[Congressional Record Volume 169, Number 202 (Thursday, December 7, 2023)]
[Senate]
[Pages S5876-S5879]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CHINA
Mr. SULLIVAN. Mr. President, I am going to pose a simple question
here related to this guy. That is the dictator of China, Xi Jinping.
Imagine if a Chinese financial institution, one of their banks, one of
their private equity funds--they have a lot of them. Imagine if a
Chinese financial institution started to invest in the United States in
big technologies that would make the U.S. military much stronger. What
do you think would happen to those executives in China? They are taking
[[Page S5877]]
Chinese money, and they are pouring it into companies that work
directly with the Pentagon, making the U.S. Army, Navy, Marine Corps,
and Air Force stronger and more lethal. What would this dictator do to
those Chinese executives?
I will tell you what he would do. A, he would never let them do it.
But if they did do it, he would arrest them, put them in jail, and
shoot them at sunup. That is what he would do.
There is not one person in this body, not one person in America--
heck, not one person in China--who would disagree with that.
That is what he would do.
So what happens when American investment companies--financial
institutions, private equity firms, hedge funds, venture capital firms,
investment banks--what happens when they invest in Chinese companies
that make the Chinese military more lethal and stronger? What happens?
The answer: pretty much nothing. Worse, we have a hard time knowing
which American firms are even doing this.
This is a huge knowledge gap in an asymmetrical advantage that our
biggest adversary--right here, Xi Jinping and the Chinese Communist
Party--has over us.
They can't invest. They won't invest. They will get the death penalty
if they invest in an American company that will help our military
become stronger.
We have, who knows, a lot of financial institutions investing in
Chinese companies to make their military stronger. We have financial
companies that are investing in the Chinese Communist Party, companies
that are producing things like advanced semiconductors, artificial
intelligence, quantum computing, hypersonics--all technologies that are
critical to dominating the 21st century battlefield. This is a giant
American national security issue.
I don't normally come down to the Senate floor and quote Lenin. I am
not a big fan of Lenin. But he purportedly said that ``capitalists will
sell us the rope with which we will hang them.''
There is a little bit of that going on right now here in the United
States of America. We have executives in this country and certain
financial institutions--by the way, these American financial
institutions and executives owe everything to their success by being
American, being in the greatest country in the world, with the rule of
law and our capital markets and our dynamic economy. Their success is
because of the great Nation we live in, and yet some, kind of addicted
to making more money--listen to Lenin. They are like, you know, maybe I
will do that advanced chip manufacturing investment in the Chinese
economy; maybe I will help them a little bit with artificial
intelligence or quantum computing.
By the way, quantum computing, if you get really good at that, you
can break any code that our military uses. You are toast if you can't
communicate in a covered fashion--encrypted.
This is really dangerous stuff. I was first, actually, made aware of
this many years ago by, in my view, one of the best Chairmen of the
Joint Chiefs of Staff for our military that we have had in decades,
Marine Corps Gen. Joe Dunford. He is just a fantastic Marine officer,
just a fantastic Chairman. He is very measured, very smart, very
strategic.
He raised this issue with me many years ago: Senator, we, America,
have financial institutions--American financial institutions using
American investment money--you know, the Iowa teachers' retirement
plan, the laborers' retirement plan. They are taking that money, and
they are investing it in China in some really advanced technologies.
There is a problem. The Chinese don't have that kind of investment
capital and professionalism to grow these companies, but we do.
So this was first brought up to me by a great Marine general. So I
started digging into it over the years and years, and it is a giant
problem. Senior administration officials in the Biden administration
agree. A whole host of top national security officials in the Trump
administration agree. This is a bipartisan issue in terms of the
concern. It is a blinking red light for our national security.
So some might ask: Well, wait a minute. What is wrong with an
American financial company making an investment in the Chinese private
economy?
Well, look, it depends on what part of the Chinese private economy.
If you want to go make more hamburgers over there and sell--I don't
know--refrigerators, that is fine. But these are investments in some of
the critical technological needs of the military that will enable
whichever military dominates these sectors to dominate the 21st century
battlefield.
And, by the way, there is no such thing as a private company in
China. If you are a private equity firm in America, you are saying:
Well, I am just investing in this private company in China to help them
with their quantum computing capability.
We all know that this guy and the Chinese military--the PLA and the
Chinese Communist Party--they own that. They own that. They will take
it, use it, dominate it.
So what can we do about this problem? Well, look, there are a lot of
ideas on what we can do about this problem. I am working on legislation
that would actually have the U.S. Government, believe it or not--and I
am not a big government guy--look into the investments being made by
American financial institutions into some of the most high-tech areas
of China, what we would call outbound CFIUS. CFIUS is this process for
inbound investment.
Let's look at what is happening outbound. It is a little more
controversial. I think we need it, unfortunately, because we have a lot
of--not a ton but, certainly, a number of--American financial
executives who are like: Look, man, whatever--patriotism, I will leave
that at the door. I am not really worried about that. I am not worried
about that guy. I just want to make a big buck. It is too bad, but we
got them. So we need this.
Here is an easier starting point. Let's have a transparency provision
that enables us, the U.S. Government, to say: All right, big financial
American firms or private equity firms or hedge funds, the American
investment dollars that you are getting from the Illinois teachers'
retirement fund, we want to know if you are putting that into quantum
computing that can help this guy dominate Taiwan.
We want to know that. We want transparency. It is pretty good idea.
Now, Senator Cornyn offered a bill--I was a cosponsor of it--that we
attached to the NDAA, saying we want outbound investment transparency.
We want to know: What are American financial firms doing helping this
guy become stronger?
It is pretty easy. Guess what, Mr. President. It is super bipartisan.
That bill is brought to the floor as part of the National Defense
Authorization Act and passed 91 to 6--91 to 6. Very few things pass 91
to 6 here. That did because it made sense. It is very bipartisan and
relatively simple. It is just transparency.
Hey, Sequoia Capital--I am going to talk about them in minute--a big
private equity firm, are they investing in quantum computing that can
help this guy dominate the world? We should know, especially if it is
American investment dollars, right?
So that is a good start. There is a lot of agreement.
Here is a letter from Dr. Kevin Roberts, the head of the Heritage
Foundation.
Mr. President, I ask unanimous consent that a letter dated November
29, 2023, be printed in the Record.
There being no objection, the material was ordered to be
printed in the Record, as follows:
Congress: Time to Walk the Walk on China
Washington--Heritage Action President Dr. Kevin Roberts
released the following statement Wednesday as Congress
finalizes its annual defense bill.
``Congress must seize opportunities in this year's National
Defense Authorization Act (NDAA) to counter threats from
Communist China and deliver for the American people. Reports
that the House of Representatives may abandon efforts to
track the billions of dollars of U.S. capital flowing into
China, including into sanctioned Chinese military and
technology companies, are extremely concerning. Doing so
would all but ensure that the House will close out its first
year of Republican leadership without notching any meaningful
legislative accomplishments to address the most critical
national security threats from China.
Multiple efforts to address threats from China are in
danger of being omitted from the NDAA, including provisions
to sanction
[[Page S5878]]
fentanyl traffickers, protect U.S. agricultural land, and end
the funneling of taxpayer dollars to Chinese drone and
biotech companies. However, the most important effort would
begin to tackle a massive problem: today, U.S. capital freely
flows into China with few restrictions, little oversight, and
minimal prohibitions. The pensions and savings of millions of
Americans are literally financing China's military buildup.
Nevertheless, reports indicate that efforts by House
Financial Services Chairman Patrick McHenry may succeed in
blocking the Senate's bipartisan Outbound Investment
Transparency Act, which would begin scrutinizing these
problematic investments in China.
``Failing to advance outbound investment reform would be a
gift to Xi Jinping and the Chinese Communist Party. Congress
works for the American people, not Wall Street. It is long
past time to stop funding our own destruction and end
business as usual with Beijing. Politicians like talking the
talk about being tough on China--it's time to walk the
walk.''
Mr. SULLIVAN. He was talking about how we need to be able to track
U.S. capital flowing into China, and it would be extremely concerning
if that Cornyn amendment didn't make it into the final NDAA.
So he is saying: Hey, Senators, House Members, make sure that stays
in.
Thank you, President Roberts of Heritage.
He also wrote the leadership of the House and Senate: Senator
McConnell, Senator Schumer, Speaker Johnson, and Congressman Jeffries.
Mr. President, I ask unanimous consent that a letter dated November
16, 2023, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
November 16, 2023.
Hon. Mike Johnson,
Speaker of the House, House of Representatives,
Washington, DC.
Hon. Charles E. Schumer,
Majority Leader, U.S. Senate,
Washington, DC.
Hon. Hakeem Jeffries,
Minority Leader, House of Representatives,
Washington, DC.
Hon. Mitch McConnell,
Minority Leader, U.S. Senate,
Washington, DC.
Dear Speaker Johnson, Leader Jeffries, Leader Schumer, and
Leader McConnell: As the FY2024 National Defense
Authorization Act (NDAA) moves through conference committee,
we write to urge Congress's support for security-related
restrictions on outbound investment of American capital to
the People's Republic of China (PRC). Many outbound
investments into China are jeopardizing our national security
by accelerating sensitive dual civilian and military
technology development for the PRC, thereby strengthening its
military, intelligence, surveillance, and security
capabilities.
Some in Congress incorrectly argue that restricting such
investments will impede the economic growth produced by
adhering to free market principles. House Financial Services
Chairman Patrick McHenry, for example, has argued that ``If
we oppose China's state-run economy, we want more private
investment--not less. Of those private investors, we want
more of them to be Americans--not fewer. And if we are truly
concerned by China's technology companies, we want as many
Americans as possible steering them, spreading Western
standards, and complying with U.S. laws.''
This argument does not apply to a state-controlled economy
like China's, where businesses succeed only at the pleasure
of the Chinese Communist Party (CCP). We regularly observe
how the PRC cajoles American businesses into advancing CCP
interests and values, from Hollywood studios and professional
sports leagues preserving their market access by self-
censoring, to major American companies promising to uphold
``core socialist values.'' It is both unwise and
unconscionable to finance the capabilities of an adversary
hostile to American interests and values.
Recognition of the risks associated with U.S. investment
flowing to the PRC is growing. In his letter of August 3,
2023, Chairman Mike Gallagher of the Select Committee on the
Strategic Competition between the United States and the
Chinese Communist Party warned that much of the more than $1
trillion that the U.S. invests in the PRC through public
markets ``directly finances PRC technology companies with
documented connections to the Chinese military and the
Chinese Community Party's (CCP) abhorrent human rights
abuses.'' President Biden's recent Executive Order 14105 of
August 9, 2023 purports to speak to this concern, as do
numerous legislative proposals. On July 25, 2023,the Senate
voted 91-6 to include in the FY24 NDAA the Outbound
Investment Transparency Act, which would require notification
of U.S. investments in key industries in foreign countries of
concern.
Congress must establish sensible restrictions on U.S.
capital flowing to sensitive industries and technologies in
China. As a starting point, the FY24 NDAA must maintain the
Senate's approach of establishing a disclosure and
transparency regime for high-tech investments. Building on
that foundation with meaningful restrictions in further
critical technology sectors would be an even better outcome
for American national security.
Nor should Congress accept attempts to substitute sanctions
for outbound investment screening. Opponents of meaningful
restrictions on outbound investment into China have argued
that additional sanctions authorities are an acceptable
alternative, despite the continuing lax enforcement of even
mandatory sanctions towards China. While we strongly support
enhancing and more sensibly harmonizing the U.S. sanctions
regime, sanctions alone are piecemeal and backwards looking,
rather than comprehensive and preventative. Predictability,
efficiency, and efficacy all favor broad, robust prohibitions
as default. Specifically, the Committee passed Chinese
Military and Surveillance Company Sanctions Act should not
replace the Outbound Investment Transparency Act.
Congress cannot allow American investment--including the
investment of millions of average Americans' retirement
funds--to bankroll threats to America's national security,
the erosion of America's technological edge, and the
violation of our nation's essential commitments to freedom
and human dignity. Congress works for the American people,
not Wall Street. As the FY24 NDAA is finalized, it must
retain the Outbound Investment Transparency Act.
Sincerely,
Chris Griswold,
Policy Director, American Compass.
Victoria Coates,
Vice President, Davis Institute for National Security and
Foreign Policy, The Heritage Foundation.
Thomas J. Duesterberg,
Senior Fellow Hudson Institute.
Michael A. Needham,
Executive Director, America2100.
Hon. Steve Yates,
China Policy Initiative, America First Policy Institute.
Joseph Miller,
Executive Director, Citizens for Renewing America.
Jon Toomey,
Senior VP of Government Relations, Coalition for a
Prosperous America.
Mr. SULLIVAN. The letter says this is really important--this Outbound
Investment Transparency Act, 91 to 6. Let's get it in the final NDAA.
It is pretty simple, pretty noncontroversial.
But, Mr. President, as you know, nothing here is ever simple.
Evidently, the chairman of the House Financial Services Committee,
Patrick McHenry--I don't know him. He seems like a nice guy, from what
I hear. But, boy, is this guy misguided because it is all over the
press that he fought like crazy to strip this provision out of the
NDAA.
Why would he do that? By the way, he is retiring. So I am not sure
why we give him a lot of say anymore. But somehow, some way, one
Congressman--Republican, by the way--over in the House convinced the
House to strip this transparency provision that is meant to undermine
this bad guy. They stripped it out of the NDAA. So it is not in the
National Defense Authorization Act because one Congressman said: I
don't want it in. Ninety-one Senators said: We need it in. And, by the
way, the vast majority of the House wants it in.
You have a really strong House Member, Congressman Gallagher, who is
leading this bipartisan China commission. He says it is really
important.
The Biden administration wants it in. I have talked to Secretary of
Commerce Raimondo and the Secretary of Defense. They all want it in.
But one Congressman, who is not even going to be around anymore, gets
to strip it out so we don't know what American investments are going to
make this guy stronger? He gets the final say?
This is an outrage. And this is enough of an outrage that Senator
Cornyn and I, 2 weeks ago, in a lunch, when the Speaker of the House
came to visit us, we said: Hey, Mr. Speaker, we are hearing some things
about this really important, simple transparency investment provision,
that you guys might strip it out. Why?
Come on. Some of us have been focused on the China threat for years,
and now, we have one Congressman, who is leaving, and he says we strip
it out, when 91 Senators say we need it.
So the Speaker said to me and Senator Cornyn--we were pretty forceful
in the meeting. I am a big fan of the new Speaker, Speaker Johnson. But
he said: Well, it might not make it in the NDAA, but we will bring to
the floor of the House a vote on the McCaul bill.
[[Page S5879]]
This is the chairman of the House Foreign Affairs Committee, Chairman
McCaul, who has an amendment that is very similar to the Cornyn
amendment. Actually, it is a little bit tougher. So he doesn't like it.
Xi Jinping doesn't like it. So we said: All right, Mr. Speaker. It
sounds like a good compromise. Let's do it. Thank you, Mr. Speaker.
Since that meeting, I think I have gotten a commitment, and I think
Senator Cornyn thinks he has gotten a commitment from the Speaker of
the House to a bunch of U.S. Senators, saying: Don't worry, we got
this.
Since that time, I have been reading press reports. Now, look, the
press can get a lot of things wrong. The press is saying: No, actually,
the Speaker is not going to bring up a vote on the McCaul bill--which,
by the way, in the House, will get 340 votes easy, and if that came
back here, it would get 91, maybe more. So it would be super
bipartisan, and this guy, this dictator, would hate it. Let's do it.
Let's do it.
But just lately, the press is reporting that the Speaker is now
saying: Maybe I won't do what I told the Senators. Maybe I am going to
put some kind of Commission together, and we will study it.
Well, as you know, when you start studying things here, that is a way
to kick the can down the road.
So my first priority here is to call out the Speaker of the House and
say: Mr. Speaker, I am pretty sure you said you were going to bring the
McCaul bill to the House floor soon--maybe before Christmas but
certainly January. Let's get it voted on. We will pass it here in the
Senate, I guarantee you. The majority leader will bring it up. Let's do
that.
So I hope you continue to make that commitment, Mr. Speaker. It would
be really disappointing if somehow a Congressman who is leaving--
leaving--teams up with the people who don't want us to know how
Americans are investing in this guy's military industrial complex. That
wouldn't be good.
So I call on the Speaker to keep that commitment that he made to a
bunch of U.S. Senators recently and not put forward some kind of
baloney Commission that is just kicking the can down the road. That
wouldn't be good.
But let me end with just a reason--like, why does transparency
matter? Why does it matter? Well, I am going to give one small example,
but it is a pretty good one.
This is a venture capital firm called Sequoia. Very successful.
Americans. They benefited from being an American company working in the
American economy. Really, really smart guys and women. Highly
successful. Their executives are very wealthy, and that is great. This
is a capitalist country; I love that.
But they were also known as one of these firms that were doing what I
said: making big investments over many, many years in very high-tech
components of the Chinese economy--advanced computer chip
manufacturing, quantum computing, things like that. I think that is
wrong, that Americans and American executives and American investment
dollars are going to China to help develop weapon systems that will be
used to kill U.S. marines and U.S. sailors if we ever get in a fight in
the Taiwan Strait.
So Sequoia Capital came to meet with me a couple years ago, and I
essentially told them that. Hey, look, you are very successful. That is
great. You live in the greatest country in the world. You have done a
lot to help our economy. But why are you helping the Chinese economy?
Why are you investing in things that are going to give them a military
advantage over our soldiers, sailors, airmen, and marines? Why are you
doing that?
They didn't have a good answer.
It wasn't a very cordial meeting, to be honest, because we didn't see
it the same way. But at the very end of the meeting, actually, one of
them got up and said: Well, you know, Senator, if we don't do these
kinds of investments in China, the Saudis and Emirates will.
I was like: Wait. What? That is your drop-the-mic argument at the
end? You requested the meeting with me. That is a pathetic argument.
What about patriotism? What about American interests?
So I started kind of blowing the whistle a little bit on this company
in hearings and stuff. We did a lot of research. They were doing a lot
of big-time investments in some of the highest tech elements of the
Chinese economy that will help their military kill American sailors and
soldiers if we ever get in a fight. That is wrong.
So we started--some of us--putting a little pressure on these guys.
Transparency. Calling them out--Americans doing this kind of thing.
Well, some of that worked. They announced a big separation agreement.
They are not going to do it anymore. They are getting pressure from the
Congress--by the way, legitimate pressure.
Here is a headline from the Wall Street Journal: ``Sequoia Made a
Fortune Investing in the U.S. and China''--China high technology that
will help their military--``Then It Had to Pick One.'' It had to pick
one because Members of Congress were saying: Enough. That is
transparency.
So we want to know how many more Sequoias are out there. It is a
pretty legitimate ask. It is actually a very legitimate ask. It is so
legitimate that 91 U.S. Senators voted for this. And we have one
Congressman over there who is leaving--not sure where he is going;
maybe he is going to Sequoia Capital--and he is blocking it.
So we need to fix this. We need to make sure the vast majority of
U.S. Senators and U.S. House Members who want transparency on this
really important national security issue--that this gets fixed.
So once again I am calling on the Speaker to keep his commitment,
bring the McCaul bill to the floor soon--next week, 2 weeks, January.
But don't let one Congressman who is walking out the door thwart the
vast, vast majority of the U.S. Senate and the U.S. House on a very
important national security issue.
You know, a lot of us talk a lot about China and the threats. I have
been coming out here since I got elected in 2015 to talk about the
challenges of this dictator. He is a menace, dangerous, and they are
growing their power. But do you know what? A lot of it is talk. A lot
of it is talk. This was something that was action. It wasn't a huge
deal--transparency, action.
Right now, we have Republican House Members--hopefully not the
Speaker, but certainly the chairman of the Financial Committee, the
Banking Committee--who are saying: No, I want to keep it in the dark,
what Americans are doing to invest in making this guy stronger.
That is wrong. Mr. President, 99.9 percent of Americans would think
that is wrong. So we need to fix it. The House needs to take leadership
on this issue. And my Republican colleagues keep talking tough on
China. It is time to act. It is time to act.
I yield the floor.
The PRESIDING OFFICER (Mr. Fetterman). The Senator from New York.
Mrs. GILLIBRAND. Mr. President, I ask unanimous consent to show
framed photos of two individuals I would like to speak about today.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________