[Congressional Record Volume 164, Number 85 (Wednesday, May 23, 2018)]
[Senate]
[Pages S2846-S2847]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                                 China

  Mr. CORNYN. Mr. President, yesterday the Senate Banking Committee 
passed a very important piece of legislation out of the committee by a 
unanimous vote. I am very pleased that this legislation, which I will 
describe in a moment, received that sort of broad bipartisan support.
  This is a bill I originally introduced with the senior Senator from 
California, Mrs. Feinstein, to strengthen the review process of the 
Committee on Foreign Investment in the United States, which plays a 
critical role in protecting our national security. The jurisdiction of 
this Committee on Foreign Investment in the United States hasn't been 
updated in more than 40 years, and bad actors like China continue to 
exploit gaps in the process to acquire sensitive national security 
know-how, as well as military and dual-use technology from U.S. 
companies.
  I want to be quick to say that this is not about labeling foreign 
investment in the United States as bad. That is not true. Foreign 
investment is by and large a very good thing. But when our laws are 
being exploited to target cutting-edge, dual-use technology that has 
national security applications, that is a matter of national security. 
This is not about banning or labeling foreign investment as being bad.
  I appreciate Chairman Crapo and the Banking Committee's bipartisan 
work in advancing this narrowly tailored legislation to close the gaps 
that I just mentioned and safeguard our national security because I 
believe it is past time for us to do so. Every day we fail to pass this 
set of reforms is a day we are putting our future in jeopardy.
  We need to maintain a sense of urgency and realize that when we are 
talking about CFIUS, or the Committee on Foreign Investment in the 
United States, there is a much bigger issue at stake, and that is the 
issue of competing global visions.
  China makes no secret about the fact that Karl Marx is, in many ways, 
its national hero. In fact, there was a weeklong celebration in China 
earlier this month which included a mandatory study session, led by 
President Xi, of Marx's famous work the Communist Manifesto.
  Events like these in some ways show that China is a wolf in sheep's 
clothing. When it tries to present itself as westernizing its economy 
and becoming a friend to the global community of nations, China 
conveniently ignores certain facts about its alternative development 
model and state-controlled economy. It also tends to disguise and 
downplay its overall geopolitical aims, to rewrite the rules of our 
world order and recreate them in China's own Communist image.
  Whether it is China's increasing belligerence in places like the 
South China Sea, its crushing of internal political dissent, its 
flagrant human rights violations, or its population controls, such as 
the one-child policy, China has repeatedly shown itself as a power-
hungry authoritarian, willing and able to violate the rights of its own 
people, and dismissive and contemptuous of international norms.
  I am not being hyperbolic. I am not exaggerating. This is just the 
truth--the hard truth--in front of us, if we will look. So let's not 
deceive ourselves otherwise. When China tries to just ``blend in'' 
internationally, let us be wary that its rosy rhetoric and misleading 
narrative of cooperation are often camouflage for its true and more 
troubling aims.
  As we all know, right now, there are high-level negotiations ongoing 
between the U.S. executive branch and Chinese Government officials on 
the very important issue of international trade, but it is important to 
remember that in the West, belief in free trade is almost axiomatic. In 
democracies like ours, free trade is based on open markets, the free 
flow of capital and information, as well as the rule of law.
  China, on the other hand, honors none of those things. It doesn't 
believe in open markets, it doesn't believe in the free flow of capital 
of information, and it be doesn't believe in the rule of law. That 
reality is why we need to approach these trade negotiations delicately. 
We need to remain steely-eyed and make sure China isn't playing us for 
fools.
  Of course, we are well aware of the need to tread lightly when it 
comes to trade. After decades of globalization, any overly broad limits 
on Chinese investment in the United States could harm American 
companies that need capital and customers to survive and grow. We need 
to resist that temptation.
  China is not just any old trading partner. Its enterprises are state-

[[Page S2847]]

backed, and there is no clear dividing line between the Communist Party 
and what might otherwise be described as the private sector. There is 
no distinction. This makes a real difference when it comes to Chinese 
investments in U.S. companies that are at the cutting edge of 
developing military dual-use technologies. It means there is a real 
potential of industrial espionage because you can't separate private, 
profit-making motives from the government's secret-stealing capacities 
and proclivities, and this means that our national security is 
vulnerable.
  In its Made in China 2025 plan, the Chinese Government made clear its 
intent to dominate technologies that will be essential down the road in 
maintaining our economic and military prowess globally. I have a chart 
here that I would like to display. It is an unclassified slide from one 
of our intelligence agencies. They provided us an unclassified version 
so that we could talk about it in public. Many of us on the Armed 
Services Committee or the Intelligence Committee are privy to 
classified briefings, but I believe it is important--and I am glad they 
do too--that we talk about what we can in an open, transparent way so 
that people can be alerted to what is at risk and what is actually 
going on.
  These are China's strategic goals. Comprehensive national power--they 
see themselves as a rival to the United States, and they would 
ultimately like to surpass us when it comes to national power. We know 
that they believe their economic growth model must be innovation-
driven; hence, their vacuuming up and relentless search for new, 
cutting-edge technology, including their activities in places like 
Silicon Valley, where they gobble up startup companies that have long-
term potential to advance their economic and national power goals. 
Obviously, they are also modernizing their military and becoming 
increasingly belligerent in places like the South China Sea in the 
process.
  How does China achieve these strategic goals? Well, it has an 
elaborate and sophisticated plan. The truth is, they are really not 
being clandestine or secretive about this. They are pretty much telling 
us what they are doing, and they are doing it quite well.
  So their strategic goals include, obviously, their security services, 
their intelligence community, their talent recruitment programs at 
American academic institutions, where they hire talent back to China to 
help them in this process. They create front companies that claim to be 
non-Chinese related in order to transact business so that they don't 
raise suspicion. They engage in an active program of mergers and 
acquisitions of companies in the United States. They make significant 
investments in science and technology, including some of the most 
cutting-edge technologies, like quantum computing and artificial 
intelligence. They are probably the worst offender in the world when it 
comes to stealing through the cyber domain--cyber theft. They are very 
creative in engaging in research partnerships. Joint ventures, one of 
the gaps that the CFIUS legislation intends to plug, where they realize 
that this is a gap in our current review process for foreign investment 
and national security implications--they have done so through joint 
ventures that aren't currently subject to that review, where they can 
get access not only to the intellectual property but also to the know-
how. In other words, they could steal blueprints and other intellectual 
property, but they don't necessarily know how to make it all work--
where the secret sauce is--until they can get access to the know-how 
through these joint ventures.

  Then there are their nontraditional collectors. In other words, 
civilians are used by their intelligence services to get information to 
vacuum up data--scientific data, our data--that they may think are 
important to their pursuit of national power, innovation, and economic 
growth model, so they use a wide variety of nontraditional collectors 
as well.
  Of course, in the legal and regulatory environment, an American 
company can't do business in China without basically turning over the 
keys to the government. Again, there is no delineation between the 
government and the private sector in China. All businesses have to 
cooperate with the Chinese Government, and the Chinese Government 
intermingles that information not only in pursuit of their economic 
goals but also in pursuit of their military goals.
  As I said, these technologies that they are acquiring and seeking to 
acquire include artificial intelligence, robotics, quantum computing, 
and 3D printing. The Chinese Government is spending $300 billion in 
subsidies to supplant foreign technology suppliers like ours with 
homegrown alternatives, and a core part of this 2025 plan is acquiring 
intellectual property from the United States. China is not even trying 
to hide it. They are advertising it, and they are doing it in plain 
sight.
  Those and related concerns are what prompted a bipartisan group of 27 
Senators recently to write a letter to Secretary Mnuchin, Secretary 
Ross, as well as Ambassador Lighthizer--the U.S. trade Representative. 
They are all involved in the ongoing trade negotiations with China. In 
that letter, we expressed concerns regarding China's targeting of our 
technology.
  As a report issued by the Pentagon recently pointed out, if left 
unchecked, this targeting could degrade core technological advantages 
of the U.S. military. Clearly, the Chinese Communist Party regards 
these sensitive technologies as essential for China's military 
modernization and is accelerating its efforts to acquire them by any 
means necessary--stealing them, engaging in strategic investments, any 
way they can do it--whether it is cyber theft, civil-military 
integration policies, coercion through joint ventures with foreign 
companies, targeted investment, or Chinese nationals exploiting access 
to such technologies here in the United States.
  The main point of our letter was not to criticize but to alert our 
colleagues in the executive branch that there is no question that China 
is actively seeking to surpass the United States both economically and 
militarily and become the world's foremost superpower. It is pretty 
obvious.
  It is imperative, though, that neither the Federal Government nor 
private U.S. companies aid or abet that effort either advertently or 
inadvertently.
  Let me conclude by saying that we should all support a peaceful, 
balanced, and constructive relationship with China, but it has to be 
realistic when it comes to China's aims and intentions, and it needs to 
be informed, as well, by China's record of deception in the past.
  When it comes to China, national security isn't just a pretext for 
economic protectionism. I think ``national security'' is an abuse of 
that label if it is used just as a pretext for protectionism. Like many 
of our colleagues, I believe strongly in free trade, as I started out 
saying in these remarks, but when national security and economic 
concerns overlap--which they do--there should be no question but that 
our national security comes first.
  For those of us who serve on committees of jurisdiction involving 
intelligence or national security, I assure you that the Chinese threat 
is real, and certain dangers are already taking effect. We need to make 
sure that not just the committees of jurisdiction understand this and 
that we are working together with the executive branch when it comes to 
maintaining this distinction--economic and military--and understand 
that it is not just about trade; it is about our national security as 
well. We need to be smart, well informed, and clear-eyed when it comes 
to engaging with an aggressive China. Our inaction has had many 
negative consequences, and we must aim to prevent any future ones.
  The PRESIDING OFFICER (Mrs. Ernst). The Senator from Delaware.