    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                        DEFENDING MAIN STREET: COMBATING CCP
                       THREATS TO AMERICA'S SMALL BUSINESSES
    =======================================================================

                                    HEARING

                                  BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                                 UNITED STATES
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD
                                 MARCH 25, 2026

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Small Business Committee Document Number 119-033
                 Available via the GPO Website: www.govinfo.gov

                                    __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
    63-520                 WASHINGTON : 2026
    =======================================================================

                       HOUSE COMMITTEE ON SMALL BUSINESS

                        ROGER WILLIAMS, Texas, Chairman
                            PETE STAUBER, Minnesota
                            DAN MEUSER, Pennsylvania
                             BETH VAN DUYNE, Texas
                               JAKE ELLZEY, Texas
                             MARK ALFORD, Missouri
                            BRAD FINSTAD, Minnesota
                              TONY WIED, Wisconsin
                          ROB BRESNAHAN, Pennsylvania
                              BRIAN JACK, Georgia
                 KIMBERLYN KING-HINDS, Northern Marina Islands
                             DEREK SCHMIDT, Kansas
                            JIMMY PATRONIS, Florida
                   NYDIA VELAZQUEZ, New York, Ranking Member
                           MORGAN MCGARVEY, Kentucky
                           HILLARY SCHOLTEN, Michigan
                          LAMONICA MCIVER, New Jersey
                            GIL CISNEROS, California
                           KELLY MORRISON, Minnesota
                            GEORGE LATIMER, New York
                             DEREK TRAN, California
                           LATEEFAH SIMON, California
                           JOHNNY OLSZEWSKI, Maryland
                        MAGGIE GOODLANDER, New Hampshire

                     Lauren Holmes, Majority Staff Director
                     Melissa Jung, Minority Staff Director

                                C O N T E N T S

                               OPENING STATEMENTS

                                                                       Page
    Hon. Roger Williams..............................................     1
    Hon. Nydia Velazquez.............................................     2

                                   WITNESSES

    Mr. Andrew Pahutski, Vice President & Fellow Economic Security,
      Systems Planning and Analysis Inc., Baltimore, MD..............     5
    Mr. Sean Murphy, Founder, Kompassion, Former Founder, Bison
      Blockchain, Cheyenne, WY.......................................     6
    Mr. Tom Lyons, Co-Founder, 2430 Group, Austin, TX................     8
    Dr. Rush Doshi, Assistant Professor, Georgetown University, C.V.
      Starr Senior Fellow for Asia and Director, China Strategy
      Initiative, Council on Foreign Relations, Washington, DC.......    10

                                    APPENDIX

    Prepared Statements:
        Mr. Andrew Pahutski, Vice President & Fellow Economic
          Security, Systems Planning and Analysis Inc., Baltimore, MD    30
        Mr. Sean Murphy, Founder, Kompassion, Former Founder, Bison
          Blockchain, Cheyenne, WY...................................    32
        Mr. Tom Lyons, Co-Founder, 2430 Group, Austin, TX............    42
        Dr. Rush Doshi, Assistant Professor, Georgetown University,
          C.V. Starr Senior Fellow for Asia and Director, China
          Strategy Initiative, Council on Foreign Relations,
          Washington, DC.............................................    58
    Questions and Answers for the Record:
        Question from Hon. Velazquez to Mr. Sean Murphy and Answer
          from Mr. Sean Murphy.......................................    62
        Questions from Hon. Velazquez to Mr. Tom Lyons and Answers
          from Mr. Tom Lyons.........................................    63
        Questions from Hon. Goodlander to Mr. Tom Lyons and Answers
          from Mr. Tom Lyons with attachment of the State Trade
          Expansion Program (STEP)...................................    65
        Questions from Hon. Velazquez to Dr. Rush Doshi and Answers
          from Dr. Rush Doshi........................................    72
        Questions from Hon. McGarvey to Dr. Rush Doshi and Answers
          from Dr. Rush Doshi........................................    74
        Questions from Hon. Latimer to Dr. Rush Doshi and Answers
          from Dr. Rush Doshi........................................    75
        Questions from Hon. Tran to Dr. Rush Doshi and Answers from
          Dr. Rush Doshi.............................................    75
        Questions from Hon. Olszewski to Dr. Rush Doshi and Answers
          from Dr. Rush Doshi........................................    76
        Questions from Hon. Goodlander to Dr. Rush Doshi and Answers
          from Dr. Rush Doshi with attachments of the United States
          Patent and Trademark Office (USPTO) and Stanford...........    77
    Additional Material for the Record:
        Ozark Integrated Circuits Letter.............................   124
        SBC Minority Letter to SBA...................................   127
        SBC Democratic Staff Report..................................   132
        Asian Americans Advancing Justice (AAJC) Letter..............   149
        Representative Tran Letter...................................   169

        DEFENDING MAIN STREET: COMBATING CCP THREATS TO AMERICA'S SMALL
                                   BUSINESSES

                                  ----------

                           WEDNESDAY, MARCH 25, 2026

                      House of Representatives,
                   Committee on Small Business,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 10:03 a.m., in Room
    2360, Rayburn House Office Building, Hon. Roger Williams
    [chairman of the Committee] presiding.
        Present: Representatives Williams, Stauber, Meuser, Alford,
    Wied, Bresnahan, King-Hinds, Velazquez, McGarvey, Scholten,
    Cisneros, Tran, Simon, and Goodlander.
        Chairman WILLIAMS. Okay. May I have your attention. Before
    we get started, I want to recognize Representative Scholten
    from the great State of Michigan to lead us in the pledge and
    the prayer. Would you stand?
        Ms. SCHOLTEN. Dear God, thank you for the opportunity that
    we have to serve this country, and to come together not as
    Republicans or Democrats, but as servants of the people for the
    United States of America. And help us to use the time today to
    uplift the voices of small business owners, main street across
    this country. May we listen with our ears and hearts wide open,
    come up with solutions to better serve the small businesses
    across this country. In the name we pray, Amen.
        I pledge allegiance to the flag of the United States of
    America and to the Republic for which it stands, one nation
    under God, indivisible, with liberty and justice for all.
        Chairman WILLIAMS. Good morning to everyone, and I now call
    the Committee on Small Business to order.
        Without objection, the Chair is authorized to declare a
    recess of the Committee at any time.
        I now recognize myself for my opening statement. And I want
    to welcome everyone to today's hearing entitled ``Defending
    Main Street: Combating the CCP Threats to America's Small
    Businesses.''
        First, I want to thank our witnesses for being here today,
    and for sharing their expertise on the important issue. I also
    thank my colleagues for joining us as we examine the challenges
    facing America's businesses in an increasingly competitive and
    complex global environment.
        Small businesses are essential to the American economy.
    They drive innovation, create jobs, and strengthen our
    communities. From cutting-edge technologies, start-ups, to
    family-owned manufacturers, small businesses play a vital role
    in driving America's economy and reinforcing our national
    security.
        However, this vital engine of our economy is under threat.
    The Chinese Communist Party has made it a priority to challenge
    the United States economically and strategically. In doing so,
    the CCP is exploiting every opportunity to target American
    innovation.
        American entrepreneurs invest significant time, capital,
    and ingenuity into developing new products and technologies.
    Yet, far too often, these innovations are stolen, replicated
    overseas, and sold at a lower cost, undermining the very
    business that created them.
        CCP-linked investments in small businesses also raise
    serious concerns. Many small businesses, particularly start-
    ups, rely on outside capital to grow in scale. But, when the
    capital comes from entities tied directly or indirectly to
    foreign adversaries, sensitive technologies and proprietary
    information risk being exposed and exploited. In some cases,
    these investments are structured in ways that obscure their
    true origin, making it difficult for entrepreneurs to identify
    their potential risk.
        Additionally, supply chain dependence on China continues to
    pose a serious threat, and for decades American businesses
    outsource production to China due to low labor costs. But this
    is efficient in the short term. It also creates significant
    risk, especially for small businesses that lack the resources
    and shift production or diversify suppliers. These challenges
    are not economic; they are matters of national security.
        Today's hearing is an opportunity to better understand how
    these threats impact small businesses and identify practical
    solutions. We must ensure that American entrepreneurs have the
    tools they need to protect their innovation, secure a trusted
    source of capital, and build resilient supply chains. If we
    fail to act, we risk losing not only our competitive edge but
    also the ingenuity and entrepreneurial spirit that define our
    nation.
        I look forward to hearing from our witnesses about their
    experiences and recommendations for how Congress can support
    and protect America's small businesses.
        With that, I now yield to my friend and our distinguished
    Ranking Member from New York, Ms. Velazquez, for her opening
    remarks.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman.
        Thank you to all the witnesses for being here with us this
    morning.
        In March of 1942, just after our entry into the Second
    World War, the U.S. Army, citing an executive order signed by
    President Roosevelt and backed by a law passed by Congress,
    forced over 100,000 ethnically Japanese people on the West
    Coast, including U.S. citizens, into what even President
    Roosevelt himself called concentration camps. The Army was
    never required to prove that the Americans in the camps posed
    any threat to national security. In fact, no Japanese American
    was ever convicted of any act of sabotage during the war.
        Their mere ethnicity was enough in the eyes of the federal
    government and the media to imply disloyalty to the country
    they were born in, lived in, and worked in. Each family was
    given a week to register with the government, liquidate their
    homes and businesses, gather what they could carry, and report
    to assembly centers, often converted from outdoor racetracks
    and fairgrounds, to wait to be sent to their assigned camp.
        Once shipped to their camps, prisoners were made to sleep
    in barracks and confined spaces with little privacy and quality
    of life under the constant watch of snipers and armed guards.
        By the end of the war, 125,000 people, half of whom were
    children, had to stay in the camps. Eighty-four years have
    passed since this deep injustice began.
        In 1988, President Reagan signed the Civil Liberties Act of
    1988 apologizing for it and providing reparations to the
    victims of the camps. I see alarming echoes of this injustice
    in our discourse surrounding China, echoes that are manifesting
    in this hearing.
        Let me be clear: The People's Republic of China is
    America's far most strategic competitor. The practices it has
    employed to bolster its state-controlled firms, corner markets,
    and undermine free competition around the world are hurting
    America's technological leadership and small businesses.
        The federal government must do what it can to address these
    issues. That is why I proudly voted for the CHIPS and Science
    Act, and Inflation Reduction Act, to set industrial policies
    strengthening the entire ecosystem of resources, tax
    incentives, ancillary businesses, and workforce development
    surrounding the domestic manufacturing of strategic
    technologies and critical components.
        Furthermore, multiple programs exist at the SBA and
    elsewhere in the federal government to bolster small businesses
    through capital access and technical assistance, which I have
    been pleased to support and strengthen throughout my tenure in
    Congress.
        That is also why I vehemently oppose the Trump
    administration's action to undermine these far-sighted
    investments and substitute them with broad untargeted tariffs,
    mass deportation, DOGE cuts, and racism against immigrants and
    minorities.
        Not only are these actions morally bankrupt, but they are
    unnecessary and undermine our national security and economy. It
    is entirely possible for the federal government to protect our
    national security without stepping into a slippery slope that
    is ethnic profiling. That means tackling complicated problems
    with new solutions and examining policies based on their
    merits, not engaging in inflammatory messaging and fear
    mongering against Americans and other people of Chinese
    ancestry.
        I sincerely hope that today's conversation stays within
    those bounds. With that, I thank the witnesses for being here,
    and I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        And I will now introduce our witnesses. The first witness
    today is Mr. Pahutski. Mr. Pahutski is the vice president and
    fellow of Economic Security and Systems Planning and Analysis
    Inc. He is a former Senior Eexecutive Member of the U.S.
    Department of Defense, with nearly three decades of experience
    in policy, acquisition, intelligence, and operations.
        Throughout his career, Mr. Pahutski has led major defense
    modernization initiatives and advised senior leaders on
    strengthening supply chains and emerging technologies. Mr.
    Pahutski holds a bachelor's degree in international economics
    from Salisbury University, home of the fighting Sea Gulls.
    Right?
        Mr. PAHUTSKI. Right.
        Chairman WILLIAMS. And has completed advanced technologies
    at Defense Acquisition University, the Naval Postgraduate
    School, and the U.S. Army War College. I appreciate having you
    here today.
        Our next witness is Mr. Sean Murphy. Mr. Murphy was founder
    of the Bison Blockchain, a long-scale bitcoin mining company in
    Cheyenne, Wyoming. Bison Blockchain faced a takeover attempt by
    the CCP and ultimately secured a CFIUS divestment order. He is
    also the founder of Kompassion.
        Earlier in his career, he was a researcher and a speaker on
    hemp, finance and healthcare policy, making appearances at the
    White House, Congress, and major media outlets.
        Mr. Murphy volunteers in the VA hospice care, is a
    palliative care father to a child with a rare terminal disease,
    and is a U.S. State Department professional fellow, and we will
    pray for your family.
        He earned a bachelor's degree from the University of Notre
    Dame. I don't know what their mascot is.
        Mr. MURPHY. Fighting Irish.
        Chairman WILLIAMS. Oh, is it? Okay. I knew you'd know that.
        Our next witness, Mr. Tom Lyons. Mr. Lyons is the co-
    founder of 2430 Group, a nonpartisan, nonprofit organization
    focused on helping the U.S. private sector defend against
    foreign espionage. He works with business leaders to protect
    intellectual property and address threats from foreign
    adversaries. Previously he served for 15 years as national
    security executive in the U.S. federal government, advancing
    U.S. interests in complex global environments.
        Mr. Lyons holds a juris doctor from the Catholic University
    of America, and a degree in international finance and German
    from Auburn University, home of the Tigers.
        And I now recognize the Ranking Member from New York, Ms.
    Velazquez, to briefly introduce our last witness.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman. I would like to
    welcome Dr. Rush Doshi, who is an assistant professor at the
    Georgetown University Walsh School of Foreign Service and the
    C.V. Starr Senior Fellow for Asia and the Director of the China
    Strategy Initiative at the Council on Foreign Relations.
        Previously, Dr. Doshi served as the Deputy Senior Director
    for China and Taiwan on the last administration's National
    Security Council. In that role, Dr. Doshi helped manage the
    NSC's first China directory, coordinated China and Taiwan
    policy, drafted President Biden's China strategy, and served as
    a top negotiator in matters regarding the PRC, Taiwan, and the
    AUKUS Alliance.
        Dr. Doshi holds a bachelor's degree from Princeton and a
    Ph.D. from Harvard. Welcome. Thank you for being here. Thank
    you.
        Chairman WILLIAMS. Thank you. We appreciate, again, all of
    you being here today.
        So, before recognizing the witnesses, I would like to
    remind them that their oral testimony is restricted to 5
    minutes in length. You all have done that. We stick with that.
        If you see the light turn red in front of you, it means
    your 5 minutes have concluded, and you should wrap up your
    testimony. If you're still out there talking after 5 minutes,
    you're going to hear this; that means ``shut it down.'' Okay.
    All right.
        So, with that in mind, I now recognize Mr. Pahutski for his
    5-minute opening remarks.

        STATEMENTS OF ANDREW PAHUTSKI, VICE PRESIDENT & FELLOW,
      ECONOMIC SECURITY, SYSTEMS PLANNING AND ANALYSIS INC.; SEAN
        MURPHY, FOUNDER, KOMPASSION, AND FORMER FOUNDER, BISON
    BLOCKCHAIN; TOM LYONS, CO-FOUNDER, 2430 GROUP; AND RUSH DOSHI,
      ASSISTANT PROFESSOR, GEORGETOWN UNIVERSITY, AND C.V. STARR
    SENIOR FELLOW FOR ASIA AND DIRECTOR, CHINA STRATEGY INITIATIVE,
                     COUNCIL ON FOREIGN RELATIONS.

                      STATEMENT OF ANDREW PAHUTSKI

        Mr. PAHUTSKI. Thank you, sir. The views expressed in this
    testimony are my own and do not necessarily reflect those of my
    employer.
        Chairman, Ranking Member, and Members of the Committee,
    thank you for the opportunity to testify today on the
    sophisticated and evolving actions of the Chinese Communist
    Party, and the cascading impact those actions are having on
    America's small businesses, the industrial base, and the
    broader United States economy.
        This hearing reflects an important recognition: Small
    businesses are essential to the United States' industrial
    capacity, innovation base, and long-term strategic advantage.
    The bottom line is clear: Protecting America's small business
    is not simply an economic issue; it is a national security
    imperative.
        Every large business started small. Many firms that will
    shape America's future manufacturing base, technological
    advantages and small businesses today often operate within
    fewer resources and fewer protections. Protecting them means
    protecting America's long-term competitive advantage.
        In today's environment, economic security is national
    security. The United States' ability to innovate, produce,
    secure supply chains, and scale trusted capacity is directly
    tied to our ability to project power globally.
        The defense industrial base is a useful point of reference,
    but the line between it and the broader American industrial
    base continues to shrink. Technologies converge through use
    applications often manifest over time, and software and other
    less tangible technologies operate across multiple domains and
    environments simultaneously.
        What appears purely commercial today may become critical to
    national security tomorrow. For that reason, these should be
    understood as codependent parts of the same national industrial
    ecosystem. The challenge is that the Communist Party of China-
    linked threats to small businesses rarely appear in only one
    form. They can emerge through investments, supply chain
    exposures, intellectual property theft, or commercial
    relationships that appear beneficial at first but create long-
    term strategic vulnerabilities.
        For many businesses, the threat does not present itself as
    coercion. It presents itself as an opportunity. Small
    businesses are often among the most innovative actors in our
    economy. The examples are endless. But they are also among the
    least equipped to detect, deter, and counter national State
    threats. Many operate with limited capital, limited legal
    support, and little margin for error when promising
    opportunities carry hidden risk.
        When small businesses are compromised, the loss is not
    confined to a single firm. The spillover effects can be seen in
    reduced innovation, weakened resilience, and less trusted
    capacity for the whole of the economy. The greater concern is
    not simply the loss of any one single contract, company, or
    technology. It is the cumulative effect of allowing promising
    American firms to be weakened before they can fully scale,
    compete, and contribute to the nation's long-term economic and
    national security growth. That is how strategic erosion
    happens. That is how the CCP is doing it: quietly,
    incrementally, and often before national security implications
    are fully understood.
        The policy goal in my view should be straightforward:
    trusted growth, American advantage. That means helping small
    businesses recognize risk earlier and making it easier for them
    to choose trusted capital, trusted supply chains, and trusted
    partners.
        The central question is not whether we will respond after
    an American company has been compromised. It is whether we will
    act early enough to help the next generation of American
    innovators, manufacturers, and strategic suppliers grow on a
    trusted, secure, and competitive path from the start.
        I thank you for your time, and I look forward to your
    questions.
        Chairman WILLIAMS. The gentleman yields back.
        I now want to recognize Mr. Murphy for his 5-minute opening
    remarks.

                        STATEMENT OF SEAN MURPHY

        Mr. MURPHY. Chairman Williams, Ranking Member, and
    distinguish Members of the House Small Business Committee. I am
    a former executive at Bison Blockchain. I am here today as an
    entrepreneur and small business owner who survived a Chinese
    takeover that literally wiped out everything we had built.
        In 2022 and 2023, Bison Blockchain poured sweat and every
    last dollar into building the largest bitcoin mine in Wyoming,
    near Cheyenne, and just one mile from the Warren Air Force
    Base, and our nation's Minutemen III missiles. When our
    domestic capital fell through, we took a last-minute lead
    investor who claimed to be from Singapore, an international
    businessman.
        After breaking ground, it became clear they were from
    Beijing and Hong Kong, majority Chinese nationals backed by
    CCP-linked capital, who also ran IP transfer companies. Just
    before bitcoin mining began, they brought in personnel from
    China to replace us as operators. We sued for breach of
    contract and interference, and then they countersued us, a
    small local business, for $110 million. It was unfair. It was
    hugely inflated, and it was lawfare. And effectively they were
    mocking us and our judicial system.
        They hired six law firms, two in New York, one in Los
    Angeles, and three locally in Cheyenne, and they exploited
    relationships between their Wyoming lawyers and Wyoming State
    legislators.
        Then came the Presidential CFIUS divestment order, but they
    saw it coming, and they sold the site to CleanSpark, a large
    U.S. public company with hundreds of millions of dollars in
    contracts with Bitmain, one of the Chinese defendants. Bitmain
    is now under investigation in Operation Red Sunset by the
    Department of Homeland Security.
        This wasn't competition. This was the Chinese mocking us
    and working with CleanSpark to try to wipe out the small guys.
    The local guys. The main street guys.
        Their plan would have succeeded, but for the extraordinary
    work of my father, Patrick Murphy, Bison's attorney; my brother
    Michael, Bison's co-founders; and two men who are here today,
    Andrew Astuno, our CFIUS expert, and Cyrus Miryekta, a national
    security consultant who helped us. I would also like to
    acknowledge Beth Clay, who is not here. But all of these
    individuals really helped me in this process with the Chinese.
        They were going to run off with the money. Everyone. The
    sales money. That was their plan, but we were able to secure
    landmark writs of prejudgment attachment and garnishment where
    the Wyoming Federal District Court took control of the sales
    money. And, once they took control of the sales money, we were
    then able to negotiate a settlement. So effectively we got
    money out and beat the Chinese.
        Who am I in all of this? I am a palliative father. My son
    battles a terminal illness, and I fight for his life every day.
        For 16 years, I have been a VA hospice volunteer, sitting
    at the bedside of dying warriors who have served this country,
    honoring the premise that no veteran dies alone.
        My advocacy for my son and veterans centers on palliative
    care and access to cannabinoids, rescheduling marijuana from
    schedule I to schedule III to unlock research and healing,
    especially for rare diseases.
        I am also an advocate against child trafficking, and I
    employ you to stand against it at home and abroad.
        These realities made me something the Chinese did not
    anticipate in the lawfare, a father who had faced bigger,
    scarier dragons than them and their 16 lawyers. Being with my
    son and veterans, I realized we are not chemical beings to be
    pumped full of pharmaceuticals. We are electrical beings that
    need to be filled with light.
        Our bodies run on bioelectric fields, energy pathways, and
    natural frequencies. This is biology, that every cell has an
    electrical charge; every muscle movement, every heartbeat is a
    result of an electrical charge or discharge. The EKG and EEG
    medical tests are measuring electrical impulses in the heart
    and brain.
        As a palliative father, I tried everything else to help my
    son. Only energetic medicine, including sound and light
    therapies brought him relief when nothing else did. And this is
    the next wave of healthcare, and the intellectual property
    behind it is pure gold.
        As a Hospice volunteer, I have seen how rampant fraud and
    abuse in healthcare devastate patients in small businesses,
    from massive durable medical equipment overbilling in Florida,
    to ghost hospice facilities in California syphoning hundreds of
    millions, literally, from Medicare and Medicaid. These scams
    inflate taxes for every family, erode trust in legitimate
    services, and risk bankrupting these programs. And our
    adversaries, like the CCP, can and do exploit to weaken us
    economically from within.
        Lawfare and IP theft are a direct threat to main street,
    and we cannot allow any foreign country, especially the CCP, to
    do these things against American entrepreneurs, parents and
    veterans.
        I have included four recommendations in my written
    testimony, and I urge your good consideration and action. Thank
    you for this opportunity to testify and tell my story.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Lyons for his 5-minute opening remarks.

                         STATEMENT OF TOM LYONS

        Mr. LYONS. Chairman Williams, Ranking Member Velazquez,
    Members of the Committee, thank you for this hearing. My name
    is Tom Lyons. I am a former CIA officer, and a co-founder of
    2430 Group, a nonprofit, nonpartisan organization that educates
    and defends U.S. innovation from nation-state economic
    espionage. I am here because America's small businesses are
    under attack, and most of them do not know this.
        We have long characterized the CCP as a strategic
    competitor, but we need to ask ourselves whether their behavior
    is that of a competitor or that of a nation at war. These are
    two different things, and they prompt two different policy
    responses.
        I would offer this, in the book ``Unrestricted Warfare''
    from 1999, two PLAs colonels wrote that the future of conflict
    would be waged through economic subversion, technology theft,
    and the destruction of a rival's competitive advantage. The CCP
    recognizes that this kind of nonkinetic gray zone warfare
    against our companies, our research institutes, and our small
    businesses can be more effective than a kinetic war. In their
    own words, this is war, and we should take them at their word.
        When it comes to measuring the damage from this war, the
    numbers we hear about are dangerously incomplete. It is often
    cited from the IP commission that we lose between 225 and $600
    billion annually to economic espionage. Those numbers do not
    capture incidents like Apple abandoning the autonomous vehicle
    industry, in part, because of PRC espionage, or one Google
    engineer walking out with the chip designs powering our AI
    systems.
        It doesn't capture the metrics of the hundreds of companies
    that were never born because we lost the entire industry.
        America pioneered the solar energy, lithium batteries,
    drone, and wind turbine industries. China dominates all of
    these today.
        We invented the World's pharmaceutical innovations, but
    China today controls the key starter materials in most of our
    drugs. Production grinds to a halt if China restricts our
    supply chain.
        The real costs are the entire sectors of the U.S. economy
    that no longer exist. Stand back and look at the industries
    that China has targeted and currently dominates: energy,
    communication, logistics, medicine, advanced computing, steel.
    These are all foundational for winning any conflict.
        And it is not limited to critical technology. The same
    pattern plays out in agricultural, manufacturing, and consumer
    goods. If Apple, a $3 trillion company, could not protect its
    AV program, what chance does a small start-up have?
        A third of our small businesses rely on free antivirus
    software. Sixty percent shut down within months of a major
    cyber attack. We have caught the big cases because those
    companies had cyber or counterintelligence measures in place,
    but most companies, most small companies do not. Small
    businesses make up 99 percent of the U.S. firms, and they
    employ nearly half of the workforce. They are the hub of
    American innovation, the engine of our economy, and the
    foundation of our ability to project force in any conflict.
        In China's unified economy, one company steals technology;
    a second will manufacture it; and a third will export it. Our
    legal system treats each as acting alone, however. So we miss
    the opportunity to hold the system accountable.
        As you know, American taxpayers have funded part of this
    effort through small business innovation grants, or PPP loans,
    going to PRC state-owned entities. We have subsidized our own
    long-term decline because we haven't had basic checks in place.
    American executives go to federal prison for price-fixing,
    insider trading, and other anti-competitive behavior. Yet the
    PRC does this at a nation-state scale.
        What the PRC is doing goes beyond trade, diplomatic, or
    regulatory issues. They are exploiting our system, which was
    designed for good-faith commercial actors. The playing field is
    simply unequal.
        I want to be clear: This fight is against the Chinese
    Communist Party; it is not against the Chinese people. Many
    Chinese nationals come here to escape the system. They are
    victims of CCP coercion themselves. Our response must be
    precise, targeting conduct, not targeting ethnicity.
        In my written testimony, we prepared specific legislative
    initiatives, the centerpiece being the Foreign Espionage
    Designation Act. In this case, the President would designate
    specific entities as foreign economic espionage organizations.
    It would then be a federal crime to knowingly accept
    compensation or material benefit from such a designated
    organization. This targets the so-called talent programs or the
    expert networks that incentivize theft across our industry.
        We also prepared the Malign Foreign Interest Disclosure
    Act, requiring that any entity receiving material-state support
    from a country of concern disclose that relationship publicly.
    American businesses deserve transparency in whom they are doing
    business with.
        We do not ask American citizens to wage war against foreign
    nation states. That is the government's job. But that is
    exactly what we are asking 33 million small businesses to do.
    If this is war, and it seems like the PLA has said as much,
    then the government must subsidize counterintelligence the same
    way we fund national defense.
        American industries face an existential threat from the
    CCP, and our small businesses are on the front lines with
    limited defenses, intelligence, and government support. The
    essential point is this: Main street should not have to fight
    this alone. It is not an equal playing field. Thank you for the
    opportunity.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Dr. Doshi for his 5-minute opening remarks.

                        STATEMENT OF RUSH DOSHI

        Mr. DOSHI. Thank you. Chairman Williams, Ranking Member
    Velazquez, and distinguish Members of the community, I
    appreciate the opportunity to testify today.
        My argument is simple: Our small businesses are critical to
    America's future in manufacturing and technology, but, today,
    China is mounting the most comprehensive industrial strategy
    any power has ever attempted and is putting our small
    businesses at existential risk. The urgent task for this
    Committee is to consider how to help our small businesses meet
    this unprecedented challenge.
        I want to divide my testimony into four questions. First,
    what are China's objectives? The Chinese Communist Party aims
    to catch up and surpass the West. It believes there have been
    four industrial revolutions that determined the fate of
    nations. The first was steam power, which brought British
    dominance. The second was electrification, and the third was
    mass manufacturing, which brought American dominance. And now
    we are in the fourth, quantum, biotech, AI, and robotics, which
    China is determined to win, not just for prosperity but for
    relative power. And Beijing sees manufacturing as the key to
    winning this revolution.
        That brings me to a second question: How is China doing in
    manufacturing? China overtook the United States to become the
    world's dominate manufacturer in less than 25 years. Over that
    period, our share of manufacturing fell by half, from 30 to 15
    percent, while China's share quintupled, from 6 percent to 30
    percent. It now exceeds that of the next nine countries
    combined, and it isn't standing still.
        China is spending roughly $400 billion a year on industrial
    policy. By contrast, the U.S. CHIPS and Science Act is $50
    billion over multiple years.
        That leads to a third question: What is the role of small
    business in this story? Large firms have dominated American
    manufacturing for decades, but their supply chains are made up
    of smaller firms. Today small business is the path to American
    reindustrialization. Smaller businesses are the keepers of
    specialized manufacturing knowledge; they are the producers of
    precision components, tooling, and specialty materials.
        Take aerospace and defense. Roughly 70 percent of Boeing's
    Dreamliner comes from its smaller suppliers. Roughly 60 percent
    of all employment in that sector is small and mid-sized
    businesses. And the story is similar in other sectors, too,
    like automotives.
        Now, China sees the value of small and medium enterprises.
    Ten years ago, when it launched its Made in China 2025 program
    to catch up and surpass the West in key sectors, it saw small
    business as part of the plan. So it launched the so-called
    Little Giants Program to boost innovation, eliminate foreign
    suppliers, and create global competitors in high technology.
        That program is a competitive program, but once firms get
    in, once they get that Little Giants designation, they get
    access to an incredible package of loans, subsidies, state
    equity investments, expedited patent processing, university
    research support, streamlined stock market listings, and even
    offtake from SOEs and the government.
        To date, more than 17,000 Chinese firms have been
    designated Little Giants. Ninety percent are in high-tech
    manufacturing, and some have grown into global titans, like
    Unitree Robotics.
        That is what our system is up against, which leads to a
    fourth and final question: What do we do? The SBA has some
    powerful tools. In fiscal year 2025, it guaranteed $45 billion
    in loans to more than 85,000 small businesses, the most in its
    history. But the truth is this is simply not enough to keep up
    with Beijing. I would like to offer a few proposals.
        First, China is going all-in on research support, but we
    have let the programs that we use to support early stage
    research lapse. Congress should immediately reauthorize the
    Small Business Innovation Research, and the Small Business
    Technology Transfer programs.
        Second, China packages its benefits together and ties them
    to a certification program whereas we launch often
    uncoordinated individual initiatives. We can change that.
    Congress can launch a certification program that provides a
    coordinated package, demand side, supply side, and regulatory
    support for our high-tech small company.
        Third, China's Little Giants raised about $125 billion in
    the last few years from private sources, often with state
    support. Meanwhile, the first cohort of our SBIC critical tech
    program might raise $4 billion. Congress should scale up that
    kind of program.
        Fourth, Chinese manufacturers are able to access low-cost
    capital, including loans. To keep up, Congress should raise the
    number of loans, the loan cap, and the total appropriation for
    U.S. SBA's new, manufacturing--Access to Revolving Credit
    Program.
        And, fifth, China's Little Giants can draw on universities,
    state institutes, and SOEs for technical assistance. Our
    equivalent program has lapsed. Congress should restore the
    Manufacturing Extension Partnership promptly.
        These are just a few recommendations, but the common thread
    through all of them is integration. The SBA has loans, equity
    vehicles, R&D programs, and technical assistance programs. What
    it lacks is a mechanism to deploy them together in a
    coordinated way.
        China has built that kind of program, and it is working.
    This Committee has the tools and jurisdiction to build the
    American equivalent. Thank you for your time, and I look
    forward to your questions.
        Chairman WILLIAMS. The gentleman yields back.
        And we will now move to the Member questions under the 5-
    minute rule. I recognize myself for 5 minutes.
        Mr. Murphy, as a small business owner, you were directly
    involved in a dispute with a Chinese-controlled entity that
    ultimately forced your company out of its own project. You
    mentioned that. Can you walk us through how that situation
    unfolded, and what warning signs, if any, you now recognize
    maybe in hindsight?
        Mr. MURPHY. Yes. Thank you, Mr. Chairman, Members of the
    Committee. There were warning signs, but all of this was under
    a prevailing need for expediency. We had secured through an RFP
    process contracts to electrical power, and that is what you
    need to mine bitcoin, is a lot of electrical power. And our
    lead investors fell through. We had raised $3 million, but we
    needed a lot more to build out the project. So we had this
    quick need to secure the capital to execute the project, and we
    ultimately, for lack of a better term, got in bed financially
    with these Chinese partners.
        So the first one was the diligence. We did not have time.
    And the nature of the capital need was expedient, like we had
    to execute on this or we would have lost the power contract. So
    there is the due diligence piece that could have, should have
    been better, but it wasn't because things had to move quickly.
        And then, second, as things devolved and that played itself
    out, was the nature of the lawfare. And they were mobilized;
    they were strategic; and they knew what they were doing in
    hiring all of these lawyers and law firms at national and local
    levels to crush us on the legal fees.
        So it was really those two: It was the upfront things that
    could have, should have been different, but it was so quick we
    couldn't do it differently. And then, as things played out,
    there was nowhere to go as a small business when the lawfare
    was happening. There wasn't a congressional--there was no
    federal mechanism, or we weren't aware of it. We were just the
    small business left to duke it out. And I don't know how that
    would be solved. There is some possibilities, but that was the
    difficult spot once it came to that, Mr. Chairman.
        Chairman WILLIAMS. Thank you.
        Mr. Pahutski, capital is the life blood of small business.
    We all know that. And many rely on alternative investments to
    scale but may not have the resources to fully vet investors. So
    my question to you would be, how can we help small businesses
    identify and avoid the investments from entities with ties to
    foreign adversaries, particularly those connected to the CCP?
        Mr. PAHUTSKI. Thank you, Chairman, for the question. And
    your question is spot on to a plan that I have devised with the
    acronym TRUST, meaning Trusted Resilient U.S. Tracks, and it is
    underpinned by 10 different items that are very simple and
    effective and in place today: Launch small business-led trusted
    capital programs at each department and agency, embedded
    already in that fabric that exists. Streamline due diligence
    support with grants and affordable tools for small businesses.
    Incentivize supply chain diversification through tax credits
    and subsidies. Establish vetted suppliers that highlight
    secure-approved partners. Foster public-private partnerships to
    mentor small businesses into contracting vehicles. Align with
    Section 1260H that Congress passed years ago that provides
    clear supply chain risk guidance. Empower small businesses with
    advocacy and pathways for market access. Build trusted and
    transparency tools to map supply chains and risk
    identifications early. Coordinate with small business
    administration offices to ensure national security while
    fostering innovation. And launch educational initiatives for
    small businesses so they know how to navigate these programs.
        It is not complicated. Everything that I have identified
    there, as kind of mentioned in others' comments, are pieces
    across this chessboard that we haven't tied together.
    Implementing them are easy. We have to move from policy to
    action, and that is what is slowing us down.
        United States is known for innovating, and China is known
    for duplicating. We have to cease that. We have to get ahead of
    their actions.
        Chairman WILLIAMS. Thank you. Mr. Lyons, in closing here,
    as you know, main street is increasingly vulnerable to Chinese
    Communist Party efforts to target America's small businesses
    and steal intellectual property. So my question would be, based
    on your experience, what was the most common method used to
    obtain intellectual property from America's small businesses?
        Mr. LYONS. Mr. Chairman, thank you for the question. It is
    a great question that should be studied further. In my
    experience, the cyber attacks are the most prevalent. The
    second I would say is insider threats. And it is leveraging
    programs, such as Thousand Talents, and following that, it is
    engagement through venture firms. And even the process of doing
    due diligence from a venture firm when they are learning about
    a start-up is a syphon of intellectual property theft. So small
    businesses today are--it is multivector. It comes through
    coercion at times on insiders as well. Under the 2017 Chinese
    Intelligence Law, PRC nationals have to cooperate when they are
    asked to. So that threatens American workers who happen to be
    PRC nationals.
        Chairman WILLIAMS. Okay. Thank you very much. And I now
    recognize, my time is up. I now recognize the Ranking Member
    for 5 minutes of questions.
        Ms. VELAZQUEZ. Thank you, Mr. Chairman. Dr. Doshi, how do
    differences in the U.S. and PRC's political economies affect
    our bilateral tech competition?
        Mr. DOSHI. Thank you very much for the question. China is a
    nonmarket economy. It has enormous amounts of state support and
    coordination to support small companies and big companies
    alike. And that means that oftentimes their companies can stay
    solvent longer. They are not targeting profit. They are
    targeting market share. There are companies which either need
    to get loans or are disciplined by our capital markets. So they
    can just stay in the game longer and throw more money at the
    problem than we can, and they have the government as their ally
    and the competition without companies.
        Ms. VELAZQUEZ. It is no secret that the PRC dominates the
    supply chain for important items like pharmaceutical
    precursors, which we saw on full display during the COVID
    pandemic. Why is it in our national interest to ensure
    manufacturing for strategic tech and their parts?
        Mr. DOSHI. Thank you for the question. We did see that
    China weaponized its unique role over the rare minerals and
    magnets supply chain. The total amount in value of the rare
    minerals we import is less than the price of an F-35, and yet
    it supports more than 20 percent of American economic activity.
        If you take pharmaceuticals, 90 percent are fermentation-
    based API; that is, antibiotics are made in China. If we don't
    bring some of that back or have it come from our allies and
    partners, China has a chokehold over our healthcare system.
        Ms. VELAZQUEZ. How does President Trump's tariff wars
    affect small business' ability to ensure and compete with the
    PRC competitors?
        Mr. DOSHI. On the one hand, the tariffs can create some
    protection from the PRC. But, on the other hand, they also
    raise the import costs for many companies that require
    importation of all kinds of imports for manufacturing. And, as
    a direct result, they may be less competitive globally, and we
    are seeing a lot of strain amongst small and medium
    manufacturers as a direct result of higher costs.
        Ms. VELAZQUEZ. Our biggest strength is our ability to draw
    and keep the best minds in the world. This helps us drain the
    PRC's expertise and use it for our interests.
        Last year Committee staff released a report finding that
    President Trump's mass deportation campaign is hurting this
    strength. Mr. Chairman, I ask unanimous consent to put the
    report in the record.
        Chairman WILLIAMS. So moved.
        Ms. VELAZQUEZ. How does the Trump crackdown harm our tech
    leadership?
        Mr. DOSHI. I think there is a risk that some of the
    immigration crackdown will reduce the flow of high-scaled
    entrepreneurs from abroad into the United States. And a lot of
    our most innovative companies are a mixture of American
    homegrown talent and also foreign talent. We are only 300
    million people. China is 1.4 billion. Our superpower is the
    ability to attract the very best from around the world and have
    them enhance our tech ecosystem.
        Ms. VELAZQUEZ. Thank you. The SBA, Dr. Doshi, just made
    sweeping lending policy changes barring small businesses from
    SBA loans if they have any foreign industry stakes. The notice
    names PRC nationals without justification, bringing
    constitutional concerns under the 14th Amendment.
        Mr. Chairman, I ask unanimous consent to put in the record
    my letter to the SBA detailing these concerns.
        Chairman WILLIAMS. So moved.
        Ms. VELAZQUEZ. Do these unnecessary restrictions constrain
    capital access for American entrepreneurs?
        Mr. DOSHI. I think a lot of foreign nationals from a
    variety of countries can do a lot of good in the United States.
    Ph.D. students from abroad, from India or China or Japan, when
    they are here, they can launch innovative companies. We
    shouldn't deny them capital just because they are foreign
    citizens.
        And, as for the China question, there are real concerns
    about security and espionage. We also have to implement this
    policy in a way that doesn't undercut our innovation
    advantages.
        Ms. VELAZQUEZ. Does it hurt small manufacturers' ability to
    onshore?
        Mr. DOSHI. I think it does because that foreign talent will
    often, especially Trump himself said, actually help us
    reindustrialize the country, for example, in areas like
    batteries.
        Ms. VELAZQUEZ. Does it incentivize them to seek more risky
    foreign capital?
        Mr. DOSHI. I think that is an important point. If you can't
    access capital from the SBA, you may end up trying to get
    capital from less trustworthy foreign sources, including China.
        Ms. VELAZQUEZ. Mr. Lyons, the prime way to monitor fraud
    and address suspicious and fraudulent activity in our federal
    research programs is through their built-in watchdogs, the
    offices of inspector general. Should they be fully funded so
    that they can be at their greatest strength? In some cases,
    some of the agencies do not have yet an OIG.
        Mr. LYONS. Ranking Member, thank you for the question. I
    see I am out of time. However, I think that any initiative that
    provides more of a capability to allow us to do research and
    background on individuals, programs, companies to determine and
    detect their connectivity to the PRC is a program I would
    support.
        Ms. VELAZQUEZ. Thank you.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Mr. Meuser from the great State of
    Pennsylvania for 5 minutes.
        Mr. MEUSER. Thank you, Chairman.
        Thank you all. Very compelling testimony. Just to start
    out, let's face it, the advantage that was provided over a 20-
    year period to China's products being shipped into the U.S.
    versus where we are today, very much thanks to the courage of
    President Trump to rethink tariffs and focus on fair trade--not
    just free trade--has more advantages and benefits than
    negatives.
        That being said, there is some real serious conversation
    taking place here. I am not new to it. I have got a relatively
    extensive business background on the international front as
    well. But what I am interested in hearing from you all is, what
    can Congress do? Many of you have outlined this in your
    testimony, I mean, in real terms, advice on recognizing the
    risk beforehand so we can hopefully share that with--in our
    promotion, communications. And, once you are under attack or
    being injured or harmed, who are you going to? Who in our
    federal government, state government? Is it FinCEN? Who is
    helping you? The DOJ, the SBA, the FBI? I mean, you know, you
    are really under significant assault, Mr. Murphy, with your
    business, and others.
        So, Mr. Pahutski, let me just start with you, and you were
    outlining, and we really want to get those 10 items that you
    had, as well as the 4 that you included in your testimony, but
    what can Congress do, and perhaps advice on recognizing, if you
    would?
        Mr. PAHUTSKI. So I think it starts with accountability.
    Right. The executive branch has the authorities to execute the
    intent and everything that has been discussed here. But
    shifting away from offices that concentrate on small
    businesses, policymakers and shifting that to action doers.
    Right. When instances occur like Mr. Murphy's, they need
    advocacy at the point of the problem. And that is a long
    problem expanse. Right. Far left is, ``Hey, where can I find
    trusted capital?'' Right. If you are working with the DOD, or
    the DOE, potentially, in his instance, that would have an
    advocacy role; they should have a list of trusted providers, of
    capital providers that he could have access to so he doesn't
    have to guess and blindly navigate that course.
        That was a policy and an instrument that had started in the
    DOD that I was familiar with about 8 years ago and has slowed.
    Right. That is something that needs to pick up pace. And it is
    not so during the current administration. It slowed over time
    because of you all's priority and focus to other things. But
    having trusted capital programs do an amazing job to avoid what
    he did.
        The other part I would advocate for is understanding the
    supply chains. Right. If you are not being bartered and traded
    through trusted capital to undermine your company, it is
    through the supply chains that make you less attractive to the
    DOD or other institutions that you work with. Right. So
    eliminating those supply chains--not just identifying the bad
    ones but providing a list of trusts vendors and sources is also
    a critical step in this.
        Mr. MEUSER. That is great. I have limited time. Mr. Murphy,
    what would say, what sort of help would you like to have had
    from the federal government, and what else could Congress do.
        Mr. MURPHY. Yes. Thank you, Mr. Chairman, and to you
    Representative. The big thing from the onset was we didn't
    know--we didn't even think about the SBA as an option for
    capital. Never--why would we get a loan? So having hybrid and
    equity options that are meaningful. So, for a business like
    ours, we needed 10- to $15 million to secure the project. We
    had already raised millions, but we needed more. So it is that
    hybrid and equity option at larger amounts, and that was what
    really led to my recommendation thinking we are doing this in
    critical technology really primarily defense right now--I think
    it is the SBIC critical technology initiative. There is a good
    amount of capital there, but there is nothing in healthcare.
    Right. There is nothing in these parallel industries that helps
    us access that.
        And, then, the other piece with the lawfare, I have a few
    notes here, things like debarment or sanctions, but tricky in
    the middle of the litigation, or fast tracking relief in some
    way to DOJ or Commerce Or the Trade Representative. But, once
    it got to the point of the lawfare, it was hard for Congress,
    or this body, to really help us. We were in the judiciary.
        Mr. MEUSER. Thank you. Mr. Lyons, somewhat of the same
    question, if you could respond relatively quickly. And, by the
    way, Mr. Doshi, your testimony was outstanding. All your
    testimonies, I want to make sure I get it to the right people
    at the SBA; your information is really critical to our economy.
    But, go ahead, Mr. Lyons. Five seconds.
        Mr. LYONS. I would commend Congress for recently passing
    SBIR reauthorization, which includes due diligence standards in
    there. That is an immediate thing. SBA should have funding to
    provide threat briefings to small businesses. The biggest
    problem today is that most companies are simply unaware of this
    issue.
        Also, states like California prevent due diligence from
    occurring without providing that diligence to the subjects of
    the diligence.
        Mr. MEUSER. My time has run out. I yield back. Thank you,
    Mr. Chairman.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. McGarvey from the great State of
    Kentucky for 5 minutes.
        Mr. MCGARVEY. Thank you, Mr. Chairman. And thank you for
    having this really important hearing today and to our witnesses
    for joining us.
        I am going to start with you, Mr. Pahutski. Your business
    has been active in SBIR, STTR since 1988. And not just active,
    but, I mean, received tons of awards. I think something like 30
    awards or more through the program. And just how have you seen
    this vital program support small businesses and promote
    American innovation?
        Mr. PAHUTSKI. I want to be careful on my testimony because
    I am not representing my company, nor the awards that they have
    received through fair competition. But Systems Planning
    Analysis broadly is considered an expert in the industry
    understanding exactly where threat vectors are coming from, and
    how to provide that strategic counsel and advice back to the
    government to avoid things--left of launch, if you would, that
    Mr. Murphy and other Americans have experienced.
        Mr. MCGARVEY. No. I appreciate that. And this is an
    example, sometimes, you know, if you are watching this place
    from afar, you think the fights are between Democrats and
    Republicans oftentimes, and sometimes, in this place, fights
    come between the House and the Senate. And this is an example
    of where the House, all of our colleagues here, took this
    incredibly program, SBIR, STTR, passed it, and then it was, not
    just the Senate Republicans--really, it was one Republican
    Senator with a bone to pick that held this entire process up.
    And now it has effectively been shuddered for 6 months.
        So they finally came to their senses over there on the
    other side of the Capitol and reopened the program, but, of
    course, now that we passed the bill out of both Chambers, the
    President has said he is not going to sign any more legislation
    until the SAVE Act is passed. So this important work remains on
    hold.
        And I just--this is important work because, as we have this
    conversation, this really, really important conversation--Mr.
    Lyons, I appreciate a lot of what you had to say about the
    threat that the PRC and the CCP is posing to Americans, to
    America, and, in particular, American business interests--we
    need to have programs like this funded that are helping our own
    small businesses continue to have an advantage, continue to
    grow, continue to invest in products and people across the
    United States. So we need the President to sign this. We need
    our small businesses to get help. We all need to work on this.
        And I just want to end on a little point, Dr. Doshi, is it
    easier to address how China is harming our small businesses
    from IP theft, from coercion, from manipulation, if we go it
    alone, or if we go at it with our allies?
        Mr. DOSHI. Well, thank you, sir. It is a great question.
    And what I want to say is that, right now, China outscales us
    in many dimensions. They are twice our manufacturing capacity,
    3 times our power generation, 11 times our steel production, 20
    times our cement production, but if we take the U.S. and put
    our allies and partners together, we outscale China. Any time
    we want to make progress, we are stronger if we do it with our
    friends, and the Chinese simply cannot match the scale that we
    have together.
        Mr. MCGARVEY. And that is why I think this hearing is so
    important. That is why it is so important in this Committee
    where we still do come together and do good work. We have some
    real threats we have to deal with. We are not going to be as
    successful if we continue to fight ourselves and fight our
    allies when we should be taking on a common enemy. So I
    appreciate you guys bringing that point up.
        And, Mr. Chairman, I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I recognize Mr. Wied from the great State of Wisconsin for
    5 minutes.
        Mr. WIED. Thank you, Mr. Chairman.
        Thank you to the witnesses for being here today.
        The Chinese Communist Party is no longer an emerging threat
    to our national security. They have a calculated and well-
    developed plan to infiltrate our educational institutions,
    internet data, military installations, and our nation's
    economy. Many of these threats are more overt than others, but
    the CCP infiltration of American small business is a problem
    that is not always discussed.
        The threat from the CCP to small businesses ranges from
    intellectual property theft to CCP-linked investments. However,
    small businesses often lack the resources to protect their
    company and the products they have poured their time into. I
    look forward to discussing these issues with all of you here
    today.
        Mr. Pahutski, what are the current gaps that small
    businesses face when seeking capital that allows CCP-linked
    investors to access this sensitive information?
        Mr. PAHUTSKI. I don't know if it is a lack of access to
    capital, but it is a lack of awareness once they have access to
    it, and that really means the speed of relevance.
        In Mr. Murphy's case, I would dare say that he was under a
    time pressure to make something happen because the deal would
    close in a certain period of time. Not having the ability to do
    due diligence, one, because of the cost, the other because of
    the education, ``do I really need to do that,'' and those two
    worlds intersect at the point of decisionmaking. And that is
    not months and weeks. That is hours and days at the most.
    Right. And so we are left to cross the spectrum of seeing these
    types of instances because we don't have the advocacy within
    the government that is a clear path to solutions for these
    small businesses. We need to do better.
        Mr. WIED. Well, this would be for, Mr. Murphy, how about,
    what are some ways that small businesses in your--from your
    experience, having gone through this, that can protect
    themselves from CCP-linked investors.
        Mr. MURPHY. Mr. Chairman, and to you, Representative, we
    talked about expediency. Right. So access to capital. These
    are--we have talked about these, but access to capital; and
    then the nature of that capital--equity, hybrid versus just
    debt only; and then the amount of that; and the ability to have
    due diligence as a part of that. But working with funds and
    particularly funds that are leveraged with the SBA program that
    are trusted, that are safe. Many of these venture capital funds
    in Silicon Valley, they are not; they are not. They are
    gathering IP. They have relationships with attorneys and many
    of the law firms. I am using Silicon Valley as an example
    because that is one that everybody is aware of. But that is the
    nature of it. So it is having what I would call safe,
    protected, trusted funds, and resources that are part of the
    diligence and to also have leverage to help entrepreneurs and
    businesses move quickly.
        Mr. WIED. So how do we do that? How do we help you? And I
    am going to just basically open this up to anybody: How can we
    help you in that regard here in Congress.
        Mr. MURPHY. I would say briefly improving, updating,
    upgrading the SBA program. I learned here from Mr. Pahutski
    that there are actual offices--like there is a Department of
    Energy SBA office. I didn't know that. That would have helped
    to know. But working and moving capital and options to apply
    for that into the agencies to help it move quicker.
        Mr. WIED. Mr. Lyons.
        Mr. LYONS. Thank you, sir. I do think awareness is a big
    part of this. I also think that State laws create a discrepancy
    in being able to actually conduct things like due diligence.
    And I brought up briefly the California statute, not to pick on
    California. It is just that we come across a lot of companies
    based in California, and the statutes are currently favored
    towards privacy versus background research on people. And, when
    you are running a critical technology like AI or quantum, where
    it makes a--it is a zero-sum game--we need to be able to
    facilitate those checks. So I think federal preemption on that
    issue, but also federal tax credits to allow companies and
    small businesses to do this would be important.
        Mr. WIED. Mr. Doshi?
        Mr. DOSHI. Thank you, Congressman. I will just offer two
    quick points.
        First, we have to protect ourselves, which means that I
    think we need to strengthen due diligence. That, in turn, means
    that we basically should think about Corporate Transparency
    Act, beneficial ownership, because knowing who ultimately owns
    some of these companies that are investing in the U.S. is
    critical, and that is the hard part of due diligence. We can
    fix that. And it also, by the way, will help combat fentanyl
    and money laundering.
        The second thing we should do is promote, and that is
    access to more capital from the SBA for our high-tech
    companies.
        Promote and protect, together, are the way we do this.
        Thank you, sir.
        Mr. WIED. All right.
        Thank you, witnesses, for being here today.
        I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Ms. Simon from the great State of
    California for 5 minutes.
        Ms. SIMON. Thank you.
        And thank you all. Today has actually been extremely
    informative.
        I have a question for Dr. Doshi.
        So, last week, the House sent the bipartisan Small Business
    Innovation and Economic Security Act--and the act, as you know,
    it reauthorizes the Small Business Innovation Research and
    Small Business Technology Transfer programs--to the President's
    desk for signature.
        I am curious, what is the significance of these programs on
    tech leadership--our tech leadership?
        Mr. DOSHI. Thank you, Congresswoman.
        The SBIR program, as I recall, has done over $70 billion in
    loans over the last 40 years almost, including many iconic
    American companies that have benefited.
        Right now, the Chinese are putting billions and billions
    and billions into their small companies. The fact that we have
    had a 6-month lag--and hopefully that will be cleared up very
    soon--puts us at a significant competitive disadvantage when it
    comes to small business relative to China.
        Ms. SIMON. Puts us at a disadvantage?
        Mr. DOSHI. Yes, ma'am, a competitive disadvantage.
        Ms. SIMON. Can you say more?
        Mr. DOSHI. Absolutely. I mean, right now, the Chinese small
    companies, the so-called ``Little Giants'' companies, are able
    to being access tens, if not more, billions, of dollars in low-
    cost capital. The fact that our program is paused means that
    every small company in China that wants to win in manufacturing
    has yet another advantage now over us, which is access to
    cheaper funding.
        Ms. SIMON. And just so the public understands, they are--
    these small Chinese companies are able to access this capital
    from the Party, from the----
        Mr. DOSHI. So they are able to get it from----
        Ms. SIMON. Where are they getting it from?
        Mr. DOSHI. Yes, ma'am. From the state and, as well, from
    the private sector, with the state backing it.
        And so, right now, we are pushing ``pause'' and the Chinese
    are pushing ``go'' through multiple funding channels.
        Ms. SIMON. So, should this act be signed by the President,
    we have no idea what that implementation would look like. So
    what are tech companies and leaders and innovators doing in the
    whim while they wait?
        Mr. DOSHI. Well, for small companies, access to capital is
    a challenge, especially now with so much capital going to the
    data-center build-out. That is crowding out capital for smaller
    companies.
        Ms. SIMON. Right.
        Mr. DOSHI. So, as we hear, they have to take capital from
    less trustworthy sources; they have to take it on less
    preferential terms. They may have to give up more equity, take
    more dilution. That is not great.
        And one of the great things about the SBA program is, it
    doesn't do any of that. It is not diluted, for example.
        So we should get that program restored. Otherwise,
    companies may make poor choices with the long-term
    competitiveness.
        Ms. SIMON. Now, in lieu of--who knows what that calendar
    will be and when the act will be signed by the President. We
    hope it will be. Any advice to this Committee on how to push
    the conversation forward?
        Mr. DOSHI. Well, I think hearings like this one are useful,
    because I do hear some bipartisan support for the idea that our
    small companies need low-cost, non-dilutive capital to lead in
    high tech. That is a view I think most Americans would support.
        And I think, at the same time, when you understand the full
    scope of what China is up--what they are up to--and that is why
    I focused on that in my testimony----
        Ms. SIMON. Right.
        Mr. DOSHI.--what they are doing--it makes all this look a
    lot more urgent. It is a lot harder to say let's push ``pause''
    when you see tens of billions of dollars flowing to small
    companies in China.
        They are very serious about promoting these small
    companies. And let me be very clear: Their goal is to
    ultimately knock our companies out of business. They don't want
    them to be selling into China or selling around the world. They
    would like their companies to win.
        And so it really is an existential question. We have got a
    lot of small companies in manufacturing. We are the backbone of
    American manufacturing. A lot of them are run by people who are
    about to retire. If those companies go out, we lose not just
    the companies but the knowledge that those companies held onto
    for decades. It will be much harder for America to
    reindustrialize, which is the President's priority, if we lose
    those companies.
        Ms. SIMON. So it never happens to me, but I have a whole 1
    minute and 39 seconds left. And I know a lot of my colleagues
    are in other hearings. This hearing, as our Chair mentioned, is
    literally on top of a number of other hearings on the floor
    today.
        So, if you could, Dr. Doshi, for the next, you know, 35
    seconds--and then I will yield my time back to the Ranking
    Member--I would love--you know, I know other Members had other
    questions for you. So, sir, are there other thoughts that you
    would like to extend to the Committee?
        Mr. DOSHI. Yes, ma'am. I think the last thing I will say is
    that one of the things that China has done very well is, it has
    packaged a lot of these benefits together--supply-side
    benefits, demand-side benefits, regulatory benefits.
        Ms. SIMON. Uh-huh.
        Mr. DOSHI. It makes it much easier for companies to have a
    one-stop shop.
        The Taiwan Economic Ministry does the same thing, by the
    way.
        So a lot of our competitors, a lot of our allies, have
    programs that are very integrated. Presenting a package of
    goods, a package of benefits, to these companies--it is not all
    about spending money--can make their lives easier and can make
    it so that they are more competitive. That is how the Chinese
    do it. It is, again, how our allies do it. It is how we can do
    it too.
        And I think we should think about the SBA having a
    credentialing program for high-technology companies so we can
    better incentivize the flow of capital. And think about this: A
    company that gets that designation, as in China, will be a much
    safer bet for the private capital markets too. I think we can
    do that.
        Ms. SIMON. Thank you, sir.
        I appreciate all of you.
        I will yield my time, my whole 30 seconds, back to the
    Ranking Member.
        Mr. DOSHI. Thank you, ma'am.
        Chairman WILLIAMS. The gentlewoman yields back.
        The Ranking Member has nothing.
        I now recognize Ms. King-Hinds from the Northern Mariana
    Islands for 5 minutes.
        Ms. KING-HINDS. Thank you, Mr. Chairman.
        And thank you to all of the witnesses for your testimony
    today.
        So, as the Chairman has stated, I represent the CNMI, which
    literally sits on the front line of a lot of these strategic
    geopolitical conversations. And, you know, for those who are
    not familiar with where the CNMI is, we are closer to China
    than we are the United States.
        And so, you know, my community is struggling economically.
    I am concerned about any type of foreign investment coming into
    the CNMI. As a matter of fact, we have been having
    conversations with the legislature as to how do we provide the
    necessary support to the local government and connect them with
    an entity like CFIUS, for example, right? Because, you know, we
    ardently object to malign CCP influence, right?
        And I am really glad, Mr. Lyons, that you distinguished
    between, you know, regular folks and the regime, right? So I
    appreciated that comment.
        And I kind of--in reading your testimony, Mr. Murphy, you
    know, I was sad for you. And I don't want something that has
    happened to you to happen to any small businesses, especially
    folks out in a remote region where, you know, the government
    doesn't have the resources and just folks don't have the
    resources, right?
        And I kept hearing a common theme amongst all of you, and
    that is due diligence.
        And as I was preparing for this hearing, I saw that there
    is no connection between the SBA, who, you know, is in charge
    of lending capital, with CFIUS under the Department of
    Treasury. And so I kind of wanted to further flesh out, you
    know, that piece that you focused on with regards to due
    diligence so that we prevent what happened to Mr. Murphy.
        And I will just open it up.
        Mr. PAHUTSKI. Maybe I could take that. I used to be the
    DOD's lead representative for CFIUS, so I am very familiar with
    the authorities that are granted to that.
        That is not, I would say, the appropriate tool. At that
    part of spectrum, CFIUS is typically reactionary, to some
    degree, because those transactions are being bought. The
    problem is well left of that. It is when we talked about when
    small businesses are faced with capital decisions, partner
    relationships, equity decisions. That is really at the point of
    no return, where the decision-making needs to happen.
        CFIUS is a great measure to protect things through the
    national-security lens, but maybe his transaction didn't
    present a national-security threat, and therefore it might
    necessarily be reviewed through those authorities.
        Ms. KING-HINDS. So I ask that question because any
    investment right now in the CNMI is viewed as a national-
    security threat if it is a foreign investment. And I want to be
    able to help my community, given the fact that we are just
    going through an economic decline. As a matter of fact, I think
    it is in economic free-fall at this point.
        And so I think you are absolutely right that CFIUS is
    reactive. How do we change it so that we ensure that what
    happened to Mr. Murphy doesn't happen? Because CFIUS is the arm
    of the federal government that is supposed to review foreign
    investments for national-security risks. And so how do we
    bridge that gap?
        And I see Mr. Lyons there nodding his head.
        Mr. LYONS. Thank you, Congresswoman.
        I think that it is a complex problem, but one thing to
    address first is that there is nothing illegal about PRC
    investment into companies. And so that means that our law
    enforcement mechanisms have no tools here.
        It does require--it does require background checks, due
    diligence, and I don't think it is always appropriate for the
    government to be involved in that, because the government
    simply doesn't collect on these issues. As a former
    intelligence officer, we focus on bigger things, I would say--
    on weapons systems, plans, and intentions. We don't focus on
    mergers and acquisitions or, really, much in the economic
    realm.
        So, for that reason, there has to be partnerships on that
    front. I think SBA pushing out threat briefs could help. I
    think tax incentives--I think tax credits--to allow companies
    to take advantage of that, from a tax standpoint, so that they
    can build a CI program or a cyber program. There is a limited
    amount of funding available from the SBA today that goes
    towards funding cyber programs, and we need to expand programs
    like that.
        Ms. KING-HINDS. Thank you.
        Mr. Doshi, you can chime in for the rest of the time I
    have.
        Mr. DOSHI. Thank you, Congresswoman. Let me just offer one
    additional point, because I agree with what everyone else has
    said.
        I think there is some value in helping small companies
    recognize that, if they take investment from Chinese sources
    and that they are in their cap table, it might make it a lot
    harder for them to get access to certain government benefits,
    from the [inaudible] to Department of War, et cetera. And I
    think getting people to understand that there is a risk, not
    just a legal risk but a reputational risk potentially, in
    having these investors is critical.
        And I will end with this. We need corporate transparency.
    We need to know the beneficial ownership of some of these
    vehicles. If we know that, we can do better due diligence in
    the open-source.
        Ms. KING-HINDS. Thank you.
        I yield back, Mr. Chairman.
        Chairman WILLIAMS. The gentlelady yields back.
        I now recognize Ms. Scholten from the great State of
    Michigan for 5 minutes.
        Ms. SCHOLTEN. Thank you, Mr. Chairman.
        Thank you, Ranking Member.
        And thank you so much to our witnesses for being here
    today.
        It seems like our questions this morning have kind of been
    going back and forth and questioning, to a certain extent,
    whether China actually is a problem or trying to point out how
    it is.
        I think we all agree, China is a problem, right?
        You agree?
        You agree?
        Yes. All heads are nodding.
        The question is, what are we going to do about it?
        Dr. Doshi, in your questions, you talk about the rapid pace
    at which China is investing in its small businesses. At the
    same time, we have seen major scaling back of our small-
    business programs.
        Can we continue at the same pace and expect different
    results? To our entire panel, I mean, yes or no, can we
    continue--no, we cannot. No. No. We cannot.
        I think that this is the central question, you know. And
    the oversight of this Committee is--if we take nothing more
    away, if we are all in agreement that China is a threat, we
    cannot continue at the same pace of scaling back our programs.
    Yes, there are other multiple things that we need to do, but
    making sure that we are putting our money where our mouth is
    and addressing this problem head-on is essential.
        I have a few other questions particular to west Michigan,
    but I really wanted to emphasize that point.
        So west Michigan is home to world-class innovation. I have
    had the privilege of touring small businesses in my district
    who are at the forefront of research and development that will
    enhance everything from medical treatments to new defense
    technologies. Many of these businesses were SBIR/STTR award
    recipients. We had 11 businesses receive awards in 2024, 4 more
    recipients in 2025.
        I was proud to vote in favor of the Small Business
    Innovation and Economic Security Act last week, which passed
    the House and would reauthorize those programs.
        With specific reference to these programs, as we talk about
    the importance of investment, Dr. Doshi, how will these
    programs, specifically, help our tech leadership?
        Mr. DOSHI. Thank you very much, Congresswoman.
        And, as you know, of course, the Midwest is home to a
    disproportionately large number of our high-tech
    manufacturers--small businesses, disproportionately.
        And so I think for these companies, access to low-cost
    capital is a challenge. Bigger companies can get better terms
    from big banks. Our smaller companies struggle. They may not be
    as well known. They are not as credible, perhaps. They have got
    other challenges.
        The government can step in, as they do in China, but it
    doesn't have to be a big cost to the government. That is the
    benefit of some of our programs.
        Ms. SCHOLTEN. Right.
        Mr. DOSHI. And if you look at the track record, our
    programs tend to do quite well. They end up creating huge
    economic benefits. Sometimes even major companies emerge from
    SBIR and STTR.
        So I think the question for us is, do we want to support
    these companies in high tech? Because if we don't want to
    support them, China is going to support it, so we have to get
    even with them.
        Ms. SCHOLTEN. That is exactly right. Thank you.
        Dr. Doshi, your testimony highlights--I want to talk about
    small manufacturers and exporters, specifically, who rely on
    technical assistance to build up and keep an edge over their
    overseas competitors.
        The MEP program--my district has benefited significantly
    from the State's work there. The Michigan Manufacturing
    Technology Center, in addition. In the past 3 years, MMTC has
    assisted 145 manufacturing companies just in my district
    alone--145--impacting over 16,000 employees. I mean, the impact
    is just so huge. And I know Michigan is, you know, a little
    outsized there, with, you know, our huge auto manufacturing
    sector, but this is a big deal to us.
        Moreover, MMTC is working to establish a new AI Lab to help
    keep Michigan ahead of the AI curve.
        Dr. Doshi, the Trump administration has withheld $19
    million in MEP funding, causing major staffing layoffs and
    hiring freezes within most MEP centers. How is this harmful to
    our domestic manufacturers? It almost goes without saying, but
    we are here to take the testimony today, so please do say it.
        Mr. DOSHI. Well, thank you, Congresswoman.
        I think it is disastrous. I mean, a lot of these programs
    are now seriously damaged. It will take, you know, months, if
    not years, for them to scale back up again.
        I am not really sure why. The President is very committed
    to reindustrialization. His team believes in
    reindustrialization. I think probably somewhere there has been
    a disconnect. And the team that he has that cares about this
    should re---should make sure that these programs have the money
    that need.
        Because the Chinese are investing, right? They do technical
    assistance, and we don't. They do technical from their SOEs,
    from the universities, state research centers, on a industrial
    scale.
        Ms. SCHOLTEN. Yeah.
        Mr. DOSHI. And we shouldn't pause ours.
        Ms. SCHOLTEN. Yeah.
        As a State that is also home to some of the leading
    universities in the country, I worry about the brain drain, not
    from people leaving this country, necessarily, but from not
    pursuing these advanced degrees in technology because they are
    not seeing, you know, the opportunity for themselves there as
    well.
        So thank you. I am out of time. I thank you all for your
    testimony today. It has been, you know, incredibly helpful.
        Mr. Lyons, I especially appreciated some of your remarks,
    so thank you.
        Thank you. I yield back.
        Chairman WILLIAMS. The gentlelady yields back.
        And I think--do we have any more here in the hearing?
        I would like to thank our witnesses. This has been a great
    hearing. And this is a bipartisan subject we all agree with--99
    percent, I am sure; maybe even better.
        But, without objection, Members have 5 legislative days to
    submit additional materials and the written questions for the
    witnesses to the Chair--and before I finish that, somebody from
    California just walked in.
        Ms. SCHOLTEN. California time.
        Chairman WILLIAMS. And I yield to the gentleman from
    California.
        Mr. CISNEROS. Thank you, Mr. Chairman.
        Sorry. I had a briefing that I had to pop into, and I just
    got out in time. And I couldn't have my watch or anything, or
    my phone or anything, to let me know what time it was, so--I am
    here now.
        So thank you all for being here today, and thanks for your
    time. And I guess I am the last one here before you can all go,
    but--so I will be quick.
        Mr. Doshi, the 2026 National Defense Strategy and National
    Security Strategy have shifted our focus as it relates to
    China. The NDS places an implicit bet on outproducing China but
    hardly mentions technology, as you laid it out in your
    testimony.
        China is prioritizing its small business, particularly in
    manufacturing and technology. How should Congress scale and
    invest in programs that boost American small business in
    manufacturing and technology?
        Mr. DOSHI. Well, thank you very much, Congressman, for the
    opportunity to talk a little bit about that.
        My view is that the SBA has a number of tools. Some of them
    have lapsed and can be reauthorized, and some of them can be
    expanded.
        In many cases, a lot of those instruments that the SBA has
    can be packaged together to give small companies a one-stop
    shop so that they can get demand-side support, supply-side
    support, and regulatory support.
        But the key point I want to emphasize is this: China takes
    its small businesses very seriously as manufacturing
    competitors. It gives them enormous amounts of resources. It
    gives them patent support, expedited access to stock-market
    listings. And it even forces the state companies and its
    government to buy from them.
        We are not going to replicate their system, but we have to
    put together a program that is not just individual projects and
    individual initiatives but packaged together to make sure our
    companies are competitive.
        Mr. CISNEROS. All right. Thank you.
        You mentioned the SBA. So the SBA is creating barriers for
    many small businesses to access resources, such as changing
    eligibility for programs, threatening to pull offices from
    major metropolitan hubs, and withholding funds from programs
    and resource partners that support small businesses.
        Are these counterproductive to the investments we need to
    be making in our small businesses for their resilience on the
    global stage?
        Mr. DOSHI. Congressman, I do worry that some of the current
    efforts are counterproductive. In particular, as we have
    discussed in this hearing, some of the key programs have lapsed
    or have been reauthorized but that has not fully gone through
    within the administration.
        That can change quickly. We know that the President is
    committed to reindustrialization, so there may be a disconnect
    within his team, but it should be possible to make progress.
        As for, you know, offices closing that are part of the MEP
    program, that is disastrous. I mean, when those offices close,
    it can take a long time for them to staff back up. In the
    meantime, our companies lose important connections to the
    assistance that they need.
        Mr. CISNEROS. Thank you for that response.
        Mr. Lyons, you highlighted the lack of awareness in
    security by small businesses against cyber intrusion in your
    testimony.
        If a small business wanted to improve their cybersecurity,
    what federal education, legal, or technological resources are
    available to them?
        Mr. LYONS. Thank you, Congressman, for the question.
        I think that the SBA has a cyber program that allows them
    to take--allows small businesses to take advantage of some
    subsidized offerings there. I think that should be expanded.
        I think that CISA also puts out routinely updated
    information regarding how small businesses can protect
    themselves.
        A lot of this is free.
        Mr. CISNEROS. Uh-huh.
        Mr. LYONS. A lot of this--I think tax credits would help
    bolster defense and bolster awareness. But a lot of this is
    also out there on sites like CISA or the NCSC.
        Mr. CISNEROS. Can I ask just one followup on that? I mean,
    the resources, you said, are free and are provided by CISA,
    SBA. But when it comes to the actual financial cost of having
    to fight this, how are small businesses able to keep it up? Or
    can they?
        Mr. LYONS. Sir, they are not.
        Mr. CISNEROS. Yeah.
        Mr. LYONS. They simply--in conversations that we have had
    with numerous small businesses, oftentimes economic espionage
    is ignored because of the legal costs associated.
        I would point to my written testimony of a few examples but
    also of some possible legislative initiatives that could change
    something like that.
        Mr. CISNEROS. Mr. Doshi, you are shaking your head ``yes,''
    so I will let you respond to that as well.
        Mr. DOSHI. Well, thank you, Congressman. I just want to add
    one additional factor.
        When our company is the victim of cyber espionage and they
    lose their IP and it goes to a Chinese manufacturer, who then
    makes the same things and sells it back to us, it should be
    easier for us to stop the importation of that infringed-upon
    export.
        Right now, it is really hard. Those small companies have to
    hire lawyers; they have to go through a process. We should make
    it easier for our companies to protect their IP from foreign
    manufacturers that have taken it essentially illegally.
        Mr. CISNEROS. All right.
        Thank you all for your testimony.
        And, with that, I yield back.
        Chairman WILLIAMS. The gentleman yields back.
        I now recognize Mr. Bresnahan from the great State of
    Pennsylvania for 5 minutes.
        Mr. BRESNAHAN. Thank you, Mr. Chairman, and to the Ranking
    Member.
        And thank you to our witnesses for being here today.
        The influence of the Chinese Communist Party is no longer
    something we can ignore or afford to underestimate. It is a
    real threat to our economy and everyday life happening right
    now, and our small businesses are on the front lines.
        The CCP knows exactly what kind of leverage it holds, and
    is not afraid to use it, whether that means undercutting
    American businesses, stealing intellectual property, or
    flooding our markets with cheap and inferior products.
        COVID-19 made that crystal-clear. It exposed just how
    vulnerable we are and how reliant we had become on China to
    keep our economy and supply chains running. That should have
    been a wake-up call, but that dependence still exists today,
    and it remains a direct risk to both our economy and our
    national security.
        That is why this Committee must continue working with the
    administration and the SBA to bring manufacturing back home and
    prioritize American production over CCP entanglement.
        That starts with being clear about what the CCP involvement
    means for our American entrepreneurs and their intellectual
    property.
        Starting a business is already a heavy lift. It takes risk,
    capital, long hours, just to get off the ground. We have seen
    it happen too many times: when the American entrepreneur puts
    everything on the line to build something from the ground up,
    only to have a CCP-linked company steal that idea, copy it
    using cheap labor, and flood the markets with knock-offs that
    undercut them at home.
        That is unacceptable and a fundamental threat to the
    American Dream. We have a duty to protect American innovation
    from that risk.
        Mr. Murphy, you know this reality of the situation all too
    well, and what your company went through is something no
    American business should ever have to face.
        So my first question, for Mr. Murphy: Looking back now,
    what would you tell a small-business owner who was considering
    taking on foreign investment? And what do you wish you had
    known before making that decision?
        Mr. MURPHY. Mr. Chairman and Congressman, we have talked a
    little bit about this--obviously, due diligence, expedient
    access to capital, the type of capital.
        And the one theme that I have heard here from the panel
    that I think I just want to highlight is this. And I don't know
    anything about the ``Little Giants'' program in China, but
    something similar.
        I mean, we are--our motto is ``free markets and
    competition.'' It is not outside of our SBA to have a packaged-
    up, competing program where an entrepreneur or business like
    mine can feel confident and empowered to go to the SBA and have
    this package of diligence, access to capital, trusted vetted
    capital partners, and the like. That seems like something we
    can and should do to compete.
        Mr. BRESNAHAN. At what point in the process, Mr. Murphy,
    did you start to feel that something was wrong, or what was the
    first indication that you had some kind of China influence
    taking over your business? Was there, like, an antenna moment
    or an a-ha moment that caught your attention?
        Mr. MURPHY. Congressman, yes, there was. There was--as we
    were breaking ground, one day, several individuals just arrived
    at the site. They showed up at the gate, they wanted to be
    seen, and they said that they had come over from Asia. And
    then, once we started putting the pieces together, we realized,
    no, they came from China, and who were they.
        And then it got back to--and we heard this term from Dr.
    Doshi--who is the ultimate beneficial owner? We did not know.
    And it turned out to be somebody different than the people that
    were on site, and it turned out to be the person who had sent
    these individuals.
        So it was that, when they showed up, that----
        Mr. BRESNAHAN. Totally unannounced.
        Mr. MURPHY. Unannounced. And that is----
        Mr. BRESNAHAN. And you had no recourse----
        Mr. MURPHY.--when I said--and I said, ``Stop. Something is
    going on here.'' And that is when I, in my mind, started
    realizing, there is something afoot.
        And then more came. And then when bitcoin miners showed up,
    this, you know, millions and millions of dollars of bitcoin
    mining machines showed up just on a dime--you know, 30 trucks,
    boom, into Cheyenne--that is when I said, we are going to start
    documenting, you know, every email, every conversation.
        And then it was shortly after that that they said, ``Hey,
    we want to renegotiate our contract. Basically, you guys go
    from your operational role in our contract that was this to a
    very small role and basically be our Wyoming guys to protect us
    in this State.'' And that was when we sued them.
        Mr. BRESNAHAN. That is absolutely abhorrent and
    unacceptable.
        One more followup question. What could we be doing in
    Congress to prevent things like this from happening in the
    future to other entrepreneurs and other businesses?
        Mr. MURPHY. Yes, Congressman. We have heard a lot of those
    good ones, ideas, today in testimony. But I think it goes back
    to--and I think, with this Committee, it is the SBA, right?
    That that is where entrepreneurs--right now, as an
    entrepreneur, I wouldn't even have thought to go to the SBA. To
    get a loan? To get a $10-million debt loan? Doesn't make any
    sense.
        But for that to be a resource that entrepreneurs and small
    business can turn to that actually helps with capital,
    diligence, and all these pieces, that, I think, makes the
    difference.
        Mr. BRESNAHAN. Thank you for being here.
        Mr. Chairman, I yield.
        Chairman WILLIAMS. The gentleman yields back.
        And I now want to repeat myself and say what a great
    hearing this has been.
        Thank you guys for taking time to do that.
        And, without objection, Members have 5 legislative days to
    submit additional materials and written questions for the
    witnesses to the Chair, which will be forwarded to the
    witnesses. I ask the witnesses to please respond promptly.
        So, if there is no further business, without objection, the
    Committee is adjourned, and thank you again.
        [Whereupon, at 11:28 a.m., the Committee was adjourned.]
        [Mr. Andrew Pahutski did not respond to QFR's in a timely
    manner.]
                                A P P E N D I X

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     [all]