people who are coming 
forward and are feeling rather hopeless right now.
    Chair Smith. Thank you.
    Ms. Kokas. Thank you.
    Chair Smith. Commissioner Salinas
    Representative Salinas. Thank you, Mr. Chair, and thank you 
to all the panelists.
    Dr. Kokas, your testimony paints a really revealing picture 
of the risks posed to Americans, both by the lack of strong 
standardized data protection in the U.S. and by our exposure to 
Chinese laws. And clearly Congress has its work cut out for us 
to ensure that we're able to protect Americans' data. In fact, 
we just saw a data breach in Oregon of almost our entire DMV 
system, about 3 million Oregonians, nearly the entire 
population of the state. So can you talk a little bit more 
about the implications of strong domestic privacy laws for 
international norms?
    Ms. Kokas. Yes. I spent last summer in Japan as an Abe 
fellow. And one of the really interesting parts about that 
dynamic was talking with Japanese policymakers about their data 
transfer agreements and the data adequacy agreement that they 
had established with the European Union. And how by not having 
those data adequacy agreements with the United States, it 
actually prevented them from being able to have better trade 
with the U.S. and more alignment in terms of ballasting against 
Chinese data gathering in Japan and the European Union, in the 
United States.
    So by making the decision to kind of go our own way--and 
there's a reason for this. It's not--it didn't occur by 
accident. It's that the country has enriched itself, and I have 
probably personally enriched myself through my 401(k) balance, 
by the rapid growth of tech stocks. And this is a way that 
we're able to grow and enrich the country. But it's also that 
now tech companies do not have the same types of incentives 
that they once did in terms of alignment with U.S. national 
security interests. Also, these have become really significant 
international issues that are driving a lot of national 
security interests, not just domestically but internationally. 
And the power of the Chinese tech sector means that this isn't 
something that the U.S. can do by itself.
    So I thank you for your question. And also, to one of my 
points, the importance of aligning state and national standards 
and using federal resources to help provide technical support 
for state organizations, which are really doing their best but 
are often faced with quite untenable circumstances. Thank you.
    Representative Salinas. Thank you. Mr. Stone Fish, you 
noted that the key to addressing corporate complicity and 
Chinese human rights violations is to promote transparency. And 
as a reporter, you have no doubt, I'm sure, thought about the 
consequences of bringing to light previous opaque connections. 
I wonder, though, whether transparency is sufficient. We heard 
about the NBA's connections to China, Mr. Kanter Freedom has 
clearly brought about a high degree of public awareness of how 
the NBA works to appease the Chinese government to protect its 
own businesses. We've heard of TikTok and making headlines for 
risking exposure of Americans' data. These kinds of stories are 
widely reported. My question is, is transparency enough to 
reform corporate operation? And what kinds of disclosures would 
you like to see that might actually have some teeth? And what, 
as Members of Congress, do we need to do to put those teeth in 
there?
    Mr. Stone Fish. Thank you. I think those are excellent 
questions. In the spirit of transparency, I'm an ex-reporter. I 
run a data and consulting company, so I don't want to pretend 
to be speaking objectively on these really important issues. I 
think you're absolutely right. I think transparency is a step, 
but there's far more that needs to happen. I think the national 
security argument is a very important one, and letting 
companies know and understand that unless they take action, the 
U.S. Government's going to get very involved in a way that's 
bad for corporations and bad for the U.S. Government. And that 
if tensions worsen and China gets close to or, God forbid, 
invades Taiwan, national security concerns will take over. And 
there's massive amounts of human rights implications with that. 
And I hope we're careful and can take a deep breath and have 
conscious debate at that time. But companies need to know that 
they're going to be in a very difficult situation.
    And I think the argument that we find to be the most 
effective, and it's sad that this is true, it's not about 
national security. It's not about human rights. It's about 
regulatory risk and it's about the bottom line. So make it 
clear to companies that this is how this loses you money, and 
that reducing your exposure to China has very clear financial 
benefits. One of the issues is with hacking and with Internet 
Protocol. You know, companies pay massive externality costs 
because of all the technology that they just leak into the 
Chinese ecosystem. And that's a very major cost. And the more 
that we bring that to light the more companies can calculate 
that better on their bottom line.
    Another one is insurance. Insurance premiums on deals in 
China are way too low because we're not properly pricing the 
risk. And the government has a role that it can play in that. 
So if you make it more expensive through insurance for 
companies to make certain kinds of investments in China, it's 
going to change the math for them. And they're going to do it 
differently. The other thing that I think is very effective--
and I applaud this Commission for doing it--is companies are 
very afraid of being hauled in front of Congress to testify. 
It's embarrassing. It distracts their CEO time. It forces them 
to answer difficult questions. So the more that companies 
understand that, the better it is.
    And the final thing I'll say is on the role that consumers 
can play. Consumers are far more critical of Beijing and the 
Communist Party than Wall Street and the executive branch of 
the government, I would argue. And so the more that actual 
consumers have a voice in their purchasing decisions, the more 
they know about where the goods, the labor, that they're 
consuming comes from, the more likely that they'll push against 
what corporations are doing. And corporations will speak to the 
market and act to reduce their China exposure.
    Representative Salinas. Thank you. Thank you, again, to the 
panelists. I yield back.
    Chair Smith. Commissioner Nunn.
    Representative Nunn. Thank you, Chairman Smith, and also to 
the bipartisan panel here. I think this is not only a really 
good conversation, it's incredibly timely. Professor Kokas, you 
highlighted at the beginning that when the United States 
Government fails to define this battlespace, the Chinese will 
do it for us. And I think that is an absolute truism. You need 
only look at what Ms. Shi has highlighted today as being so 
very true. I would offer that the same is also true for our 
business and innovation sector. If we in the United States fail 
to define this battlespace, the Chinese are going to do it for 
us.
    Mr. Kanter Freedom, more than a decade playing professional 
sports in the NBA--I mean, you are an individual who came, from 
a community that had a totalitarian regime, to the United 
States. You're now an amazing U.S. citizen. You're still an 
incredible basketball player. You came under this vacuum of 
leadership by corporate America that allowed the Chinese to 
define what our principles would be in the United States simply 
because you wore a pair of shoes that said, I don't support the 
Chinese government's abuse of Tibet or its abuse of the 
Uyghurs. Who specifically did you feel the most pressure from? 
Was it someone in China? Or was it somebody right here in the 
United States?
    Mr. Freedom. It was actually the Players Association, to 
whom I give thousands of dollars every month to protect my 
rights against the NBA, you know? And I was very confused. I'm 
like, why are they pressuring me? They should be on my side, 
not the NBA's side.
    Representative Nunn. Absolutely right.
    Mr. Freedom. And one of my teammates said, well, if there 
is no NBA, there is no Players Association. So they've got to 
do whatever they can to put pressure on you. At one point, I 
was talking to someone from the NBPA, the Players Association. 
They said, if you don't stop--if you don't stop wearing those 
shoes, we are going to change the rules so no one can put any 
kind of message on their shoes. And I was like, I cannot 
believe that they are telling me that they're going to change 
the rule in the whole NBA, so no one can.
    Because it was so beautiful, seeing all these players 
writing these beautiful messages on their shoes about their 
kids, about if someone passed away, RIP blah blah, you know? It 
was a beautiful message. And then during the NBA bubble, the 
NBA was the one that was telling us, you know, be outspoken 
about the social justice happening in America. They put the BLM 
logos on the floor. They put the phrases on our jerseys, which 
was controlled by the NBA. We couldn't pick what we wanted. 
Adam Silver was the one telling all the players, hey, just go 
out there and speak, give interviews and stuff.
    And all of a sudden when the topic was China, you know, 
they were just all silent. And they were just going against 
what I was saying, which was nonpolitical, you know? So it was 
someone from America. And I was like, how can the biggest 
dictatorship in the world, China, control a 100 percent 
American-made company and fire a U.S. citizen? And I would just 
keep asking that question to myself. I was like, are we really 
free? Is it only the NBA? The more I studied, the more I 
realized, the NBA is not the only one. You see Hollywood, Wall 
Street, academia, big tech, you know, farmland. And I started 
to ask this question of myself; you just keep talking about the 
freedom we have in this country--are we really free? So it was 
literally someone from the NBA who was American.
    Representative Nunn. Mr. Kanter Freedom, you highlight the 
story of wearing ``Free Uyghur'' shoes. As an amazing NBA 
player, you were pulled--didn't play a single game when you 
wore those shoes. And within 24 minutes of that game alone, the 
Chinese government said they were going to pull all Boston 
Celtics games. As a result, the NBA basically not only 
pressured you, but gave, (1), the Boston Celtics a horrible 
loss. [Laughter.] (2), deprived people of China a great 
opportunity to see not only a great game, but really give an 
on-ramp for more Chinese to see what is true and great about 
America, our freedom of speech.
    And (3), perhaps worst of all, we saw an American 
institution that wraps itself in the flag and is proud to stand 
on every social issue for the voice of, as you highlighted, our 
First Amendment freedom of speech rights, but then muzzles our 
own American population because of a hopeful pot of money 
coming out of China to keep them going. This is frustrating not 
only on multiple levels--and Mr. Stone Fish has highlighted 
this--this is the soft power that China controls all over the 
world. But to have it come home to roost here in the United 
States puts us in a highly detrimental place, Mr. Chairman. And 
I appreciate that this Commission is really looking at what the 
Chinese have done to subvert our own basic freedoms in the 
U.S., as they've done in Ms. Shi's case back home.
    I want to speak very specifically now on a couple of issues 
that are of acute interest. Professor, you know, I'm an 
information operations warfare officer with the U.S. Air Force. 
One of the things that we have looked at specifically is this 
relationship--China has tried to manipulate the battlespace, 
specifically in the digital sector. Can you please speak about 
some of these emerging technologies, specifically artificial 
intelligence, blockchain--with China's blockchain-based service 
network, their consumer-facing applications, as you 
highlighted, TikTok here domestically, but WeChat domestically 
in China, and the contribution of the Chinese Communist Party's 
global surveillance state for data collection and how it's 
manipulating. It's a lot.
    Ms. Kokas. Oh, no, but I love it. It's a great question. I 
won't be able to answer it all today, right here, but I'll do 
my best. I like to think about this on three different levels. 
On one hand, the risk that kind of comes up most commonly is 
the risk to individuals. So, like, what's happening when I'm 
being surveilled? I would argue that this is actually kind of 
the lower level. We can kind of even put that aside because 
most people are not that interesting. Maybe members of this 
Commission are, but you know, most people are not.
    Then there's this level of economic competitiveness. It's 
the fact that there's this asymmetrical trade in data between 
the U.S. and China. So companies like ByteDance and companies 
like TikTok can operate in the U.S., but equivalent firms 
cannot operate in China. So there's data that Chinese companies 
in the U.S. are able to gather and as a result, they are able 
to out-compete U.S. firms.
    So this is an economic competitiveness risk, which then 
feeds into--you know, when we talk about the communication 
space, the movement away from the creation of controlled 
communication environments, where we don't actually know 
precisely what the terms of service mean, what the long-term 
implications are--there aren't really mechanisms in the U.S. to 
prevent private companies from executing on their own terms of 
service. So in the event that this changes our communication 
environment, there's very little that we can do.
    Now in the context of something like WeChat, people who 
start WeChat accounts in China and then continue using them in 
the U.S., there is a CitizenLab report that noted that Chinese-
registered accounts--and even those that switched to 
international numbers--can still be subject to Chinese terms of 
service. So we are already seeing this kind of expansive 
censorship and expansive use of Chinese government 
extraterritorial oversight in a U.S. context.
    Now, when we think about the long-term issues of things 
like generative AI, this asymmetrical trade becomes 
particularly important because these firms, as a result of 
civil-military fusion, are pressured by the Chinese government 
and can be pressured by the PLA to share their insights to be 
able to develop new tools in a wide range of different areas, 
from health,to communication,to financial services. And these 
not only out-compete, but they also have dual uses.
    One area that I thought was very interesting that I 
couldn't do a lot of research on because of my lack of 
clearance was the precision medicine industry and the 
investment of Chinese firms in the precision medicine industry 
in the U.S., and the development not just of new precision 
medicine tools, but potentially bioweapons in the long term. So 
that's something that I would, in your context, perhaps look at 
in greater depth.
    Representative Nunn. Both enlightening and frightening at 
the same time. The other area that you highlighted here is the 
uneven enforcement by the CCP. Here in the United States, at 
least you have the ability to go in front of a court and have 
your day. For a recent series of raids done by the Chinese 
Communist Party on U.S. financial sectors--I'm talking here 
Bain Capital, Mintz--these growing hostilities--some American 
companies doing business in China are recognizing that their 
future there is short term if they don't completely abdicate to 
Chinese rules of enforcement. Talk to us about how that is not 
only a bludgeon to basically force U.S. companies to give up 
their American principles, but it's also becoming a very 
dangerous tool. Those who are doing business within China are 
going to be sacrificing their long-term capital, no longer 
being U.S. institutions, but really Chinese institutions that 
happen to operate in the United States.
    Ms. Kokas. This is a really important point. And again, I'm 
happy to discuss it in greater depth. But I think that we need 
to think about this on a couple of different levels. First of 
all, it's the role that individuals play. So individuals now 
post-COVID face significant checks on their ability to move. 
COVID checks require you to share your passport number or your 
residence permit, your Chinese bank account number. So to be 
able to do anything, like be able to get into a cab or rent a 
scooter or purchase something, you have to be able to follow 
these checks and be able to submit yourself to this type of 
surveillance. So people who are working for those companies, 
both foreigners and Chinese people, in order to continue to 
exist within a Chinese context have to follow, essentially, the 
most conservative versions of these rules in order to continue 
to operate.
    Now, one of the things in talking with people from the 
American Chamber of Commerce that's been very revealing is that 
in a lot of situations it's not actually possible for companies 
to follow all Chinese laws at the same time, so they're 
inevitably violating some laws. So as a result, there's always 
the potential of a crackdown somewhere. And as we're seeing 
increasingly vague laws (we just had this espionage law that 
came out on July 1st) that apply to companies, in addition to 
data security and oversight regulations. This increases the 
difficulty for companies to operate and to be able to operate 
legally.
    And I don't know what that looks like for the future and 
what types of decisions companies have to make in order to 
maintain their presence in the Chinese market. So I would say 
that this is an area where enhanced reporting requirements, 
particularly for Chinese investments, become really important 
so that at a very minimum those decisions are more visible.
    Representative Nunn. Professor Kokas, I think those are 
exceptional recommendations. The areas where I think this 
Commission can be very effective too is holding the 
transparency. Look, this has got to be a team fight. We have 
the opportunity to stand for American principles with the U.S. 
Government, with the American people. We also need our business 
and innovation sectors to be on the same page because we are 
essentially allowing winners and losers to operate in this 
space; those who decide to do the bidding and will of the 
Chinese Communist Party get to have some sanctuary and 
therefore a market share, while those who hold the same 
principles that they would operate under in the United States 
are deprived of that.
    And as a result, we're enfranchising the bad behavior of a 
few corporations who exploit humans, who torture individuals, 
who sacrifice American principles, so they can get a market 
advantage over those who are doing the right thing. I think 
transparency is a huge part of what this is. And I thank the 
Chairman for bringing this forward in a bipartisan way. I hope 
those companies have the opportunity to come here and justify 
their existence as well. Thank you very much, panel.
    Chair Smith. Thank you, Commissioner Nunn, so very much.
    Ms. Wexton, I know--I think you're still online.
    Representative Wexton. I'm still here. Thank you very much, 
Mr. Chairman. Good to see everybody. Thank you so much for 
coming today. This has been very, very enlightening--a very 
enlightening discussion, so I'm really glad to have been here 
for it.
    I do want to ask Mr. Stone Fish--when Shein announced that 
it was going to engage in independent audits now, spot checks 
to address forced labor, experts like Adrian Zenz said that 
these audits would be inadequate if state-sponsored forced 
labor was in any way involved. And it creates a systematically 
corrosive environment in which targeted groups mobilize through 
extensive government and grassroots recruitment efforts. With 
this environment in mind, what tactics have you seen companies 
like Shein take in hiding the source of materials mined, 
produced, or manufactured, either in whole or in part, with 
Uyghur forced labor?
    Mr. Stone Fish. Thank you, Congresswoman. I think that's an 
excellent question. You cannot do audits in China today 
anymore. It is not safe. You don't get concrete information. 
And you're often putting your Chinese staff in danger. When you 
hire a company in China to go do an audit, you're sending 
someone to a plant and you're incentivizing them to lie. 
Because what if they go to a plant and they find forced labor, 
and they know that if they speak out about it maybe they'll be 
in danger, or their families or their friends or their 
children. So there's no way to do it. And what we strongly 
recommend is using open-source information, which you can do 
safely from outside of China, to paint very accurate pictures 
of links between corporations and various elements of the 
Chinese Communist Party.
    And that's a model that we, ourselves, take at the company 
I run, Strategy Risks. It's using open-source information to 
show the links between companies and the Chinese Communist 
Party. And we think that's incredibly important. It's also--as 
the information environment in China degrades--it's going to 
get more and more difficult for journalists, for policymakers, 
for companies--as Commissioner Nunn was saying--to get good, 
concrete information from China. And so we need to understand 
that big data, AI, open-source collection methods, are going to 
be necessary for transparency.
    Representative Wexton. Thank you very much for that answer. 
Another question, your testimony said that we need to require 
corporations to disclose their exposure to China. But companies 
in their filings to the SEC often don't break out their China 
revenue, hiding behind broader categories like ``Asia.'' The 
more information investors, regulators, and citizens have about 
how American companies are exposed in China the better. That's 
one of the reasons that I'll be reintroducing my Uyghur Forced 
Labor Disclosure Act, which passed in the 116th Congress with 
bipartisan support. But a lot of my colleagues believe that 
issuers should only be required to disclose information that's 
material, and they already are obliged to disclose it, and they 
don't think that this is material. Please explain why it's 
important that corporations disclose their financial ties to 
China, including their supply chains.
    Mr. Stone Fish. That's an excellent point. It's, for so 
many companies, the most important market outside of the United 
States, and for some even more important than the United 
States. And so the idea that not giving a full picture on your 
most important market, or one of your most important markets, 
is just beyond me. I think another thing that companies do to 
hide behind this is they don't clarify whether or not when they 
say ``China,'' they're including Hong Kong, or Macau, or 
Taiwan. And so I think requiring clarity there as well is 
incredibly important--so that when companies say ``Greater 
China'' or ``China,'' what exactly are they saying? Because 
there's a real need for investors to make material decisions 
based on what their exposure is. So I applaud you, 
Congresswoman, for pushing on this issue.
    Representative Wexton. Thank you very much, Mr. Stone Fish. 
And I would applaud you for the change of heart that you've had 
as you've progressed through your career. Please talk a little 
bit about how you came to that, and how you came to the 
conclusion that you wanted to fight for good rather than be 
part of the problem. If you could talk a little bit about that, 
that'd be great.
    Mr. Stone Fish. Thank you. I love that question. That's a 
fun one to answer. I lived in Beijing for six years. I was a 
journalist. And it's hard to blame anything but naivete. When 
you're living in Beijing, you think the way things are is the 
way things are supposed to be. You bask in that environment. 
And it was only coming back to the States and seeing prominent 
Americans talk about China, not like Chinese people do--which 
is incredibly diverse and fascinating--but like the Communist 
Party. So they would say things like, China has 5,000 years of 
history, and China only wants peace. China has lifted hundreds 
of millions of people out of poverty. And you wonder, why are 
they just repeating Chinese propaganda?
    And then I forced myself to go back and look at all the 
times that I did that, and all of the ways that I praised or 
facilitated the Communist Party. And it was a very 
uncomfortable transition, but I think it's really important for 
us to do--to go through and see how we did this, and just be 
very open-minded about these things. I do worry now a little 
bit about self-censorship in the other direction. I'm, myself, 
very anti-Communist Party, but there are legitimate reasons to 
support the Party. And one has to be able to have a 
conversation about it.
    You know, I don't want us to be in a scenario where if 
someone says something nice about Beijing, they're 
automatically accused of being a Chinese spy, or of being a 
toady, or a lackey. I think we need to have a reasoned debate. 
And I applaud this Commission for the way that it frames these 
issues and discusses these issues. So thank you for that.
    Representative Wexton. Thank you very much. I want to thank 
all the witnesses for being here today. And I want to 
acknowledge everything you guys have been through. I mean, it's 
true that a lot of you are still dealing with the effects of 
what your families are going through in China here in the U.S. 
And I feel really bad for you about that. But we're trying to 
make sure that we do what we can to stop this transnational 
coercion. Thank you so much. And even Professor Kokas, I think 
you may not consider yourself very ``interesting''-- I'm sure 
you are very interesting to the Chinese Communist Party. So 
lock down all your devices, please.
    Thank you all so much for coming. It was really 
fascinating. Take care. And I yield back.
    Chair Smith. Thank you very much, Commissioner.
    I'd now like to yield to Commissioner Wild.
    Representative Wild. Thank you so much, Mr. Chairman. And 
let me just commend the chairs of this Commission and the staff 
who have put together an incredibly dynamic hearing with 
absolutely fascinating witnesses. So much of what we do here in 
Congress often goes unnoticed by the public. And part of that 
is just because it doesn't seem that interesting to the outside 
world. And we've all found that when we can make subjects 
interesting, people are more likely to listen. And thank you 
for helping us to do that. I'm honored to be a member of this 
Commission.
    I just want to say a few things. First, Mr. Freedom, full 
disclosure, Sixers fan here. [Laughter.] I think the last time 
you and I saw each other was in January of 2021. We were on 
Zoom at the peak of COVID and talking about human rights and 
equal justice around the world. And I think at that time, you 
weren't yet a United States citizen. And now you are one. So 
congratulations on that. I have to say, you're a very good 
storyteller. You said a couple of times, I'm not a politician. 
But I suspect that there is a place for you in U.S. politics, 
if you're interested [Laughter.] because you're so good at 
telling stories.
    You made the comment that human rights is about politics. 
You also very vividly illustrated that fighting for human 
rights can be lonely. It can be a lonely task. But what we've 
also seen through this hearing, and what we know if we just 
look around the world and look at different companies, is that 
fighting for human rights is sometimes at odds with the 
almighty dollar, or euro, or lira, or whatever currency a 
company is dealing in. And that profits often transcend concern 
for human rights. And I think that's what this hearing is all 
about. It's sad, but I'm glad that we are having it. The other 
thing I'll say about your comments, you made the comment that 
somebody in the Players Association said to you, If there's no 
NBA, there's no Players Association. I would suggest to the 
Players Association that they study the power of organized 
labor and what they have done in this country and elsewhere to 
really advance their rights.
    So with that said, Mr. Stone Fish, I just want to comment 
on what you said about the power of the consumer. We often have 
seen campaigns at the grassroots level against products, 
companies. And they don't start because somebody in Congress is 
talking about it. They start because there is an activist, or a 
group of activists, who are going out there and dispersing 
information, which, of course, is a little easier now with 
social media. And, you know, more power to them. Quite 
honestly, rather than Congress leading the way, what we often 
see is that governments--and I'll speak for Congress here--
often take our direction from what consumers in the population 
are talking about, and worried about, and advocating about. So 
I agree with you that the power of the consumer is huge.
    You know, Dr. Kokas, let me just say, first of all, thank 
you for having your students read the terms of service--the 
TikTok terms of service. They might be the only people in the 
world who have, but I'm glad somebody did. [Laughter.] Some 
lawyer, or group of lawyers, spent a lot of time on those terms 
of service, so it's nice that somebody read them. But you've 
made some really fascinating points in your testimony. And 
we've talked a lot about what companies are doing wrong. And I 
really do worry that often corporate America, or maybe 
corporations around the world, talk out of both sides of their 
mouths. You know, they can condemn human rights abuses but, you 
know, We have to have this relationship because it's critical 
to our profit margin.
    What I'd like to do--just because we've talked a lot about 
the negative--can you give us any examples of U.S. companies 
that have navigated these dynamics with China differently, in a 
positive way, how they have navigated the PRC market and still 
done well? They've still been able to continue selling products 
in the world's largest market, while still standing up for 
their fundamental principles. Do any come to mind for you? And, 
by the way, I open this up to anybody--but you in particular, 
because you've studied it so much.
    Ms. Kokas. Thank you. I think that that's a really 
important question. And one of the things that we've seen is 
that companies do the right thing when they face pressure, most 
consistently----
    Representative Wild. Back to Mr. Stone Fish's point, right?
    Ms. Kokas. Right. Yes. And this isn't just pressure 
internationally, but also pressure from their consumers. So the 
``Top Gun'' case that I discussed--you know, there was a huge 
outcry after Tom Cruise's bomber jacket had the Taiwan flag and 
the Japanese flag obscured. And then eventually Tencent pulled 
out, so there was less financial incentive for the film to move 
forward--making those statements. So I think really shining a 
light on things becomes really important. And that's one of the 
reasons why I have my students read the terms of service, so 
that at a very minimum they know what's happening.
    And that's why I think hearings like this are so important. 
And also transparent reporting requirements that are easy for 
consumers to read and that occur quarterly, are the sort of 
things that companies have to respond to. Now, I would urge--
there are existing statutes in place, there are already 
existing reporting requirements that just could be tweaked.
    The other thing that I think is useful is to look at things 
like ESG indices that help to--and this isn't something that 
Congress would do, but it's something that Congress could 
support--where when we enhance reporting requirements, there's 
a way to actually financially reward companies that are 
involved in those particular indices. So I think Mr. Stone Fish 
is ready to go. So I'll let him----
    Representative Wild. Go ahead.
    Mr. Stone Fish. Thank you. I think that's an excellent 
question. We rank companies on their China exposure. And I can 
say with almost certainty that the company that has the lowest 
China exposure doesn't want people to know that. And I do hope 
with the new regulatory climate----
    Representative Wild. And why is that? Why do they not want 
people to know that?
    Mr. Stone Fish. Because some investor, some board member, 
some business tie they have will see that and then perhaps get 
angry and get upset. It's actually very fundamental with the 
NBA as well. We did a big project with ESPN, ranking NBA team 
owners on their China exposure, and we found that a lot of the 
pressure came not from the team itself, but from the owner. 
It's very similar with Hollywood, too. It's not just that this 
film offended Beijing or kowtowed to Beijing. It's that someone 
involved with the making of the film, or the parent company, or 
the studio thought that this could jeopardize their business 
relationship.
    And so there's no--you know, we rank on a scale from zero 
to 100, and there's no zero. There's no company that has no 
exposure to China. I mean, we are in a very entwined world. We, 
in 2019, traded 25 times more with China than we did with 
Russia. The number is much higher now. And so where we are in 
this very messy process is, we are decoupling. We are de-
risking. We are moving in that direction, so that hopefully in 
six months or a year, if tensions continue to go the way 
they're going, there will be companies that can stand up and 
proudly say: Yes. I have removed my China exposure. And this 
makes me a healthier company, more responsible to my 
shareholders and to my consumers.
    Representative Wild. Well, thank you. You know, it's 
interesting because there seems to be almost a kneejerk 
reaction to ``made in China'' products. I will tell you, 
political candidates who have political swag--T-shirts, hats, 
whatever--that are found to have a tag that says, ``made in 
China,'' they're going to hear about it, and it's going to 
become a negative hit on them. But so many people I don't think 
really understand the full cycle. So what a lot of consumers, 
voters, and other people in the U.S. might be thinking about 
is: We've outsourced so many things to China. We've lost market 
share. We've had factories close down, including in my own 
district, the Pennsylvania Seven. You know, workers have lost 
their jobs.
    But the reason for that is not only that there are very low 
wages and lower costs of operating in China, but that that 
comes at the expense of the Uyghurs and the people who are 
producing these products in China. And that's the part that 
often--I will tell you--and I don't fault anybody for this, 
because it takes a lot of critical reading and thinking--but I 
think it's really important that we draw that full circle.
    And that it's not just about your factory closed and 
everybody lost their job. Huge, and very, very destructive to a 
community. And why did that happen? Well, because the Chinese 
can produce it more cheaply. And why can the Chinese produce it 
more cheaply? And that's really the question. When we're 
talking about human rights, that needs to be elevated and 
really needs to be talked about. Not just that we're losing 
market share. And, you know, as I said, I represent--or maybe I 
didn't say--I represent a district where manufacturing is king. 
It is the largest sector of our economy, which I'm really happy 
to report, because for a long time it wasn't. We lost Bethlehem 
Steel, which closed specifically because of Chinese steel.
    Really, we were on a downward slide. We have come back. And 
quite honestly, the CHIPS and Science Act that was passed here 
is going to make a huge difference in manufacturing communities 
like mine--and, of course, we know that the Chinese waged a 
particularly high-profile campaign on social media against the 
CHIPS and Science Act. And I think that [Laughs] there's a 
reason for that.
    I want to switch gears for just a minute, and--well, let me 
just finish this line of questioning. You know, as we talk 
about all of these things, we still have to acknowledge that we 
are very interconnected. As Secretary Yellen said on her visit 
to China, we seek to diversify not decouple. I think that's a 
really important message. And people have to understand that. 
Can any of you speak to what more we can do as policymakers to 
assist businesses that want to invest fully here in the United 
States, but are reliant on doing business in the PRC, at least 
in the short run, for certain parts or processes? Because I 
hear about that a lot in my community, things that cannot be 
made without things in the supply chain coming from China. How 
can we support those companies?
    Mr. Stone Fish. I'll answer that. There are things that 
can't be made outside of China, but there are plenty of things 
that can. And so----
    Representative Wild. But that takes ramp-up. I mean, let's 
face it, we're seeing that right now with semiconductors. I 
mean, it's going to take a while to get to where we need to be. 
But go ahead, I'm sorry.
    Mr. Stone Fish. No, I think that's an excellent point. And 
it does take ramp-up. And it's good that we're starting now. 
Or, you know, starting over the last couple of years. I think 
the issue is that so many American champions of American 
solutions also have large ties to China that aren't 
economically required. I will have to double check this, but I 
believe Mountain Pass, which is seen as the U.S. solution to 
the rare earths problem, is something like 7 or 8 percent owned 
by Chinese companies. And that's not the solution that the 
American people need.
    And it's not that this company needs that stake in order to 
survive. We deal with companies on this all the time. When, you 
know, a company has, say, 1,200 factories in China, the idea 
isn't, Shut them all down. The idea is, okay, of these 
factories, maybe 10 or 20 percent are nonessential, but are 
also very entangled with the Chinese Communist Party. And those 
are the ones that you get rid of first.
    Ms. Kokas. One thing that I think is also useful is 
rewarding mitigation strategies. Shutting down a factory is 
more visible, but rewarding companies and working with 
companies to develop their mitigation strategies, and honoring 
that, and honoring that ramp-down time is really important, 
because it's not financially feasible in a lot of cases to shut 
things down.
    Representative Wild. I completely agree with you. I'd love 
to have another discussion at some point about the pragmatic 
approach to doing that, because I think you're absolutely 
right. But those are great words. We've got to figure out how 
we do that to support those.
    I want to switch now, if I may--do I have a few more 
minutes? Thank you, Mr. Chair.
    Ms. Minglei, thank you so much for being here. And thank 
you for advocating for workers in the PRC, as well as for your 
husband. You have a lot of courage and you've spoken very 
powerfully. And, you know, the defense of universal human 
rights, and dignity, and fighting against the use of forced 
labor, is just so incredibly important. Your husband, as we 
know, was arrested and sentenced to five years' imprisonment in 
2019 due to his activism, including defending workers from 
discrimination in the workplace.
    As you may have gleaned from my initial comments, I am a 
big fan of organized labor. I think that it serves a purpose. I 
think the Players Association should take some lessons from 
them. But it's just critically important because that is how an 
ordinary worker gains power--not alone, but collectively. And 
that's how it has to happen. And, of course, we know that pro-
worker advocacy is dangerous in the PRC, because they don't 
have organized labor, as we know it, there. There's the All-
China Federation of Trade Unions, which is government 
controlled and is the only legal organization that workers can 
join, am I right?
    Ms. Shi. Yes.
    Representative Wild. Let me just ask you--I just want to 
express my solidarity, I hope that comes through, for the 
sacrifices that you and your husband have endured. I hope 
that--have you been able to speak with him?
    Ms. Shi. Not really. Actually, since he was arrested, I 
have never had a chance to meet his lawyers. I was in China--we 
finally came to the United States two years ago. But before 
that, for almost two years, I would go to the detention center, 
the court, and I also went through the Chinese procedural 
process. I went there 24 times, but never had a chance to visit 
him and never had a chance to call him, never had a chance--
like, even recently, my letters are still seized by the prison. 
And they just don't even----
    Representative Wild. You're not sure he's even receiving 
them?
    Ms. Shi. Yes. They just don't give the letters to him. My 
family members confirmed. I have sent several letters to him, 
and he said he didn't receive them. So even a photo--because 
when he was arrested, my girl was only three years old. And 
they arrested him in front of my daughter; the same day, I was 
put into backwards handcuffs and also interrogated overnight. I 
left my daughter in the preschool, and they didn't allow me to 
pick her up. My girl is now a 7-year-old, so almost four years. 
I really wanted to just give him a photo. You know, as a 
father, you really want to see how your baby is growing. But 
even this very tiny request--the Chinese government won't let 
him have that photo.
    So this is why human rights is so important. I also work in 
the business area and my job used to be global commerce 
director. And I also was the supply chain director for one 
year. I know all of the business area. But the point here is, 
don't ask a company about the profit, don't ask about the 
expense, just ask them one question: As a human, where are 
human rights? If we don't have human rights, we lose freedom.
    Representative Wild. Well, I think--I have to say, I think 
that is the exact point of this Commission.
    Ms. Shi. Yes.
    Representative Wild. I'm grateful that it was created and 
exists. And the challenges--that's too soft a word--but what 
your husband has gone through, what you have gone through, what 
your daughter has gone through, highlight just how critical 
this situation is. And that's just one story. I am sure there 
are many, many stories like that. And, of course, that 
suppresses any thoughts that other workers might have about 
collectively coming together to fight this kind of abuse. So 
thank you for telling the story. Thank you all for being here. 
It's incredibly important. And I hope that one day we will be 
able to look back on this and see some improvement.
    I've never believed that the solution is to just completely 
shun China. I agree with the Secretary--diversify not 
decouple--it's just a reality. But we also have to remember 
that there are many, many people there who are not the PRC, 
they are just residents, citizens of China. And they are not 
bad people. And that's something that often gets--a message 
that gets lost too. So we just have to keep amplifying this, I 
really believe. But thank you all for really compelling 
testimony. With that, I yield back.
    Chair Smith. Thank you so much, Commissioner Wild.
    And I too would agree with what my friend and colleague has 
just said, that our argument is not with the people of China, 
it's with the oppressors. We stand with the oppressed, not the 
oppressors. And the Chinese Communist Party are the oppressors. 
So I thank all of you for your extraordinary testimony. Is 
there anything you would like to add before we end this 
hearing? If not, I would ask unanimous consent that the 
comments of Jim McGovern, our ranking member on the House side, 
be made a part of the record. Also, Sarah Cook, who is the 
senior adviser on China, Hong Kong, and Taiwan for Freedom 
House, and Maya Mitalipova, who is the MIT Director of the 
Human Stem Cell Lab, that their testimony be included in the 
record. And that the statement of Roger W. Robinson, Jr. in 
partnership with the Coalition for a Prosperous America, be 
made a part of the record as well.
    I want to express my deepest thanks to Jenny Wang for her 
work on this hearing--I really deeply appreciate the leadership 
she has shown; Matt Squeri; Scott Flipse; Piero Tozzi, our 
chief of staff for the China Commission; Diana Moyseowicz, for 
her help as well. You know, there are many, many witnesses who 
could be here. I think we've got the best of the best who have 
given us insight and information that is actionable. And I 
can't thank you enough for that.
    We will continue this series on corporate complicity by 
inviting the corporations themselves to be here--including 
Nike, the NBA, the NBA Players Association, and others. Of 
course, Milwaukee Tool. In the past, some have said yes, and I 
think that's a good thing. I mean, hopefully they'll all say 
yes. And hopefully they'll come to see that they can make an 
enormous difference. The NBA, which is not hurting for money--
we're talking about value added in terms of dollars that they 
make, and players make. It is a very lucrative league without 
China. So my hope is that the moral imperative that Enes Kanter 
Freedom brings to a sharp point here at this hearing is heard 
by them. There are good players who I think want to do the 
right thing. Hopefully, they'll be encouraged by your 
leadership to do so.
    So, without any further ado, this hearing is adjourned. And 
again, I thank you.
    [Whereupon, at 12:34 p.m., the hearing was concluded.]

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


                            A P P E N D I X

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


                          Prepared Statements

                  Prepared Statement of Robert Silvers

    Good morning, Chairman Smith, Co-Chairman Merkley, and 
distinguished Commissioners. Thank you for the opportunity to discuss 
the critical work of the Department of Homeland Security (DHS) and the 
Forced Labor Enforcement Task Force (FLETF) to combat the scourge of 
forced labor in global supply chains, including that stemming from the 
People's Republic of China's (PRC) systematic use of forced labor to 
profit on the backs of ethnic and religious minorities.
    The United States has long recognized and condemned the PRC's 
ongoing genocide and crimes against humanity against predominantly 
Muslim Uyghurs and other members of ethnic and religious minority 
groups in the Xinjiang Uyghur Autonomous Region (Xinjiang). This 
includes the abhorrent practice of using these groups' forced labor in 
the mining, production, and manufacture of goods.
    U.S. laws that prohibit the importation of goods made with forced 
labor reflect our values. We are proud at DHS to enforce our forced 
labor laws. We do so because they are the law of the land. And we do so 
because it is the right thing to do.
    Congress charged the FLETF with driving initiatives that support 
enforcement and enhance compliance by leveraging the authorities and 
expertise of the Task Force's member agencies--DHS, along with the 
Departments of State, Labor, Commerce, Justice, and Treasury, and the 
Office of the U.S. Trade Representative.
    In my role as Chair of the FLETF, I focus on ensuring that the U.S. 
Government is doing everything it can to eradicate forced labor from 
global supply chains. Under the leadership of Secretary Mayorkas, we 
are facilitating the flow of legitimate trade while working across the 
government and with non-governmental organizations (NGOs) and industry 
to keep goods made with forced labor out of U.S. commerce.
    Our country has enforced forced labor laws for many years. But it 
was the unwavering commitment and determination of the Congressional-
Executive Commission on China (Commission) and other supporting Members 
of Congress that, on a broad and bipartisan basis, led to the passage 
of the Uyghur Forced Labor Prevention Act (UFLPA). This new law has 
brought a sea change to the way we approach these issues.
                          uflpa implementation
    Our implementation of the UFLPA has been speedy, strong, and 
surgical. Speedy, because we implemented ahead of the schedule required 
by the law. Strong, because we devote the full weight of our resources 
to enforcing the law. We made it clear that when it comes to forced 
labor in Xinjiang or goods made by persecuted minorities removed from 
their homes in Xinjiang, we will brook no quarter. And surgical because 
our enforcement is based on sophisticated risk assessment, 
intelligence, and data-driven targeting.
    There are several components of the UFLPA that make it uniquely 
powerful in addressing the PRC's state-sponsored cruel and inhumane 
forced labor regime. These, among other things, include the public 
identification of illicit actors through the UFLPA Entity List and the 
law's key enforcement mechanism: a rebuttable presumption that goods 
mined, produced, or manufactured wholly or in part in Xinjiang, or by 
entities identified on the UFLPA Entity List, are prohibited from 
importation into the United States.
                 the uflpa rebuttable presumption and 
          u.s. customs and border protection (cbp) enforcement
    The UFLPA charges CBP with the enforcement of a rebuttable 
presumption that the importation of goods mined, produced, or 
manufactured wholly or in part in Xinjiang, or by entities identified 
in the UFLPA Entity List, are prohibited from entry to the United 
States under Section 307 of the Tariff Act of 1930, as amended (19 
U.S.C. 1307).
    Since the UFLPA's rebuttable presumption took effect in June 2022, 
CBP has targeted more than 4,200 shipments under the law, valued at 
over $1.4 billion, sending a clear message to importers that we take 
our mandate seriously.
    CBP uses a risk-based methodology, leveraging dynamic models that 
utilize the latest intelligence and analysis to identify shipments that 
warrant further scrutiny. DHS is partnering with industry to test 
innovative artificial intelligence and machine-learning technologies 
that can streamline supply chain tracing and improve CBP's analytical 
capabilities. We are also exploring more precise scientific testing for 
cotton and other commodities that can help us determine the true origin 
of goods.
    Our early enforcement posture has been robust, but we do face 
challenges. The UFLPA mandate came without additional funding for CBP 
enforcement efforts, the FLETF's work on the UFLPA Entity List, or 
other FLETF enforcement-related activities. We appreciate Congress's 
subsequent support provided to CBP, but more is needed. To meet the 
FLETF's UFLPA mandate, we have shifted resources toward this mission, 
and we look forward to working with Congress to secure much-needed 
additional funding.
    We also are pursuing strategies to address the risk of goods made 
with forced labor entering the United States through low value, de 
minimis shipments that have less detailed data available for our 
review. As there is no de minimis exception to the UFLPA, we are firmly 
committed to meeting this challenge, including undertaking initiatives 
to increase information availability and assess risk in the de minimis 
environment. We welcome the opportunity to work with Congress to 
address these challenges together.
    Alongside our enforcement activities, DHS and CBP are committed to 
supporting industry's compliance and due diligence efforts to prevent 
illicit goods from entering legitimate commerce in the first place. 
Toward that end, we have held more than 400 engagements with the trade 
community and provided extensive information and guidance to industry 
to help our trade community partners understand our implementation and 
enforcement of the UFLPA and to support their own complementary 
efforts.
    Recognizing that many in the trade community may not have 
sufficient resources or mechanisms to identify indicators of forced 
labor in their supply chains, CBP recently held its first Forced Labor 
Technical Expo to highlight tools and technologies that promote due 
diligence by enhancing transparency and verifying the provenance of 
goods. We also issued best practices guidance based on lessons observed 
to date, including documentation that traces a given product through 
the entire supply chain. Additionally, CBP developed an interactive 
Digital Dashboard with statistics on UFLPA enforcement that provides 
insight for the public on stopped entries by industry sector and 
country of export. As part of our commitment to transparency and 
accountability, we will continue to assess what additional data we can 
publicly report.
               the private sector's response to the uflpa
    Since we began enforcement of the UFLPA, we have seen significant 
evidence that industry is taking compliance seriously. Private sector 
decision-makers are rapidly coming to understand that there is 
collective will on the part of Congress and the Executive Branch to 
stand firmly behind a zero-tolerance policy for goods made with forced 
labor. They understand that they have a responsibility to examine their 
entire supply chains for any indicators of forced labor and to take 
immediate steps to mitigate the risks from suspect suppliers.
    We are still in the early stages of quantifying the impact of the 
UFLPA on private sector behavior, but early data show significant 
promise. For example, one respected supply chain mapping and 
verification technology company reports that ``transactions from 
entities potentially subject to enforcement under the law decreased by 
approximately 40 percent between June 2022 and March 2023. The same 
period also saw the overall value of transactions decrease by 
approximately 50 percent.'' \1\ We are seeing similar trends from other 
providers which support extensive anecdotal reporting from the trade 
community that industry is taking UFLPA enforcement seriously and 
taking steps to ensure compliance, including moving their supply chains 
out of Xinjiang and away from suppliers that cannot deliver the 
requisite transparency.
---------------------------------------------------------------------------
    \1\ Altana Technologies (2023, June), The fight against forced 
labor is a struggle. As we pass the one-year anniversary of the Uyghur 
Forced Labor Prevention Act's enforcement....Linkedin. [https://
www.linkedin.com/posts/altana-ai_altana-illuminating-the-xinjiang-
forced-activity-7078081734608617472-JqRg]
---------------------------------------------------------------------------
    We will continue to monitor the data for trends and act on that 
data, and continue every effort necessary to ensure that the United 
States is not a dumping ground for goods produced through the suffering 
of others.
                   uflpa strategy and the entity list
    As Chair of the FLETF, DHS led the development and implementation 
of a comprehensive strategy that identified illicit actors through the 
UFLPA Entity List and called for strategic partnerships and 
collaboration with key stakeholders across government, industry, civil 
society, and like-minded international partners.
    Since passage of the UFLPA, the FLETF initiated extensive 
engagements with industry and NGOs in the development and 
implementation of a strategy to prevent the importation of goods made 
with forced labor in the PRC. We continue to solicit and review 
information about the PRC's forced labor schemes, as well as regarding 
effective corporate compliance programs and other industry efforts to 
conduct due diligence.
    With the information collected from stakeholders and our federal 
partners, the FLETF issued the Strategy to Prevent the Importation of 
Goods Mined, Produced or Manufactured with Forced Labor in the People's 
Republic of China (the UFLPA Strategy) in June 2022, identifying 20 
entities for the inaugural UFLPA Entity List. This strategy provides 
extensive guidance for how we expect importers to examine their supply 
chains for indicators of forced labor and establishes a framework for 
partnership with industry and civil society.
    We continue to refine and implement the UFLPA Strategy. The FLETF 
is committed to expanding the UFLPA Entity List by identifying 
companies that utilize or facilitate the use of forced labor in or from 
Xinjiang in line with the statutory standards. This commitment was 
recently demonstrated by the addition of two new entities to the UFLPA 
Entity List. There is more work to do, and the FLETF will continue to 
add entities to the UFLPA Entity List as warranted by the facts and the 
law.
    We have an extraordinary partnership with the NGO community, whose 
research and monitoring efforts are critical to our understanding of 
forced labor schemes and efforts to obscure the true origin of goods. 
Through our collaboration with NGOs and the development of our own 
knowledge base, the FLETF is expanding our expertise in identifying and 
assessing suspected entities, and we anticipate more additions to the 
UFLPA Entity List in the coming months. There is an active pipeline of 
referrals that our agencies are examining, and we will continue to move 
expeditiously to act on these referrals.
    Collaboration and engagement with stakeholders across the trade 
community is a critical component of our work to fully implement the 
UFLPA Strategy. We have engaged with hundreds of representatives from 
the private sector, including meetings with C-Suite executives and 
board directors, to emphasize our message that forced labor must be a 
top-tier compliance issue. In the same way that corporate compliance 
programs routinely include safeguards to address corrupt foreign 
practices, money laundering, export controls, sanctions, and privacy 
laws, the private sector must direct institutional attention to 
compliance with forced labor laws. My engagements have taught me that 
the overwhelming majority of corporate leaders want to do the right 
thing. Through our enforcement actions, we are making clear that it is 
incumbent on them to do so, and we have provided detailed guidance to 
show them what we expect to see in terms of due diligence.
                               conclusion
    The PRC's ongoing genocide and crimes against humanity against 
Uyghurs and other minorities in Xinjiang has continued for years, but 
with the passage of the UFLPA, we have taken a significant step towards 
justice, accountability, and fair competition. This is a testament to 
the impact that Congress and the Executive Branch can have when they 
work together. There is much more work to do. But we are all-in on this 
mission.
    We will further our collaboration with civil society to expand our 
intelligence on forced labor schemes and their presence in global 
supply chains. We will continue our enforcement activities wherever the 
facts lead. We will build on our partnerships with the private sector 
to share information and guidance that can enhance due diligence 
practices and compliance policies. We will press forward with further 
innovation and deployment of technologies that support this mission. 
And we will continue to work closely with the Commission and Congress 
to advise you of the important work being done.
    I thank the Commission and Congress for your support in the fight 
against forced labor. Thank you again for the opportunity to appear 
before you today, and I look forward to taking your questions.
                                 ______
                                 

               Prepared Statement of Enes Kanter Freedom

    Chairman Smith and Co-chair Merkley, and members of the 
Congressional-Executive Commission on China, thank you for the 
opportunity to be here today.
    I'm a basketball player. My job is to go out there and compete with 
my teammates and try to win an NBA championship. I ask people when they 
call me a retired NBA player, not to--because I refuse to accept that 
my career ended the way it did. My entire life I worked so hard to 
achieve my NBA dream, and I made it. However, because I wanted to stand 
up for what is right, my career ended in a very brutal way.
    I have been talking about the human rights violations in my home 
country, Turkey, for the last 11 years. There are many innocent people 
in Turkey being persecuted by Erdogan's regime. Due to my outspokenness 
about the human rights violations and political prisoners in Turkey, 
Turkish President Erdogan fired my dad from his job as a scientist. My 
sister went to medical school for 6 years, and she still can't find a 
job. My little brother was playing basketball and he got kicked off 
every team because he shares the same last name as me. They were 
affected so much that they had to put a statement out publicly 
disowning me. The letter is still on the internet. The Turkish 
government didn't believe it, and they sent police to raid my house in 
Turkey. They took all their electronics away because they wanted to see 
if I am still in contact with my family or not. They couldn't find 
evidence, but they threw my dad in jail. The U.S. put so much pressure 
on Turkey, and they finally let him go.
    After that, they revoked my passport, tried to kidnap me in 
Indonesia, put my name on the Interpol list, put a bounty on my head, 
and in 10 years they sent 12 arrest warnings for me.
    One of the reasons I was fighting so hard against this brutal 
regime is because I had so much support from the NBA--support from the 
commissioner, Adam Silver, my teammates, and every organization I 
played for (5 different teams--Utah, Oklahoma, the New York Knicks, 
Portland, Boston).
    Especially the support from my teammates and the NBA gave me so 
much hope and motivation to fight.
    When I was playing for the New York Knicks, I didn't travel to 
London for an exhibition game against the Washington Wizards because I 
was scared for my life. Commissioner Adam Silver came out in a press 
conference and said, ``As an NBA family we support Enes Freedom and his 
fight against the Turkish regime, we support every player to stand for 
whatever they wanna believe in.'' I wanted to cry that day because of 
how much support I felt.
    Three years ago, in 2020, Covid hit and the NBA took us to Orlando 
to continue to play the games. It was during the George Floyd protests 
that the NBA told every player that this is all about social justice, 
and that they are here to bring change. We are more than athletes. I 
respect everyone who peacefully protests. During those times the NBA 
put Black Lives Matter logos on the floor and put those phrases on our 
jerseys (this was controlled by the NBA--we couldn't pick what we 
wanted to pick). In every interview we were doing, the NBA was telling 
us to talk about social justice issues. All the players were putting 
these social justice messages on their shoes and we brought lots of 
attention about what's going on.
    My activism towards China started with a simple basketball camp. I 
had a beautiful basketball camp in New York. In fact, Congressman 
Hakeem Jeffries joined me at that camp. After the basketball camp, I 
sat down and was taking pics with the kids one by one. I remember 
taking a pic with this kid and their parent called me out in front of 
everyone and said, ``How can you call yourself a human rights activist 
when your Muslim brothers and sisters are getting tortured every day in 
concentration camps in China?'' I was still smiling for the camera, 
after I took a picture with his kid. I turned around and said, ``I 
promise I'm going to get back to you.''
    That day, I canceled everything and went back to my hotel and 
started to educate myself about what's going on. I know on the Internet 
you can find all kinds of news, so I called my manager and told him 
that I need him to find me a concentration camp survivor. In a couple 
weeks, he found a lady who was a survivor. She and I had a one-hour 
conversation about all the torture methods, the gang rape, the forced 
sterilization and abortion methods. I couldn't believe my ears. At the 
end of our conversation, I asked her, ``What can I do to help you?'' 
She answered, ``Nothing.'' I said, ``What do you mean, `nothing'? So we 
had this 1-hour conversation for no reason?'' She said ``Listen, I live 
in America, I can do whatever I want, I can say whatever I want, I can 
eat whatever I want, I'm free. I have my freedom here. Help those 2 to 
3 million Uyghurs who are in concentration camps, getting tortured, and 
raped every day.''
    At that moment, I said to myself, I don't care what it takes, I'm 
going to help these people.
    I wanted to do it in a unique way, because when I was a kid 
watching an NBA game, the first thing I looked at was the NBA players' 
shoes. I looked at the color, the brand, if they're comfortable or not, 
and the next day I was asking my dad to please buy them for me. Every 
kid loves shoes, so I wanted to inspire the young generation with 
something I knew they would pay attention to.
    I reached out to artists around the world who were oppressed by 
their regimes, and I told them to put all of the struggles, pain and 
stories on the shoes. I created these shoes without using slave labor.
    My first topic was ``Free Tibet.'' I was playing for the Celtics, 
and it was our first game of the season against the New York Knicks at 
Madison Square Garden. Because it was opening night at the Garden, 
everyone was there to watch that game. Knicks vs. Celtics is always a 
good rivalry so the whole country and world was watching that game. I 
put ``Free Tibet'' on my shoes and started to warm up with my 
teammates. We sang the National Anthem, and there was 1 minute left 
until the game started. We were in a huddle in front of our bench when 
two gentlemen from the Celtics came up to me and said, ``You need to 
take your shoes off immediately.'' I asked them why and they said, 
``Your shoes have been getting so much attention internationally and we 
are getting many calls so please take them off.''
    It was the perfect moment for me because I was just getting ready 
for my citizenship test. So I closed my eyes and said, ``Okay, Enes, 
there are 27 amendments and my First Amendment is freedom of speech.'' 
I opened my eyes and told them ``No, I'm not taking my shoes off.''
    They kept telling me to take them off, and I said, ``Even if I get 
fined, I'm not taking them off.'' They said, ``We're not talking about 
a fine, we are talking about getting banned.''
    They were really threatening to ban me from the NBA because of my 
shoes.
    I played zero minutes that half and after the first half I went 
back to my locker room and checked my phone. There were thousands of 
notifications and I clicked on the one that my manager sent me saying, 
``China just banned every Celtics game on television.'' It literally 
took China 24 minutes (1 quarter 12 minutes, 2nd quarter 12 minutes) to 
ban every Celtics game. The game went into overtime and we lost the 
game. I played zero minutes that night after previously playing in 
every game before that. After the game, every media outlet wanted to 
talk to me, and I told my manager no, because I didn't want my 
teammates to think I'm doing this for attention.
    After the first game, the NBPA (The NBA Players Association) called 
me and said, ``The NBA is pressuring us so much. You can never wear 
those shoes again.'' They were calling me and my manager every hour, 
wanting to make sure I was not going to wear them ever again. I spoke 
about the problems happening in Turkey for the last 10 years without 
consequence, yet I speak about China for 1 day and my phone was ringing 
every hour asking me to stop what I'm doing.
    The NBPA told me that if I didn't stop, they would change the rules 
so that no player can put any kind of message on their shoes ever 
again. I couldn't believe how much they were pressuring me because I 
paid thousands of dollars to the players association every month to 
protect my rights against the NBA, but on this topic they were on the 
NBA's side.
    At one point I was so frustrated, and I told them, ``Okay, I 
promise that I'm not going to wear `Free Tibet' shoes ever again.'' 
They asked me a few times to promise them and I said, ``I promise'' and 
they said, ``Okay, problem solved.''
    The next game I wore ``Free Uyghurs'' shoes. The NBPA called me 
after the game and said, ``Enes, you are a liar, you lied to us, we can 
never trust you again.'' And I told them, ``I never lied to you. I just 
said, `I'm not going to wear ``Free Tibet'' shoes ever again, but I 
never said I'm not going to wear ``Free Uyghurs'' shoes.' '' So, at 
that point, they understood that they were not going to be able to make 
me delete my tweets, apologize to the Chinese government, and put any 
false statements out there.
    After the third game, one of my teammates walked up to me and said, 
``Enes, you know this is your last year in the NBA, right? If you ever 
criticize China or NIKE, then you're never going to be able to play 
basketball in this league. So have fun, smile, and I hope we win a 
championship this year because this is your last year--your basketball 
career is ending.''
    My agent called me after the fourth game and said, ``Enes, I work 
for you, I don't work for the NBA, so I have to keep it honest with 
you. If you say another word about the Chinese government, then you're 
never going to play basketball in this league again. No team will sign 
you, and all the owners who look like they care about social justice, 
in reality all they care about is money and business, so you won't be 
playing again.''
    After the fifth game, I had a conversation with Commissioner Adam 
Silver. We had a 30-minute phone conversation and at the end, he even 
admitted the following: ``We are a business, Enes, it's a different 
system in China.'' I asked him, ``What do you think about China banning 
every Boston Celtics game on television?'' and he said, ``It's not 
true.'' I told him that there were lots of legitimate reports out there 
and he said, ``I don't know about it''--which was a lie.
    It was the perfect moment for me because it was right before the 
Beijing Winter Olympics, so I tried to reach out to everyone. Not just 
NBA players...I tried to reach out to the NFL, MLB, MLS, the NHL, WWE, 
and even the Olympians.
    But unfortunately, they all said the same thing: ``Enes, what you 
are doing is so amazing, so courageous, so inspiring; we love you, we 
support you, but we cannot do it out loud. I asked them why, and they 
said, ``We have shoe deals, endorsement deals, jersey sales, and we 
want to get another contract with the league that we play with.''
    I asked them one simple question: ``Put yourself in their shoes. If 
your mother, your sister, or your daughter was in those concentration 
camps getting tortured and raped every day, would you still pick the 
money and business?'' They usually turned around and left the room.
    After a couple of months, one of my friends called me. His name is 
Daryl Morey. He was the first guy who tweeted and said, ``Stand With 
Hong Kong'' and the NBA lost millions of dollars because of it. I was 
playing for the Boston Celtics when he tweeted, and the Celtics made us 
unavailable to the media for 2 weeks because I was the only player in 
the NBA that supported Morey's tweet publicly. When we had a 
conversation after a couple of months regarding me talking about China, 
he said, ``Enes, don't give up; when I tweeted about Hong Kong, the NBA 
made me take my tweet down, they made me apologize, they made me put 
out some statements which I didn't wanna put out. But you don't give up 
and you keep going.''
    February came, and there was a trade deadline. Many of my teammates 
knew that I had played my last game in the NBA and they were telling me 
you will get traded or let go. And they were right.
    The Boston Celtics traded me to the Houston Rockets, (who are known 
to be China's team because of players like Yao Ming). And the Houston 
Rockets released me immediately.
    It was over, and everyone in the NBA knew it, too.
    After I got released, about 3 weeks later, China put the games back 
on television. ESPN did an investigation and found out that 49 NBA 
owners have 10 billion dollars tied up in China. I had a conversation 
with the ex-owner of the Milwaukee Bucks and he even said: ``China's 
taken a very aggressive stance, which is `if you want to bitch about 
us, you're out'--I get it, it's business.''
    I played 11 years in the NBA, I had hundreds of teammates and 
hundreds of coaches, yet not one of them reached out to me or texted me 
to say good luck with whatever is coming next. They were so scared that 
if I ever did an interview, that I would mention their name saying, 
``He texted me or he supported me.'' They knew that if I ever did, it 
would affect their contract situation or their endorsement deals.
    I just turned 31 years old. I'm young, healthy, and love 
basketball. I still work out almost every day and I'm in really good 
shape. Everyone knows that the only reason I'm not in the NBA is 
because of the things that I spoke about. I averaged a double-double 
with Portland the year before I spoke out about the issues in China.
    I have NO regrets. If I had to do it all over again, I would do it 
even stronger. This is bigger than me, bigger than basketball and 
bigger than the NBA.
    People keep talking about me losing my career, but they need to 
realize that I lost my family because I wanted to stand up for the 
victims of human rights violations in Turkey. Me losing my career is 
nothing compared to losing my family.
    Freedom is not free, and it's going to come with some consequences. 
But someone had to stand up for the innocent around the world, no 
matter how much money or business I have lost because of it.
    According to my manager, I lost around 50 million dollars, with all 
the NBA contracts and endorsement deals that I could've signed.
    I sleep in peace at night knowing that I did the right thing. My 
only question is: How can the biggest dictatorship in the world, China, 
control a 100% American-made company and fire an American citizen?
    Thank you all.
                                 ______
                                 

                   Prepared Statement of Shi Minglei

    Thank you, Mr. Chairman, and thank you to the Congressional-
Executive Commission on China for convening this hearing.
    My name is Shi Minglei. I am the wife of a famous Chinese human 
rights activist, Cheng Yuan, who is currently serving a five-year 
sentence at a facility called Hunan Chishan Prison. There, as I will 
discuss in more detail later, prisoners are forced to work making 
gloves for a famous American brand, Milwaukee Tool.
                    short introduction of cheng yuan
    First, I'd like to tell you about my husband. In 2008, Cheng Yuan 
left a job in finance to found an NGO called ``Nanjing-based Justice 
For All,'' which was initially focused on combating employment 
discrimination against persons with hepatitis B, which is a significant 
issue in the People's Republic of China. From there, he expanded his 
work to other areas of social justice, including advocating for an end 
to the PRC's one-child policy and standing up for the rights of Chinese 
human rights lawyers after the 709 Crackdown by founding NGO Changsha 
Funeng.
                     about the changsha funeng case
    Cheng Yuan's fruitful and influential human rights work led PRC 
security agents to arrest Cheng Yuan and his two colleagues Wuge 
Jianxiong and Liu Dazhi on July 22, 2019, which is known as the 
``Changsha Funeng NGO Case.'' And they were called the Changsha Three.
    I haven't seen Cheng Yuan since he was arrested in 2019. He was 
arbitrarily detained, tortured, charged with ``subversion of state 
power,'' deprived of the legal right to access to his legal defense, 
deprived of communication rights with family members and lawyers, and 
secretly tried and sentenced to 5 years' imprisonment. That is how he 
ended up at Hunan Chishan Prison.
            persecution against cheng yuan's family members
                      to force him to plead guilty
    The persecution against Cheng Yuan also expanded to our family 
members. On the same day he was arrested in 2019, I was suddenly placed 
under home arrest with my 3-year-old daughter. I was handcuffed, put 
into a black hood, and interrogated for almost 20 hours in a secret 
place by Chinese national security agents in plainclothes. The Chinese 
national security agents threatened to bring my 3-year-old girl to 
undergo interrogation with me. That night my daughter was left in her 
preschool until night, and they didn't allow me to pick her up. After 
that day, my daughter and I lived under surveillance for half a year. 
The Chinese national security agents also froze my bank account and 
seized my photo ID, passport, driver's license, and even my Medicare 
card to silence me. Cheng Yuan's brother, sister, my mom, and my 
relatives, also my colleagues and my ex-boss, were harassed by Chinese 
national security agents.
                        no rule of law in china
    Here I want to point out that the sentences against Cheng Yuan and 
the Changsha Three are totally illegal. They indicate the PRC 
government's abuse of the Chinese national security law against NGO 
activists and Chinese civil society, its arbitrary detention, and its 
deprivation of lawyers' rights, torture, and secret sentencing. All of 
these are against the UN conventions the PRC government signed, and 
they're even against Chinese constitutional and procedural law itself.
    And even now, the court refuses to give our family members Cheng 
Yuan's verdict document. It has become a state secret and is hidden 
away from the public, which is also against Chinese procedural law 
itself.
released prisoners testified about forced labor in hunan chishan prison
    Another activist who was imprisoned there is Lee Mingche, a 
Taiwanese human rights activist who was arrested by the PRC government 
in March 2017 and released in April 2022. After his release, Lee 
revealed that while he was imprisoned at Hunan Chishan Prison, he was 
forced to produce gloves, including gloves bearing the Milwuakee Tool 
logo. One of Lee's jobs was to cut materials into the shape of a glove. 
Lee said that there were three to four cutting machines devoted to 
cutting Milwaukee Tool gloves. Another of Lee's jobs was sewing the cut 
materials into actual gloves. I am told my husband is currently forced 
to do a significant amount of sewing as well. Lee said that if 
prisoners refused to work or to meet quotas, they were subject to a 
variety of punishments, including being forced to stand for several 
hours straight, having their contact with family members cut off, being 
denied commissary rights, and, in some cases, being subjected to 
beatings, including with electric batons. Lee has attested to many of 
these facts under penalty of perjury and is willing to testify to them 
under oath as well, though he is currently facing difficulties 
traveling to the United States.
    Another recently released prisoner, whom I will refer to using the 
pseudonym Xu Lun, as he is still in the PRC, has similarly reported 
being forced to produce gloves bearing the Milwaukee Tool logo while 
imprisoned at Hunan Chishan Prison. Xu confirmed that failure to meet 
the production quotas was met with punishment like being forced to 
stand and being beaten and shocked with electric batons. Xu also 
confirmed workdays of about 11 hours, at least 6 days a week, with 
minimal breaks, and being paid only 20RMB, or about $3US, per month. 
That works out to an hourly wage of 1 cent.
  reasons big companies like milwaukee tool use forced labor in china
    Due to the lack of rule of law in the PRC, it is extremely 
dangerous for former prisoners located there to speak publicly about 
these issues. That is precisely why big companies like Milwaukee Tool 
are able to get away with benefiting from forced labor in the PRC. They 
know that the lack of human rights protection in the PRC means it is 
difficult, if not impossible, for victims to hold them accountable. 
Meanwhile, it is extremely beneficial to Milwaukee Tool's bottom line 
if those who are actually making their gloves are paid only 1 cent per 
hour. Of course, they would prefer to have their gloves manufactured in 
the PRC, rather than in the U.S., where they'd have to pay workers 
several thousand times more, and where the kinds of abuses people like 
Mr. Lee and Mr. Xu suffered would not be tolerated. In this way, 
American workers can also be counted among the victims of Milwaukee 
Tool's disregard for human rights.
       concerns about cheng yuan's well-being and call for action
                          to stop forced labor
    As for my husband, I am deeply concerned about his well-being. In 
recent visits by other family members, he has confirmed that he is 
forced to work 11 to 12 hours a day, hunched over a sewing machine. He 
has also said that he has been subjected to solitary confinement, 
forced to stand for hours, deprived of sleep and food, and forced to 
drink water from the toilet. And although he has not specifically said 
that he has been working on gloves bearing the Milwaukee Tool logo, the 
mere chance that he might be should be intolerable to Americans.
    Thus, Mr. Chairman, Senators, Representatives, CECC 
representatives, I am calling on you to stop American companies like 
Milwaukee Tool from using forced labor in the PRC now!
    Mr. Chairman, I ask that two documents be entered into the record. 
The first is an investigative report from Wisconsin Watch about 
Milwaukee Tool's forced labor in Hunan Chishan Prison, and the second 
is an Explainer regarding Cheng Yuan's case. [Both appear under 
Submissions for the Record.]
    Thank you.
                                 ______
                                 

                 Prepared Statement of Isaac Stone Fish

    Distinguished Chairmen and Commissioners:
    Boeing keeps me up at night. The company considers China one of its 
most critical markets. It's also a key element in an American 
warfighting strategy. In June the CEO of Raytheon--another crucial 
defense contractor--admitted to having ``several thousand suppliers in 
China'' and claimed decoupling was ``impossible.'' Boeing is far more 
exposed to China than Raytheon is. If China invaded Taiwan, would 
Boeing exercise its considerable influence in Washington to weaken the 
Pentagon's warfighting efforts?
    Corporate America has a China problem. For decades, Beijing has 
successfully incentivized many elite American corporations, business 
leaders, and politicians to strengthen the ruling Chinese Communist 
Party, and to entangle themselves within China--often at a cost to 
America.
    It goes like this: Beijing and its allies publicly excoriate a 
relatively small number of people and institutions--freezing out the 
NBA in 2019 after a deleted tweet, say, or criticizing Mercedes-Benz in 
2018 for quoting the Dalai Lama in an Instagram post. The global 
companies fear a boycott in the Chinese market, or regulatory scrutiny. 
Chinese officials then reach out to the company's government affairs 
department, or its leadership, or its diplomat consultants--more on 
that later--and urge them to apologize. To yield. Fascinatingly and 
disturbingly, sometimes companies that yield get punished further. And 
sometimes companies and individuals that don't yield find themselves 
rewarded by Beijing. The Party's unpredictability and unevenness leads 
businesses to be overcautious--which only makes the strategy more 
effective. And so, companies seek to placate Beijing.
    How did this problem of corporate complicity start, and how can 
Americans fix it?
    There is a clear origin story. Before Walt Disney thanked a public 
security bureau that rounded up Uyghurs and sent them to concentration 
camps, before LeBron James criticized the Houston Rockets' general 
manager for discussing democracy in Hong Kong, before Marriott fired an 
employee for supporting Tibet, before Boeing ran ads praising Beijing, 
before the late business tycoon and Republican super-donor Sheldon 
Adelson personally lobbied to kill a bill condemning China's human 
rights record, before Ronald Reagan called China a ``so-called 
Communist country,'' Henry Kissinger, whose relationship with the Party 
became a blueprint for this whole mess, sat with Premier Zhou Enlai in 
a Chinese government guesthouse in July 1971, discussing philosophy.
    By his charm, flattery, and persistence, over dozens of 
conversations over several years, Zhou initiated Kissinger as a 
``friend'' of China. (``Friend'' is a technical term for a non-Chinese 
person who supports the Party.) Zhou, and successive Party leaders, 
convinced Kissinger that strengthening ties between the United States 
and China was not only good for America--they benefited the individuals 
involved (in this case, Kissinger). And Kissinger, arguably the most 
influential person in 20th century foreign policy, spread these ideas.
    Kissinger's trips to China shaped history not only by 
reestablishing a relationship between the two countries. They also 
inaugurated two crucial phenomena that still shape American corporate 
and political behavior today. First, Beijing successfully employed 
tactics from the United Front Work Department: strengthening American 
``friends'' and weakening ``enemies.'' As Chairman Mao Zedong put it, 
the United Front ``mobilizes friends to strike at enemies.'' Second, 
Kissinger's trips engendered the rise of a whole new industry, that of 
``diplomat consultants,'' who fit nicely into the long-standing Chinese 
tradition of trading access for accommodation.
    It's a tradition with sadly bipartisan enablers. Former defense 
secretary William Cohen, democracy icon Madeleine Albright, president 
George H.W. Bush, and especially former secretary of state Kissinger 
enriched themselves by instructing American firms on how to cohere to 
Party standards, chill anti-Party speech, and ensure that they were 
strengthening the Party in America. They do this not only when acting 
in their capacity as consultants, but also in their capacity as 
``formers'': dulling criticism while serving on think tank boards, 
ensuring cooperation with China while chairing U.S. Government panels, 
pretending to journalists that they seek a strong U.S.-China 
relationship because it helps America. In other words, since founding 
the consulting firm Kissinger Associates in 1982, Kissinger--and so 
many like him--have been businesspeople masquerading as diplomats.
    Corporate complicity in America is a difficult problem to discuss 
because it involves criticizing so many powerful individuals. We cannot 
address the problem abstractly. Moreover, decorated Americans and 
storied brands make mistakes, and act in complex ways: people and 
institutions aren't just `Chinese lackeys' that jeopardize American 
interests--they sometimes take actions that help, and sometimes take 
actions that hurt, America's manifold and often contradictory 
interests.
    And as war with China grows increasingly likely, this difficult 
conversation about corporate complicity grows increasingly urgent.
    I should disclose at this point that I'm not a disinterested 
observer, nor are my views objective. It will be helpful here to share 
my background, and a mea culpa for some of my own compromises and 
ethical lapses, before I discuss how to address this mess. I'm a former 
Beijing-based journalist, who covered Chinese politics and culture for 
Newsweek. I visited all of China's twenty-two provinces, its four 
municipalities, its five (inaccurately named) autonomous regions, the 
``special'' administrative regions of Hong Kong and Macau, and the 
country of Taiwan, which Beijing has long disingenuously claimed.
    In 2022 I published a book, ``America Second'' (Knopf), which arose 
out of my frustration with how Americans, and American corporations, 
discussed China. Not in the wonderful, awful, plain, or madcap ways of 
Chinese people, but in the ways of the Party. They'd repeat Party 
phrases like ``China has lifted hundreds of millions of people out of 
poverty,'' or ``China has 5,000 years of history.'' The problem is not 
the veracity of the phrases--the problem is repeating phrases which, 
like the two quoted here, are Party propaganda. Context and history 
matter. One can be, for example, an American socialist, and think that 
the country should nationally be socialist--but no one with any sense 
of history should ever call themselves a National Socialist.
    The book also arose out of a desire to apologize for committing 
similar ethical lapses, from my two decades researching, living in, 
travelling through, working on, and countering China. I'd self-censor, 
tempering my criticisms to avoid offending the Party. I've taken money 
from organizations linked to the Party: still, today, I consult for 
corporations that strive to maintain access to China. Sometimes, I 
self-censor in the opposite direction, being more critical than I 
actually feel on China in settings with other China hawks. The data and 
consulting company I run, Strategy Risks, benefits from an increasingly 
risky world. Indeed, I started the company several years ago with these 
trends in mind. Let me never pretend to be a disinterested observer.
    These are complicated issues, and expressing oneself accurately is 
challenging. Still, I'd like to do better.
    The solutions to corporate complicity and kowtowing to Beijing 
aren't to be found in mandating any sort of objectivity around China; 
rather, they lie in promoting transparency and healthy debate. Require 
corporations to disclose their exposure to China. Public companies, in 
their filings to the SEC, often don't even break out their China 
revenue, hiding behind broader categories like `Asia.' The more 
information investors, regulators, and citizens have about how American 
companies are exposed to China, the better.
    Strong libel laws that protect U.S. activists, journalists, and 
thinkers benefit America's battle against the pernicious aspects of 
Beijing. I'm delighted that, on July 4th, I can write the words ``Henry 
Kissinger is an agent of Chinese influence''--a conclusion I drew from 
dozens of hours of research into Kissinger's business dealings, back 
when I was a journalist--and know that our wonderful First Amendment 
protects me.
    And the solution to corporate complicity requires a healthy debate 
about war with China. Should the United States go to war with China to 
defend Taiwan? Does that mean World War III? If there is a war, how are 
we defending ourselves from the possibility of a Chinese attack? If 
there is a war, how do we ensure that we protect Chinese Americans, and 
people in China? I worry that we're suppressing this conversation, even 
though war may be near.
    Play the grim parlor game: if one of those Chinese spy balloons had 
exploded over America, how many Americans would have to die for us to 
go to war with China? The possibility of war is very real, and very 
worrying.
    I worry, too, about our awful history of Japanese internment during 
World War II, and the ethical sacrifices U.S. bureaucracies will make 
and have made in times of crisis. I worry about the millions of Chinese 
who have worked for, or closely with, American companies and whom 
Beijing may soon see as enemy combatants. I worry about American 
companies supporting the Chinese war effort, or hampering the American 
war effort. And I worry that--like after 9/11--fear and xenophobia, and 
not caution and strategy, will drive our actions.
    We must prepare. Prepare by ensuring that we adhere to our values 
of diversity, integration, and protecting our own. Prepare by working 
with Boeing, Raytheon, and other pillars of our military production to 
reduce--immediately--their exposure to China. Prepare by encouraging 
American companies to have contingency plans to protect their Chinese 
staff, and their staff in China. Prepare by admitting to ourselves that 
if Beijing attacks Japan, or Taiwan, or kills a number of Americans--
public pressure may demand a response, even if that rashly leads to the 
next world war.
    Prepare for the looming specter of World War III, not because you 
strive for war, but because you strive for openness, transparency, and 
civic debate. Be prepared, because the alternative is far worse. Talk 
about it.

                   Prepared Statement of Aynne Kokas

    Chairman Smith, Cochairman Merkley, and distinguished members of 
the Congressional-Executive Commission on China, it is an honor to 
present my testimony.
    As the United States grapples with how to approach China's 
expanding digital influence, it is imperative to explore the role of 
U.S. corporations operating in the country as well as firms that serve 
as U.S.-based data brokers. My testimony explores the ways that 
fragmented U.S. data oversight laws interact with Chinese government 
data oversight to pressure corporations to prioritize compliance with 
Chinese laws and policies. Additionally, I delve into similar dynamics 
that have fueled misinformation and censorship in the media sector. 
Drawing from my recent books, Trafficking Data: How China Is Winning 
the Battle for Digital Sovereignty (2022) and Hollywood Made in China 
(2017), I make recommendations to reduce U.S. corporate digital rights 
violations by Chinese firms, as well as firms operating as data brokers 
in the U.S. I argue for the importance of focusing attention on how to 
bring overarching U.S. digital oversight in line with our allies and 
partners to better serve as a countervailing force against pressure 
companies face from Chinese government regulations. I look forward to 
the discussion and would be happy to expand on any of these points 
during questioning.

    My testimony focuses on four key findings:

    1.  U.S. data oversight laws follow a risk-based model, which 
assumes corporations have the capacity to mitigate harm.

    2.  Many Chinese corporate data oversight laws have expansive 
extraterritorial scope and lack transparency. The opacity of these laws 
makes it difficult to determine the extent to which firms are 
exploiting data in the normal course of their operations.

    3.  Without comprehensive data protections in the U.S. and the 
potential for financial, civil, and criminal penalties in China, 
companies must navigate a complex legal landscape.

    4.  The intersection of pressure for Chinese market access with 
weak U.S. laws has further created an environment ripe for censorship 
and disinformation.

U.S. technology oversight assumes the capacity to mitigate harm. 
However, there are currently no comprehensive data security laws in 
place either domestically or extraterritorially.

    Fragmented sector-based and state-based oversight fails to keep 
pace with evolving technologies, leaving U.S. citizens vulnerable to 
data breaches and exploitation.
    Sector-based oversight, such as the Health Insurance Portability 
and Accountability Act (HIPAA), neglects key areas of the health 
technology sector, from commercial DNA testing to medical devices to 
smart watches. The Children's Online Privacy Protection Act (COPPA) 
requires parental consent for self-disclosure of information by 
children under 13,\1\ but has serious limitations--it protects children 
under 13 only when information is shared by them, rather than by an 
adult.\2\ Once a parent consents to the child's self-disclosure, sites 
can freely collect any shared information.\3\ Moreover, the law does 
not appear to cover household-level (rather than individual-level) data 
that might include that of children under 13, such as that collected by 
Google Home and Amazon Alexa devices.\4\
    By failing to update existing sector-based laws to reflect the 
breadth of opportunities for data-gathering by firms, it becomes 
impossible to move forward with even the most basic standards of user 
data protection.
    State-based oversight further fragments the U.S. corporate data 
security landscape, with state legislatures facing pressure to oversee 
complex laws that often exceed their technical capacity, budgetary 
constraints, and scope of oversight. States with more technical 
resources already offer digital rights enforcement to their citizens 
(e.g., enhanced protection of biometric data for Illinois residents, 
financial data for New Yorkers, and user data for those living in 
California, Utah, and Virginia), thereby creating a patchwork of data 
protection regulations across the country. For example, there are 
multiple competing standards for how people in different states can use 
popular apps like TikTok and WeChat. This makes it difficult for U.S. 
businesses and citizens to navigate the complex and often conflicting 
regulatory environment.
    Adding to this complexity are third-party data brokers, who acquire 
and sell corporate data. In bankruptcy proceedings, banks can require 
firms to liquidate their data as an asset, increasing the vulnerability 
of user data.\5\ Data broker activity in bankruptcy proceedings and 
elsewhere further fragments U.S. data oversight and highlights the need 
for comprehensive national data protection regulations.
    Corporate and user data form the foundation of a wide range of 
emerging information and communication technologies. It is important to 
prevent data trafficking, the uncontrolled movement of commercial data 
across borders through government pressure, not just for immediate 
security purposes, but also to protect long-term competitiveness in 
communications, artificial intelligence, healthcare, payments, and 
other critical sectors.

Chinese laws, by contrast, are wide-reaching with strong data 
localization requirements, unclear enforcement or statutes of 
limitations, and an extraterritorial scope.

    The Cybersecurity Law of the People's Republic of China \6\ \7\ 
requires critical information infrastructure data to be stored in 
China. China's Personal Information Protection Law (PIPL) offers 
enhanced data localization requirements beyond the critical information 
infrastructure data localization which makes transfer of data overseas 
subject to a security assessment by the Cyberspace Administration of 
China.\8\ Article 3 of PIPL includes broad corporations that process 
personal information within China's borders, emphasizing the 
extraterritorial nature of the law's scope.
    PIPL is one of many Chinese laws that implicate worldwide corporate 
operations. The ``Provisions on the Governance of the Online 
Information Content Ecosystem'' asserts potential criminal or civil 
liability for consuming, producing, or sharing ``negative'' 
information. The Law of the People's Republic of China on Safeguarding 
National Security in the Hong Kong Special Administrative Region, 
colloquially known as the Hong Kong National Security Law, permits the 
Chinese government to hold people and platforms liable for crimes 
committed extraterritorially, which puts particular pressure on firms 
with large Chinese operations.\9\
    Further, most Chinese digital oversight laws lack clear enforcement 
parameters, encouraging corporations to comply with the most 
conservative interpretations of the law. The Provisions in Online 
Governance, Cybersecurity Law, Personal Information Protection Law, and 
Hong Kong National Security Law all lack clear enforcement provisions, 
but one of the more interesting opportunities for government access to 
corporate data is China's national security audit system, established 
by the 2021 Data Security Law,\10\ that can review any activities that 
influence or might influence national security data. All companies 
operating in China are subject to the regulations, and the scope of 
what constitutes national security data is neither fixed nor 
transparent. Through the data audit process, regulators can pressure 
firms to share data with the Chinese government as a condition of their 
continued operation.

Corporations gathering user data in the United States that are subject 
to Chinese laws face significant pressure to comply with Chinese laws 
in the absence of comprehensive U.S. data protections.

    This dynamic is apparent in the Internet of Things (IoT). Haier, a 
Chinese company, purchased GE Appliances in 2016 for $5.4 billion,\11\ 
the world's largest consumer appliance company.\12\ Since then, Haier 
has launched an entire line of connected consumer electronics called GE 
Smart Appliances \13\ that gather data and store it on apps developed 
by Haier U.S. Appliance Solutions, Inc. Haier has also developed the U+ 
Connect platform, which collects data through all connected GE 
Appliances and Haier-connected products.\14\ Haier uses Baidu's 
TianGong smart IoT platform to connect equipment, manage devices, and 
store data for the U+ Connect platform that GE Appliances use,\15\ 
thereby integrating GE Appliances into China's data storage system.
    Precision agriculture is another prominent area where this dynamic 
plays out. Syngenta, a firm that gathers and integrates data about 
agricultural yields,\16\ is one of precision agriculture's major 
players. ChemChina, the state-owned China National Chemical 
Corporation, became the world's largest supplier of pesticides and 
agrochemicals with its $43 billion acquisition of Syngenta in 2017 and 
it is also the top pesticide seller in North America. \17\
    Syngenta collects data via drones and satellites to help farmers 
manage crop yields \18\ and sells seeds, fertilizers, and pest 
management to AgriEdge users at a discount. AgriEdge has become 
integrated into the U.S. agricultural landscape, covering 10.5 million 
acres of arable U.S. land in 2021, with more than 95% of growers using 
whole farm management systems from Syngenta.\19\ Even the Ram, a 
popular farm vehicle which holds a greater than 25% stake in the U.S. 
truck market, now offers packages that include AgriEdge.
    By integrating the U.S. agricultural and IoT ecosystems with a firm 
owned by a Chinese state-owned enterprise, the U.S. is taking a risk 
that the extraterritorial nature of Chinese laws will force firms to 
share key data about how U.S. homes and agricultural ecosystems 
function. I discuss other examples in the gaming, social media, 
satellite, smart city, and payment sectors in my book, Trafficking 
Data. However, regardless of the sector, the Chinese firms face no 
legal data storage requirements in the United States.
    Beyond industry-specific exposure, COVID-19 protocols in China 
control the behavior of people working at corporations in China. Access 
to essential payment, mobility, and communication apps in China now 
require sharing, at a minimum, one's passport number or residence card 
number, but more commonly, a Chinese bank account, enabling both 
monitoring and punitive action. Such technical systems require 
individuals doing anything in China, whether visiting family, working, 
or doing research, to either depend on a Chinese colleague or friend, 
allow tracking, or submit oneself to the scrutiny of a residence 
permit, to engage in the most basic activities of living. When using a 
term like corporate complicity, it is important to recognize that many 
of the workers or corporations in question must balance their ability 
to continue to function.

Pressure for Chinese market access interacts with weak U.S. laws to 
contribute to censorship and disinformation.

    These shifts in market power are changing our digital landscape in 
two key ways.
    First, firms are changing the content they produce. To gain access 
to China's profitable but tightly regulated media market, Hollywood 
studios must comply with Chinese censorship rules, which can impact the 
content of films. For example, in Doctor Strange, the character of The 
Ancient One was portrayed as a Tibetan monk in the original version of 
the movie, but in the Chinese version, this character was changed to be 
a Celtic woman to avoid offending the Chinese government, which does 
not recognize Tibet as an independent country.\20\ Similarly, the 
character of The Mandarin, who is portrayed as a villain in the 
original version of the movie, was changed to be non-Chinese in the 
Chinese version.\21\ While it is clear that ``yellow peril'' 
stereotypes like those visible in characters like The Ancient One and 
The Mandarin present problematic representations of race, it is the 
market under which studios changed those characters that is most 
significant. In Mulan (2020), the film's global release evoked Chinese 
central government narratives urging the prioritization of the central 
government at the expense of dangerous borderlands.\22\

    Figure 1: Nine-dash line maritime claim in Abominable (2019)

    [GRAPHIC] [TIFF OMITTED] T3486.035
    

    Source: South China Morning Post

    Second, firms are extending Chinese market policies globally in the 
absence of laws. The University of Toronto's Citizen Lab reported that 
accounts that fall under WeChat's Chinese terms of service, accounts 
first registered in China (or ``China-registered-accounts),'' are 
subject to ``pervasive political censorship'' even outside of China, 
even when those accounts move to international numbers.\23\ This 
includes foreign students, immigrants, and businesspeople who first 
download WeChat in China but switch phone numbers when they move 
outside of China.

Recommendations

    The following recommendations are based on my award-winning books 
Trafficking Data: How China Is Winning the Battle for Digital 
Sovereignty (Oxford University Press, 2023) and Hollywood Made in China 
(University of California Press, 2017). These strategies are critical 
for reducing U.S. corporate violations of digital rights violations in 
relation to Chinese firms and all firms that serve as data brokers in 
the United States.

      Work with Allies and Partners to Establish Standards for 
Data Transfer

            Review and align the U.S. with adequacy standards 
for cross-border data transfer established by the European Union and 
Japan.
            Join key trade agreements like the Comprehensive 
and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) and 
other trade agreements that enhance transparency in cross-border data 
transfers while also requiring the protection of personal information 
for users.

      Enhance U.S. Oversight to Prevent International Data 
Trafficking

            Work with states to harmonize state-level data 
security oversight through federal legislation. This could include 
practices such as issuing best practices for state data-security 
oversight. Grants for specific state-level data security projects would 
help to enhance state-level technical oversight capacity.
            Build out a national data privacy framework to 
prevent consumer data exfiltration to non-allied countries. Such a move 
is important not just to protect user data, but it is also essential to 
help build consensus among democratic allies, many of whom have 
different approaches to data oversight than the United States.
            Enhance technology sector collaboration across 
developed democracies as outlined in S. 604, the Democracy Technology 
Partnership Act.
            Develop more precautionary approaches to the use 
and introduction of ICT products and services. Approaches like S. 686, 
the bipartisan 
RESTRICT Act, represent an important first step.
            Regulate the data broker industry in the United 
States. S. 631, the
UPHOLD Privacy Act of 2023, S. 1029, the Protecting Military 
Servicemembers' Data Act of 2023, and H.R. 3045, You Own the Data Act 
and others, offer first steps in this direction.
            Enhanced SEC reporting of data storage practices by 
publicly traded firms would use existing reporting mechanisms to 
enhance corporate accountability for how, when, and where firms share 
their data. Explore ways to require data storage and security reporting 
by privately held U.S. firms. Improved transparency in data storage and 
security practices is valuable not just due to the ability to track 
data trafficking, but also in the provision of helpful metrics to 
include data storage and security in environmental, social, and 
corporate governance investment indices.

    Fund Chinese area studies so that workers can better understand the 
implications of their business decisions related to China. The lack of 
secondary and tertiary education opportunities to learn about China 
means that most people entering the U.S. workforce do not have a 
working understanding of China's political system, which can lead to 
uninformed decision-making both in terms of the under- and over-
estimation of risk. Funding from Title VI, the Fulbright U.S. student 
China program, the East-West Center, the Woodrow Wilson Center, the 
National Endowment for the Humanities, and the Kluge Center at the 
Library of Congress, has been central to my ability to research and 
teach about China at the University of Virginia and as a student in 
public universities in California and Michigan. To prevent corporations 
from enabling human rights violations, there is a crucial national 
security need to fully fund the study of China and Chinese by American 
students and scholars.

Dr. Aynne Kokas is C.K. Yen Chair, Miller Center for Public Affairs; 
Director, University of Virginia East Asia Center; Non-Resident China 
Studies Fellow, Baker Institute for Public Policy, Rice University; and 
Associate Professor of Media Studies, University of Virginia.
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                                 ______
                                 

                 Prepared Statement of Hon. Chris Smith

    Today's hearing, ``Corporate Complicity: Subsidizing the PRC's 
Human Rights Violations,'' will come to order.
    Since the Tiananmen Massacre in 1989--and for some, even before--
far too many elite leaders of America's most profitable corporations 
and like-minded government enablers here and around the world have 
embraced and welcomed the Chinese Communist Party with open arms.
    The predictably false hope that robust trade would somehow help 
China matriculate from a dictatorship to a functioning democracy had no 
compelling precedent in history--especially a country that is owned--
lock, stock, and barrel--by a brutal Communist party.
    That false hope has been further exposed every single year since 
the early 1990s by China's ever-worsening abuse and violence against 
its own citizens.
    The pervasive use of government-sanctioned genocide, torture, rape, 
forced abortion, involuntary sterilization, forced organ harvesting, 
sex and labor trafficking, religious persecution, kangaroo courts 
(particularly for political and religious prisoners), free speech and 
assembly violations, the atrocities they have committed in Hong Kong 
after making solemn promises to protect basic rights as well as the 
Sino-UK Agreement--and of course there are so many other crimes against 
humanity--an absolutely shameful record of wanton cruelty.
    Tragically, the abuse and violence has only gotten worse under Xi 
Jinping. With his infamous executive order of May 26, 1994, President 
Clinton abolished the requirement that the Chinese Communist Party 
achieve ``significant progress'' in protecting human rights as a 
condition for extending Most Favored Nation status (MFN)--the 
elimination of import tariffs by the U.S.
    A few months earlier in 1994, before President Clinton's 
capitulation, I travelled to Beijing and met with foreign ministry 
officials and argued that President Clinton wasn't going to back down 
or back off his promise to end MFN unless China reformed its barbaric 
practices. I even conveyed to CCP officials a bipartisan letter signed 
by 100 Members of Congress--left and right, Nancy Pelosi was on that, 
Frank Wolf was a co-signer, and many others--and we said we stand with 
President Clinton, and we stand with human rights.
    While there, I also met with the U.S. Chamber of Commerce in 
Beijing who thought we were wrong to link MFN with human rights. After 
a spirited exchange over breakfast, I came away with the inescapable 
conclusion that no human rights violation by the CCP would disrupt 
lucrative business deals.
    A few months later--to my shock and dismay--President Clinton 
delinked human rights from trade. He did it on a Friday afternoon, 
after almost everybody in this building had left to go back to their 
districts. I was lingering, doing some work in the office. I ran over 
to the press gallery and did a press conference, impromptu. If you go 
to C-Span, you can see it. I wasn't the only one: Nancy Pelosi ended up 
doing her own press conference. We were shocked that he delinked. He 
had accused--and rightfully--George Herbert Walker Bush of coddling 
dictatorship and I agreed with that after Tiananmen Square.
    The symbiotic U.S.-China trading relationship--that emerged in the 
1990s and continues to this day--allowed many to become incredibly rich 
and powerful while conveying to the CCP extraordinary industrial 
capacity and know-how for both consumer goods, and ominously, military 
products and capability.
    That CCP military capability today, however, poses an existential 
threat to Taiwan, numerous nations in the region--and to the United 
States of America.
    Today, it is deeply discouraging to see the ongoing complicity of 
American companies in aiding and abetting the Chinese Communist Party's 
heinous crimes against humanity and genocide.
    Many are complicit in concealing the PRC's abuses. Many are 
complicit in the PRC's restrictions on freedom. Many are even complicit 
in amplifying the Chinese Communist Party's propaganda across our 
country--spreading political and ideological stances that are 
completely contrary and antithetical to what the United States stands 
for.
    American companies and consumers should not be subsidizing tyranny.
    In January, I introduced--I should say re-introduced--the China 
Trade Relations Act of 2023 to end MFN, now called normal trade 
relations, with China.
    Actually, it's almost a carbon copy of what we were talking about 
in 1993, with President Clinton. I did press conference after press 
conference, thanking him for linking human rights with trade--only to 
see one year later that he delinked it.
    Every single person testifying here has done an enormous amount of 
work and provided leadership. We're so grateful that you're here. One 
of our distinguished witnesses today has paid an enormous price: the 
loss of his amazing 11-year basketball career in the NBA--for his 
courageous stand for human rights, especially for the Uyghurs, the 
victims of Xi Jinping's ongoing genocide.
    He will testify today that after he was released, about 3 weeks 
later--released means fired, of course--China put the games (that had 
been barred from Chinese TV because he wore basketball shoes that said 
``free the Uyghurs'') back on television. ESPN did an investigation and 
found out that 49 NBA owners have $10 billion tied up in China.
    Money talks and human rights go right out the window.
    The Chinese Communist Party ordered the NBA to sanction--to fire--
Enes Kanter Freedom and like cowards, they obeyed.
    I'd like to yield to my good friend and colleague, Co-chair of our 
Commission, Senator Merkley.
                                 ______
                                 

                Prepared Statement of Hon. Jeff Merkley

    Thank you very much, Mr. Chairman. And welcome, it's good to have 
you with us. I'm glad we're continuing to dig into the issue of 
corporations' connection to the Chinese Communist Party's human rights 
abuses in China and elsewhere. This has been an intense interest, a 
bipartisan and bicameral interest of our Commission. With so many of 
the issues we monitor, the CCP's abuses are sometimes amplified or even 
abetted by the actions of actors closer to home. When products from 
cotton to car parts are made on the backs of Uyghur slave labor, 
companies seeking to get those products into the U.S. market subsidize 
the economic machinery of genocide. When authorities crush Hong Kong's 
cherished freedoms, they count on multinational corporations to 
continue business as usual. When mass surveillance and biometric data 
collection target repressed populations, some American companies 
provide the technology, the services, or the data that bolster the 
surveillance state.
    Our commissioners have taken such an interest in these issues 
because it's unacceptable to us if any American business props up 
genocide, enables censorship, or legitimizes actions that trample on 
basic universal freedoms. That's why last Congress I chaired hearings 
focused on: the message that leading American companies were sending by 
lending their prestige to the 2022 Beijing Olympics, and we focused on 
the way the PRC leverages technology for deeply repressive purposes and 
on the coercive economic dynamics that all too often lead companies to 
self-censor or even parrot propaganda. We sent letters to some of the 
most respected brands in America when their actions put them at risk of 
complicity in human rights abuses, companies like Apple, Hilton, 
Amazon, Airbnb, NBC, the National Basketball Association, and more.
    This Commission's signature initiative to guard against corporate 
complicity has been the Uyghur Forced Labor Prevention Act. 
Representative McGovern, Senator Rubio, Representative Smith, and I 
spearheaded that legislation to protect American consumers and to hold 
corporations trading in the products of forced labor accountable. At 
our April hearing, we heard from experts about the initial 
implementation of this law and the difficult road ahead to make sure we 
enforce it effectively. I'm grateful that Under Secretary Silvers, the 
Chair of the Forced Labor Enforcement Task Force, is with us today to 
help us grapple with those challenges.
    As we heard at that April hearing, businesses should now consider 
themselves on notice that protecting their supply chains from being 
tainted by forced labor must be a top tier issue of corporate 
compliance--because it is for the U.S. Government. But that's only the 
start of the paradigm shift that we need. We need businesses across the 
economy to diversify their supply chains to be less susceptible to 
Chinese coercion and to avoid complicity in human rights abuse. We need 
greater transparency about businesses' data practices, exposure to the 
pressure coming from China, and more. And defenders of freedom need to 
speak out so businesses know there will be reputational costs for 
abetting human rights abuse.
    Thank you to all of our witnesses for your role in speaking out. I 
appreciate you sharing your expertise and personal stories with us and 
I look forward to your testimony.

              Prepared Statement of Hon. James P. McGovern

    Good morning. I join my colleagues in welcoming those present at 
today's hearing on business and human rights in China. I regret that I 
am not able to join you in person.
    Today's hearing is not the first time the Congressional-Executive 
Commission on China has taken up the role of businesses and their 
potential--even actual--complicity in the commission of grave human 
rights violations in the People's Republic of China.
    We did our best to engage the corporate sponsors of the 2022 Winter 
Olympics, held in China in February 2022, to use their leverage in 
support of human rights. But our efforts and those of many other human 
rights advocates fell short--the Games were not postponed and they were 
not moved. It turns out that the profit motive that fuels the engine of 
capitalism is far more powerful than the principle of human dignity 
that lies at the heart of America's Bill of Rights and is the core of 
international human rights laws and norms. ``Reputational risk'' cannot 
compete.
    This reality informed the bipartisan Uyghur Forced Labor Prevention 
Act that I was privileged to lead and which became law in December 
2021. Rather than rely on moral suasion, the law creates a rebuttable 
presumption that all goods produced in the Xinjiang region of China are 
made with forced labor. Importing goods made with forced labor is 
illegal in the United States--has been since 1930. Now the burden of 
proof lies with those who want to import goods to show that their 
supply chains are free of forced labor. We will hear today from DHS 
Under Secretary Silvers that the law has brought a sea change to the 
way the Government approaches forced labor issues. That is a very good 
thing.
    But I cannot help but express my frustration that it seems to be so 
hard to get the private sector to pay attention to grave human 
violations that occur in the places they do business, in concrete ways 
that actually matter.
    We will hear today about several ways that the PRC government 
pressures businesses to comply with its ideological and ``security'' 
interests. That is information that has been shared with us 
consistently in the past and it is important to continue to document 
and draw attention to the ways these pressure campaigns work.
    But I hope the witnesses will also talk about how we can do a 
better job of getting businesses to comply with the spirit of human 
rights laws. For all the kudos we have received for passage of the 
UFLPA, there have also been plenty of complaints about the ``burden'' 
it creates for the private sector.
    The reality is that Congress ends up having to write human rights 
laws as tightly as possible, because experience suggests that they will 
not be honored otherwise.
    My question for the witnesses today is, Why is it so difficult to 
get businesses to comply, and what can we do about that? Is the best 
option--perhaps the only option--to make sure that compliance is in the 
financial and market interest of businesses?
    If that's the case, maybe my colleagues across the aisle should 
rethink their opposition to economic, social, and governance guidelines 
for investment--since ESG rules are the very thing that Uyghur 
advocates have been asking us to use to end Uyghur slave labor.
    One further point: I understand that implementing a law like the 
UFLPA requires resources. This Commission must be clear that talk about 
human rights in China--or anywhere else, for that matter--has to be 
backed up with funding. Cuts to the budgets of agencies that implement 
human rights policy will gut that policy. It is important to keep this 
in mind during appropriations season.
    Thank you.
                       Submissions for the Record

                              ----------                              

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                     Submission of Maya Mitalipova

       Forced Organ Harvesting and Corporate Complicity in China

    The Chinese government is building the world's largest DNA database 
by acquiring DNA sequencing data from companies within China and across 
the globe, including the USA.
    Numerous biotechnology companies are assisting the Chinese police 
in building this database and may find themselves complicit in these 
violations. They include multinational companies such as U.S.-based 
Thermo Fisher Scientific and major Chinese companies like BGI (Beijing 
Genome Institute), AGCU Scientific, and Microread Genetics.
    Chinese authorities are enrolling in genome surveillance tens of 
millions of people in Tibet and Xinjiang (aka East Turkistan), who have 
no history of serious criminal activity. Those individuals have no 
control over how their samples were collected, stored, and used. 
Neither do they know of the potential implications of DNA collection 
for them and for their extended families.
    The indiscriminate collection of biometric data in China was first 
reported by Human Rights Watch. Beginning in 2013, state authorities 
obtained biometric samples from nearly the entire population of Tibet 
(3 million residents) and in 2016, a similar program was launched in 
Xinjiang, where data from the region's estimated 15 million Uyghurs and 
other Turkic people was collected under the guise of free annual 
physical exams. Note, the Han Chinese population of the region was 
exempt from this program. Despite it being ``free exams,'' no results 
were returned to these residents.
    Mass DNA sequencing is a costly project. The least expensive 
sequencing of a small portion of DNA today costs $100 per sample. To 
sequence 15 million samples in Xinjiang can cost at least $1 billion to 
$2 billion. To maintain these databases for tens of millions of 
samples, you need a substantial number of professional bioinformatic 
specialists, specialized computers and software, and expensive 
sequencing machines.
    Why is the Chinese government investing billions of dollars to 
sequence the DNA of the entire population of Xinjiang and Tibet?
    What can DNA sequenced data be used for? DNA sequencing can be used 
in basic biological research, disease discovery, finding of novel 
treatments, forensics, ancestry research, and in organ transplantation.
    Now let's see which of these uses can be applied to Uyghur people 
in Xinjiang:

      Finding disease mutations and ancestry research? In the 
region, where the Chinese government is conducting genocide against 
Uyghur people by detaining up to 3 million (according to the State 
Department) of them in prisons and camps? The answer is ``NO.''

      For forensic investigation? On the rest of the population 
of Uyghurs who are not yet detained? On people who are tightly 
monitored by extensive surveillance cameras? On people whose passports 
have been confiscated by authorities since 2016? On people whose 
kitchen knives are chained in their homes? They live in open air 
prisons.

    They have no way to commit a criminal act even if they want to. On 
the margin it can add to the cost of DNA sequencing by tightening 
surveillance capacity. But the answer is ``NO.''
    Then the only other reason for DNA use left is for organ 
transplantation.
    And ``YES,'' its use for forced organ harvesting and 
transplantation can absolutely justify the enormous cost of mass DNA 
sequencing.
    According to witnesses, authorities in Xinjiang, on a mandatory 
basis, withdraw not only blood for DNA, but also perform an ultrasound 
check of all internal organs including an iris scan. Again, patients 
never receive the results of these health checks.
    China's organ transplantation industry amounts to, at a minimum, 
60,000 organ transplants per year. The least expensive kidney 
transplant costs around $70,000 and other organs can cost up to half a 
million dollars.
    In free countries like the USA and Europe, organ donor recipients 
are on a waitlist for years for matching donor organs, while in China 
the matching donors can be found in a few weeks. The Chinese government 
favors forced organ harvesting from prisoners of conscience and this 
has been practiced for decades, involving a very large number of Falun 
Gong practitioners and now Uyghurs. According to research conducted by 
Ethan Gutmann, an estimated minimum of 25,000 Uyghurs are subject to 
forced organ harvesting per year.
    For successful organ transplantation, doctors rely on several 
important criteria including three main blood tests, cell surface tests 
and limited DNA tests to determine if a patient and a potential donor 
are a match. Current genetic tests detect differences in DNA sequences 
at just a few specific locations in the genomes of transplant 
recipients and their organ donor. The fewer the differences, the better 
the chances of long-term acceptance of the new organ. Whole genome 
sequencing data for a large number of genes would give a better match 
of donor and recipient organs, which in turn will result in no 
rejection and long-term survival of transplanted organs.
    When a patient requests an organ in China, his/her DNA-sequenced 
data will be blasted against millions in the DNA database stored in 
computers. Within a few minutes, a perfect match will be found. If a 
potential donor of the organs is not in prison or a camp, then Chinese 
authorities can easily find a reason to detain a match to be killed for 
their organs on demand.
    This is the main reason why the Chinese government invested 
billions of dollars in DNA sequencing of the entire population of 
Xinjiang and Tibet. Because it will make exponentially many more 
billions of dollars per year in return.
    Thermo Fisher's involvement in forced organ harvesting in Xinjiang 
is undeniable. But, while it has vowed to stop selling sequencing 
machines to the region and to stop providing technical support to 
maintain them, the company is very successfully selling HLA kits and 
other custom-made DNA profiling products for organ transplantation, as 
high as in the ten million range. Thermo Fisher's Huaxia PCR 
amplification kit was developed specifically to identify the genotypes 
of Uyghur, Tibetan, and Hui ethnic minorities.
    The continued sale of DNA profiling products and technologies by 
Thermo Fisher to China has to be stopped by Congress!
    I urge Congress to question, and if necessary to sanction, Thermo 
Fisher for aiding China in the genocide of the innocent Uyghur people 
and prisoners of conscience throughout mainland China!
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        Statement of Roger W. Robinson, Jr., in Partnership with
                 the Coalition for a Prosperous America

    Mr. Chairman, I am grateful for this opportunity to submit the 
statement before you today as the former Chairman of the U.S.-China 
Economic and Security Review Commission, Chairman and Co-founder of the 
Prague Security Studies Institute, and an advisor to the Coalition for 
a Prosperous America. As a former international banker, a senior White 
House official and founder of a successful business and think tank, it 
is a privilege to bring my over forty-five years of experience in 
national security and global finance to the table in seeking to enrich 
these important proceedings.
    The topic of this hearing is very timely, as the CCP's economic 
aggression towards our nation has been a driving force--and funding 
engine--for most other forms of its malign behavior and hostile 
actions. Without sufficient economic and financial resources and 
influence from Western businesses, the CCP would be unable to 
accomplish their overarching strategic goals and inflict more immediate 
harm to the human rights and well-being of all people groups, but 
notably those living under the oppressive regime of the CCP.
    We are talking about multi-faceted economic aggression here, going 
well beyond traditional trade and commercial topics. For the most part, 
the Commission is well aware of the various iterations of China's 
economic aggression, and they need not be repeated here. That said, the 
CCP's economic and financial warfighting is, in no small part, 
dedicated to ensuring that it continues to attract massive annual 
dollar and other financial flows from the U.S. and allied capital 
markets.
    My testimony will focus on this last point, as absent China's 
continued, and largely unfettered, access to the U.S. debt and equity 
markets alone, most, if not all, of their economic predations globally 
would be severely hobbled, if not made impossible. The Commission would 
likely benefit from an improved understanding of the inordinate 
financial risks facing American investors associated with holding 
Chinese corporate securities and sovereign bonds, the monumental 
national security and human rights concerns being funded and/or 
facilitated by these CCP corporate proxies and potential policy 
solutions that, in my view, should be enacted forthwith.

Potential Policy Solutions

    Rather than postponing a discussion of such potential policy 
solutions to later in this testimony, I believe there is merit to 
outlining them at the outset.
    Chinese CCP-controlled companies should be delisted and de-
registered from U.S. exchanges (including the Over-the-Counter 
market)--and excised from U.S. indices, and the investment products 
benchmarked against these indices--as soon as practical (i.e., in no 
more than 180 days) and American persons worldwide should be prohibited 
by law from holding these Chinese corporate securities, if these 
companies are found to be:

     1.  Non-compliant with any U.S. federal securities laws and 
regulations;

     2.  Sanctioned or blacklisted by any agency of the U.S. government 
for actions counter to U.S security or foreign policy interests and/or 
human rights violations or abuses;

     3.  Refusing to permit American shareholders from holding the 
actual shares of Chinese publicly traded companies via scandalous, 
``shell company'' substitutes like Variable Interest Entities (VIEs)--
domiciled in the Cayman Islands or other off-shore locations--rendering 
American investors without adequate legal protections, minority 
shareholder rights or actual Chinese shareholdings;

     4.  Moving the shares of non-U.S. regulated, non-transparent 
Chinese companies from domestic Chinese exchanges directly into U.S. 
indices and investment products benchmarked against them, notably 
thousands of so-called ``A- share'' companies;

     5.  Associated in any way with the PLA or PLAN, and/or CCP 
security or intelligence services;

     6.  Reliably reported to be engaged in human rights violations, 
such as aiding and abetting genocide, trafficking in forced labor, 
equipping concentration camps and helping build Beijing's surveillance 
state;

     7.  Helping arm, equip, or otherwise provide economic support for, 
the malevolent activities of adversaries of the U.S., such as Russia, 
Iran, and North Korea;

     8.  Participating in activities that disrupt the established, 
rules-based international order, such as building and militarizing 
illegal islands in the South China Sea; impeding freedom of navigation 
in international waters and violating international environmental 
standards;

     9.  Utilizing illegal means to manipulate international 
organizations, data, and groups to advance the CCP's global agenda;

    10.  Not subject to the rule of law;

    11.  Failing to safeguard minority shareholder rights;

    12.  Not engaged in adequate material risk disclosure and standard 
corporate governance practices;

    13.  Subject to Article 7 of China's National Intelligence Law 
which requires, on demand of the CCP, the weaponization of Chinese 
companies for espionage, military activities, and other strategic 
purposes; and

    14.  Permitting the establishment of Chinese Communist Party cells 
in their senior management structures.

    Moreover, the issuance of dollar-denominated Chinese sovereign 
bonds (which I term ``Anti-Liberty CCP Bonds''), which provides 
billions of dollars annually in discretionary cash directly to the 
Communist Party, should be prohibited by law.

How Does China View the Capital Markets Landscape and Define Success?

      China experiences success when greatly expanding its 
access to hard currency financing and income, particularly via the sale 
of securities of CCP-controlled enterprises in Western capital markets 
and as a sovereign borrower.

      The CCP likely has no better American friend than Wall 
Street firms in protecting it from being meaningfully penalized by the 
U.S. government for its malevolent behavior in the form of capital 
markets sanctions and restrictions--arguably Beijing's worst fear. 
Maintaining this formidable, ``elite capture'' shield against financial 
decoupling by the U.S. is essential and constitutes a major victory to 
date for the CCP.

      Having some 5,000 Chinese companies traded on U.S. 
exchanges (including as many as 4,000 ``A-share'' companies listed only 
on domestic Chinese exchanges) represents a highly successful ``force 
multiplier'' in the funding of the CCP to the tune of trillions of 
dollars over the past decade or two.

      Listing--or even just trading--on U.S. exchanges imbues 
thousands of Chinese CCP-controlled enterprises with the equivalent of 
an American ``Good Housekeeping Seal of Approval'', stimulating other 
global exchanges to grant such market entry. Moreover, it sends a U.S. 
signal that could well end up relaxing strict regulatory compliance in 
allied capital markets and probably giving their regulators and asset 
managers a ``green light'' to add the securities of ``bad actor'' 
Chinese companies to the investment portfolios of millions of their 
retail investors.

    As for metrics, the publicly available numbers tell part of the 
tale and, hence, China's ``success'' in our markets can be measured to 
a certain extent. It is also important to track the progress of 
BlackRock, J.P. Morgan Chase, and others in their pursuit of at least 
one of their ``holy grails''--selling wealth management, mutual funds, 
ETFs and other investment products and services directly to Chinese 
retail and institutional investors. The CCP has mastered the technique 
of moving the goal lines of such Wall Street ``holy grails'' closer to 
realization during periods of uncertainty and Chinese funding 
shortfalls.
    The CCP counts on the Treasury Department, the Securities and 
Exchange Commission, the National Economic Council and, to a lesser 
extent, the Commerce Department as well as some on the House Financial 
Services and Senate Banking Committees to, in effect (and perhaps 
unknowingly), take Wall Street's side (read the CCP's side) during 
policy debates inside and outside of the Executive Branch and shape the 
``fine print'' regarding the scope and substance of sanctions, 
enforcement actions, waivers and the deliberate creation of loopholes.
    Other factors concerning how China defines its success in the 
capital markets include:

      Acceptance of Chinese sovereign debt in global capital 
markets via the inclusion and growth of Chinese bonds in major global 
bond indexes (e.g., FTSE World Government Bank Index, JP Morgan Global 
Aggregate Bond Index, Bloomberg Barclays Global Aggregate Index), and 
the volume and size of China Interbank Bond Market.

      Capital formation with minimal loss of shareholder voting 
rights via market capitalization of Chinese companies versus 
shareholder voting rights granted to foreigners.

      Development of a modern financial services industry, 
without creating dependence on Western companies via progress in 
implementing eight main tasks of Fintech Development Plan for 2022-
2025; growth of wealth management AUM; shift from traditional retail 
holdings of individual securities, real estate, and bank deposits to 
mutual funds and other pooled investment vehicles; and M&A activity in 
Chinese investment banks.

      Creation of a NASDAQ-style capital markets system that 
can support a leading technology via company listings and market 
capitalization of ChiNext (Shenzhen Stock Exchange) and STAR Market 
(Shanghai Stock Exchange), and the number of large, high-profile IPOs 
in mainland markets instead of U.S. and Europe.

      Stability of major financial institutions, including 
China's Big Four publicly traded banks, via their total assets and 
market capitalization.

China's Strategy and Financial Market Ambitions

    In my view, China likely must achieve annual economic growth of 5% 
or more to avoid slow-motion economic and financial implosion. Last 
year, China grew by some 2% (as the 3% figure is regarded by many 
experts as deliberately exaggerated). The country's real estate 
disaster, a massive debt burden, relatively low consumer spending as a 
percent of GDP and a host of other indicators makes clear that China is 
now somewhat adrift--seeking to cobble together a new growth model 
given that their traditional model of infrastructure development and 
debt stimulus has finally hit the wall.
    In short, China must access hundreds of billions of dollars 
annually to remain a going concern over time (read continued CCP rule). 
There is no ``going elsewhere'' for such large amounts of capital when 
the U.S. controls as much as 60% or more of the world's dollar 
liquidity, the world's reserve currency and capital markets that are 
nearly the size of the rest of the world's combined. Capital markets 
sanctions are Beijing's single greatest non-military fear because--like 
the Soviet Union before them--the CCP knows that it is predominantly 
about the money (read access to trillions of dollars of American funds 
under management).
    Other factors concerning how China views the capital markets 
include:

      Beijing taps global capital markets to finance enhanced 
economic development and growth.

      China sees capital markets development as necessary to 
help blunt U.S. financial tools, including sanctions regimes and 
potential dollar weaponization against the PRC.

      China does not view the financial services industry as an 
industry that should be developed for its own sake; they are not 
pursuing financialization of their economy in the style of the U.S. and 
U.K.

      China is not interested in creating an independent 
financial services constituency that could challenge the existing power 
structure (witness the train of events following the cancellation of 
the Ant Financial IPO on the eve of its initial public offering).

    China's strategy is to use its command economy (at least when it 
comes to finance and the markets) to manipulate the global financial 
system to serve its funding, lobbying, and other strategic interests. 
Given the CCP's total control over Hong Kong, this task has been made 
considerably easier. The large-scale inclusion of CCP-controlled 
companies in the U.S. and allied capital markets--in terms of both 
listing and trading--is a major ``validator'' for China. The spikes and 
surges in bilateral tensions have flown right over China's capital 
markets penetration activities like storm clouds that pass over and do 
no harm. This fact alone constitutes quite an amazing success for the 
CCP.
    Not that long ago, at a time when there were some 1,260 Chinese 
companies on the Commerce Department's Entity List for egregious 
corporate national security and human rights abuses, of that number 
only 16 were listed on the Treasury Department's OFAC List (i.e., the 
NS-CMIC List), impeding their ability to raise funds on the U.S. 
capital markets. Beijing has also, thus far, escaped any ``sanctions 
harmonization'' efforts in the Executive Branch, whereby a U.S.-
sanctioned Chinese company by any relevant government agency would 
automatically cost the company access to U.S. exchanges and the ability 
of American persons to hold its securities. These are examples of how 
China achieves its key strategic objectives and ambitions--at U.S. 
expense.
    With respect to the types of Chinese CCP-controlled enterprises 
which are presently listed or traded on U.S. exchanges, it is not 
pretty. Examples include: Chinese companies that are equipping 
concentration camps in Xinjiang; trafficking in forced labor; aiding 
and abetting genocide; constructing the ``surveillance state''; 
militarizing China's illegal islands in the South China Sea; building 
advanced weapons for the PLA, including components for its last two 
aircraft carriers and first hypersonic glide vehicle; providing lethal 
and non-lethal aid to Russia in its war of aggression against Ukraine; 
and the list goes on. Indeed, many of the Chinese companies traded in 
the U.S. capital markets are presently under various U.S. sanctions 
regimes. It is an epic understatement to say that these malign Chinese 
corporate activities are impacting negatively on democratic societies 
and economic competitiveness, especially our own.
    As mentioned above, China primarily relies on its perceived allies 
in the Executive Branch to do the heavy lifting on its behalf, with the 
priority being resisting, diluting, and otherwise eviscerating any 
capital markets sanctions directed its way. Whether it involves a 
waiver of federal securities laws via, for example, the Public Company 
Accounting Oversight Board's MOU with the China Securities Regulatory 
Commission in May 2013, or waiving enforcement of President Biden's 
Executive Order 14032, China has been able to largely count on the 
cooperation of the Treasury Department, the Securities and Exchange 
Commission, the National Economic Council and other senior Executive 
Branch decision-makers in the financial space to calm the waters and 
discreetly build the loopholes.
    Most often it is a sad testament to the ``revolving door'' between 
Wall Street executives and key officials in the economic and financial 
agencies of government that gives rise to direct or indirect conflicts 
of interest, particularly with regard to capital markets sanctions 
designed to protect our national security, fundamental values, and the 
fiduciary interests of U.S. retail investors.
    Congressional Committees with jurisdiction over this issue 
portfolio are likewise subject to intense Wall Street and Executive 
Branch lobbying or interventions that have often diluted and narrowed 
the legislative intentions of Committee members and staff (e.g., large-
scale political donations).
    The bilateral financial relationship is largely dominated by a 
relatively few large U.S. asset managers (e.g., Black Rock, Vanguard, 
State Street, etc.) and index providers (e.g., MSCI, FTSE-Russell, 
etc.). Firms such as Sequoia and KraneShares are also reportedly 
factors in maintaining a steady flow of U.S. investor capital into the 
coffers of the CCP.

CCP Strengths in the Capital Markets

      As the world's second largest economy perceived to be 
flush with cash and a potential market of 1.3 billion consumers, China 
has harnessed, directed and manipulated Western greed to advance its 
strategic aims to an unprecedented, perilous degree.

      Never in memory has this ominous level of ``elite 
capture'' within the U.S. by our foremost adversary been achieved.

      Despite the relatively near-term prospect of a shooting 
conflict with the United States over Taiwan that could largely wipe out 
U.S. investors in Chinese securities, there appears to be no one in the 
Executive Branch that can answer the straightforward question: What is 
the total amount of U.S. investor risk exposure to some 5,000 Chinese 
companies traded in the U.S. capital markets, including passive 
investment products? This reality alone is emblematic of China's 
strength in dissuading the U.S. government from even questioning this 
massive, asymmetric financial risk to our country and its citizens, 
much less viewing the CCP--as many Americans do--in roughly the same 
league of adversary as the former Soviet Union and Nazi Germany.

      China has prospered by knowing that it largely continues 
to receive all of the benefits of an open, free-market U.S. economy and 
the rules-based international trading and financial systems, without 
abiding by the rules.

      Pay-offs, corruption, intimidation, covert action and 
extortion have been hallmarks of China's wholesale penetration of U.S. 
society--and the capital markets are no exception.

      At a time of growing market saturation in the U.S. and 
ever finer spreads, American asset managers, index providers, and other 
market players are fairly desperate to replicate their U.S.-based 
successes in the relatively virgin territory of the Chinese domestic 
financial system, individual's savings and still-
nascent markets. China is acutely aware of these Wall Street cravings 
and has exploited them masterfully.

      As an authoritarian police state, China can turn on a 
dime when deemed necessary--witness the near overnight end of its 
coveted zero-Covid policy. This ``command'' system provides Beijing 
with greater agility to exploit targets of opportunity than their 
Western counterparts, such as cornering world markets in rare earths, 
cobalt, lithium, and other key resources for future economic 
competitiveness and global influence. Ironically, Beijing often 
attracts funding in the U.S. capital markets for the Chinese CCP-
controlled enterprises mandated to secure these strategic objectives.

      The phenomenon of ``national champions'' and the ability 
to pick winners to receive massive government subsidies, priority 
resources, and other competitive advantages--without any regard to 
corruption safeguards and other Western constraints--often permits 
Beijing to win strategic contracts and ``buy off'' countries, regions, 
and even continents (e.g., Africa), sidelining the U.S. and our allies.

      China has achieved a virtual free pass--absent meaningful 
U.S. penalties--in its ability to collaborate with the world's most 
heinous regimes and has successfully forged an updated ``axis of evil'' 
with Russia, Iran, and North Korea. To date, there has been virtually 
no serious sanctions for these malign activities in the U.S. capital 
markets.

      China has submitted an avalanche of patent applications, 
particularly concerning technologies which connect to the internet. 
State-directed efforts such as these are not just designed to unfairly 
enhance Chinese competitiveness, but also for the malevolent purpose of 
denying cutting-edge technologies to the U.S. and its allies. Worse 
still, China is attracting the funding to develop these technologies 
often from the U.S. debt and equity markets.

    Other CCP market strengths include:

      A centralized regulatory regime that can enact reforms 
quickly inside China's relatively young capital markets industry.

            China is enacting reforms and plans to steadily 
develop its capital markets with internal and external capital.

            Beijing has focused its capital markets on 
boosting small and mid-sized enterprises, especially in the technology 
sector.

      China has room to grow, with retail investors largely 
untapped, compared with the relatively saturated financial industry in 
the U.S. and Europe.

            It is encouraging development of a wealth 
management industry.

    China is exacting concessions and favors from major U.S. and 
European financial firms in exchange for relatively limited access to 
its retail investment market.

CCP Weaknesses in the U.S. and Allied Capital Markets

      Not one of the roughly 5,000 Chinese companies listed or 
traded on U.S. exchanges is compliant with U.S. federal securities 
laws, including Dodd-Frank.

      95% of Chinese enterprises listed on the NYSE and NASDAQ 
are scandalously structured as Variable Interest Entities (VIEs), 
involving substituting the actual shares of Chinese companies with the 
shares of shell company contracts in the Cayman Islands with no actual 
Chinese stock changing hands, no minority shareholder rights and very 
limited, if any, legal recourse for U.S. investors.

      China engages in little, if any, material risk 
disclosure, corporate governance, risk management or the rule of law--
standard requirements for their American and other Western corporate 
counterparts. The CCP is also stepping up harassment of American and 
allied diligence and research firms and auditors, such as Bain and Co., 
the Mintz Group, Deloitte and others. The CCP is likewise shutting down 
Western access to traditional Chinese databases like Wind Information 
and Capvision and seeking to blind further U.S. asset managers, index 
providers and U.S. investors by criminalizing standard market diligence 
and research activities by Western firms. Even the U.S. Chamber of 
Commerce has stated that this recent Chinese offensive against Western 
professional services firms ``dramatically increases the uncertainties 
and risk of doing business in China''.

      Article 7 of China's National Intelligence Law of 2017 
permits the ``weaponization'' of all Chinese enterprises for strategic 
purposes, such as espionage and PLA activities, at the discretion of 
the CCP. This entirely negates the view that Chinese companies can be 
considered purely commercial, benign entities.

      The CCP has required all companies in China to establish 
Communist Party cells in their senior management structures, possibly 
including foreign-owned Chinese firms, which completely refutes the 
long-held argument that China possesses true ``private sector'' 
companies.

      China's real estate crisis--implicating some 30% of GDP, 
as much as half of the annual revenues of the provincial governments, 
some 40% of all bank lending and roughly 80% of the net worth of the 
Chinese population--remains an asymmetric risk to Western investors 
with little transparency on how this ticking economic bomb will be 
defused, if it is even possible.

      China's economic growth model of infrastructure 
investment and a massive accumulation of debt to stimulate demand has 
largely run out of gas and cannot be offset by relatively anemic 
consumer spending as a percent of GNP (some 50% versus more than 70% 
for most G-7 countries). In short, China will likely not be able to 
grow its way out of a debt overhang of more than 300% of GDP, putting 
U.S. retail investors at greater risk.

      China is a malevolent, ``bad actor'' country--witness its 
``no-limits'' partnership with Russia and client state relationships 
with North Korea and Iran--that will likely take more aggressive 
actions against the U.S. strategic interests in the Pacific (e.g., the 
South China Sea) as well as move ahead with the forced reunification 
with Taiwan in the relatively near term. Accordingly, the CCP's ``old 
friends'' on Wall Street are having an increasingly difficult time 
justifying their large-scale risk exposure to Chinese securities, 
including those of U.S.-sanctioned enterprises. For over two decades, 
China and its U.S. financial supporters have avoided any granular 
policy scrutiny by the national security community, the Congress, the 
media and others. Hopefully, these days are rapidly coming to an end.

      Over the course of 2023 and 2024, Beijing, Wall Street 
and certain conflicted American government regulators will likely be 
subject to the introduction of bipartisan Congressional legislation 
designed to make it illegal to: 1) hold the securities of ``U.S. 
adversaries'' (including Chinese publicly traded companies) in the 
International Fund of the federal Thrift Savings Plan; 2) continue 
China's use of Variable Interest Entities as vehicles to list on U.S. 
exchanges; 3) continue including non-U.S. regulated Chinese ``A-share'' 
companies in U.S. indices and the investment products benchmarked 
against them; 4) continue the issuance of Chinese dollar-denominated 
sovereign bonds, directly funding the CCP via the proceeds of these 
``Anti-Liberty'' bonds; and 5) hold U.S.-sanctioned Chinese companies 
in U.S. investment portfolios.

      President Xi Jinping continues to serve as a one-man 
wrecking ball for the CCP, particularly vis-a-vis China's relationships 
with its U.S. and allied capital markets facilitators. His deep 
distrust and paranoia toward all things viewed to be threats to the 
primacy of the CCP and its hold on power will likely negate a number of 
measures designed by some of his more market-wise colleagues to elevate 
the comfort level and risk appetite of U.S. and allied investors 
(witness the new CCP effort to criminalize standard diligence and 
business information-gathering) by Western professional services 
companies.

    Other weaknesses include:

      Reliance on dollars, euros, yen and pounds for foreign 
exchange reserves caused by a lack of internationalization of renminbi.

      An undeveloped corporate debt market.

      An undisciplined and erratic retail investor base.

      Overleveraged and overinvested in the real estate market.

      CCP reluctance to allow ``national champions'' that could 
one day challenge its hold on power.

      CCP unwillingness to adopt GAAP and PCAOB standards.

      An undue reliance on U.S. know-how for capital markets 
execution.

      A Chinese government tendency to intervene and manipulate 
market outcomes.

      A ``low-trust'' culture which pervades Chinese capital 
markets and the perceived and real risk of fraud.

Framework for Viewing China's Presence in the U.S. Capital Markets

      China has largely perfected leveraging U.S. and allied 
greed and the quest for profits, jobs, exports and market share. It 
will likely continue to achieve notable successes in achieving its 
strategic aims through the skillful employment of these and other tools 
of persuasion--including intimidation and extortionary practices that 
have a proven track record. Although Beijing occasionally goes 
overboard with its immense espionage campaign against the U.S. and its 
allies (e.g., secret police stations in major U.S. cities to round-up 
and/or track Chinese dissidents), it has yet to pay any material price 
for these malevolent undertakings in the U.S. capital markets.

      China has engaged in over two decades of economic and 
financial warfare against the United States with no meaningful 
opposition, or even an announced recognition that such warfare is 
underway. Multilateral institutions have been recruited and, in effect, 
weaponized to adopt China's brand of standards and norms, and to 
provide friendly cover for some of its most heinous human rights abuses 
and national security violations. The U.S. has, to date, foolishly 
underwritten this enormous tab over the course of many years with the 
witting, and unwitting, transfer of trillions of investment dollars 
from scores of millions of U.S. retail investors to the coffers of the 
CCP and the Party's corporate proxies.

    In my view, it is not possible to identify a strategic-level, 
financial scandal of anywhere near this scale in modern history, 
whereby a democracy (notably our own) has engaged in the multi-
trillion-dollar underwriting of an authoritarian police state (read 
China) bent on undermining our values and way of life, aided and 
abetted by some fiduciarily malfeasant Wall Street firms and other fund 
managers, and certain conflicted U.S. government regulators at the top 
levels of the Treasury Department, the SEC and the National Economic 
Council.

Threats to the United States

      The prospect of an upcoming U.S.-China military conflict 
over Taiwan (if Taiwan's DPP party wins the Presidential election early 
next year) is probably the greatest threat the CCP faces of being 
electrocuted in the U.S. capital markets--not because of Wall Street's 
revulsion, but a more militant, bipartisan consensus in Congress and 
among the American people.

      The PLA and its Navy are veritably intoxicated by the 
array of advanced weapon systems they have brought online, including 
hundreds of new surface combat ships, several classes of submarines, 
lasers, sophisticated cyber capabilities, hypersonic glide vehicles and 
missiles, rail guns and new generation ICBMs. The desire to deploy and 
make use of these military capabilities against U.S. and allied assets 
is intense and perilous. A shooting, ramming, blinding or other 
incident in the South China Sea or elsewhere would now likely impact 
China's access to U.S. capital markets for the first time.

      China's efforts to restrict further the access of 
professional Western market research and diligence firms seeking to 
gather standard, risk-related information will likely complicate its 
ability to attract adequate amounts of U.S. and allied capital, 
particularly when Congress better understands the dimensions of the 
U.S. financial ``free-lunch program'' for the CCP, described above.

Assessing the Counter-Arguments--The Prospective Costs of Financial 
Decoupling

      The cost to American investors of a sudden financial 
decoupling from China (e.g., an armed conflict with the U.S.) would 
likely be quite severe, but ultimately manageable.

      It appears that no U.S. officials have talked publicly 
(and perhaps not even privately) about the total financial risk 
exposure of American institutional and retail investors to thousands of 
Chinese corporate securities, but it is likely well over a trillion 
dollars and likely some multiple of that number. We just do not know. 
Accordingly, the U.S. appears to have done frighteningly little in the 
way of ``national financial risk management'' with respect to China, 
and some of the probable ``downside'' outcomes referenced are likely to 
result in serious financial losses for average Americans that could be 
avoided, if the Congress acts now, preferably on a veto-proof basis.

      A more gradual financial decoupling could mean a good 
deal of market volatility over a several-month-period, a highly 
workable circumstance.

      Just as the interruption and restructuring of China-based 
supply chains entails costs, so too does the potential loss of Chinese 
investment in Treasuries and the excising of thousands of unfit Chinese 
companies from U.S. investment portfolios.

      For China, any meaningful contraction of access to the 
U.S. capital markets would likely have disastrous consequences over 
time, given the non-convertibility of its currency and fairly desperate 
need for hundreds of billions of dollars annually to fuel even its 
diminished economic growth rates. A more serious cut-off of access to 
the American capital markets would likely prove the death knell of CCP 
rule over a relatively short number of years, given China's massive 
``overhead'' requirements to service its population and maintain 
reasonable living standards to keep the peace at home.

      The cost of doing nothing and maintaining the status quo 
could mean the loss of American competitiveness in a number of key 
technologies and industrial sectors, including those vital to 21st 
century security. In a very short number of years, the U.S. could 
likewise lose the capability to prevail in an armed struggle over 
Taiwan, or even the South China Sea, and could be, in effect, compelled 
to cede regional hegemony to the PLA and the CCP, not to mention 
stimulate the nuclearization of Japan, South Korea, and Australia.

Overarching Considerations

    As things stand at this writing, China continues to enjoy largely 
unfettered access to the U.S. and allied capital markets. There are no 
meaningful capital markets sanctions in place on either side of the 
Atlantic and the CCP and its publicly traded corporate proxies continue 
to defy gravity--with the cooperation of Wall Street and certain 
conflicted official regulators--with respect to investor protection, 
national security concerns and corporate human rights abuses.
    Even in the tunnel-vision American financial community, there 
should be a growing recognition that the CCP is an avowed adversary of 
the U.S. comparable in many ways to the former Soviet Union and Nazi 
Germany. The preferential treatment and massive American funding which 
China is presently pocketing would be far more difficult, if not 
unthinkable, were this new ``Cold War'' mindset to become official U.S 
policy--a Cold War begun decades ago, and prosecuted daily, by the CCP.
    Wall Street firms have publicly made clear that they will continue 
to engage in undisciplined ``business as usual'' with Chinese publicly 
traded companies until such scandalous market activities are made 
illegal. Accordingly, as stated earlier, the Congress will almost 
surely need to pass legal prohibitions on a range of Chinese funding 
and trading activities in our capital markets. A number of specific 
recommendations in this regard have been cited earlier in this 
testimony, but include: American holdings of notorious, unregulated 
``A-share'' companies; Chinese enterprises embedded in the 
International Fund of the Thrift Savings Plan; the listing or trading 
of U.S.-sanctioned Chinese companies; continued use of near-fraudulent 
VIEs; the exclusion of Chinese companies not in compliance with federal 
securities laws; and a number of other prudent measures that we 
expect--and require--of other foreign participants in our markets. 
There is also a need for U.S. legislation that prohibits any Communist 
Party cells from being established in the China-based operations or 
joint ventures of U.S. asset managers, banks, and other financial 
institutions.
    Finally, the leadership at BlackRock, and perhaps others on Wall 
Street, have exhorted American investors to triple their risk exposure 
to Chinese publicly traded companies from the already outrageous and 
perilous level that it is today. To me, this not only screams fiduciary 
malfeasance, but, intended or not, also reflects greed in its most 
calloused and irresponsible form.
    Moreover, contrary to the arguments often used by these market 
players to justify their China-related investment decisions on our 
behalf, such holdings often involve considerably higher risks and lower 
returns than elsewhere in their investible universe. Merely one example 
is the Tennessee Consolidated Retirement System (TCRS). For the last 10 
years TCRS has not invested in China, Russia or a host of smaller 
emerging countries due to the results of a screening methodology that 
the TN Treasury uses to evaluate nations eligible for investment in the 
emerging market portfolio.
    Annually, the TN Treasury evaluates each investable emerging market 
country using a ``Global Democracy Index,'' developed by the Economist 
magazine in combination with an index of corruption called the 
``Corruption Perceptions Index,'' created by Transparency 
International. Countries which score badly on the combination of 
corruption and democracy are eliminated as possible investment options. 
Tennessee has been using this screening method for more than a decade 
and in that time not once has China scored well enough to merit 
investment. Regarding returns, at the one-year mark, the Tennessee 
Emerging Markets Portfolio--as of Dec. 2021--had a 7.71% return, 
compared to the MSCI-EM return of -2.5%. At the 5-year mark, as of Dec. 
of 2021, TCRS had a 10.16% compared to MSCI-EM which was 9.9% and the 
MSCI-EAFE (followed by the Thrift Savings Plan for the I-Fund baseline) 
which was only a return of 9.5%.
``A-Shares'' and Passive Investments Not Covered by the Holding Foreign 
Companies Accountable Act

    Congress, the media, and independent regulators like the SEC have 
recently focused on the risks posed to U.S. investors from Chinese 
companies directly listed on U.S. stock exchanges. While I initially 
welcomed this focus and encourage further action, it does not address 
the bulk of ``bad actor'' Chinese companies that are still present in 
American passive investment products. Their presence is in the form of 
nearly 4,000 A-share and H-share companies found throughout passive 
investment funds, such as Exchange Traded Funds (ETFs) and mutual funds 
and has received little or no regulatory scrutiny or fiduciary 
diligence. Tens of millions of Americans are unwittingly exposed to 
these notorious ``A-shares'' in their investment portfolios and 
retirement accounts.
    The financial industry will not lead. Congress must do so. To 
ensure against further American investment dollars flowing to Chinese 
companies that pose investor protection, national security, and human 
rights concerns, Congress should take the following actions:

      Pass legislation that requires index providers and asset 
managers to address the risks posed by A-share and H-share companies;

      Require a proper implementation of the Holding Foreign 
Companies Accountable Act (HFCAA) such that its December 2022 agreement 
with the Chinese regulatory authorities is actually enforceable, or 
that non-compliant Chinese companies are immediately delisted and de-
registered from U.S. exchanges;

      Expand the HFCAA to cover Chinese companies traded in the 
United States via passive investment products, despite not being 
directly listed on U.S. exchanges, to ensure that ETF products traded 
on U.S. exchanges are PCAOB-compliant, consistent with the investor 
protection imperatives of the Act;

      Compel the SEC to require further disclosures and issue 
new rules for index providers as it pertains to oversight of proper 
diligence (including the security-minded and human rights-related 
variety) and risk management--both almost entirely missing today;

      Compel the SEC and other U.S. Government agencies to 
require more information for investors and fiduciaries with regard to 
the geographic location of companies, their industries or sectors, 
their linkages to foreign governments or foreign actors, the presence 
of companies on U.S. sanctions lists and other national security, human 
rights, or political risk factors;

      Require index providers to reevaluate their index 
inclusion criteria, which currently expose U.S. investors to material 
and reputational China-specific risks and further require them to 
justify continued inclusion of any such risky China securities;

      Harmonize U.S. sanctions policy against Chinese companies 
in order to close current gaps that exist between different sanctions 
lists. This will assist index providers, asset managers and investors 
in their compliance and due diligence processes;

      Establish a new, official list of known Chinese corporate 
human rights abusers, so that these enterprises can be denied access to 
our debt and equity markets and prohibited by law from their securities 
being held by American persons worldwide;

      Enact a national policy to prohibit U.S. investors from 
investing--either here or abroad--in the securities of Chinese 
companies which have established CCP cells in their management and/or 
decision-making structure.

A-Shares in U.S. Index Funds: Just How Massive Is U.S. Risk Exposure?

    In May 2018, after three years of deliberation and negotiations 
with Chinese regulatory authorities (and considerable arm-twisting from 
Beijing), major index provider MSCI released a list of large-cap China 
A-shares to be included in the MSCI China Index, Emerging Markets (EM) 
Index, and All Country World Index (ACWI) beginning in June that year. 
The MSCI EM Index previously only included shares of Chinese companies 
listed in Hong Kong or the United States. As of June 2018, MSCI had 
over $1.8 trillion in assets benchmarked globally to its Emerging 
Markets Index suite, 30.99% of which was comprised of China-based 
securities.
    By November 2019, MSCI had increased and expanded its index 
exposure to mainland Chinese companies significantly by including mid-
cap China A-shares and quadrupling the inclusion ratio of China A-
shares in the MSCI EM Index from 5% to 20%. The total index weighting 
of China A-shares jumped from 0.7% to 3.3%, drawing in an estimated $80 
billion in foreign inflows to the Chinese market. As of August 2020, 
the overall weight of China A-shares in the MSCI EM Index had risen to 
5.1%, where it currently remains.
    FTSE Russell followed in MSCI's footsteps and was the second major 
index provider to include China A-shares in its indices. In June 2019, 
FTSE added 1,097 China A-shares into its FTSE Global Equity Index 
Series (GEIS, which covers the FTSE Emerging and All-World Indices) in 
the first stage of inclusion (20%), drawing an expected $10 billion 
from U.S. passive investors. As of June 2020, China A-shares 
represented approximately 6% of the FTSE Emerging Index. Roughly 4,000 
China A-shares are available to U.S. investors at this point through 
their inclusion in indices.

Undisclosed Risks to Investors

    Index providers neglect to consider the full range of China-
specific material risks to investors when determining index 
constituents and weighting. These include considerations of 
reputational risks relating to national security, export controls and 
sanctions regimes, human rights violations, political factors, or even 
full consideration of traditional environmental, social, and governance 
(ESG) factors.
    Retail and institutional investors are exposed to a wide range of 
publicly traded Chinese companies involved in developing weapons 
systems, new ``dual-use'' technologies, and building infrastructure in 
support of China's military modernization goals; and companies involved 
in facilitating the ongoing genocide of Uyghurs and other Turkic 
Muslims in Xinjiang, the systematic intimidation and coercive 
assimilation of Tibetans, and the mass surveillance and government 
interference in people's lives in Hong Kong. Beyond these, additional 
risk factors to consider include U.S. sanctions designations and any 
other blacklists that may signify a material reputational and financial 
risk to investors.
    As of at least June 2022, a look at five of the larger mutual funds 
offered by industry leaders--Fidelity Emerging Markets Index Fund 
(FPADX), State Street Emerging Markets Equity Index Fund (SSKEX), 
BlackRock iShares MSCI Total International Index Fund (BDOKX), Vanguard 
Emerging Markets Stock Index Fund (VEMAX), DFA Emerging Markets Core 
Equity I (DFCEX)--(which happen to be included in the new Mutual Fund 
Window available to TSP beneficiaries)--includes at least 14 underlying 
companies directly linked to China's military-industrial complex and 
listed on either the Department of Defense's Section 1260H list or the 
Treasury Department's NS-CMIC List or both, in just these five funds. 
This is in addition to several companies on the Commerce Department's 
BIS's Entity List and others with documented links to the oppressive 
Chinese surveillance state and connected to Uyghur forced labor.

Federal Government's Thrift Savings Plan Investing in Our Adversaries

    The U.S. Government is facilitating the investment of billions of 
taxpayer dollars in CCP-controlled companies via the federal workers' 
retirement system, the Thrift Savings Plan (TSP). The Thrift Savings 
Plan is the largest defined contribution pension system in the world, 
with more than $730,000,000 in assets. In June 2022, the TSP's 
administrators on the Federal Retirement Thrift Investment Board 
(FRTIB) enabled TSP participants to invest up to 25% of their savings 
(a minimum of $10,000) in more than 5,000 mutual funds via a new 
platform called the ``Mutual Fund Window.'' The TSP's Mutual Fund 
Window initiative was launched in June of last year and has already 
received more than $47 million in investments. No due diligence or 
screening has been performed to ensure the mutual funds included in the 
new TSP platform exclude U.S.-sanctioned or other Chinese corporate 
``bad actors.''
    Participants are unable to determine what mutual funds are included 
in the Window until after they have transferred a minimum of $10,000. 
The Coalition for a Prosperous America's (CPA) research has 
demonstrated that the Window's largest emerging markets funds include 
problematic CCP-controlled companies in their investment portfolios.
    CPA's research also found that five of the largest international 
funds in the Window had an average weight of 22 percent toward Chinese 
companies, and all five funds held companies listed on the U.S. 
Department of Treasury's list of Chinese Military-Industrial Companies, 
the Department of Commerce Entity List, the Commerce Department's 
Unverified list, or the Department of Defense Chinese Military 
Companies list. Companies are placed on these lists because they 
threaten U.S. national interests, have been involved in serious 
technology theft, and/or are implicated in the genocide of the Uyghur 
people.
    The FRTIB claims it has neither the time, expertise, nor the 
resources to research the mutual funds offered to current and retired 
federal employees, military personnel, and veterans in the interest of 
ensuring that CCP-controlled corporate bad actors are excluded from 
their portfolios. The FRTIB also claims they are not obligated to 
restrict investment in problematic Chinese companies. For example, the 
FRTIB has not fulfilled its 2020 public pledge to remove Chinese 
companies from the TSP's International Fund (I Fund).
    Worse still, in May 2020, the Department of State notified Congress 
that the passage of the Beijing-drafted National Security Law obviated 
the distinction between Hong Kong and the People's Republic of China, 
and that Hong Kong could no longer be considered autonomous. Despite 
this determination, the FRTIB has refused to remove 32 Hong Kong-based 
Chinese companies from the International Fund of the TSP.
    Through the research conducted by CPA and its allies, several 
Chinese Communist Party-owned companies were found in the funds, 
including the Aviation Industry Corporation of China (AVIC), China 
General Nuclear Power Group (CGN), and COSCO Shipping--all PLA-linked 
enterprises. The funds also included companies under scrutiny for 
forced labor practices, as well as those involved in China's growing 
surveillance state.
    By some estimates, American investors have provided as much as $2-
$3 trillion or more in investment capital to Chinese companies over the 
past decade (including passive investment vehicles). This is, in no 
small part, due to a May 2013 bilateral MOU between U.S. and Chinese 
securities regulators, whereby U.S.-listed Chinese companies enjoy 
preferential access to U.S. capital markets because they are not 
required to meet the same requirements as U.S. public companies. U.S. 
capital markets have funded China's unprecedented military build-up; 
its Belt and Road Initiative; gross violations of human rights, 
including genocide and crimes against humanity; predatory and market 
distorting trade practices; and the wholesale theft of American 
technology and intellectual property.
    The U.S. Government has sanctioned hundreds of Chinese companies 
for their role in enhancing the threats to our national security posed 
by the PLA and egregious human rights violations, but they still 
benefit hugely from largely unrestricted access to U.S. capital markets 
and are held by hundreds of widely available mutual funds, public 
pension funds, and university endowments. In 2019, BlackRock--as the 
lead asset manager of the investment portfolio of the Thrift Savings 
Plan--advised the FRTIB to increase the TSP International Fund's 
exposure to CCP-controlled firms. BlackRock continues to be one of the 
most vocal investment managers encouraging expanded investment in 
China, and in 2021 became the first U.S. investment management firm to 
provide investment products directly to Chinese retail investors--
perhaps as a reward.
    To be clear, no U.S.-listed Chinese-domiciled companies held by 
either the core TSP funds, or the Mutual Fund Window, are compliant 
with federal securities laws and regulations, such as legally mandated 
audit requirements designed to protect American investors. Due to the 
negligence of the TSP's managers, American servicemen and women, and 
other government employees may be unwittingly funding their country's 
leading adversary--including companies involved in the PLA's 
modernization efforts or the CCP's genocide against the Uyghur people.
    We should be able to all agree that CCP-controlled companies should 
not be financed through the retirement savings of U.S. government 
employees. The FRTIB should not be allowed to abdicate its due 
diligence and fiduciary responsibilities to our military and federal 
workforce. At a minimum, the FRTIB should take steps to ensure that the 
TSP Mutual Fund Window publicly discloses: 1) which TSP regular or 
mutual funds hold Chinese-domiciled companies, including those based in 
Hong Kong; 2) whether any such company has been sanctioned or otherwise 
listed by an agency of the United States government; and 3) whether any 
such companies are non-compliant with U.S. securities laws and 
regulations, including PCAOB audit requirements.

Harmonizing Government Sanctions--How to Guide Investors Away from Bad 
Actor Chinese Companies

    Capital markets sanctions have been scarcely utilized to date, 
despite being a highly effective tool to advance America's national 
security, fundamental values, investor protection and other national 
goals. Polling conducted by CPA shows an overwhelming majority of 
Americans are concerned about investing in risky Chinese companies and 
support stricter investment requirements and safeguards. A poll 
conducted by Morning Consult shows sixty-two percent of voters are 
troubled that Americans can invest in Chinese and Russian companies 
that have been sanctioned by the U.S. government or have not complied 
with U.S. securities and other laws.
    To accomplish the mission of ramping down U.S. capital investment 
in unfit Chinese companies, three Executive Orders have been 
promulgated by both Republican and Democratic presidents in an effort 
to selectively enforce capital investment bans on Chinese companies in 
critical industries and linked to the CCP's military and military-civil 
fusion operations. The first two EOs, enacted by President Trump--EO 
13959 (now amended by EO 14032) and EO 13974 (now rescinded)--focused 
on Chinese enterprises on the U.S. Department of Defense's Chinese 
Military Company List (as called for by the annual NDAA) and required 
that they be placed on the Treasury's Office of Foreign Assets Control 
(OFAC) list. If a company were on the DOD list, then it was 
automatically slated for a prohibition on the buying and selling of its 
securities within a certain window of time.
    Under the Biden administration, these policies were updated with a 
new EO, 14032. This EO expanded the scope of capital markets sanctions 
beyond the DOD list and now includes what are known as surveillance 
technologies companies. This new EO, however, rescinded the concept of 
forced divestment by canceling out EO 13974, and created a new list 
within OFAC, as opposed to the DOD-only list. Now OFAC can add a 
broader swath of companies across more categories to its Non-SDN 
Chinese Military Industrial Complex Companies List (NS-CMIC List).
    Regrettably, but true to form, the Treasury Department is reluctant 
to engage in the process of making additions to its list, despite 
commitments from the White House to update the list on a rolling basis. 
Indeed, the list is basically just gathering dust at this writing. This 
Committee and others need to try to compel Treasury to follow through 
on sanctions updates at regularized intervals and in alignment with 
broader U.S. policy aims and priorities. Rather than adding companies 
to this list and updating the EO's annex, Treasury issued some squishy 
guidance at the one-year mark of the Biden EO and basically undercut 
the While House's own intentions by releasing a contradictory and 
intentionally vague FAQ sheet, which reads in part, regarding the 
concept of ``divestment'':

        ``U.S. persons are not required to divest their holdings of 
        CMIC securities during the relevant 365-day divestment period 
        and may continue to hold such securities after the divestment 
        period. E.O. 13959, as amended, permits purchases or sales made 
        solely to effect the divestment of CMIC securities, but only 
        during the 365-day divestment period. Accordingly, any such 
        purchase or sale is prohibited after the 365-day divestment 
        period, absent OFAC authorization.''

    Further, in addition to this highly--and deliberately--confusing 
FAQ, Treasury has failed to add new sanctioned entities, not yet 
releasing one new tranche of sanctioned entities since the initial EO 
(though a few companies were added when a rule in the Federal Register 
clarified the intermingling of the Trump-era EO list, the DOD list, and 
the new, updated Biden-era EO, which allowed for less than ten 
additional companies to be added to the NS-CMIC list annex).
    As of October of 2022, the Commerce Department's well-known Bureau 
of Industry and Security (BIS) Entity List contained 1,167 listed 
entities, while the NS-CMIC list contained only 68. While we understand 
that these lists are not the same and require different legal standards 
and thresholds for listing, common sense and U.S. policy would indicate 
these lists should be in complete or near-complete alignment. 
Tragically, but again not surprisingly, only 16 Chinese corporate 
wrongdoers are on both lists. This means that only 1.4% of those 
companies being subject to specific licensing requirements for the 
export, reexport and/or transfer (in-country) of specified equipment 
and technologies are likewise being denied fundraising privileges in 
the U.S. capital markets.
    As stated on the Commerce Department's BIS website, ``Since its 
initial publication, grounds for inclusion on the Entity List have 
expanded to activities sanctioned by the State Department and 
activities contrary to U.S. national security and/or foreign policy 
interests.'' It would stand to reason, therefore, that these same 
concerns regarding sanctioned activities and corporate behavior 
contrary to U.S. national security and/or foreign policy interests 
would also apply to attracting capital in our markets which easily 
could facilitate the means of production of the very goods the U.S. is 
supposedly concerned about. Also, when a company is added to the NS-
CMIC List, subsidiary or parent companies must also be considered and 
included.
    There is much room left to institutionalize and utilize capital 
markets sanctions as a powerful new force and tool kit in economic and 
financial statecraft as well as to help clean up our heavily soiled 
capital markets.
    One key area for inclusion is the concept of sanctions 
harmonization. Better than the notion of sanctions reciprocity, 
sanctions harmonization links up current lists run by various U.S. 
Government departments and agencies in an interlocking process such 
that being sanctioned or listed by one enables the other to undertake 
sanctions action as well, and ultimately lead to--at long last--
increased listings by OFAC and more rigorous routine reviews.
    Current U.S. Government arrangements provide little transparency on 
why some Chinese companies are selected to be on one list, but not 
another. Across the U.S. Government, there are dozens of reports, 
lists, advisories, or sanctions tranches issued on a recurring basis. 
Some of these include: the U.S. Commerce Department's Bureau of 
Industry and Security (BIS) Entity List, the Military End User List, 
the Unverified List, the Department of Defense's 1260H or CMC List 
(formerly 1237 CCMC List), the new Uyghur Forced Labor Prevention Act 
Entity List maintained by the Department of Homeland Security, the OFAC 
NS-CMIC List, and more.
    There is an urgent need to put in place a process by which agencies 
responsible for enforcing and implementing sanctions better communicate 
with each other and the Congress to ensure that every company that is 
listed by any agency goes through a review by all agencies for 
inclusion on each individual sanctions list. To that end we support 
draft legislation Congress is currently considering to address this 
very issue. The goal is to require the agencies that maintain malign 
entity lists (Departments of Commerce, Treasury, Defense, and Homeland 
Security) to better coordinate, review listing decisions of other 
agencies, and decide on listing such entities on their respective 
lists. The bill requires that agencies reviewing a company or entity 
that was listed by another agency provide a legal justification to 
Congress (affirmative or negative) and notify the public. Moreover, 
Global Magnitsky Act sanctions must be included in this policy arena, 
requiring some necessary updates to separate out human rights 
accusations from those of corruption, enabling further actions and 
sanctioning to take place by Treasury.
    Additionally, the State Department must be included at the table as 
the U.S. government's preeminent authority on human rights. State 
Department warnings such as the one issued on December 8, 2020, on bad 
actors present in U.S. capital markets or the Hong Kong or Xinjiang 
Business Advisories must be issued and updated on a recurring basis and 
linked to sanctions from Treasury, notably inclusion on the NS-CMIC 
List.
    While both houses of Congress unanimously passed legislation to 
require a report annually to be produced by Treasury--in consultation 
with DOD, State, and the intelligence community--on the presence of 
malign Chinese companies in the U.S. capital markets, the measure 
failed to be included in the final China bill voted on this summer. To 
properly tackle ending the CCP's abusive exploitation of the U.S. 
capital markets (and Wall Street's facilitation of same), Congress must 
have the necessary information. This can be done in consultation among 
Treasury, the SEC, the State Department, the Department of Defense, the 
National Security Council, and others to ensure that Congress has 
better information with which to make informed decisions to protect our 
capital markets, investors, and nation from the CCP's financial 
predations.
    As an illustration of the challenge facing the U.S, the federal 
government has recently implemented the CHIPS Act and export controls 
designed to prevent China building advanced semiconductors with 
military capabilities. Yet financial industry data shows that last 
year, U.S. investors provided $8.8 billion to Chinese semiconductor 
startups, more than six times greater than the $1.3 billion invested in 
comparable U.S. startups. Much of those 8.8 billion dollars came from 
U.S.-based public and private investment funds. Why are we supposedly 
working hard to prevent Chinese access to advanced U.S. semiconductors, 
while simultaneously permitting multi-billion-dollar American funding 
of Beijing's development of such dangerous, militarily relevant 
capabilities?
    Another telling anecdote is that of CSSC Holdings Ltd. As of June 
2022, household names in the investment world--BlackRock and Vanguard--
are providing Exchange-Traded Funds (ETFs) and other investment 
products to consumers that track indices containing Chinese companies 
building and modernizing the Chinese Communist Party's military. CSSC 
Holdings Ltd. was listed as a constituent of the MSCI Emerging Markets, 
MSCI ACWI, FTSE Emerging, and FTSE All-World indices. These indices are 
tracked by trillions of dollars of assets under management globally 
through associated ETFs.
    Most Americans are not positioned to analyze the indices tracked by 
their ETFs, or to have a handle on which Chinese companies are in their 
ETFs and other index funds. This is, in part, what is desperately wrong 
with this picture. What happened to fiduciary responsibility along the 
trail? Do these prominent U.S. asset managers fully understand and 
appreciate the risks to their corporate reputations and brands once a 
large swath of the empirical facts and evidence are made available to 
the American people? Have those Members of Congress who have, to date, 
fulsomely supported the positions taken by these asset managers 
concerning China's presence in our capital markets thought through how 
this is ultimately going to play out politically? Apparently not.
    On June 17, 2022, the People's Liberation Army Navy (PLAN) 
successfully launched its third aircraft carrier from Shanghai's 
Jiangnan Shipyard. The new carrier enables PLAN to launch a wider 
variety of aircraft and is reportedly equipped with technology 
furthering PLAN blue water naval capabilities. Jiangnan Shipyard, where 
the Fujian was built, is a commercial and naval shipbuilding facility.
    Jiangnan was wholly acquired in 2019 as a subsidiary of China State 
Shipbuilding Corporation Holdings Limited (CSSC Holdings Ltd.). CSSC 
Holdings Ltd. is the publicly traded arm of China State Shipbuilding 
Corporation Ltd., a Chinese state-owned enterprise carrying out 
shipbuilding and repairs for cargo customers and PLAN military vessels 
and is included in some of the world's most prominent investment 
indices. Foreign capital flowing into Jiangnan Shipyard directly via 
its commercial business or indirectly via CSSC Holdings Ltd. 
securities, may both directly and indirectly support PLAN 
modernization.
    Development of the PLAN's fourth aircraft carrier is reportedly 
underway at Jiangnan Shipyard, with the carrier's launch expected 
between 2025 and 2027.
    CSSC was designated as a Non-SDN Chinese Military Industrial 
Complex Company (NS- CMIC) on June 3, 2021. This listing, under 
Executive Order 13959 (as amended by President Biden in Executive Order 
14032), prohibits U.S. persons from purchasing or selling any 
securities of companies deemed to be supporting China's military-
industrial base. This prohibition does not apply to subsidiaries, like 
CSSC Holdings Ltd. or Jiangnan Shipyard, that are not also explicitly 
designated by the Treasury Department's Office of Foreign Assets 
Control (OFAC). Correspondingly, CSSC was designated by the Department 
of Defense as a Chinese Military Company operating directly or 
indirectly in the United States by the Biden Administration in June 
2021, in accordance with the FY21 NDAA's section 1260H.
    As of June 2022, CSSC Holdings Ltd. was listed as a constituent of 
the MSCI Emerging Markets, MSCI ACWI, FTSE Emerging, and FTSE All-World 
indices. These indices are tracked by trillions of dollars of assets 
under management globally, for example, through the associated 
Exchange-traded funds (ETFs). The primary ETF providers include 
BlackRock's iShares products and Vanguard's UCITS products, 
respectively.
    In addition to issuing yuan-bonds, as of 2015, the CSSC corporate 
family has raised nearly $2.6 billion through euro- and dollar-
denominated debt placement via markets such as the U.S. Over-the-
Counter market, Frankfurt, and Bank Sarasin (Switzerland) markets and 
JP Morgan bond-focused ETFs, among other debt markets. Nearly all of 
this was underwritten by Western banks, most commonly Barclays and 
Societe Generale. Four of CSSC's euro- and dollar-bonds have yet to 
mature.
    These cases underscore why greater transparency and more robust 
disclosure must be required of U.S. index providers and fund managers. 
U.S.-sanctioned and known bad actor Chinese companies must be 
prohibited from investment exposure by Americans through the imposition 
of targeted capital markets sanctions. Considering the recent spy 
balloon incident and CCP-led aggression against Taiwan, American 
investors must stop funding the People's Liberation Army and Navy and 
enabling their military modernization via the manufacture of advanced 
weapons systems. It is sadly ironic that Americans are simultaneously 
financing our own military modernization and that of the CCP.

Recommended Policy Actions

    To reinforce the policy recommendations enumerated at the outset of 
this testimony, there are three basic pillars to consider when 
assessing the status and suitability of Chinese publicly traded 
companies to list or trade in the U.S. capital markets: national 
security, human rights, and investor protection. Thus far, China must 
receive a failing grade in the category of investor protection by any 
reasonable measure. It has been also amply demonstrated that a 
disturbing array of sanctioned and other Chinese corporate national 
security and human rights abusers are included in America's most 
popular international indices and investment products. These are the 
facts of the case. Chinese enterprises have been receiving preferential 
treatment by the U.S. government--notably the Public Company Accounting 
Oversight Board (PCAOB)--since well before the May 2013 bilateral MOU 
which enshrined this preferential treatment for Chinese public 
companies over American market participants. Congressional action is 
clearly warranted here, given the glaring shortcomings of the well-
meaning Holding Foreign Companies Accountable Act (HFCAA).
    CCP-controlled Chinese companies must retain largely unfettered 
access to the U.S. capital markets--period. The reverse is not true. 
Our capital markets constitute arguably the most powerful non-military 
lever and sanctions tool that the U.S. possesses in its economic 
arsenal. Although it is preferred that the exercise of such leverage be 
in concert with U.S. allies, it is not a requirement, given America's 
dominant position in the global financial domain.
    In comparison, Chinese equity markets are regarded by most market 
experts as glorified casinos, largely manipulated by Chinese leadership 
(e.g., witness the equities market meltdown in the summer of 2015). 
Like its equity markets, China's huge bond market is largely non-
transparent and comprised of the securities of ``black box'' 
enterprises. Hong Kong has been all but snuffed out--courtesy of 
Communist Party repression--as a credible global financial hub and it 
is now just another Chinese city. There exists precious little 
reciprocity with regard to the treatment and latitude accorded U.S. and 
allied financial sector companies in China's capital markets and 
financial system. Indeed, the stunning lack of reciprocity alone can 
only be described as scandalous and unsustainable.
    Concerning capital markets diplomacy, there are basically zero 
existing joint efforts underway among the U.S. and its partners and 
allies with respect to the glaring shortfalls and abuses in investor 
protection norms and national security and human rights concerns by 
Chinese companies in Western capital markets. The principal reasons for 
the absence of such urgently needed cooperation among allies are a 
concerted effort to preserve Wall Street and other market fees, the 
lure of selling investment and wealth management products to average 
Chinese institutions and citizens, and the often-conflicted policy 
positions of the economic and financial agencies of government.
    Few policymakers appear mindful of the devastating consequences for 
the cause of freedom resulting from the trillions of dollars that have 
thus far been transmitted from the investment portfolios of scores of 
millions of unwitting American and allied investors to the bank 
accounts of the Chinese Communist Party and its proxy enterprises. 
Tragically, this explains, in no small part, how China has been able 
to: 1) achieve near parity militarily with the U.S.; 2) construct its 
elaborate surveillance state: 3) establish control over vital global 
resources and technologies; 4) vacuum up much of the world's strategic 
business, military and personal data and many other malevolent 
activities. That said, all one hears in the halls of the Pentagon is 
``it's [the capital markets] not in our lane''.
    In addition to the aforementioned U.S. Government actions, below is 
a mere sampling of what else should be happening among partners and 
allies. This includes:

      A permanent G-7 working group on the national security, 
investor protection and human rights dimensions of the Chinese 
corporate and sovereign presence in each nation's capital markets;

      A revival of the now-moribund Economic Secretariat of 
NATO to do the same, with a concentration on military and security 
concerns;

      The harmonization of security-minded regulatory regimes 
among the allies;

      The authorization--and institutionalization--of an array 
of capital markets sanctions tools and policy options to push back 
against, or respond to, the actions of malign publicly traded Chinese 
companies as well as the CCP's ongoing efforts to penetrate and 
undermine our societies and way of life;

      The passage into law of a number of legislative 
initiatives (some enumerated above) in the U.S. Congress, and its 
allied counterparts, designed to make illegal the kind of Chinese 
government abuses listed above in the ``Strengths'' section of this 
testimony;

      The allied establishment of permanent senior interagency 
or inter-ministerial groups, reporting directly to the Head of State, 
on the massive Chinese funding, espionage and other unfair and/or 
malign activities in the U.S. and allied capital markets;

      The standing up of Economic and Financial Warfare Centers 
in the U.S. and allied countries (e.g., within the Indo-Pacific Command 
of the United States) to counter the various forms of such financial 
and related warfare being waged by the CCP and its corporate proxies 
against Western countries on a daily basis for over two decades;

      The establishment of a ``Sixth Domain'' of American and 
allied warfighting--notably the ``Economic and Financial Warfighting 
Domain'' (joining the land, sea, air, cyber and space domains)--to end, 
at long last, this scandalous multi-
trillion-dollar U.S. and allied underwriting of the Chinese Communist 
Party's police state and the PLA, courtesy of Beijing's clever and 
successful weaponization of our capital markets.
Conclusion

    Mr. Chairman, in closing, I would like to address what we, as 
individual investors can do to safeguard our hard-earned retirement and 
investment dollars, our country, and our fundamental values.
    There are probably well over 100 million of us, Mr. Chairman, 
holding the stocks and bonds of U.S.-sanctioned and other Chinese 
corporate ``bad actors''. Do we really believe that the American people 
would have wanted to be holding--unwittingly--the securities of Soviet 
companies or those supporting Nazi Germany? Do we really believe that 
my former boss, President Reagan, would stand by and permit the multi-
trillion-dollar American funding of those that would destroy our 
democracy and everything we hold dear? As his NSC Senior Director of 
International Economic Affairs, I was in a position to know, and I can 
assure you that he would not--not for a moment.
    Accordingly, I call upon the members of this Committee, and the 
Congress more broadly, as well as my fellow American retail investors 
to go to their fund managers, stockbrokers, financial advisers, pension 
system administrators, college endowments, corporations, unions, and 
others, and say the words: ``Not with my money. Take me out of Chinese 
companies, particularly those buried in my Exchange-Traded Funds, 
mutual funds, and other passive investment products.'' Nancy Reagan 
captured this sentiment succinctly in her anti-drug campaign in the 
1980s, ``Just say no!''.
    If the Congress passes the necessary laws recommended in my 
testimony; if we take a stand as individual Americans in defense of 
where our money is going and how it is being used by Wall Street firms 
and other supposed financial gurus who often cannot see further than 
their quarterly quotas and bonuses, we can not only set free some 300 
million people without a shot fired--as was the case with the Soviet 
Union--but some 1 billion 300 million Chinese nationals living under 
the fear, repression and brutality of a fascist dictatorship.

    Remember always, money often kills in the hands of authoritarian 
police states.

    We must act now before it is too late and scores of millions of our 
nation's investors face material, if not debilitating, financial 
losses. For example, more likely when, not if, the first shots are 
fired in the Taiwan Strait--as soon as next year--it will be too late. 
We cannot wait another day. Let us together make the American 
``defunding'' of the Chinese Communist Party the 21st century 
equivalent of our ``finest hour''.
                                 ______
                                 

                        Statement of Sarah Cook

  Emerging Pressures on U.S. Businesses and Risks of Complicity with 
                  Beijing's Censorship and Propaganda

    Thank you for the opportunity to submit a written statement for 
today's hearing. This brief submission focuses on several recent 
developments and incidents in China and globally that may affect the 
business and human rights landscape in the coming years as it relates 
to the information space, drawing on research from Freedom House and 
other sources.
    Legislative changes adopted in China since 2021, additional 
regulatory shifts, and specific incidents that have occurred and been 
documented by Freedom House in our China Media Bulletin and Beijing's 
Global Media Influence projects point to the following circumstances as 
potential risks and scenarios that U.S. businesses and policymakers 
should be aware of and prepared for:

    1. Shifting red lines and arbitrary enforcement of laws related to 
permissible versus criminalized speech or information sharing

    In recent months, China's security and propaganda apparatus has 
turned its sights on foreign consulting and auditing companies, 
conducting coordinated raids, detaining employees, broadening an 
espionage law, and airing slickly produced ``special reports'' about 
its crackdown on state television. The campaign has sent waves of alarm 
across the international business community. Notably, recent prison 
sentences against high- and low-profile civic activists serve as a 
reminder that the private-sector cases are just one piece of a much 
larger pattern of politicized prosecutions in China, one whose 
examination can provide insight into what further targeting of U.S. 
businesses and employees by Chinese security forces may entail. A 
review by Freedom House in May 2023 of over two dozen cases that had 
gained public visibility in the prior three months provided some sense 
of the scale of the problem, the sorts of behavior being punished, and 
the profound flaws in the legal system that enable such prosecutions. 
The article provides a full analysis and numerous cases involving 
political and religious prisoners, shedding light on how even seemingly 
minor infractions--which would be tolerated or even praised in a 
democracy and some of which were deemed permissible within China in the 
recent past--can now yield harsh punishments.
    Under the revisions to the Espionage Law that came into effect on 
July 1, foreign businesses and their employees may be at greater risk 
than previously of overstepping these boundaries. Even prior to the 
change, implementation rules to the law adopted in 2017 and described 
in a post by Chinese law expert Jeremy Daum outline various ``non-
espionage conduct'' that could still be encompassed. Reading between 
the lines, such conduct includes various human rights causes and 
persecuted communities whose members are routinely prosecuted and 
subjected to long prison terms after questionable trials: political 
activism deemed ``subversion of state power,'' investigative reporting 
perceived as ``distorting facts,'' advocacy for Uyghur or Tibetan 
minority rights deemed ``separatism,'' or peaceful practice of faiths 
like Falun Gong or certain forms of Christianity being deemed to be 
carrying out activities ``endangering national security.''
    The case of Dong Yuyu, a journalist for the Chinese state-owned 
newspaper Guangming Daily, is one example of how previously routine 
engagements between respected individuals, even journalists at state-
run outlets and foreign diplomats, could now be suspect in the current 
political and legal context in China. Dong, a savvy observer of 
international relations, was widely known among foreign journalists, 
business executives, and diplomats. Sensing the regime's growing 
sensitivity to such interactions, he had become more circumspect in his 
writings and careful in his meetings with foreigners, but his 
precautions were apparently insufficient. He was detained in February 
2022, three months before retiring, on espionage charges after meeting 
with a Japanese envoy. Dong's case is now moving to trial and is 
perhaps the most chilling for the business community, given that raids 
on consulting and auditing firms have also been linked to the enhanced 
espionage law.
    Recent restrictions on the information available from academic 
databases or collections of judicial verdicts--content that was 
previously easily available to foreign researchers, journalists, and 
corporations--could also add to the narrow path for those seeking to 
better understand what is happening in China beyond CCP-
approved narratives in traditional and social media. If an individual 
were to obtain the same information now that had previously been openly 
available through an innovative workaround or Chinese contact, that 
person could reasonably be deemed as attempting to access ``state 
secrets'' or engaging in espionage and be subject to prosecution.

    2. Growing pressure to self-censor corporate speech

    The Chinese government is adept at using foreign business 
investment, market access, and the legal risks facing firms and their 
employees in China as leverage to dictate speech outside China's 
borders. Examples of this development are the incidents in 2018 related 
to drop-down menus of hotel chains and airlines or the deletion of a 
Mercedes Benz post on a foreign social media platform. Besides 
government pressure, Chinese state media and vocal nationalist netizens 
(whose detractors are more heavily censored on Chinese platforms) have 
also been known to apply pressure on foreign companies to say--or not 
say--certain things regarding human rights conditions in China. The 
recently released 2023 survey results from the American Chamber of 
Commerce cited such pressure. Seventy-two percent of U.S. companies in 
China reported facing pressure in 2022 to make (or not make) statements 
on politically sensitive issues and 45 percent cited an increase in 
pressure compared to previous years. Among these businesses, 57 percent 
of respondents reported that the pressure came from the Chinese 
government and 37 percent from Chinese media, although the wording of 
the question conflates pressure to speak--or to self-censor--and is 
vague about what topics fall under ``politically sensitive'' items. As 
pressure from Chinese state entities grows alongside the legal risks 
for firms and employees, businesses are more vulnerable to feeling 
forced to concede to such requests and to omit publicly that they were 
done under pressure.

    3. Pressure to infringe on the speech or privacy of others

    This type of action is arguably more problematic than self-
censorship of corporate statements themselves, but not often 
disaggregated in discussions of corporate complicity with CCP diktats. 
Yet it is profoundly impactful and a known deployment of the various 
leverage points possessed by Beijing to co-opt or coerce foreign 
businesses into restricting speech and access to information inside and 
outside China. The lengths the regime is willing to go to are evident 
as far back as 2007 when a NASDAQ employee in China was detained by 
state security, resulting in a Chinese dissident television station 
being denied the ability to report from the exchange's headquarters in 
New York. More recently, in February 2023, Apple removed within days 
the Damus social media app from its store in China at the demand of the 
Cyber Administration of China, with it joining hundreds of other 
applications omitted from the store (including those of U.S.-based news 
outlets). Just last month, in the latest example of censorship pressure 
vis-a-vis the arts, the Chinese embassy urging a Polish venue to cancel 
an exhibit by a dissident Chinese artist. These incidents are only a 
small sample of cases from around the world in the corporate, media, 
and cultural sectors.
    Hundreds of incidents that have occurred globally over the past 
decade demonstrate that once the CCP--or a company, media outlet, or 
owner with close ties to the Party--gains a foothold within an 
information dissemination channel, manipulation efforts inevitably 
follow. This may not occur immediately, but can evolve over time or be 
activated as soon as a test case with sufficient significance to 
Beijing emerges. At that point, CCP leaders, diplomats, and other 
state-linked actors will not hesitate to use previously acquired 
economic and political leverage to impose their will. While most such 
incidents that have gained public attention involved censorship or 
other manipulation, demands on foreign firms in China to provide 
government agencies access to user data upon request is also a risk. 
Last September, the CAC urged firms to improve the ``traceability'' of 
users. Any foreign company providing digital technology services in 
China will inevitably face such a request, compliance with which would 
risk landing a user in prison over internationally protected speech on 
political, religious, or social topics.

    4. Expanding demands from Hong Kong authorities

    Following the adoption of the National Security Law, the Hong Kong 
government has been increasing demands on foreign companies, especially 
technology firms, to enforce limits on speech or access to information, 
both within Hong Kong and globally. Apple has come under growing 
pressure to remove certain apps from its store in Hong Kong, with one 
December 2022 report finding that 53 Virtual Private Network apps had 
been made unavailable in the territory after adoption of the National 
Security Law. Also in December, Hong Kong-based users noticed that the 
``safe browsing'' feature on the Apple-owned web browser Safari had 
temporarily blocked the website GitLab, which has been censored in 
China. In 2021, Hong Kong authorities ventured further afield and asked 
a website-hosting company in Israel to shutter a pro-democracy website, 
warning that refusal could result in fines or prison time for employees 
under the territory's National Security Law.

    5. Enticement to aid Beijing with its foreign media influence 
efforts

    As the CCP, Chinese diplomatic missions, and their proxies invest 
more and more resources in influencing foreign media environments and 
reaching overseas audiences, the funds also available to businesses--
including public relations (PR) firms--who assist them is notable. 
Country case studies and other research from a recent Freedom House 
report, Beijing's Global Media Influence, reveal the extent to which PR 
firms have been working to get Beijing's message out and to co-opt 
local voices in countries as diverse as the United States, Panama, 
Taiwan, and Kenya. In at least some cases, the effort involves covert, 
coercive, or potentially corrupting activities. Last month, Freedom 
House published a detailed analysis of this phenomenon, drawing on 
recent filings under the Foreign Agents Registration Act (FARA) and 
shedding light on millions of dollars in potential profits per year 
flowing to this sector.
    But while a wide range of corporations and governments--
authoritarian and democratic--make use of PR firms' services to 
encourage sympathetic coverage and counter negative reporting, there 
are several factors that arguably make Beijing's practices both notable 
and potentially problematic. The first is the sheer scale of resources 
devoted to media influence efforts by the Chinese Communist Party (CCP) 
and large China-based corporations with close party ties. The potential 
for enormous and long-term profits entices international PR firms, 
creates economic dependencies, and discourages work with other clients 
that might threaten those relationships. A second factor is Beijing's 
layered use of intermediaries and proxies, which makes it harder for 
foreign interlocutors to fully appreciate who is behind a particular 
submission, invitation, or request. And lastly, some actions by PR 
firms and their Chinese clients have veered from ordinary public 
relations into censorship, intimidation, disinformation, or 
circumvention of local laws.
Opportunities for resisting censorship requests and the role of 
counter-pressure from headquarters, investors, and foreign regulators

    On a more positive note, as evident from some of the above examples 
and others, it is not a foregone conclusion that requests from the CCP 
to restrict access to information or cancel events will yield their 
desired outcome. The dissident artists' exhibit in Poland has continued 
as scheduled. Google has not ceded to demands to alter its search 
results for Hong Kong's anthem after they apparently contributed to a 
pro-democracy protest song being played at international sporting 
events instead of China's national anthem. And the above-mentioned 
Israeli website vendor, after initially complying with the demand, 
reversed course and reinstated the site.
    Moreover, even as U.S. businesses in China are eager to please 
Chinese consumers and stay on the good side of the government, they may 
also yield to pressure related to their global reputation, talent 
recruitment, or from corporate headquarters, investors, and foreign 
regulators. One striking finding from the AmCham survey was that 80 
percent of U.S. businesses in China had introduced or were planning to 
implement Environmental, Social, and Governance (ESG) strategies in 
China, including as a result of requests from these sources. Such 
strategies may run into conflicts with other business prerogatives in 
the country, but external actors could potentially push firms to stay 
true to those principles.

Conclusion

    The CCP's growing repression at home and brazenness in its foreign 
relations has contributed to heightened tensions with the United States 
and poses a risk to U.S. citizens and businesses in the country. Recent 
news reports and the AmCham survey point to the growing recognition of 
these risks and to actions some businesses are taking in response, 
including reducing investment in China. But the risks are not only to 
profit margins. In a political system as tightly controlled, arbitrary, 
and brutal as China's is today, the risk of complicity in suppressing 
the rights of innocent Chinese citizens or of putting a company's 
employees in danger is high. And with Beijing's growing global 
footprint in the information space, even leaders of businesses with no 
presence in China are likely to face visits from Chinese embassy 
officials with requests for censorship or opportunities to polish 
Beijing's image.
    Anyone engaged in the media or corporate space should acknowledge 
these possibilities and be prepared in advance for how to resist when 
pressure to adjust content in Beijing's favor inevitably emerges. It is 
these individual choices that will not only help uphold free speech but 
also protect at least some innocent people--
foreigners and Chinese nationals alike--from languishing in Chinese 
prisons.
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                          Witness Biographies

    Robert Silvers, Under Secretary for Strategy, Policy, and Plans, 
Department of Homeland Security; Chair, Forced Labor Enforcement Task 
Force (FLETF)

    Robert Silvers was confirmed by the Senate as the Under Secretary 
for Policy on August 5, 2021. He is responsible for driving policy and 
implementation plans across all of DHS's missions. Mr. Silvers also 
serves as Chair of the interagency Forced Labor Enforcement Task Force 
(FLETF). Mr. Silvers previously served at the Department of Homeland 
Security during the Obama administration as Assistant Secretary for 
Cyber Policy. In that role he oversaw private-sector engagement, 
Federal Government incident response, and diplomatic outreach 
pertaining to cybersecurity and emerging technology. Mr. Silvers also 
previously served as DHS's deputy chief of staff, managing execution of 
policy and operational priorities across the entire department.

    Isaac Stone Fish, Visiting Fellow, Atlantic Council

    Isaac Stone Fish is the author of America Second: How America's 
Elites Are Making China Stronger, a book about American political and 
business leadership's deep ties to Beijing. A Mandarin speaker and 
formerly a Beijing correspondent for Newsweek, Mr. Stone Fish spent 
seven years living in China, and has visited every Chinese province, 
municipality, and special administrative region. He serves as a 
visiting fellow at the Atlantic Council, a contributor to CBS News, an 
adjunct at New York University's Center for Global Affairs, and a 
columnist on China risk at Barron's. Mr. Stone Fish is the founder and 
CEO of Strategy Risks Corp., which quantifies corporate exposure to 
China.

    Aynne Kokas, C.K. Yen Professor, Miller Center, University of 
Virginia

    Aynne Kokas is the C.K. Yen Professor at the Miller Center, the 
director of the University of Virginia East Asia Center, and an 
associate professor of media studies at the University of Virginia. 
Kokas's research examines Sino-U.S. media and technology relations. Her 
award-winning book Trafficking Data: How China Is Winning the Battle 
for Digital Sovereignty highlights how Silicon Valley data governance 
practices help China build infrastructures for global tech oversight. 
Her book Hollywood Made in China argues that Chinese investment and 
regulations have transformed the U.S. commercial media industry. Dr. 
Kokas is a non-resident scholar at Rice University's Baker Institute of 
Public Policy, a life member of the Council on Foreign Relations, and a 
fellow at the National Committee on United States-China Relations' 
Public Intellectuals Program.

    Shi Minglei, advocate and wife of Chinese human rights defender 
Cheng Yuan

    Shi Minglei, a Chinese Christian, became a human rights advocate 
after her husband Cheng Yuan, a prominent rights defender, was arrested 
by the Chinese National Security Bureau in July 2019. Due to his 
influential and successful work, he was secretly sentenced to five 
years in prison. To date, he has been arbitrarily detained for almost 
four years and is jailed in China's Chishan prison. After learning that 
her husband was subject to forced labor in prison, Ms. Shi began 
publicly spearheading awareness campaigns and preparing civil lawsuits 
against participating businesses. She aims to expose global supply 
chains benefiting from the forced labor of Chinese political prisoners.

    Enes Kanter Freedom, human rights activist and former NBA 
basketball player

    Enes Kanter Freedom is a human rights activist, professional 
basketball player, and Nobel Peace Prize nominee. Since the 2021 NBA 
season, Mr. Freedom has used his global platform to advocate for the 
rights of Uyghurs, Tibetans, Hong Kongers, Taiwanese, and others facing 
the Chinese Communist Party's oppression. In February 2022, he was 
traded from the Boston Celtics to the Houston Rockets, who ultimately 
waived him. Mr. Freedom lost his NBA career for speaking out against 
human rights violations in China.

                                 [all]