[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.

                          ____________________