James Comer Chairs House Oversight Committee Hearing On Dangers Of The CCP In The U.S.

last year

On Wednesday, Rep. James Comer (R-KY) chaired a House Oversight Committee hearing on CCP warfare against the United States.

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Transcript

00:00:00This hearing of the Committee on Oversight and Accountability will come

00:00:02to order. I want to welcome everyone here today. Without objection, the chair may

00:00:07declare a recess at any time. I now recognize myself for the purpose of

00:00:12making an opening statement. This hearing is the second in the Oversight

00:00:17Committee's investigation into the federal government's inadequate

00:00:21acknowledgement of and response to the Chinese Communist Party's campaign to

00:00:26infiltrate and influence America through a strategy known as political

00:00:30warfare. Americans outside of Washington have no difficulty identifying the CCP

00:00:36for what it is, an authoritarian communist regime enslaving its own

00:00:41people and seeking to destroy America, which the CCP calls its, quote, chief

00:00:47enemy. The American people know that the CCP represents the greatest foreign

00:00:52threat to the American way of life. According to the latest Pew Research

00:00:56poll, 81% of U.S. adults see China unfavorably. This spring, Gallup reported

00:01:02that Americans see China as our country's top foe, yet too few federal

00:01:07agencies have recognized that. For decades, the CCP has waged an aggressive

00:01:12campaign of political warfare, a strategy to weaken our nation without

00:01:17ever firing a shot. The end goal is clear, to weaken and defeat America. The

00:01:25committee's government-wide investigation has brought federal agencies in to

00:01:28answer for their insufficient responses. We found that too much of Washington

00:01:33bureaucracy is incapable of or unwilling to address the CCP threat. Today, our

00:01:40witnesses will testify about how the CCP is seeking to subvert our open system of

00:01:45government and society. These witnesses have great insight into CCP influence

00:01:50within federal agencies, the intelligence community, international institutions, and

00:01:55business circles. To be clear, it is the Chinese Communist Party who is to blame

00:02:00here, not people of Chinese descent, who themselves are often singled out by the

00:02:05CCP using these exact influence tactics. Despite the fact that CCP political

00:02:11warfare targets and threatens all Americans, why do many federal agencies

00:02:15fail to speak honestly to the American people about the CCP? Too many federal

00:02:21officials do not realize that they have fallen for CCP influence tactics in ways

00:02:26that cause some officials to reflexively dismiss the truth about this communist

00:02:31regime. Worse, some federal officials go so far to actually excuse the CCP's

00:02:37action. Some agencies do so despite abundant evidence that the CCP is spying

00:02:44on Americans, fueling the fentanyl crisis that is killing tens of thousands of

00:02:48Americans each year, stealing trade secrets to stifle American innovation,

00:02:54harassing Chinese students who dare speak out against the regime, threatening

00:02:59our energy grid and critical infrastructure, infiltrating our food

00:03:03supply, and much, much more. To say that it is somehow racist or inappropriate for

00:03:09federal agencies to aggressively combat the CCP threat placed

00:03:13directly into the party's hands. The CCP uses many tools and people to wage

00:03:18political warfare against America. Through what is known as the United

00:03:23Front, the CCP manipulates networks to carry out relationship-focused influence

00:03:28campaigns through a multitude of proxies. The United Front has long used proxies

00:03:33found in the business community, amongst cultural and political leaders, in

00:03:37international organizations, and in other influence circles to advance the regime's

00:03:43destructive ambitions. The CCP prioritizes seeking to influence key

00:03:48players in prominent business circles to curry good favor for the party-shaped US

00:03:52decision-making and exploit US businesses. Through deceptive but

00:03:57enticing business deals, the CCP has lured many American businesses into the

00:04:01lion's den that is China. Once reliant on China, too many US companies fall prey to

00:04:08quote, elite capture. They may find that they feel they have little choice but to

00:04:13support CCP interest to the detriment of their own business and our nation. CCP

00:04:20elite capture tactics have also seeped into federal agencies, influencing their

00:04:24approach to China. Many federal officials, especially in the military and

00:04:28intelligence community, fell for the false CCP narrative of the so-called

00:04:33quote, peaceful rise of China, and have yet to acknowledge their dereliction of

00:04:39duty. For too long, the courageous few who spoke out about the CCP threat

00:04:43were ignored and some were silenced. Much of the American government seems to have

00:04:48forgotten that its purpose is to promote the interests of Americans. When federal

00:04:54officials transparently message to the public about the CCP threat, they should

00:04:57also help inspire and equip Americans to strengthen their communities, innovate,

00:05:02and create, which will secure a strong and prosperous future for our nation. A

00:05:07strong America can resist even the most aggressive communist political warfare.

00:05:12I thank the witnesses for appearing today and look forward to your testimony.

00:05:15I now yield to Ranking Member Raskin for his opening statement. Thank you, Mr.

00:05:21Chairman. Welcome to our witnesses. The majority has convened a hearing on

00:05:26defending America from the Chinese Communist Party's political warfare. This

00:05:31is paradoxical because our colleagues have spent the last 18 months spreading

00:05:36disinformation from Alexander Smirnoff that Moscow and Beijing have clearly used

00:05:41as political warfare against America as part of their collapsed impeachment

00:05:46inquiry against President Biden. All over the world, from the autocrats in Moscow,

00:05:51to the communist bureaucrats in mainland China, to the theocrats in Saudi Arabia,

00:05:56the enemies of constitutional democracy and freedom seek to destabilize the

00:06:01American government. The tyrants of the world are targeting Joe Biden and

00:06:04promoting Donald Trump, who has fondly described President Xi as a

00:06:09brilliant man, who has called Vladimir Putin a genius, and who has said he fell

00:06:15in love with Kim Jong-un. While Donald Trump has described President Xi as a

00:06:20very good man, China is in fact an authoritarian police state and violator

00:06:25of the human rights and civil liberties of hundreds of millions of people.

00:06:29President Xi has persecuted, incarcerated, and oppressed the Tibetans, the Uyghurs,

00:06:35and the people of Hong Kong and Taiwan. Xi has made common cause with his fellow

00:06:41tyrants, forming a no-limits alliance with Putin's Russia just a few weeks

00:06:47before Putin's illegal invasion of Ukraine in 2022. Beijing maintains a

00:06:53defense treaty with Pyongyang and is a key ally to Kim Jong-un, a third-generation

00:06:59dictator and communist monarch who presides over a totalitarian dungeon for

00:07:05his people. At our last hearing on the CCP's political warfare, Professor Tim

00:07:10Snyder explained how Chinese propaganda ploys have succeeded because certain

00:07:15American officials, including sadly some members of this committee, have parroted

00:07:20Russian and Chinese state disinformation. In The Atlantic, Ann Applebaum describes

00:07:25how the CCP's political propaganda against the U.S. both undermines American

00:07:31faith in our own political institutions and helps to consolidate domestic

00:07:36repression in China. As she puts it, quote, if people are naturally drawn to the

00:07:42image of human rights, to the language of democracy, to the dream of freedom, then

00:07:46those concepts have to be poisoned. That requires more than surveillance, more

00:07:50than close observation of the population, more than a political system that

00:07:55defends against liberal ideas. It also requires an offensive plan, a narrative

00:08:01that damages both the idea of democracy everywhere in the world and the tools to

00:08:06deliver it. Far from opposing these autocrats, Donald Trump has joined them

00:08:10in attacking our democracy by promoting utterly debunked claims of election

00:08:16fraud and orchestrating a lawless and violent campaign to overturn the

00:08:21legitimate results of the 2020 presidential election. He has openly

00:08:25stated his desire to pardon criminal insurrectionists and to rule as a

00:08:29dictator, using government not for the common good but to pursue his political

00:08:34enemies and to enrich himself and his family. As president, Donald Trump

00:08:39received millions of dollars from the Chinese government and state-owned

00:08:42companies to say nothing of the valuable trademarks Chinese authorities

00:08:46rushed to grant him and his family. In exchange, he opposed sanctions against

00:08:51Chinese telecom companies and banks, even when they threatened our national

00:08:55security. He assured President Xi that sending Uyghurs to forced labor camps

00:08:59was, quote, exactly the right thing to do, and that violently cracking down on

00:09:04pro-democracy protests in Hong Kong was acting very responsibly. He even tried to

00:09:10cancel military exercises with Japan and South Korea because China complained

00:09:15about it. While Donald Trump has proclaimed that he and Xi love each

00:09:19other, the Biden-Harris administration has responded forcefully to the

00:09:23political security and economic challenges posed by the CCP. As Secretary

00:09:27Blinken put it, the U.S. relationship with China is the biggest geopolitical test

00:09:32of this century. The Biden administration has shored up our democratic

00:09:36institutions to withstand attacks from autocrats and strengthen our alliances

00:09:40with democracies, both in Europe and the Indo-Pacific. While Trump has said he

00:09:45would encourage Russia to, quote, do whatever the hell they want to any NATO

00:09:49member country that doesn't meet spending guidelines on defense, President

00:09:53Biden has established AUKUS, a security pact with Australia, the UK, and the U.S.

00:09:58to help sustain peace in the Indo-Pacific. Domestically, bills

00:10:02championed by congressional Democrats and signed into law by President Biden,

00:10:06including the Inflation Reduction Act, the bipartisan infrastructure law, and

00:10:10the Chips and Signs Act, are investing in American workers in innovation,

00:10:14creating hundreds of thousands of manufacturing jobs here, and establishing

00:10:19domestic supply chains in strategic industries. These are big wins not just

00:10:24for our economy, but for our national security. President Trump has idolized

00:10:28and emulated dictators like Xi and Putin, and worked to move our country

00:10:32towards authoritarianism and away from democracy and the rule of law. In stark

00:10:37contrast, the Biden-Harris administration recognizes the key to out-competing the

00:10:42People's Republic of China lies in defending the extraordinary journey of

00:10:46American democracy, the enduring strength of our international

00:10:49relationships, and the revitalization of our economic competitiveness. I look

00:10:53forward to exploring these themes with our expert witnesses, including our

00:10:57distinguished former colleague, Tom Malinowski. Thank you, Mr. Chairman. Now,

00:11:00you're back. I'm pleased to introduce our witnesses today. All witnesses are

00:11:03testifying in their personal capacities. Mary Kissel is the

00:11:13Executive Vice President and Senior Policy Advisor at a financial services

00:11:17firm where she provides advice on macroeconomic trends and geopolitical

00:11:20risk. Prior to this role, she served as the Senior Advisor to the U.S. Secretary

00:11:24of State Mike Pompeo. Before joining the State Department, Ms. Kissel spent 14

00:11:29years on the Wall Street Journal Editorial Board as Chief Foreign Policy

00:11:33Commentator in New York and Editorial Page Editor for Asia-Pacific based in

00:11:38Hong Kong. Captain James Fannell is a retired U.S. Navy captain. He worked as a

00:11:44Naval Intelligence Officer specializing in Indo-Pacific affairs for almost 30

00:11:48years. Most recently, he served as the Director of Intelligence and Information

00:11:52Operations for the U.S. Pacific Fleet. Throughout his career in the Navy, he

00:11:56served in an unprecedented series of afloat and offshore assignments

00:12:02focused on China. He was also a founding member of the Committee on Present

00:12:05Danger China. He is currently a government fellow with the Geneva Center

00:12:10for Security Policy. Eric Bethel is a former U.S. Executive Director at the

00:12:15World Bank where he participated in the analysis and development of over 100

00:12:19billion dollars of capital in the developing world. He is currently a

00:12:22partner at a venture capital fund focused on maritime sustainability. Prior

00:12:27to these roles, Mr. Bethel worked as an investment banker and private equity

00:12:30professional focused on developing markets and served as Managing Partner

00:12:34of Sino-Latin Capital and Managing Director of ChinaVest in Shanghai, China.

00:12:40Former Congressman Malinowski served two years, two terms in the U.S. House of

00:12:46Representatives on behalf of New Jersey's 7th Congressional District while

00:12:49in Congress. He was Vice Chairman of the House Foreign Affairs Committee and a

00:12:52member of the Transportation and Infrastructure and Homeland Security

00:12:55Committees. Since leaving Congress, he has been a senior fellow at the John McCain

00:12:59Institute and serves on the boards of Radio Free Europe and Refugees

00:13:03International. Prior to Congress, he served as President Obama's Assistant

00:13:06Secretary of State for Democracy, Human Rights, and Labor, among other roles.

00:13:11Pursuant to Committee Rule 9G, the witnesses will please stand and raise

00:13:15their right hand. Do you solemnly swear or affirm to tell the truth that

00:13:22the testimony that you are about to give is the truth, the whole truth, and

00:13:25nothing but the truth, so help you God? Let the record show that the witnesses

00:13:29answered in the affirmative. Thank you, and you all may take a seat. We appreciate

00:13:35you being here today and look forward to your testimony. Let me remind the

00:13:38witnesses that we have read your written statement and will appear in full in the

00:13:42hearing record. Please limit your oral statement to five minutes. As a reminder,

00:13:46please press the button on the microphone in front of you so that it is

00:13:52on and the members can hear you. When you begin to speak, the light in front of you

00:13:55will turn green. After four minutes, the light will turn yellow. When the red light

00:13:58comes on, your five minutes have expired. We'd ask that you please wrap up. I now

00:14:03want to recognize Ms. Kissel for her opening statement. Mr. Chairman, ranking

00:14:09member, distinguished members, I'm honored to testify today on the Chinese

00:14:13Communist Party's influence operations and their impact on the Department of

00:14:16State. As former senior advisor to the Secretary, I was one of the few officials

00:14:21who worked across all bureaus and with many of our missions abroad. I saw

00:14:25firsthand China's vast influence operations and why they are a threat to

00:14:29our national security. Xi Jinping has accelerated China's influence operations

00:14:34via expansion and empowerment of the United Front Work Department and other

00:14:37party-state apparatuses. Often, these operations seem innocuous and like even

00:14:42friendly exchanges. Sister city agreements, business chamber meetings,

00:14:46think-tank conferences, and interviews with Chinese propaganda outlets, to name

00:14:51a few, are all opportunities for gray zone influence operations. Many of these

00:14:55activities are legal under current U.S. law. The Chinese party-state targets our

00:15:00diplomats most obviously by attempting to soften their views of its totalitarian

00:15:04regime through formal state-to-state engagement, giving the impression of

00:15:08productive work. Unfortunately, talking to party officials isn't the same as

00:15:13talking to our democratic allies. Beijing uses these exchanges to give itself

00:15:17breathing room to further China's foreign policy priorities and to

00:15:21distract us from the regime's economic coercion, gross human rights violations

00:15:26against the Chinese people, the People's Liberation Army's accelerating

00:15:30militarization, and many other transgressions. This is why our diplomats

00:15:34must always prioritize tracking what China does rather than what its

00:15:38officials say. The Xi regime regularly conducts influence operations within our

00:15:43own borders because we, as a democratic society, allow party officials freedom of

00:15:48movement and speech that no ordinary Chinese citizen enjoys at home. In

00:15:52contrast, our diplomats must apply for advanced permission to travel or meet

00:15:57with Chinese officials, permission that is regularly refused without explanation

00:16:01or recourse and are closely surveilled and even harassed while doing normal

00:16:05diplomatic work. Additionally, Beijing maintains an unofficial presence in our

00:16:10country, often cloaked as civil society organizations or community-based

00:16:14organizations that ultimately report to and receive money from the party and, in

00:16:19some cases, instructions from China's Ministry of Public Security. We worked to

00:16:24correct these imbalances during the Trump administration using the tools

00:16:27available to the department, such as shuttering China's Houston consulate for

00:16:31its malign activities and reinvigorating long-standing but long-ignored

00:16:36restrictions on Chinese diplomats' travel. Yet we are far from achieving parity in

00:16:40the treatment of our diplomats. More perniciously, China has proved adept at

00:16:46using states' bureaucratic structure to its advantage. Our diplomats are

00:16:50incentivized to smooth disputes and reticent to issue frank statements that

00:16:55might upset their diplomatic counterparts. Different bureaus also

00:16:58pursue different priorities. As a result, state may provide conflicting messaging

00:17:03to Americans. For example, the department recently encouraged American students to

00:17:07study in China but, at the same time, counsels Americans to, quote, reconsider

00:17:12travel to the country because of the risk of wrongful detentions. Educating

00:17:17Americans on gray zone Chinese influence operations is also deeply

00:17:20important for our business community. I serve as a director of two publicly

00:17:25traded companies. Few American executives and directors are aware that they, like

00:17:30our diplomats, are prime targets of Chinese influence operations, which aim

00:17:34to identify prominent Americans who may now or in the future be convinced to aid

00:17:38Beijing in some form or fashion. The State Department should be at the

00:17:42forefront of America's efforts to combat CCP influence operations. Our

00:17:46political officers can work with allies to document and curb China's malign

00:17:51activities. The Consular Affairs Bureau can issue clear and complete travel

00:17:56warnings while using new technologies to ensure visa applicants from China are

00:18:00thoroughly vetted for links to China's military, intelligence, or security

00:18:05services. Our public diplomacy teams can proactively refute Chinese party

00:18:10propaganda while promoting our superior free political system. The IO Bureau can

00:18:15track and expose Chinese influence ops at the UN and other multinational bodies

00:18:19that receive substantial U.S. financial contributions. Here at home, the

00:18:24department can educate and inform subnational units of our federal system

00:18:28that are heavily targeted by influence operations but lack foreign policy

00:18:32expertise. The Economic and Business Affairs Bureau can issue regular guidance

00:18:36on the risks of operating in China and the benefit of diversifying supply

00:18:40chains. These are just a few ways states should be engaging in this fight. These

00:18:45efforts do not require new resources but rather a more strategic allocation of

00:18:50our existing assets. In conclusion, I believe this committee's work is vital

00:18:56to the national interests of the United States. I'm grateful for your attention

00:19:00and I look forward to your questions. Thank you. Thank you very much. I now

00:19:05recognize Captain Finnell for his opening statement. Chair Comer, Ranking

00:19:11Member Raskin, and distinguished members of this committee, thank you for

00:19:15inviting me to testify. China's political warfare poses an existential threat to

00:19:21America, a threat that we've ignored for far too long. My focus today will be on

00:19:26how our government was so easily co-opted and deceived as well as how

00:19:30senior officials ignored valid indications and warning and failed to

00:19:34forcefully alert decision-makers. Their failure over decades undermined

00:19:38America's ability to build a national security strategy to defend against the

00:19:43PRC's ongoing political warfare. Through such tactics as elite capture,

00:19:48psychological warfare, deception, disinformation, and propaganda, the

00:19:53Chinese Communist Party misled and enculturated our government as well as

00:19:58other American elites. Out of fear of provoking Beijing, these elites blindly

00:20:02promoted the engagement strategy, which was in effect an appeasement strategy.

00:20:07The result, as a matter of national policy, the U.S. chose both to ignore and

00:20:12abet the PRC's unrestricted warfare against America. In particular, the

00:20:18intelligence community and the Department of Defense were deceived into

00:20:21buying the lie of China's peaceful rise and thereby failed to fulfill their most

00:20:26basic function in our government. As a result, senior U.S. leaders unilaterally

00:20:32disarmed, psychologically, intellectually, militarily, despite clear evidence that

00:20:37the PRC's rise was anything but peaceful. These leaders failed to understand that

00:20:42since its inception, the Chinese Communist Party has classified America

00:20:46as its main enemy. They chose to ignore Beijing's clearly stated intent to

00:20:51defeat America first through political warfare, that is, through a protracted

00:20:56Maoist political struggle as well as through the very real threat of kinetic

00:21:00warfare. While there were some in the government who did their job and gave

00:21:04warning, in general those officers were silenced. And in a world of dangerous

00:21:09groupthink, these officers were ridiculed, smeared, threatened, and censored. For them,

00:21:14their integrity and accuracy became a career death sentence. Thus, the question

00:21:19to be answered by this committee should be, why did the U.S.

00:21:22National Security Committee, specifically the IC and DoD, fail to recognize this

00:21:28dangerous strategic trend line? Why did they fail to give adequate warning so

00:21:33our government could adopt policies to stop the PRC's malignant rise? Just as

00:21:38has been done before, Congress must compel the IC and DoD to explain this

00:21:43failure. The most important steps must be to understand how it happened, and as

00:21:48such, Congress must demand accountability. Questions that must be answered also

00:21:54include, how did the PRC's political warfare organizations influence and

00:21:59deceive the IC and the DoD? What multiple failures occurred? Why were these

00:22:04failures not corrected internally? What assumptions and biases existed that

00:22:09colored IC and DoD reporting on China? As well as, who understood the threat but

00:22:14was ignored or punishment for their accurate assessments? My written

00:22:19testimony provides seven recommendations for you to use to address this clear and

00:22:23present danger. Today, I will focus on just one, that the executive branch in

00:22:28Congress must admit that the U.S. National Security Community failed. These

00:22:33officials inherit a post-World War II Pax Americana, a position of overwhelming

00:22:38military and political dominance, and they squandered it. Admission of failure

00:22:43is the most important first step in establishing accountability and, more

00:22:48importantly, fixing the problem. Finally, I remain extremely concerned that our

00:22:52national defense today continues to be degraded by those who favor

00:22:57unconstrained and unaccountable engagement with the Chinese Communist

00:23:01Party, despite the overwhelming evidence of the PRC's malicious intentions and

00:23:06their lethal capabilities. Just as America must rapidly build the platforms

00:23:11and weapons necessary to deter and defeat the PLA, the U.S. government must

00:23:16also fight the PRC's political warfare operations, which have so badly subverted

00:23:22America's defenses. This must be done immediately. I strongly support this

00:23:27committee's work and will do whatever is possible to assist you to help America

00:23:31acknowledge our past failures and to fight against the Chinese Communist

00:23:34Party's political warfare. If the Republic is to survive these attacks, we

00:23:39must vigorously preserve our system of individual liberty, democracy, and rule of

00:23:44law. If we fail, America will surely fall under the boot of an expansionist,

00:23:50genocidal, and totalitarian Chinese Communist Party. I thank the committee

00:23:55for the opportunity to testify and I look forward to answering your questions.

00:23:58Thank you very much. And now recognize Mr. Bethel for his opening statement. Mr.

00:24:03Chairman, Ranking Member, esteemed members of the Oversight Committee, I'm

00:24:07honored to address you today. This is a matter of critical importance, and that

00:24:12is China's expanding influence within multilateral institutions and the

00:24:17imperative that we have to address this development. Drawing from my own

00:24:21experience at the World Bank as the U.S. Director, I've witnessed firsthand the

00:24:25nuanced and strategic efforts that China has employed to enhance its presence

00:24:30within key international bodies. These efforts significantly impact global

00:24:35governance and regulations. China's concerted plans to augment its influence

00:24:41are evident across several pivotal organizations. For instance, China holds

00:24:47significant sway with the International Telecommunications Union, the ITU. This is

00:24:52an organization that actively helps shape the global telecommunications

00:24:57standards. In 2014, Zhao Haolin was elected Secretary General, and he remained at the

00:25:03organization until 2022. During his tenure, China leveraged its influence at

00:25:09this organization to support companies such as Huawei and ZTE. Meanwhile, at the

00:25:16United Nations Industrial Development Organization, UNIDO, they exemplify

00:25:21China's strategic alignment of multilateral initiatives with their

00:25:25domestic agenda. UNIDO was initially established to promote the

00:25:28industrialization of the developing world. In 2013, Chinese Communist Party

00:25:34member Li Yong became Executive Director, and during his eight-year term,

00:25:39China seamlessly integrated UNIDO with the Belt and Road Initiative, otherwise

00:25:44known as the BRI. The UNIDO endorsement not only enhanced China's credibility,

00:25:49but it also extended their economic and strategic reach globally, leveraging

00:25:54other multilateral platforms to further their national interests. The CCP's

00:26:00involvement in the International Civil Aviation Organization has also been

00:26:04concerning, particularly regarding the establishment of air navigation and

00:26:08safety standards. Liu Fang led the organization from 2015 to 2021. During

00:26:15her tenure, the ICAO came under fire for denying Taiwan access to

00:26:21participation in crisis coordination efforts during COVID, and then attempting

00:26:26to silence criticism on Twitter. China's ascendancy extends far beyond these

00:26:33examples. I don't have enough time to go through them. Its influence permeates

00:26:38other critical multilateral bodies, including the 15 principal agencies of

00:26:43the United Nations, where Chinese deputies hold influential positions. The

00:26:48implications of China's influence within these institutions are profound. They

00:26:52extend beyond mere representation to shaping global engagement, rules,

00:26:58regulations, and standards. China's involvement in the ITU, for instance,

00:27:02impacts global telecommunications standards, with significant ramifications

00:27:06for technology and innovation worldwide. Similarly, its influence at UNIDO and

00:27:11other international bodies reflects its efforts to align multilateral

00:27:16initiatives with China's foreign policy agendas, such as the Belt and Road. As

00:27:21China continues to assert its influence in multilateral institutions, it's

00:27:25imperative for the international community, including the United States, to

00:27:29respond effectively. Failure to address this issue could result in a significant

00:27:34shift in global governance dynamics, and this is going to have far-reaching

00:27:40effects for international corporation, the rules-based order, and the promotion

00:27:45of democratic values. During my tenure at the World Bank, I observed firsthand the

00:27:50critical importance of maintaining the integrity and impartiality of

00:27:54multilateral institutions, ensuring that these organizations serve the collective

00:27:59interests of the international community is paramount. We should

00:28:02develop a comprehensive strategy to safeguard these institutions from undue

00:28:06influence and ensure that they remain effective in promoting government global

00:28:11development and stability. In conclusion, I urge the committee to recognize the

00:28:15urgency of addressing China's expanding influence within multilateral

00:28:19institutions. It's essential to develop a comprehensive strategy to safeguard the

00:28:24integrity, the impartiality, and the effectiveness of these organizations so

00:28:30that we can ensure that they serve the collective interests of the

00:28:32international community. Thank you for your attention to this pressing matter.

00:28:35Thank you very much. I now recognize Congressman Malinowski for his opening

00:28:40statement. Thank you, Mr. Chairman, Mr. Raskin. It's great to be back with you. As

00:28:46we focus on America's vulnerabilities today, I'd like us to remember our

00:28:50strengths. America has the strongest economy in the world. China is struggling.

00:28:54We have allies. China has none. We're a democracy with ideas that people

00:28:58everywhere find attractive. China is the opposite. Everyone wants to come to

00:29:03America. No one wants to emigrate to China. In fact, they are losing their best

00:29:07and brightest people to us. All that said, a CCP-led China does pose a growing

00:29:13political, military, and economic threat to the United States, and CCP political

00:29:17warfare in America is part of that picture. But it's essential to remember

00:29:22what China is trying to accomplish, the ends as well as the means, which are to

00:29:26amplify our divisions and to create political paralysis so that we squander

00:29:31our strengths so that our government cannot act to meet our challenges. So how

00:29:35do we beat that? First, I believe that the Trump administration deserves credit

00:29:40for beginning to change the old paradigm of U.S.-China relations. The Biden

00:29:44administration rightly continued what its predecessors started, including its

00:29:48trade measures. But Biden added far more effective restrictions to deny China

00:29:53access to critical technologies, and unlike Trump, he got our European allies

00:29:57to join us. This kind of unity is precisely what we need to win and what

00:30:02CCP political warfare aims to prevent. If we want to win, we need to invest in our

00:30:07own industrial base, bring high-tech manufacturing back to America, and make

00:30:11sure that we, not China, dominate the clean energy technologies of the future.

00:30:16Again, exactly what the Biden administration is doing, thanks to the

00:30:19infrastructure bill, the CHIPS Act, and the clean energy and science investments

00:30:23in the Inflation Reduction Act. Please remember this, the Chinese government

00:30:28explicitly opposed the CHIPS Act. It is currently suing the United States and

00:30:33the World Trade Organization to stop the IRA's electrical vehicle subsidies.

00:30:37That's how they are trying to weaken America, and it tells us all we need to

00:30:42know about how to strengthen America. If we want to win, we have to strengthen our

00:30:46security alliances, and here again, Biden has succeeded through the AUKUS

00:30:50partnership, by defending the Philippines and the South China Sea, by bringing

00:30:54Japan and South Korea closer together. Remember that President Trump threatened

00:30:58to pull our troops out of Japan and South Korea, which would have realized

00:31:02the wildest fantasies of CCP strategists seeking to displace US

00:31:07power in Asia. And President Biden has also been right to heed the advice of

00:31:11our friends in Taiwan by helping Ukraine. The CCP wants Putin to win in Ukraine. It

00:31:18was obviously happy to see the National Security Supplemental, with its funding

00:31:22for both Taiwan and Ukraine, held up for so many months. Passing that bill was

00:31:27another defeat for CCP political warfare. And finally, if we want to win, we have to

00:31:32stand up consistently for our values and for American institutions. I believe the

00:31:37Biden administration has done that too, and while the Trump administration

00:31:40sometimes tried and deserves credit for it, it was repeatedly undercut by Trump

00:31:45personally. You don't win a contest of ideas with the CCP under a leader who

00:31:50says, as President Trump did, that Xi Jinping is, quote, smart, brilliant,

00:31:56everything perfect, because he, quote, runs 1.4 billion people with an iron fist.

00:32:01And finally, please remember this. One of the goals of CCP political warfare is to

00:32:07discredit the United States and our democracy. I went up against them many

00:32:12times as a diplomat. They tried to probe every single internal weakness we had in

00:32:16that way. We're not going to rebut CCP propaganda about us if we have leaders

00:32:22in our own country who say that America's elections are rigged, that our

00:32:26free press is the enemy of the people, that our independent judiciary is

00:32:30corrupt, that we have political prisoners in America, that it is America's fault

00:32:35that Russia invaded Ukraine, and so on and so on. If you're a CCP propagandist

00:32:41trying to disparage America and you hear stuff like that, you don't have to invent

00:32:46your own material anymore. All you have to do is retweet the Americans who say

00:32:50it. Now, there's a lot the Democrats and Republicans can do together to combat

00:32:56CCP political warfare inside our country. I agree with much of the picture that

00:33:01you painted, Mr. Chairman. There's bipartisan legislation in this Congress

00:33:06and previous Congresses that should be taken up, that I hope we have a chance to

00:33:10talk about today, to deal with some of those specific concerns. But above all, I

00:33:15hope we'll keep in mind what China wants us to do to ourselves to stop believing

00:33:20and investing in our country and to stop leading the world, and then we

00:33:25should do the exact opposite. Thank you, and I look forward to your questions.

00:33:30Thank you. Votes have just been called. They're just two votes, and the Speaker's

00:33:38Office has sent out a notice that they're not going to hold these votes

00:33:40open as long as they have been, so we're going to recess for approximately, until

00:33:46approximately 10 minutes.

00:33:54Committee will now reconvene. I now recognize Mr. Gosar from Arizona for

00:34:00five minutes for questions. Thank you, Mr. Chairman. The corporate left is quick to

00:34:04cancel and adhere to wokeness and political correctness, but only in this

00:34:08country. In NFL stadiums, the end zone is covered with the word, end racism, in

00:34:13enormous letters. But as the NFL expands to viewers in China, the racism occurring

00:34:19in China is not such a big deal anymore. Who cares the Uyghurs are enslaved, or if

00:34:25the racial and religious minorities like the Uyghurs and the members of the

00:34:28Falun Gong have their organs forcibly removed. It is all about people, profits

00:34:34over people, while pretending to be as clean as wind-driven snow, as Russell

00:34:37Limbaugh used to put it. The list of corporate hypocrites who cozy up to

00:34:41human rights abusers goes on and on, but I will not bore you with that right now.

00:34:45If you're going to rely on the goodwill of the corporate left to forego all the

00:34:49greed in China, you're going to be waiting a long, long time. But there is a

00:34:54very simple solution, ending the fiat currency system. It's simply too

00:34:58enticing for these companies to not do business in a country whose currency is

00:35:02a pittance compared to the dollar. Author Lewis Learman called being the

00:35:08country with a reserve currency, quote, a curse, because that is exactly what it is.

00:35:12Consumers in foreign countries simply cannot afford goods priced in the

00:35:16American dollar, so bye-bye manufacturing, and say hello to

00:35:20America's biggest new import, debt. And if you wonder why big banks like

00:35:25the fiat system, a non-fiat monetary system, would level the playing field

00:35:30between all countries and restore manufacturing to the United States, I

00:35:34appreciate the committee's desire to keep us safe from China. However, in all

00:35:38honesty, I'm much more afraid of the United States government. Just look at

00:35:42January 6. Over 1,450 mostly peaceful protesters have been charged

00:35:47with crimes. The FBI can't help but brag. The government wanted to put Julian

00:35:51Assange behind bars for 175 years for daring to expose government

00:35:56misconduct and the true nature of the United States military involvement in

00:35:59Iraq and Afghanistan, which was not pretty to say the least. The DOJ is

00:36:05attempting to send a number of peaceful pro-life protesters to

00:36:09jail for years simply for voicing their beliefs that abortion is murder. Steve

00:36:14Bannon, Mark Meadows, John Eastman, Jeff Clark are just four of the names

00:36:17targeted by the DOJ due to the crime of supporting Trump. The list of people and

00:36:22entities prosecuted by the DOJ, including obviously the former president, is also

00:36:26one that goes on and on, but I will not bore you again. I'm happy that the House

00:36:31leadership decided to investigate these atrocities on behalf of the

00:36:34American population, who supported Donald Trump by setting up the

00:36:38weaponization subcommittee run out of the Judiciary Committee. And while not

00:36:42dismissing China as a threat, I reiterate I'm much more concerned

00:36:47about our own government's desire to imprison those who disagree with them

00:36:50and their actions to render the First Amendment a meaningless paper memento

00:36:55than I am with a country suffering from a self-imposed demographic

00:36:58catastrophic caused by forced abortions and the one-child policy. All

00:37:04this leads me to a simple question. How are we supposed to fight China when

00:37:07we're becoming China? I have a question for all of you. In the Twitter files, we

00:37:13learned the FBI pressured Twitter to remove posts from the Hunter Biden

00:37:16laptop information on election fraud and COVID-19 and suspend Donald Trump's

00:37:21Twitter account. Has the CCP engaged in similar censoring activities? Mrs. Kissel?

00:37:31Thank you for your question, sir. I don't think that it's accurate to compare

00:37:38the United States, the world's most vigorous democracy, to a totalitarian

00:37:42Marxist-Leninist regime that is committing crimes against humanity and

00:37:46genocide. I'm here today to talk about what I believe to be a nonpartisan issue

00:37:54which is the extraordinarily serious threat that the United States and

00:38:00American citizens here and abroad face from the Chinese Communist Party and I

00:38:06strongly believe that this threat is differentiated from the threat that we

00:38:11faced during the Cold War, where they were over there and we were over here.

00:38:16This is a far more dangerous and complex threat. Our economies are intertwined, as

00:38:24my witnesses to my left have also articulated. This is unlike anything else

00:38:31we've ever faced. I spoke in my testimony about the gray zone activities that I

00:38:36believe are not adequately recognized and combated by the federal government

00:38:41and I'm here in particular to talk about CCP influence on the State Department. I

00:38:46also work in the business community and I'm telling you directors, CEOs are not

00:38:53aware of these threats. Now part of the problem is that the Trump administration

00:38:58woke up America and the world to the threat of the CCP. We would not be having

00:39:04this hearing today were it not for the work that we did. The Biden administration

00:39:08has essentially adopted our framework and continued it. I'm grateful for that

00:39:14but there's far more to do and we don't have a lot of time. Thank you very much.

00:39:19Thank you. Chair now recognizes Mr. Lynch from Massachusetts. Thank you Mr.

00:39:25Chairman. First of all I want to thank the witnesses for your willingness to

00:39:28help the committee with this work. Appreciate that. Mr. Malinowski, one of

00:39:34the most common weapons that authoritarian regimes employ when

00:39:38attacking democratic governments around the world is to undermine the

00:39:43very electoral process, the democratic electoral process by claiming that

00:39:49elections were either rigged or stolen and that's in order to discourage

00:39:56democratic participation number one but also to undermine the government

00:40:01that is elected through that process and that's happening around the world

00:40:08and largely being conducted by both China and Russia. In this country back

00:40:16in 2022 after the election, former President Trump and his personal

00:40:21attorney Rudy Giuliani, Kenneth Cheeseboro, Mr. Eastman and others

00:40:26challenged the results of the 2020 presidential election in this country.

00:40:31They did so in 62 cases in nine states. They lost all of them. Every single case

00:40:40was either dismissed or dismissed because there were no facts to support

00:40:47the claim or they were dismissed after the merits were heard. All those

00:40:52attorneys have been disciplined in some fashion, either that or indicted or

00:40:57disbarred and and or are currently appealing their their convictions. Does

00:41:04not the, now meanwhile candidate Trump continues to say that despite losing

00:41:11those 62 cases, continues to say that the elections in the United States were

00:41:17stolen and and and seeks to undermine and some of the members on this

00:41:20committee do the same thing. Seek to undermine the democratic process in this

00:41:24country. Doesn't this have the same effect that isn't this in harmony with

00:41:30the with the Chinese program and the Russian program to undermine the the

00:41:37credibility and integrity of our elections in this country? It's

00:41:41definitely in harmony. What one of the central goals of CCP propaganda and it's

00:41:50true of the Russians and the Iranians and most of our adversaries is to

00:41:55convince people around the world that the United States is not in fact the

00:42:00democracy that we claim it is. Or even to convince people that democracy itself,

00:42:07the idea of democracy is a spent force. When I was an assistant secretary of

00:42:14state for human rights and democracy arguing with the Chinese government that

00:42:19this is the argument that they tried to make, not very successfully and certainly

00:42:23it's a major feature of their propaganda around the world. As I noted in my

00:42:27testimony, it does not help us when American leaders echo exactly the same

00:42:33argument when they say that America has political prisoners, American elections

00:42:39are rigged, American institutions are corrupt. Now Republicans and Democrats

00:42:45we've always disagreed about policy and that's fine, that's that's good, but at

00:42:50least in most of my life we were united in defending America, in saying that our

00:42:56country has the best institutions, the finest system of government in the world.

00:43:01I think blaming America first is no way to win an argument with the Chinese

00:43:07Communist Party. Thank you. I just want to add the US president, former president

00:43:12Donald Trump praised Chinese President Xi Jinping after the ruling Communist

00:43:18Party announced that it was eliminating the two-term limit for the presidency,

00:43:22paving the way for Xi to serve indefinitely according to audio aired by

00:43:27CNN. And this is a quote from from former President Trump, he's now president for

00:43:33life, president for life and he's great and look he was able to do that, I think

00:43:38it's great, maybe we'll have to try to give that a shot someday, meaning

00:43:44electing a leader for life rather than subject to periodic election. Trump went

00:43:49on to praise Xi as a great gentleman and added he's the most powerful Chinese

00:43:54president in a hundred years and said Xi had treated him tremendously well

00:44:00during his visit in November. What does this do about our ability to hold Xi

00:44:08responsible for his oppression and and conducting full-spectrum surveillance

00:44:14over the Chinese people? Right, so look at the time former President Trump said

00:44:18those things, other members of his administration including Secretary

00:44:21Pompeo were trying to do the right thing, that we're standing up to Chinese

00:44:25human rights abuses, but the president of the country is the boss and when the

00:44:31president says things like that to Xi or about Xi it undercuts everybody else

00:44:36who's working for him to try to advance American values of freedom and democracy

00:44:41and besides it's just kind of bizarre and embarrassing, it sounded like he was

00:44:46envious of Xi Jinping and that's no place for an American leader to be. Thank

00:44:51you Mr. Chairman, I yield back. Chair recognizes Mr. Palmer from Alabama for five minutes.

00:44:55Thank You Mr. Chairman, just a point of clarification before I begin, is this a

00:45:00hearing about China or is it about? It's a hearing about China and we have we

00:45:06have passed along a number for Trump derangement syndrome to our colleagues

00:45:11so apparently they haven't started taking classes yet but it is about China

00:45:16very important issue and the government's failure to respond to the

00:45:21CCP threat. Well reclaiming my time I think that China is a serious enough

00:45:26threat that we need to focus on China and I will encourage my colleagues to do

00:45:30that. I have watched as China has has become the dominant influence at least

00:45:36economically and through their debt diplomacy and in our own backyard in the

00:45:40Western Hemisphere and we've done little to nothing to address it. I think

00:45:46we put ourselves in a very bad position, Ms. Kessel, in that we've allowed China

00:45:54to become the dominant economic force. I think in November Xi Jinping will be in

00:45:59Peru to cut the ribbon on a major seaport that that is built and designed

00:46:04to compete with our West Coast seaports. They're planning to build a major

00:46:08railroad. How would you respond to the fact that that we have we have been

00:46:14rather absent in our own region? Thank you for your question, Congressman, and

00:46:23thank you, Mr. Chair. I agree this is a serious threat and I'd like to focus on

00:46:27it. It also I don't believe should be a partisan issue at all as the former

00:46:32Congressman intimated. This is a threat to all Americans, Republican, Democrat or

00:46:38otherwise. The good news is that the Trump administration, as I said

00:46:43previously, woke up America and the world to the threat and we started to take

00:46:48actions across a number of fronts. President Trump, of course, was the first

00:46:53one to identify the fact that China was cheating on trade, that they were

00:46:58violating our intellectual property, and we took action on that. Under Secretary

00:47:02Pompeo, who I worked for at the State Department, we declared crimes against

00:47:07humanity and genocide, that China was committing these actions against the

00:47:11Uyghurs, the Hui and other people. We did a number of other important initiatives.

00:47:16We went around the world and we convinced many, many nations to get rid

00:47:20of Huawei from their telecommunications networks. We worked to probe what was

00:47:27going on at the WHO and what happened with COVID, which we now know came from

00:47:32a lab in Wuhan. If I may interrupt, when the Trump administration took action

00:47:42against China in regard to the spread of COVID, I think my colleagues across the

00:47:47aisle referred to him as a xenophobe. Well, again, I'd rather this not be a

00:47:51partisan hearing because I believe the threat is too grave to engage in

00:47:56that today. I want to continue this dialogue, but I only have a couple

00:48:02minutes left, and I want to talk about China's debt diplomacy. We know Pakistan,

00:48:09Kenya, Zambia and Sri Lanka already, Laos, Mongolia, are all under tremendous

00:48:16pressure. We just saw what happened a couple of days ago in Kenya when the

00:48:21government there is trying to raise taxes just to pay their debt. I think

00:48:24Zambia and Sri Lanka defaulted on their debt, and we're seeing this

00:48:31happen all over the world. It's not just sub-Saharan Africa, and it's happening

00:48:36in South America as well. Well, again, the good news is that at least U.S.

00:48:41investors, U.S. businesses are waking up. Look at the numbers of foreign direct

00:48:44investment into China. It's falling off a cliff, and if you go and you talk to our

00:48:49Latin American partners, our African partners, they want to do business with

00:48:53American companies, and I believe that the State Department could play a very

00:48:57constructive role in reaching out to these partners, partnering with U.S.

00:49:01business, and saying, okay, where can we come in and compete and win? Because

00:49:06these nations don't want Chinese workers coming in, taking their jobs. They don't

00:49:11want dirty money floating around their economy and their system further

00:49:14corrupted. They want to do business with us. So there's a lot of room here for the

00:49:19U.S. State Department to play a positive role. My fear, Congressman, is that we

00:49:24don't have the time that we had during the Cold War. We had decades to argue

00:49:30amongst ourselves, Republicans and Democrats, about the best way, right, to

00:49:34combat the Soviet threat. I don't believe that we have that time with communist

00:49:38China today, and that's, again, why I'm so glad that Congress is taking this threat

00:49:43seriously and having these hearings. We need to talk about it. We need to talk

00:49:47about their military buildup, in particular. There are experts on this

00:49:50panel. I've only got a few seconds. I think we also need to talk about how

00:49:53complicit we've been in helping build out their Navy and other military assets,

00:49:58how we have been lackadaisical in protecting our intellectual property, and

00:50:02just have not taken seriously the China threat. And again, Mr. Chairman, I

00:50:09think we need to take a long, hard look at what's happening in our own hemisphere,

00:50:13and that's something that I'm working on as a Western Hemisphere alliance,

00:50:16because China, contrary to what some of my colleagues think about other issues,

00:50:23China is the existential threat, and I think businesses are waking up to that.

00:50:28We also need to wake up to the fact, though, that there are other

00:50:32countries around the world that need us to engage and engage intelligently in this,

00:50:36and I appreciate every member of the panel here. I'm sorry I didn't get a

00:50:41chance to address the rest of you, and Tom would see you, but this is the

00:50:48existential threat facing our country, and I yield back.

00:50:51Very good. Chair now recognizes Ms. Brown from Ohio. Thank you, Mr. Chairman. As a

00:50:56member of the Select Committee on the Strategic Competition between the United

00:51:00States and the Chinese Communist Party, I have spent much of this Congress

00:51:04analyzing and evaluating the threat posed by the Chinese Communist Party's

00:51:08rising influence. Democrats and Republicans are clear-eyed about the

00:51:13critical ways in which we need to advance our national interests,

00:51:16politically, economically, and from a security standpoint, to be able to

00:51:20compete with the People's Republic of China on the world stage. The policies

00:51:25passed by House Democrats last Congress and implemented by the Biden-Harris

00:51:29administration are already working to do just that, bringing tens of thousands of

00:51:34good-paying manufacturing and technology sector jobs back to the

00:51:39United States. This is in part due to the legislation passed under Democratic

00:51:44leadership, like the CHIPS and Science Act. CHIPS and Science is an investment

00:51:48in American labor, the American workforce, and our economy, and ultimately our

00:51:53national security. In just one specific instance, American semiconductor jobs are

00:51:59growing rapidly following decades of decline. This is because the CHIPS Act

00:52:03makes a $50 billion investment in the American semiconductor industry and

00:52:08creates an unprecedented tax credit for investments. And that's only the start. As

00:52:14a result of this federal kickstart, the American private sector is matching and

00:52:19surpassing government funding, announcing more than $160 billion in their own

00:52:26investment in semiconductor and other electronics manufacturing. Welcome back,

00:52:31Mr. Malinowski. I have a couple questions for you. How is the CHIPS and

00:52:36Science Act working to bring jobs back to American communities, which have seen

00:52:41declines in manufacturing opportunities in the past? Thank you. Thank you, Ms.

00:52:48Brown. I think you put it very, very well. I mean, we are reinvesting in

00:52:52America. We're reinvesting in American manufacturing. When I was first running

00:52:56for Congress, most people thought we would never become the manufacturing

00:53:03country that we used to be, and we are becoming that country again. This is

00:53:07obviously good for American workers. It's good for our economy. But in the

00:53:12context of this hearing, we have to consider how much it helps us in the

00:53:17strategic competition with China. And keep in mind, in addition to the CHIPS

00:53:23Act, which is investing in semiconductor manufacturing in the United States, the

00:53:27Biden administration has imposed devastatingly tough restrictions on the

00:53:33export of microchip technology to China, not just from the United States, but

00:53:40enlisting countries like Japan and the Netherlands, which are the main

00:53:44manufacturers of the machines that make high-end microchips,

00:53:50semiconductors. And between the positive investments and the sanctions, if

00:53:57you will, the United States is racing ahead and China is falling behind. As I

00:54:03mentioned in my opening testimony, China explicitly, the Chinese government

00:54:07explicitly opposed passage of the CHIPS Act by the U.S. Congress for all of

00:54:13those reasons. They understand what their national interests are, and I think

00:54:18there are lessons for us in that, about how we should invest in our country in

00:54:22the future. Thank you.

00:54:23No, thank you. So it's like you were in my mind. In addition to the investments

00:54:27in semiconductors that President Biden has also made in directing that

00:54:32increase on tariffs, which you kind of touched on, on semiconductors and

00:54:36certain imports like EVs, electric vehicles, steel and aluminum, and medical

00:54:41supplies, can you elaborate a little bit more on how these tariffs benefit

00:54:45American manufacturers, our economy, and strengthen our national security?

00:54:49Yeah. So like on EVs, for example, I always think about this. Sure, it's an

00:54:54environmental issue, but it's an economic security issue. This is the industry

00:54:57of the future. People around the world are going to want to electrify

00:55:02transportation. And the question is, does America dominate that industry or

00:55:06does China dominate that industry? Again, we are not only investing in domestic

00:55:12manufacturing in clean energy industries through the Inflation

00:55:16Reduction Act, we are also imposing tariffs on Chinese-made EVs. And just

00:55:22a few days ago, at our urging, the European Union imposed its own tariffs

00:55:28on Chinese-made electric vehicles. And if anybody wonders where China stands

00:55:34on the Inflation Reduction Act, they are currently suing the United States

00:55:38and the World Trade Organization to try to take down those EV policies.

00:55:43So whatever we may think of it, it's absolutely clear where China stands.

00:55:48They want us to stop doing this because it hurts them.

00:55:52Thank you again. These strategic tariffs directed by the President are

00:55:56helping to combat the unfair trade practices of the Chinese Communist Party.

00:56:00They are a win for American workers and manufacturers, bringing even more

00:56:05jobs, opportunities and security back to the United States. President Biden

00:56:09knows what so many of us in Ohio and other manufacturing states know.

00:56:13Bringing jobs, opportunities and technology back to the United States is

00:56:18the best way for us to compete economically with the Chinese Communist

00:56:22Party. In doing so, we are supporting manufacturers large and small, lifting

00:56:26communities out of poverty and strengthening our national security.

00:56:30Thank you, Mr. Chairman.

00:56:32Thank you, Mr. Chairman, Mr. Bethel. Can you give me a brief rundown if you can?

00:56:53Yeah, kind of keep it brief because I think we could have a long conversation

00:56:57about it, about how the PRC uses its power to infiltrate our financial

00:57:03systems to its advantage and to our disadvantage. And I want to have a

00:57:07broader discussion with the rest of the panel about that.

00:57:13Where to begin? Yeah.

00:57:17First of all, let's let's understand, let's provide context and understand

00:57:20what we're dealing with. What we're dealing with is we have a free and open

00:57:24system and our financial managers, hedge fund managers, Wall Street

00:57:29professionals have an obligation and their obligation is to provide a rate

00:57:33of return to their pensioners. They have a fiduciary and a moral obligation.

00:57:39So the challenge that we have is to tell them you can't invest in China

00:57:45because they'll say, well, don't don't blame the player, blame the game. My

00:57:48job is to create a rate of return. Now, what I find very ironic about the

00:57:54situation is that those same players that are quadrupling down on ESG are

00:58:01also quadrupling down on China. Every letter in that acronym stands for

00:58:05something. E stands for the environment. Having lived in China 10 years, I can

00:58:09assure you that I may have lost years of my life just breathing the air, right?

00:58:13S stands for social. And clearly what's happening in Tibet, in Xinjiang, in

00:58:19other places don't reflect a positive social outcome for the Chinese people.

00:58:25And G stands for governance. You may ask yourself, how do there exist private

00:58:30companies in China when the government can strip you of your CEO and disappear

00:58:36your senior leadership? So what what I don't understand is how you can be for

00:58:41ESG and at the same time for China. I've been arguing this case for years, but

00:58:47we now find ourselves in a situation where many of these financial managers

00:58:51have lost money to the tune of two, three trillion dollars over the last

00:58:56several years. One company alone, an American company, NVIDIA. I was going to

00:59:03say thank you to Miss Brown, but she left. But NVIDIA has a higher market

00:59:09capitalization than the entire stock market of China. And that's happened over

00:59:14two years. So the word of caution is to our financial community is be aware of

00:59:20what you're dealing with. And I find it also objectionable that Chinese

00:59:25companies listed in the United States don't file proper PCAOB accounting

00:59:31standards. How is that possible?

00:59:33So how is that possible? And I suspect if I talk to each one of you, including my

00:59:39former colleague here, all with the best of intention, you know, to counteract the

00:59:44Belt and Road Initiative, we need to use things like the International

00:59:48Development Finance Corporation. We need to compete against China where they are

00:59:52competing. It costs the American people more money. But what you just described,

00:59:57the unequal playing field, where American companies must comply, Chinese

01:00:02companies don't have to, they're advantaged. And the answer is, is the

01:00:08taxpayer's got to pay more. Where if we just shut off the, we're funding our own

01:00:14demise, we're funding our own demise.

01:00:19Miss Kissel, I'm sure you have plenty of examples. Captain, I don't know if that's

01:00:23your wheelhouse, no pun intended, but I'd love to hear your, you know, your your

01:00:28thoughts on that, because I feel like there's an answer right in front of us,

01:00:32which is relatively inexpensive from an output, right? It's going to cost

01:00:36everybody something, right, if you're not getting cheap Chinese goods. But we're

01:00:40going to take the cheap Chinese goods while allowing them to abuse our system,

01:00:44and which they literally finance their operation that we're asking our American

01:00:50taxpayers to then finance the opposition, which is ridiculous.

01:00:55Well, I think Eric hit on an important concept that could be applied across

01:01:00agencies, and that's the concept of transparency. And as you say, fair and

01:01:04equal treatment. We shouldn't give China special advantages, because communist

01:01:09China, it's it's a party state. We don't use that terminology, but we should. It

01:01:14doesn't function like our economy. It's a criminal state. Every economic activity

01:01:19accrues to the party's benefit, and the party's goal is to upend our way of life

01:01:25and to dominate and change our way of life. I believe that these listing

01:01:31standards should be changed. I believe that the State Department should issue

01:01:35very clear guidance on the risks of traveling and doing business with China.

01:01:40It's very confusing. I get a lot of questions from clients about this,

01:01:43saying, well, should I go? Should I continue to invest? What are the risks?

01:01:47We should explain that very clearly. I think transparency goes a long way. And

01:01:51I also think, frankly, that it's unconscionable that you have federal

01:01:55employees, pension funds going to companies that uphold the party state

01:02:02that is committed to destroy us. That's insane. So who has the sole power? Who,

01:02:07if anybody? I know, Mr Chairman, with I'll conclude here, who has the sole

01:02:12power to even the playing field? We're not saying what I'm saying is, is that

01:02:19we should be reciprocity. If it's good for them, it's good for us. If they

01:02:21allow it, we'll allow it. But if they won't allow it, we won't allow it. Why

01:02:25do they? Who has the sole authority? Here's the challenge. There's not a

01:02:27single answer to your question. It's a very complex and complicated threat. The

01:02:33SEC has to deal with it. Commerce has to deal with it. The National Security

01:02:37Council, State Department, all arms of the federal government have to deal with

01:02:41it. But also state governments have to deal with it because the CCP is

01:02:46conducting influence operations and softening up our local and allow them

01:02:50to not follow the rules, allowing them to not follow the rules. All those

01:02:54agencies have to change that. This has to be an all of government effort, in

01:02:58my opinion.

01:03:00The gentleman's time has expired. The chair recognizes the gentlewoman, Ms

01:03:04Norton, for five minutes for question.

01:03:08Thank you, Mr Chair. This is a question for Mr Marinovsky.

01:03:14The Biden Harris administration is investing in domestic technology and

01:03:18domestic manufacturing because they are key components to strengthen our

01:03:24economy, create good jobs, protect our national security and compete with the

01:03:30people with the People's Republic of China. These investments mean that more

01:03:35components of our computers, computers and cars, as well as critical nano

01:03:45and biotechnology are being developed and manufactured here in the United

01:03:52States. By strengthening American supply chains, we prevent over reliance

01:03:59on China for essential goods.

01:04:03As we have learned from Cove in 19

01:04:08pandemic supply, supply chain diversification is

01:04:15crucially important,

01:04:17not just for our economy, but to ensure Americans have food, medical supplies

01:04:25and other essentials during times of global crisis. Mr Malinowski,

01:04:33how specifically will increasing domestic manufacturing of semiconductors

01:04:42and other technology strengthen national security?

01:04:47Thank you.

01:04:49I will repeat myself as often as necessary on this point. Congresswoman

01:04:56Norton, bringing advanced manufacturing away from China to the United States

01:05:03and to our allies is absolutely essential to our national security, in

01:05:08part because these advanced technologies are critical to China's military

01:05:13development. Um, and for many, many other reasons, we are doing that in

01:05:21ways that are, I think, very surprising to the Chinese Communist Party. One

01:05:24reason why Xi Jinping expressed confidence when he launched on his

01:05:31current path several years ago was that he believed the United States was in

01:05:35decline, both politically and economically. He did not believe that we

01:05:40would come together as we have to invest in our infrastructure, to invest

01:05:45in critical technologies and advanced manufacturing. And so politically, from

01:05:51the standpoint of our morale and his morale, it's also very important that

01:05:55we're doing this. Um, I want to quickly also just associate myself with, um, my

01:06:03colleagues on the panel in their answers to Mr Perry. I enjoy the rare

01:06:08moments when I can agree with Mr Perry. Didn't happen often when I was here,

01:06:12but we both enjoyed it when it happened. Um, I agree with their analysis. I

01:06:17agree with their recommendations. I think the only way, the only way in

01:06:21which I would part a little bit is that I just think the United States of

01:06:25America is doing better across the board right now on all these fronts. I

01:06:30don't think we're on the verge of somehow being defeated or overrun by

01:06:33China. Um, foreign direct investment in China as a result of policies that

01:06:39were begun in the Trump administration continued under Biden, declined by 82%

01:06:45in just the last year. Think about that. 82%. They are reeling because we are

01:06:51finally waking up to the threat and doing things that are effective on a

01:06:55bipartisan basis. And my plea to you is don't stop doing those things

01:06:59since 2021. The Biden administration, Biden-Harris administration has

01:07:06created hundreds of thousands of new manufacturing jobs in the United States

01:07:12through the Chips and Science Act. The Biden-Harris administration is making

01:07:18significant investments in domestic manufacturing of batteries and electric

01:07:25vehicle components, which simultaneously reduces dependence on the PRC and

01:07:33helps reduce dependence on fossil fuels by making electric vehicles more

01:07:39accessible to Americans when they make a choice about what type of car to

01:07:44buy. Through the Inflation Reduction Act and the bipartisan infrastructure

01:07:50law, every congressional district in America is benefiting from Federal

01:07:54funding for sustainable battery manufacturing. Mr. Malinowski, how are

01:08:01these investments key to competing with the People's Republic of China?

01:08:07Mr. Malinowski. Well, I have two seconds, so I will just say that the

01:08:10People's Republic of China, their government, opposed us making every

01:08:13single one of those investments because they understand that they are good

01:08:17for America and bad for their designs on America.

01:08:22China controls over 80 percent of certain segments of the EV battery supply

01:08:27chain. Investing in the domestic battery supply chain and building a

01:08:33sufficient domestic industrial base is a win-win. The Biden-Harris

01:08:41administration is enhancing our resiliency, strengthening our national

01:08:46security, and creating jobs. I yield back, Mr. Chairman.

01:08:50The Chair now recognizes Dr. Fox from North Carolina.

01:08:53Dr. Fox. Thank you, Mr. Chairman, and I thank our witnesses for

01:08:57being here today. Nice to see you, Tom.

01:09:01We know that the Chinese Communist Party seeks to influence and

01:09:04undermine the U.S. economy in countless ways, and I appreciate what

01:09:08you all have said. This has felt in nearly all industries, including

01:09:12our domestic textile industry, which is being flooded with fraudulent

01:09:17products that undercut U.S. manufacturers, its workforce, and the

01:09:21legitimate players in the market. To stop the CCP's shameful use of

01:09:26forced labor in the Xinjiang region, Congress passed the Uyghur

01:09:31Forced Labor Prevention Act in 2021. This law, designed to prevent

01:09:37goods manufactured in the Xinjiang region from entering the U.S.

01:09:43because they're presumed to be made with forced labor. Since 2021,

01:09:49Mr. Bethel, are you aware that the CCP continues to use forced labor

01:09:54to exploit its own people and undermine the U.S. economy, especially

01:09:59the textile industry?

01:10:04Yes.

01:10:05Yes? Okay, good.

01:10:07Make it easy for you.

01:10:09Yeah, Mr. Farrell.

01:10:12Yes, ma'am. Everything that I see in the reporting suggests that that's

01:10:15still going on.

01:10:17Ms. Kissel.

01:10:21Yes, and we shouldn't forget this is a totalitarian regime. None of the

01:10:27citizens, the ordinary Chinese people, enjoy the rights and freedoms.

01:10:32While we recognize the crimes against humanity and genocide in Xinjiang,

01:10:37we should also recognize that the people of Hong Kong, Macau, and the

01:10:41rest of mainland China also suffer under the jackboot of the Chinese

01:10:46Communist Party.

01:10:47Yes.

01:10:48We've heard that many Chinese companies exploit the de minimis tariff

01:10:53exemption to avoid tariffs, inspections, and continue importing goods

01:10:58from the Xinjiang region that are prohibited under the Uyghur Forced

01:11:03Labor Prevention Act.

01:11:05Mr. Bethel, can you speak to how this exemption is being exploited by

01:11:09the CCP?

01:11:11Sure.

01:11:12Before I do, let's contextualize what we're dealing with.

01:11:18China has ethnic minorities.

01:11:20They're called the Uyghurs, okay?

01:11:22And China has taken these ethnic minorities and put them in

01:11:25concentration camps.

01:11:27How are we allowing this?

01:11:29And how is the world not waking up to this?

01:11:31This is atrocious.

01:11:33Anyway, to answer your point, it's very easy for Chinese companies to

01:11:38circumvent the anti-dumping and forced labor bill by simply going to

01:11:42other countries.

01:11:43So, in other words, if China can export goods and materials to, say,

01:11:49Mexico or a CAFTA country and Mexico can assemble them, they can get

01:11:56them into the U.S.

01:11:57through NAFTA.

01:11:58So I think we should be very aware of not just the end destination, the

01:12:04ultimate origin of where the goods came from.

01:12:07Well, I want to stick with this issue for just a moment.

01:12:11It's estimated that half the de minimis shipments entering this country

01:12:16are textile or apparel products.

01:12:18This severely hurts the U.S.

01:12:20textile and apparel industry because it does not abide by the established

01:12:24trade rules.

01:12:25And many of the de minimis shipments, as confirmed by Customs and Border

01:12:30Protection's testing, and as you alluded to, contain cotton from that

01:12:35region.

01:12:36What can be done to close this de minimis loophole that harms U.S.

01:12:41industry and perpetuates human rights abuses?

01:12:44Mr. Bethel.

01:12:46Well, I think galvanizing a whole-of-government approach is a great

01:12:51first step.

01:12:52I think one of the things that we're missing here is that China views

01:12:56warfare as a multidimensional attack against the United States, where we

01:13:02view warfare purely in the kinetic realm.

01:13:05So I saw that Jim had this book here called Unrestricted Warfare, which

01:13:10is written by two PLA colonels, in which they claim that you can attack

01:13:15the United States diplomatically through culture and education, science

01:13:20and technology, data, space, trade, and it's all interconnected.

01:13:26So I think taking a whole-of-government approach and understanding that

01:13:29this can't be solved by one agency, but rather by many agencies, I think

01:13:33that's probably the smart approach.

01:13:36Thank you.

01:13:37And Captain Farrell, to build on what Mr. Bethel was saying, how can we

01:13:43get our military and intelligence community to recognize that it's

01:13:48underestimated the CCP and what's being done in these very disparate ways

01:13:57of undermining our country?

01:14:00Well, we need to, as Eric said, we need to recognize that China is using

01:14:04comprehensive national power, as they define it, to attack the United States

01:14:08across this whole-of-government, as we call it, process.

01:14:11And in terms of the military domain and the IC, as I said in my opening

01:14:15statement, we need to have a recognition of past failure to truly understand

01:14:21the intentions of the Chinese Communist Party to displace the United States

01:14:25as the world's superpower.

01:14:27And until we do that, we're not going to be able to move forward.

01:14:30And so we need to have something like we had in the 70s with the Church

01:14:34Committee or the Pike Committee.

01:14:36We need to have a committee hearing that really goes into the IC and the

01:14:39DOD to understand how it's possible, for instance, in the space of from

01:14:432005, the United States Navy had a 76-ship advantage over the Chinese

01:14:48Navy, and today it's 39 ships in favor of the Chinese.

01:14:52That's 115 ships swing in a 20-year period, and yet we sat here dumbfounded

01:14:58and didn't do anything about it.

01:15:00And while we have moved some manufacturing back to the United States,

01:15:03China today has 13 major naval shipyards.

01:15:06The United States has seven.

01:15:08Just one of China's is greater than all seven of ours.

01:15:11We have some serious problems ahead of us.

01:15:13Thank you, Mr. Chairman.

01:15:15I yield back.

01:15:16The lady yields back.

01:15:17Chair recognizes Ms. Lee from Pennsylvania.

01:15:19Thank you, Mr. Chair.

01:15:21You know, this really should be a bipartisan hearing, but I'm afraid my

01:15:27Republican colleagues are so focused on getting their fear-mongering

01:15:30sound bites that they've lost the plot a bit.

01:15:33Because there's a lot on this topic we can agree on.

01:15:35American jobs, for instance.

01:15:37We all want to see manufacturing come back to our communities.

01:15:40And we all want to see that local manufacturing create good-paying

01:15:44union jobs.

01:15:45Communities like my home city of Pittsburgh have been hit hard by

01:15:49outsourcing and relocating.

01:15:51We're the steel city, but we've had to adapt and transition to other

01:15:54industries as the manufacturing has declined.

01:15:56Rather than giving up, we should be working to revitalize our

01:15:59manufacturing and expand job opportunities.

01:16:01The bipartisan infrastructure law, chips and science act, the inflation

01:16:05reduction act have created the support for more than $860 billion

01:16:09in business investments in industries like electric vehicles and

01:16:13clean industry, excuse me, clean energy and semiconductors.

01:16:17Mr. Malinowski, how does investing in these types of industries help

01:16:21ensure good-paying jobs in manufacturing here in the United States?

01:16:27Well, it transparently obviously does.

01:16:31And I think as you know better than most, given the district that

01:16:37you represent, not only were we losing jobs in these industries

01:16:43year after year after year, decade after decade, but we were losing

01:16:49the confidence as a country that we could ever be a manufacturing

01:16:53power again.

01:16:55And if you look at what Chinese strategists and propagandists were

01:16:59saying about the United States, they too were dismissive of the

01:17:03possibility that the United States would become that kind of

01:17:07manufacturing country again.

01:17:09So the fact that we have come together and made the decision we are

01:17:13going to do it and demonstrated that it's possible in the way that

01:17:17we have in the last couple of years, not only is great for jobs and

01:17:21for families getting money in their pocketbooks, it's also, I think,

01:17:27great politically and from a morale standpoint for our national

01:17:31confidence.

01:17:33And it shows China that we are not to be trifled with.

01:17:37Thank you for that.

01:17:39Staying on those particular sectors, those types of industries,

01:17:43what are some of the long-term benefits of developing these jobs

01:17:47in our communities?

01:17:49Aside from the morale boost.

01:17:51Yeah.

01:17:53But for the communities themselves.

01:17:55We can build better-paying jobs than existed before.

01:17:59So there's a dignity benefit that I think should be very important

01:18:05to all of us.

01:18:07There is a huge benefit to our national security because many of

01:18:11these industries are critical to our military modernization.

01:18:17And therefore, for national security reasons, it's important that

01:18:21this manufacturing happen either in the United States or on the soil

01:18:25of our closest democratic allies.

01:18:29So, you know, the benefits are infinite.

01:18:33The drawbacks are zero.

01:18:35And I keep coming back to China explicitly did not want us to do

01:18:39this.

01:18:41And that tells us everything.

01:18:43Thank you.

01:18:45Of course, this is just the start, right?

01:18:47Workforce hubs and communities around the country, including

01:18:49the U.S., translate into pipelines for good-paying jobs in communities

01:18:53that have been left behind.

01:18:55Through this program, the administration has invested almost

01:18:57$450 million to expand registered apprenticeship and pre-apprenticeships,

01:19:01which supported the education and training needs of more than a million

01:19:05Americans.

01:19:07Already, these investments have created nearly 800,000 manufacturing

01:19:09jobs here in the United States and doubled new factory construction.

01:19:13But to better understand the full problem, I think we also need to ask,

01:19:15how do we get here?

01:19:18Moving forward, Mr. Malinowski, what are some of the challenges to

01:19:22remaining competitive against China and keeping our manufacturing workforce

01:19:26in the United States?

01:19:28Workforce is the key.

01:19:30We're investing in manufacturing.

01:19:32We're investing in science.

01:19:34We have 8 million unfilled job openings in the United States right

01:19:36now.

01:19:38How do we solve that?

01:19:40We need workforce training.

01:19:42We need to invest in community colleges, which train young people

01:19:44directly for these jobs.

01:19:46And if I can touch a third rail, we absolutely, from a national

01:19:50security point of view, need more legal immigration to the United States.

01:19:54One of our biggest comparative advantages over communist China is that

01:19:58no one wants to emigrate to China because it's a dictatorship.

01:20:02And the best, brightest, most talented people in the world want to

01:20:06come here.

01:20:08I don't want a single person coming illegally.

01:20:10I want us to control it.

01:20:12But we need more, not less, legal immigration.

01:20:14Thank you.

01:20:16Thank you for that.

01:20:18Fighting back against China's unfair trade practices, investing in our

01:20:20American workers, and bringing good-paying union jobs back to the

01:20:22communities across the country all seem like bipartisan goals.

01:20:24The American people deserve more than this fear-mongering.

01:20:26They deserve solutions and actions.

01:20:28And I thank you for that.

01:20:30And with that, I yield back.

01:20:32Chair, I recognize Mr. Grofman from Wisconsin.

01:20:34Thank you.

01:20:36First of all, Mr. Bidle, Mr. Bethel, thank you.

01:20:40Mr. Bidle, Mr. Bethel, you mentioned I think a little bit the plight of the

01:20:48Uyghurs, which kind of shows what the CCP is capable of.

01:20:52Has any American industry, particularly the NBA owned by these

01:20:56billionaires, it doesn't seem to bother them.

01:21:00Could you give us in general an overview of what the response of the

01:21:04schmoozers who run America's big corporations has been to what's going

01:21:08on with the Uyghurs?

01:21:12I think people just don't want to talk about it.

01:21:16To give you an illustration, Volkswagen, it's not an American company

01:21:20obviously, but it's emblematic of what the situation is.

01:21:24Volkswagen has its single largest factory for automobile production in

01:21:28Xinjiang, China.

01:21:30If they were to speak out, ask yourself what happens.

01:21:34Furthermore, 90% of the photovoltaic material for solar panels comes

01:21:38from Xinjiang.

01:21:42We have solar panels on our roof.

01:21:46We have a Tesla.

01:21:48We're very concerned about the environment.

01:21:50I'll preface that.

01:21:52However, it's all coming from China and from Xinjiang.

01:21:56I think there's a level of intellectual dishonesty.

01:22:00China's been very careful to address the seams

01:22:04in our government.

01:22:06Do you care more about human rights or do you care more about environmentalism?

01:22:10First of all, I think this institution has to familiarize

01:22:14itself where this green stuff is coming from.

01:22:18Maybe if they realized so much of it's coming from China,

01:22:22they wouldn't be so gung-ho and pushing it more on people.

01:22:26I do want to comment

01:22:30on Mr. Malinowski's comment.

01:22:34I do not believe American industry is on the ropes for manufacturing.

01:22:38Wisconsin right now is the number one manufacturing state

01:22:42in the country.

01:22:44Their only big problem is they got two problems.

01:22:46One problem is they need more people to work.

01:22:48By the way, I really dislike it when people imply the non-union jobs

01:22:52of which we have so many good ones don't count.

01:22:54I think probably disproportionately the boom

01:22:58in manufacturing jobs in Wisconsin has come from non-union jobs

01:23:02and if we try to focus on union jobs, we won't be as successful.

01:23:06Manufacturing is booming in Wisconsin.

01:23:10I wish we had more high-tech manufacturing.

01:23:12Do you think we should do something tax-wise on that?

01:23:16Mr. Malinowski, do you think that would help?

01:23:20I would be very open to anything.

01:23:24Can I comment on your NBA comment?

01:23:28I think we can agree on a bunch of things.

01:23:32A few years ago, the Houston Rockets, an NBA team,

01:23:36fired one of their executives for criticizing human rights abuses in China.

01:23:40I introduced a bipartisan bill, forgetting now who my co-sponsors were,

01:23:44to prohibit American companies

01:23:48from taking personnel actions against employees

01:23:52for exercising their free speech rights to criticize human rights abuses abroad.

01:23:56It's a non-controversial bill.

01:24:00We weren't able to pass it, but it's something I would highly recommend you guys take up.

01:24:04I can't think of any argument against it.

01:24:08I think it's something that would unite all of us Republicans and Democrats on this panel.

01:24:12I totally agree with you. That's an issue that we should be concerned about.

01:24:16I think the middle class in America is very proud to be American

01:24:20and very great to be American.

01:24:24It's the multi-billionaire class that doesn't seem to recognize what we have.

01:24:28I'll ask one final question here.

01:24:32It can be any one of you.

01:24:36One of my concerns is how America is portrayed in the Chinese media.

01:24:40What they're saying about America as they communicate with their own citizens.

01:24:44I've heard for years, and when I talk to Chinese around here,

01:24:48they're all, oh, everybody in China loves America.

01:24:52But I hear in their curriculum that they're giving their own people

01:24:56and sometimes anti-American.

01:25:00Could one of you guys comment on what both the news and educational curriculum,

01:25:04how are they educating the Chinese to think about America?

01:25:08First of all, I think it's important that we recognize

01:25:13that China does not have media.

01:25:17It has propaganda. It is fundamentally different from our free and open press.

01:25:21It is a party state. I've used that phraseology before.

01:25:25I think it's important that we adopt it as a country and a federal government.

01:25:29I'll give you an example from our time in office.

01:25:33We declared Chinese propaganda outlets like Xinhua foreign missions

01:25:37because they report to Beijing. They don't report to a CEO

01:25:41with an independent board. Their function is to promote the interests of the Chinese

01:25:45Communist Party. We received huge pushback from U.S.

01:25:49media organizations that wanted to keep their

01:25:53reporters in China. My question to them was,

01:25:57how are they going to report in China? They can't freely walk around. They're surveilled.

01:26:01They're harassed. You'd probably get more good reporting

01:26:05out of basing your people in Taipei and talking to

01:26:09the Chinese business people who are traveling there.

01:26:13We're running out of time. Can I ask you, what is more progressive,

01:26:17the Chinese media or the American media? The Chinese do not have media. They have propaganda

01:26:21outlets. The United States has a dynamic,

01:26:25competitive, free media. Some of it is garbage. Some of it

01:26:29is great, but at least we have a competitive, free and open system.

01:26:33Thank you. Very good. Chair recognizes

01:26:37Mr. Frost from Florida. Thank you, Mr. Chair. When we talk about the threats

01:26:41posed by the CCP, I think it's important that we

01:26:45make sure that the actions to counter those threats don't also undermine our own

01:26:49democracy in the process. Otherwise, we play right into the hands of our adversaries

01:26:53and folks who wish to destabilize our country. What we need is a

01:26:57targeted, informed action, the kind that the Biden administration has been taking,

01:27:01not the chaotic sideshow that we saw during the Trump administration.

01:27:05For proof of Trump's China first, America second policy,

01:27:09all we have to do is look into his business dealings. Mr. Malinowski,

01:27:13are you familiar with the Industrial and Commercial Bank of China or the

01:27:17ICBC? Yes, generally. Is it

01:27:21an independent entity or is it tied to the Chinese Communist Party?

01:27:25There are no independent entities in China, but that one in particular is tied.

01:27:29The ICBC is owned by the People's Republic of China.

01:27:33In the first few years of his presidency,

01:27:37President Trump took payments after payments from one of his Trump Tower

01:27:41tenants, the ICBC. Yes, the one owned by the CCP.

01:27:45This continued even after authorities

01:27:49started investigating ICBC's ties to front companies funneling

01:27:53money to North Korean nuclear programs. In other words,

01:27:57Trump was valuing North Korean nukes, the CCP,

01:28:01and his own bottom line over our national security and the interests of Americans.

01:28:05As a matter of fact, during Trump's only term as president, the Republican

01:28:09chairman of the House Foreign Affairs Committee begged the Trump administration to

01:28:13quote, more Chinese banks, to target sanctions towards

01:28:17quote, more Chinese banks that do business with North Korea with

01:28:21or without Beijing's cooperation, end quote. But

01:28:25that would require the former president to recognize America's

01:28:29interests in curtailing the PRC's influence

01:28:33over his own financial interests. Trump has enabled

01:28:37President Xi every step of the way. Mr. Malinowski, do you

01:28:41know what former President Trump's policy was towards the Uyghur

01:28:45people? Look, I've tried to be fair here

01:28:49and make a distinction between the Trump administration and the former president.

01:28:53I think the Trump administration

01:28:57did a lot of things that I agree with in China and had people who were responsible

01:29:01and working for the American people. I think his former

01:29:05national security advisor, John Bolton, has said

01:29:09the president himself far too often mixed his personal interests

01:29:13and obsessions with his responsibilities as commander

01:29:17in chief. And of course, we know what he reportedly said

01:29:21to Xi Jinping about the concentration camps that

01:29:25we all agree are horrible. In Xinjiang, he said

01:29:29that that's a perfectly fine thing to do. Exactly. He said

01:29:33quote, exactly the right thing to do when talking about

01:29:37concentration camps to detain folks.

01:29:41Mr. Malinowski, considering that the former president Trump repeatedly chose

01:29:45his pro-CCP patrons over Americans, what

01:29:49guardrails are in place to ensure that future administrations don't repeat

01:29:53this pattern? I don't know if there's any legal guardrail against

01:29:57the kinds of statements that he would make about Xi Jinping.

01:30:01We just have to exercise our good judgment as voters, whether we are

01:30:05Republicans or Democrats, to choose leaders who

01:30:09really do put American values first.

01:30:13I think there are, on issues like emoluments,

01:30:17which the ranking member of this committee has emphasized,

01:30:21I think there are also legal measures that we can enact, whoever

01:30:25may be president at any given moment, Democrat or Republican, to make

01:30:29sure that they do not have personal business interests that are linked up

01:30:33with foreign powers. What signal does it send to authoritarian

01:30:37regimes around the globe, including China, when we have a leader who

01:30:41repeatedly puts their own interests first and turns a blind eye to human

01:30:45rights abuses? I think the signal that it sent to China at the time was that they could ignore

01:30:49Secretary Pompeo and National Security

01:30:53Advisor Bolton and others in the Trump administration who were

01:30:57trying to emphasize human rights because their boss didn't care. Their boss seemed

01:31:01to envy the powers that Xi Jinping possessed, rather

01:31:05than being disgusted by them. The threats posed by the CCP

01:31:09are very real, and our foreign policy towards them is one of the most

01:31:13pressing policy issues our country faces. But we need an administration and

01:31:17president who can effectively counter the threats posed by the CCP,

01:31:21not leaders who put their own financial interests first.

01:31:25Thank you. I yield back to the ranking member.

01:31:29Chair, I now recognize Ms. Mace from South Carolina.

01:31:33Thank you, Mr. Chairman. It wouldn't be a China hearing on the

01:31:37CCP without the left invoking Trump, Trump, Trump.

01:31:41I find their comments today quite ironic. I do want to respond to some of the

01:31:45things that were said today. Most recently, to quote my colleague, leaders who put their

01:31:49own financial interests above all else. Well, Joe Biden and his family

01:31:53received over $8 million from communist China, by the way.

01:31:57Let's have an honest discussion about who's paid for by China

01:32:01and who is not, and the entitlement that I'm witnessing

01:32:05today. But also, the idea

01:32:09that Joe Biden is free and clear on this thing. The Biden

01:32:13and Harris administration has responded forcefully to the political security and economic

01:32:17challenges by the CCP. And nothing could be further from the

01:32:21absolute truth. It would be wonderful if mainstream media would actually cover it.

01:32:25But here's some of the things that they've said, that Biden has said

01:32:29and the Harris administration, that they don't want to contain China.

01:32:33Biden called Xi Jinping a smart, smart

01:32:37guy, end quote. He described his relationship

01:32:41with Xi Jinping as a quote, friendship. He said of the CCP, Joe

01:32:45Biden said directly that they're not bad folks.

01:32:49He said also that it's in our own self-interest that China continues

01:32:53to prosper. But is it? It's not actually. It's actually unsafe for

01:32:57the entire world, not just the United States. Also, Joe

01:33:01Biden called travel restrictions with China during COVID hysterical

01:33:05xenophobia and fear mongering.

01:33:09So I see a lot of hypocrisy from my colleagues on the other side of the aisle

01:33:13today. And even worse so, the fact that they want

01:33:17to place an attack on democracy on Trump or

01:33:21Republicans is actually hysterical. And it is actually a lie.

01:33:25It was just last year when the ranking member of this committee, when

01:33:29discussing Smirnoff today, called that witness when we were going over the

01:33:33FBI 1020 form as trustworthy and credible. Because that

01:33:37is what the FBI told members of this committee. I am just

01:33:41tired of the lies. I'm tired of the attacks on Republicans.

01:33:45And to quote my colleague earlier today, that we want to

01:33:49damage the idea of democracy, that Donald Trump attacks democracy.

01:33:53I can think of nothing worse than an attack on democracy when you're literally

01:33:57throwing the presidential nominee for our party

01:34:01off the ballot in multiple states, whereas the Supreme Court

01:34:05ruled that was unconstitutional. Literally, the left is

01:34:09trying to dismantle freedom. They're trying to dismantle liberty. They are trying

01:34:13to dismantle the Constitution and everything

01:34:17our founding fathers and our nation was founded on in this country today.

01:34:21So I would like us to have a more honest discussion about

01:34:25what is actually happening in this country, what we're doing, and more importantly, not doing

01:34:29to combat CCP. So I've got about two minutes left.

01:34:33I want to reiterate, Joe Biden and his family received over $8 million

01:34:37from China and CCP-aligned companies. So my first question

01:34:41goes to Mr. Fanel. Your testimony today focused on the failures

01:34:45of the intelligence community, the same, quote,

01:34:49professionals that lied to the American public

01:34:53weeks before an election that said that Hunter Biden's laptop was

01:34:57Russian disinformation, literally an attack on democracy, the position

01:35:01that the left took. What steps, in your opinion, are necessary

01:35:05to ensure that bias and faulty assumptions don't poison the intelligence

01:35:09that our nation and her people rely on?

01:35:13Well, as it relates to the intelligence assessments

01:35:17on China, we've had 30 years of what we

01:35:21call, my co-author and I have called, threat deflation, where the

01:35:25intelligence community has habitually and perpetually downplayed

01:35:29the threat from the PRC. Are they lying to the American public?

01:35:33Are there instances of them purposely, dishonestly providing

01:35:37false information? In the course of my career, I don't think I saw anybody

01:35:41outright lie about and manufacture anything. What I see, though, is

01:35:45how is it possible that for 30 years you can continually

01:35:49say that this is not a threat, this is not a threat, and never once

01:35:53say, hey, we have to worry about a threat? Would you call it propaganda? Is that a better

01:35:57way, other than a lie? Is it propaganda coming from the intel community?

01:36:01I think it is. What we're talking about here today in this hearing, it's the influence

01:36:05of political warfare from the PRC that has infected our academics,

01:36:09our think tanks, our government institutions. How are, we have 20 seconds

01:36:13left, U.S. tax dollars funding some of this propaganda and

01:36:17promoting the CCP, yes or no? Yes. Thank you, Mr. Chairman, and I

01:36:21yield back. I'd like to yield back, Chair recognizes Mr. Crockett.

01:36:25Thank you so much, Mr. Chair.

01:36:29You know, I always come ready and then I get

01:36:33thrown off. So, first of all, I thought that this was going

01:36:37to be somewhat bipartisan. I often tell

01:36:41our friends from Taiwan that the only thing that is bipartisan in this

01:36:45118th Congress is China. But boy,

01:36:49you know, it never ceases to amaze me how we get so partisan

01:36:53and how we just start straight up lying. So, let me make sure that

01:36:57we get the record correct really quickly. At this time,

01:37:01I'd like to enter into a record an article from Reuters. Biden

01:37:05calls Xi a dictator after carefully planned summit.

01:37:09Thank you so much. In addition to making

01:37:13sure that we can outline some of the things that it was

01:37:17Trump that said, I think my colleague from South Carolina may

01:37:21have gotten confused about who said what, but these are things that Trump has said about

01:37:25Xi. Smart, brilliant, everything perfect. We love each other.

01:37:29President Xi, who's a friend of mine, who's a very, very good man. There's

01:37:33nobody like that. The look, the brain, the whole thing.

01:37:37My feeling towards you is an incredibly warm one. This doesn't

01:37:41sound like someone that has any intentions of being

01:37:45hard on China, in my opinion. So, let me

01:37:49go through a couple of other things that are disturbing. It was brought up a little bit earlier.

01:37:53This question about immigration, or there was some things about immigration.

01:37:57I know that you emphasized that we should look to legal immigration

01:38:01and because I am off script right now, I'm curious to know if any

01:38:05of you are aware of what has happened in Japan

01:38:09and the difficulties that Japan has faced based upon the

01:38:13fact that they actually haven't wanted to engage in legal immigration

01:38:17and it has detrimentally affected them economically.

01:38:21Is anyone familiar with that? Just curious.

01:38:25Yes, no, it's absolutely true. It's absolutely true. So, I do want to

01:38:29say that it does hurt us when we decide to demonize

01:38:33people that are trying to come to this country. It hurts us economically. There

01:38:37also was this insinuation that people aren't working because they

01:38:41just, I guess, are lazy. I'm not really sure, but I do want to be clear

01:38:45that we have had record unemployment under this

01:38:49administration. In fact, we hit a 54 record low,

01:38:5354 year record low under this administration, so

01:38:57people are working. Now, let me get to my actual planned remarks.

01:39:01I want to go back to something else that you brought up, which is my

01:39:05amazing ranking member and the

01:39:09investigation that we were trying to do as it relates to emoluments.

01:39:13I'm going to start off first with you, Captain.

01:39:17I know you're no longer serving as an intelligence officer on

01:39:21China, but I have a simple yes or no question. Given your experience, would you trust

01:39:25someone to go head to head against an enemy like the Chinese government

01:39:29if that person, whose duties include ensuring national and international

01:39:33security against the PRC, if that person has received

01:39:37millions of dollars in other financial benefits from the Chinese government?

01:39:41I don't know who you're talking about,

01:39:45so I'd have to wait and see who you're mentioning.

01:39:49Okay. Well, I'm going to say that I wouldn't trust

01:39:53that person, and it's the reason that I don't

01:39:57trust that Trump will protect this country.

01:40:01In fact, just this year, when asked whether the U.S. should defend Taiwan

01:40:05if it means going to war with China, Trump merely stated,

01:40:09well, I don't want to say, but remember Taiwan

01:40:13did take all of our chips business. We used to make our own chips. Now they're made

01:40:17in Taiwan. Taiwan took our business away. It doesn't sound like he's too

01:40:21friendly on Taiwan, and I do want to say that

01:40:25while that may be the case, this administration and a democratically

01:40:29controlled House and Senate made sure that they did something smart on

01:40:33legislation. That legislation was led by my predecessor, the late, great Eddie

01:40:37Denise Johnson, in the Science Committee, and the Chimps in Science

01:40:41Act is absolutely making sure that we're moving those jobs back. I know

01:40:45Samsung is doing lots of great things in Ohio, and we know that these

01:40:49plants are sprouting up everywhere to make sure that we can make chips here.

01:40:53But what I continue to see is that Trump seems to only care about his

01:40:57money. Democrats on this committee publicly released financial documents detailing

01:41:01how Trump received over $5.5 million from the Chinese government.

01:41:05Not only that, these records also showed how President Trump and his White House

01:41:09senior advisor, Dara Ivanka, received hundreds of trademarks by the PRC

01:41:13during that time. So I'm going to skip to this timeline because I want to make

01:41:17sure we cover this. ZTE is a China telecommunications company

01:41:21which has had extremely close ties to the Chinese government, including reports showing ZTE

01:41:25employees entering and exiting Chinese spy facilities.

01:41:29Unfortunately, what we saw when we look at this timeline is that

01:41:33in May of 2018, China approved Ivanka's trademarks

01:41:37for bath mats, textiles, and baby blankets. May 7,

01:41:412018, China approved five additional trademarks. May 13, 2018,

01:41:45President Trump tweets he's instructed the Commerce Department to reverse

01:41:49his decision to sanction ZTE. June 7,

01:41:532018, Ivanka's company gets three more provisional

01:41:57Chinese trademark approvals the same day the Trump administration officially announces

01:42:01an agreement to lift the sanctions on a seven-year period.

01:42:05Chair recognizes Mr. Sessions from Texas.

01:42:09Mr. Chairman, thank you very much. I want to thank the panel for being here today.

01:42:13The

01:42:17USDA estimated that foreign investment in

01:42:21U.S. agriculture land grew to approximately

01:42:2540 million acres in 2021. That's a

01:42:29CIO study. We

01:42:33increasingly find out that China is not only after

01:42:37food, but after land that is near

01:42:41important installations. Perhaps it could be

01:42:45something related to the military. Do any of

01:42:49you have an expertise in speaking about that

01:42:53that you could lend some insight to that?

01:42:57Captain?

01:43:01Yes, sir. The threat from

01:43:05the Chinese in terms of what they're acquiring in our country, in terms of

01:43:09buying land in its close proximity to our military installations

01:43:13is greatly concerning, as was their spy balloon reconnaissance,

01:43:17intelligence surveillance and reconnaissance balloon that flew over our

01:43:21country and collected over critical U.S. military

01:43:25installations. And so we need to be very aware of where they're at,

01:43:29what they're doing. In the book that we just wrote, Embracing Communist

01:43:33China, America's Greatest Strategic Failure, we actually call out and say that

01:43:37we need to move the CFIUS process, which is the oversight

01:43:41of where certain acquisitions are made in our country,

01:43:45move it out of Treasury and move it over to Defense, because that's how

01:43:49important and serious this threat is. Interesting.

01:43:53If I can add a little bit? Oh, yes, sir.

01:43:57It's not just in the U.S., right? Not only is China buying

01:44:01millions of, hundreds of thousands of acres. You can go to Uruguay

01:44:05and find it. Well, you can go to Argentina, which is where I was going.

01:44:09China has a military base with satellites that can track their

01:44:13polar LEO satellites that can then track hypersonic weapons. This isn't

01:44:17fear-mongering. This is reality. In Argentina, they're building

01:44:21a dual-use port in Ushuaia, and they're going to

01:44:25land a fiber-optic cable to Antarctica, and the fiber-optic cable

01:44:29can be used as a sensor to detect our submarines.

01:44:33In Panama, China owns container terminals on both sides of the canal.

01:44:37So I think it's not just in the United States, but we should be aware that China

01:44:41is encircling us, and we need to kind of wake up and get out of

01:44:45the matrix. Ms. Kessel? If I could add

01:44:49just a little bit more to that. And the purchases of land don't

01:44:53always have military and intelligence implications. It's also

01:44:57crime and drug running, which we've seen in states like Oklahoma

01:45:01and Maine, where federal authorities have arrested Chinese individuals

01:45:05likely associated with the triads who are running drugs

01:45:09and committing federal crimes within our borders. Marijuana farms.

01:45:13Correct, the marijuana farms, which is why we need a whole-of-government

01:45:17approach, as the other panelists and I have suggested. There's not one

01:45:21solution to this problem. It's a very comprehensive, different,

01:45:25serious threat than anything we've ever faced in the past. Ms. Kessel, so that

01:45:29we all understand, we're up here for policy. I think the people that are

01:45:33serious about this are in the room right now.

01:45:37Tom, welcome. I'm glad to see you. I'm interested

01:45:41if both of you would accept the challenge.

01:45:45I'm not asking about a 20-page paper. I'm asking about

01:45:49an executive summary or whatever you'd like to do. I'm

01:45:53interested in how you, Ms. Kessel,

01:45:57in the Trump administration, under the Secretary

01:46:01of State, viewed this issue and how it was looked

01:46:05at from if there was a holistic viewpoint

01:46:09of a plan that might

01:46:13lay itself out across government.

01:46:17Was it NSA who was in charge? Was it out of the White House?

01:46:21If you would do that, and Tom, if you would do that for me, too.

01:46:25I'm not trying to do anything more than compare

01:46:29and contrast. I think somewhere the answer's

01:46:33got to lie with all of us, not one administration

01:46:37or the other. And I know that there are people that

01:46:41write about these things all the time. I'm not doing that.

01:46:45But I am interested in professionally, a professional

01:46:49viewpoint that you have about

01:46:53serious people in the prior administration and

01:46:57serious people in this administration writing

01:47:01me, I will share it with everyone on this committee, about

01:47:05how it was looked at from a perspective of

01:47:09national security and following down.

01:47:13Tom, is that something that you could accept?

01:47:17100%. It's a legitimate concern, and I appreciate the way in which

01:47:21you're approaching it. Because I'm concerned. We had a member here who was talking about

01:47:25it's all politics. No, it's not all politics. It's all protecting the

01:47:29nation. And there are people who do things differently.

01:47:33Mr. Chairman, when I receive this, I will notify

01:47:37this committee for distribution. I'd like to ask that both of you

01:47:41provide that to me. Tom, I'll give you my information.

01:47:45And you're speaking specifically of the land.

01:47:49No, sir. I'm speaking about how we should look at China. If it's just

01:47:53land, that's fine. But I'm worried about how

01:47:57do we look at China? Who is, do we

01:48:01have someone specifically related in there who can see

01:48:05the entire set? I appreciate

01:48:09both of you. If you want to send me someone just on land, that's fine.

01:48:13What I'm saying to you is I will share it with the entire committee,

01:48:17and we will appreciate it. And thank you all for being here. Captain, I'm sorry.

01:48:21I've run out of time, but I gave you my information.

01:48:25Mr. Chairman, thank you. Thank you. Chair recognizes Ms. Porter from California.

01:48:29Does everyone remember 2008

01:48:33when the United States caused a global economic meltdown?

01:48:37We were financing our housing market with securitized bonds

01:48:41backed by shady, risky collateral, shady, risky mortgage loans

01:48:45that went bad. And the fallout was terrible.

01:48:49Today, China is setting the world up for a global economic meltdown.

01:48:53How? They are financing their infrastructure with

01:48:57securitized bonds that are backed by risky, lousy

01:49:01collateral. Local governments in China have major expenses.

01:49:05They build massive infrastructure, they deliver public services, and those investments are

01:49:09ballooning in size and price, driven in part by an effort from

01:49:13localities, cities, and provinces to outcompete each other.

01:49:17Now in China, unlike in the United States, state and local governments cannot

01:49:21assess sales or property tax, and they cannot directly issue bonds.

01:49:25So the Chinese localities don't have those ways to raise money

01:49:29for infrastructure services. Given this, the Chinese have gotten

01:49:33creative with how to fund their infrastructure.

01:49:37In China, local governments sign over assets like

01:49:41land or stock in government companies to private local government

01:49:45financing platforms. For example, local government might have a 50-year

01:49:49lease on land under a residential high-rise, but that

01:49:53lease and its revenue are collateral for the private

01:49:57financing platform. Now these platforms are called

01:50:01private, but they are implicitly backed by Chinese state assets as

01:50:05collateral. With all this backing, the local government financing

01:50:09platform borrows money from a bank, the bank loans are

01:50:13bundled together into the bond market.

01:50:17These bonds get a high rating, triple A,

01:50:21because they have the implicit backing of the CCP.

01:50:25This should remind us of what happened here. Our mortgage bonds

01:50:29got really high ratings, even though they were loaded with mortgage loans

01:50:33subprime predatory mortgage loans, because they were implicitly backed by

01:50:37our government-sponsored entities like Fannie Mae and Freddie Mac.

01:50:41Mr. Bethel, what is the greatest risk of this Chinese financing system?

01:50:45First of all, let me

01:50:49congratulate you on doing a deep dive on what's happening in the Chinese

01:50:53economy. I would like to recognize my staffer for helping me put this together

01:50:57and myself for making it comprehensible to the American people.

01:51:01I'd like to go back to the

01:51:05gentleman from Pennsylvania who asked about why on earth are we

01:51:09investing in China? A lot of these bonds are being sold

01:51:13globally and internationally. I think we should be aware

01:51:17that there is a ticking time bomb. What concerns me more broadly

01:51:21than this particular issue is that China

01:51:25has a massive debt crisis and their economy is

01:51:29decelerating. What does a Xi Jinping do

01:51:33when the relationship between the government and people

01:51:37is broken? There is an implicit pact

01:51:41between the people and the government. The government provides economic

01:51:45opportunity to the people, and the people, in turn, choose not to create a revolution.

01:51:49This is actually not different than our country, I just want to point out.

01:51:53When things went south here in 2008, we bailed out banks and homeowners.

01:51:57I guess what I'm trying to get at in this specific instance, and I want to get

01:52:01back to the consequences of all this in a minute, is the value

01:52:05of land. This works so long as the value of this land, of these assets,

01:52:09continues to go up, just like it worked when housing prices in America

01:52:13continued to go up. It is likely,

01:52:17it is inevitable, that prices will not continue to

01:52:21rise. There is a significant property bubble.

01:52:25Like any bubble, the system is not sustainable, and once this batch

01:52:29of long-term urban leases, which began years ago, expires,

01:52:33which is about in the next five, will start in the next five years, there will be a glut,

01:52:37and leases won't be as valuable. That will cripple

01:52:41the bond market. Mr. Bethel, do you know how large this bond

01:52:45market is? I can get back to you on that.

01:52:49Ms. Kissel, do you know? I don't, but again, I would also like

01:52:53to add my congratulations. It's the first time I've seen Congress take a deep dive like this.

01:52:57It's very important. But you touched on, actually, what I think could be the solution.

01:53:01You mentioned the rating agencies and the AAA ratings.

01:53:05Congress could act to break up the duopoly of S&P

01:53:09and Moody's and force American investors to do their own

01:53:13due diligence and not outsource their due diligence

01:53:17to rating agencies. So rating agencies are not perfect.

01:53:21We all saw that in 2008 and 9 and 10 and 11 as the

01:53:25financial crisis continued. Go back to the size of this market.

01:53:29It is trillions of dollars. It is a multi-trillion dollar

01:53:33time bomb in the middle of the world's second largest economy.

01:53:37I just want to close by explaining to the American people, because I know the witnesses

01:53:41understand this, why should we care? Because I think when we

01:53:45hear, oh, China's economy might go south, well, you know, maybe that's good news for us.

01:53:49It is not. If the Chinese economy

01:53:53collapses, it will reverberate around the world, just like when our

01:53:57housing market, backed by crappy bonds, securitized bonds, collapsed, it reverberated

01:54:01around the world. Our economy will suffer because of

01:54:05these risks. Global companies that rely on Chinese corporations for

01:54:09manufacturing, other supplies, will all be hurt. So this is a disaster

01:54:13waiting to happen, and we need to mitigate our risk. I yield back.

01:54:17The gentlelady yields back. Excellent questions, Ms. Porter.

01:54:21Chair recognizes Mr. Biggs from Arizona. Thanks, Mr. Chairman.

01:54:25I appreciate all the witnesses being here. I appreciate this. I apologize for having to step out

01:54:29for a portion of your testimony. I did

01:54:33hear the ranking member, and I thought at first he was

01:54:37talking about former

01:54:41presidential candidate Hillary Clinton claiming the 2016 election was

01:54:45stolen, and with all of the groups on the left

01:54:49that asserted that for literally six years now.

01:54:53But then I realized, no, no, he's got TDS. That would be wrong.

01:54:57Leaving the political side of it out now, I

01:55:01thank you for your testimony. And I'll just say, Captain Fennell,

01:55:05in your book, Embracing Communist China and America's Greatest Strategic Failure,

01:55:09which I recently read, you argue that the United States

01:55:13should employ a modern-day Truman doctrine to counter the Chinese

01:55:17Communist Party. And there's some significant contextual differences

01:55:21between what was going on post-World War II with where we are today

01:55:25and the ascension or the

01:55:29immersion of the Cold War. I'm wondering if you would

01:55:33discuss and tell me and tell us what

01:55:37aspects of the Truman doctrine you think need to be implemented

01:55:41today with regard to China.

01:55:45Well, I think that we need to look back on that history

01:55:49and understand that we were coming out of a world war

01:55:53and that we were coming out of a time where we didn't know what the future

01:55:57would lead to with a threat from the Soviet Union.

01:56:01And so the government under Truman and its doctrine was designed to

01:56:05make sure that we were defending ourselves against this potential threat

01:56:09and so that we used the resources that we had to make

01:56:13sure that our government and our country were able to

01:56:17defend ourselves against a threat that we didn't know everything

01:56:21about it, but we knew that it had malign intentions for us. And I think

01:56:25that's the difference of what hasn't happened over the last 75

01:56:29years is we haven't labeled the PRC as that

01:56:33threat, which the Truman doctrine did with the Soviet Union, and that we didn't

01:56:37draw the distinctions in the line in the sand for a lot of reasons.

01:56:41And we understand why we engaged China.

01:56:45For a lot of reasons, we did not perceive China as a threat

01:56:49because economically they were backwards

01:56:53and we did not view them as a capable military threat

01:56:57legitimately. And so we then facilitated

01:57:01their rise and their move from basically a third world

01:57:05economy with no technology. We allowed them to skip literally

01:57:09generations of technological development because

01:57:13we facilitated their theft of our IP and our technology.

01:57:17And so I appreciate what you're saying,

01:57:21and so I'm thinking of all the things that I know went on in the Cold War, all the

01:57:25things that we did, whether it was imposition on corporations, what we were selling,

01:57:29what we would allow in, the exchanges of people

01:57:33across the borders, not just directly

01:57:37U.S. to Soviet Union, but affiliates and

01:57:41within the blocks of countries. So

01:57:45Mr. Bethel, your statement, you talk about a

01:57:49comprehensive strategy. And I've sensed that that's what all of you

01:57:53talk about. I'm trying to get specific iterated

01:57:57issues that we can look at, create legislation,

01:58:01and do what we're supposed to do, which is impose laws to

01:58:05enact policy. Well, impose policy to enact laws,

01:58:09vice versa, it doesn't matter. But can you give me some of your strategies

01:58:13when you say a comprehensive strategy dealing with China?

01:58:17I have to be sensitive about what I say because I recognize that

01:58:21the CCP could be listening, so I'm happy to take this on. I anticipate that

01:58:25they are. But I think the first strategy is to know what you want.

01:58:29I don't think we know what we want as a country. And so if you don't know where you're going, then any

01:58:33road will take you in any direction. Well, okay, so

01:58:37that's an old kotowaza, as we

01:58:41would say in Japanese. But the bottom line

01:58:45is we want to be secure

01:58:49from China. We want to have control of our destiny. When China,

01:58:53the middle kingdom,

01:58:57they want to become the hegemon, the world hegemon.

01:59:01And that is the problem that we face,

01:59:05is dealing with a country that is

01:59:09willing to emasculate itself in order to gain the upper

01:59:13hand. And so that's why I'm asking.

01:59:17Maybe you feel more comfortable talking

01:59:21in a skiff or something, but I'm trying to get specific items,

01:59:25not generic items. I mean, should we

01:59:29be limiting student visas from China, for instance?

01:59:33Maybe we should. We probably should.

01:59:37And Ms. Kissel, in your document, you were talking specifically

01:59:41about how we are treated by

01:59:45CCP on diplomacy

01:59:49and diplomats and visitors, etc. Should we be

01:59:53doing the same? Should we be restricting travel of Chinese diplomats here?

01:59:57And I'd like to know.

02:00:01100%. We talked a lot about reciprocity in the Trump administration, but there's a long

02:00:05way to go. We do not have freedom of movement in China. They should

02:00:09not have freedom of movement here. Our consular affairs people, as I say in my

02:00:13testimony, should be clearly vetting every person who enters from Communist

02:00:17China for military intelligence security ties. We should be limiting Chinese

02:00:21students who are coming here to study STEM. We should be talking to our

02:00:25European allies and encouraging them to forbid Chinese students

02:00:29who come from military universities in China for studying in European

02:00:33universities or Australian or Japanese universities, for instance. There's an

02:00:37enormous amount that the State Department can do. Aside from just the actions

02:00:41that I've outlined here, rhetorically, we need to issue clear,

02:00:45comprehensive travel warnings. I fought very hard when I

02:00:49was at State to get the Consular Affairs Bureau to put

02:00:53accurate, complete warnings out about the risk of travel. We now have

02:00:57different travel warnings for mainland China than we do for Hong Kong.

02:01:01These aren't functionally different places. They're one and the same. It should be the same

02:01:05level. Just to give you one example, but I agree with Eric

02:01:09that it has to be a comprehensive strategy and we have to stop being

02:01:13defensive. We need an offensive strategy that plays to our

02:01:17strength and that also utilizes not just our own power economically,

02:01:21militarily, and otherwise, but the power of our friends and allies

02:01:25because we also have friends and allies that aren't just democracies. There are

02:01:29places like Vietnam, for instance, not a democracy that very clearly

02:01:33recognizes the threat from Communist China. We need to leverage that relationship

02:01:37across the spectrum of Federal power and use it. Thank you.

02:01:41Thank you, Mr. Chairman. And I'll just say, having met with Central

02:01:45American leaders over the last couple of months, they're really concerned

02:01:49about the influence China is having in their nations, and you're right

02:01:53about them controlling like Panama or trying to get control of Panama. I think of Sri Lanka.

02:01:57I think of what happened there. I mean, I'll yield back.

02:02:01Very good. Very good. Chair, we're going to ask Mr. Timmons from South Carolina.

02:02:05Thank you, Mr. Chairman. Captain Fennell,

02:02:09I really think that the United States government has been getting policy

02:02:13as it relates to China wrong for more than my lifetime,

02:02:17decades. And, you know, the people in South Carolina,

02:02:21we had a good thing going. We had a thriving textile industry

02:02:25up until the 70s when Washington said we have to increase labor

02:02:29standards and environmental standards. And to be fair, we needed to do both of those.

02:02:33But the manner in which we did that legislatively caused

02:02:37hundreds of thousands of jobs to go overseas. And, yes, we need to

02:02:41stop pouring chemicals into our rivers. Yes, we should not have people working

02:02:45in 100-degree temperature 120 hours a week. But when

02:02:49we are not competitive in the global economy because of the regulations

02:02:53that we have here, it really impedes our ability to be prosperous.

02:02:57So, I mean, in retrospect, we should have said these are the new standards, and anybody

02:03:01that wants to engage in commerce in the United States has to meet

02:03:05these standards. And, you know, we really haven't learned our

02:03:09lesson. And it's frustrating because, I mean, I did see

02:03:13one glimmer of hope the way that we handled

02:03:17Huawei a few years ago. And, I mean, the Chinese were essentially

02:03:21giving away next-generation wireless technology to get a back

02:03:25door into all the privacy of developing countries, and some developed countries.

02:03:29And, I mean, I think Huawei shows that China

02:03:33can be held accountable. And

02:03:37it's a good example of the U.S. takes a leadership role, but

02:03:41we get all of our like-minded allies on board

02:03:45to get them to not cheat and to not steal

02:03:49our data.

02:03:53I mean, do you think that the way that the United States handled Huawei is a case study for how

02:03:57we can try to hold them accountable to be equitable partners in the

02:04:01global economy? Well, I know you directed the question to me, but there's

02:04:05two people here that were in the Trump administration that actually were responsible.

02:04:09We can go, Ms. Castell. Let's start with you. Yeah, that entire effort was run

02:04:13out of the State Department and our Economic Affairs Bureau, and it wasn't

02:04:17easy. We went, for instance, to see the U.K. government, and

02:04:21they laughed us out of the room. And, eventually, we had to tell them, look, we can't

02:04:25share sensitive intelligence with you if it's traveling over Huawei

02:04:29networks. And so, finally, they came around. Germany, it's taking much longer.

02:04:33But the problem isn't a single

02:04:37country or ally. There are many, many different kinds of Huaweis, whether

02:04:41it's the equipment that is scanning containers, whether it's China Unicom,

02:04:45China Telecom. We took action there. But, as you've seen recently in the press, we

02:04:49have a problem now with the cloud services that they provide in the United States.

02:04:53So, again, there's an enormous amount that the State Department can do

02:04:57by going around the world, because you don't want back doors built in allied

02:05:01or neighboring countries. Look at the Bahamas. Huawei is all over the Bahamas.

02:05:05Huawei built Saudi Arabia's 5G network. So, there's an

02:05:09enormous challenge, not just here at home, but abroad. To your

02:05:13point, I was using Huawei as an example, but it's really just about a

02:05:17cultural disparity. I mean, the Chinese

02:05:21government views it as their job to make sure that every business has

02:05:25an advantage to compete in the global economy. It's cultural.

02:05:29Our system of government is supposed to have the

02:05:33government staying out and allowing our businesses to

02:05:37produce the best product or service that we can provide

02:05:41and let capitalism do the rest. I mean, this really is

02:05:45a clash of cultures in many ways. Would you agree?

02:05:49I believe that the United States, one of our greatest

02:05:53advantages is our capitalist, competitive, free, and

02:05:57open system. And one of the challenges that we face with China is that

02:06:01we have integrated communist China into that system, and we've made our companies,

02:06:05our investors, and others dependent on it. We also have China integrated

02:06:09into international institutions like the World Trade Organization. What do you

02:06:13do when the second largest participant in the WTO doesn't follow the rules?

02:06:17How do you fix that? It's a very difficult problem to fix.

02:06:21So it's a very multifaceted issue, but I believe that there are

02:06:25steps that can be taken today. Most notably, you recognize the problem,

02:06:29you make it transparent to U.S. investors and companies the risks

02:06:33that they face, you force disclosure, and then you start to set red lines

02:06:37and say, in strategic industries, whether it be pharmaceuticals, semiconductors,

02:06:41military equipment, or others, you can't go there.

02:06:45And we need to stop saying we compete with China.

02:06:49That implies that they follow the rules. They don't.

02:06:53They're not a competitor, they're an enemy. And as a nation, under both

02:06:57Republican and Democrat administrations, we simply haven't gotten there yet,

02:07:01and because we have confusion of a cooperate, compete, and confront

02:07:05policy, which is confused, we get confused policy.

02:07:09And that's dangerous.

02:07:13Mr. McClain from Michigan.

02:07:17I just have a couple of UCs. Sorry, Ms. McClain.

02:07:21Mr. Chairman, I

02:07:25request that the Congressional Executive Commission on China Annual Report for

02:07:292023 be admitted to the record.

02:07:33And a piece entitled Hong Kong is Unrecognizable After Two Years Under the National

02:07:37Security Law, which gets to the point that Ms. Kissel just made.

02:07:41And to the point that Mr. Bethel made, but expanding on a little bit more,

02:07:45is the World Health Organization is not salvageable with regard

02:07:49to its infiltration by the CCP.

02:07:53Thank you. Chair now recognizes Ms. McClain from Michigan.

02:07:57Thank you, Mr. Chair, and thank you all for being here today. Ms. Kissel, I think you said

02:08:01something very insightful that really caught my attention, is we've got to have

02:08:05some red lines. And to quote you, you said

02:08:09we can't go there. And I'm experiencing this a little bit

02:08:13in my state. I mean, if you look at the CCP, they're not our friend. I don't think anyone

02:08:17would disagree with that, right? That's pretty bipartisan.

02:08:21You know, from the intermittent camps, the abrasive military posture

02:08:25in the South China Sea, and the crackdown in Hong Kong, it's clear

02:08:29they're not our friend. And I would also want to make sure that my

02:08:33ladder's on the right wall. And I have a good understanding that if you are a Chinese company,

02:08:37you must turn over all of your data to the CCP

02:08:41if they ask for it. Is that correct? Am I mis... Okay. So I just want to

02:08:45talk about some facts. We in Michigan have the Goshen

02:08:49plant that is very near and dear

02:08:53and it's a very sensitive topic to me. It's being built

02:08:57close to Ferris State University, which was recently given

02:09:01an accreditation for its information security and

02:09:05intelligence system program. This is a university, American university, right?

02:09:09Michigan also has a military facility

02:09:13that is actively training Taiwanese soldiers

02:09:17to combat China in the event of an invasion.

02:09:21The Goshen plant is being constructed just

02:09:25miles from this facility. I'm not much

02:09:29for coincidences, but I'd like to get your thoughts on do you think that's a

02:09:33coincidence? We have a Chinese-owned company

02:09:37and the only spot they can figure out

02:09:41that is feasible for them to build at

02:09:45is next to a university

02:09:49and next to a military base. Anybody think that's a coincidence?

02:09:53I'd just like to get your thoughts on that. Now here's the kicker.

02:09:57Here's the kicker. Our legislator, our governor

02:10:01is going to give that company, Chinese-owned

02:10:05company, $800 million.

02:10:09I'm with you, Ms. Kissel. Am I saying your name

02:10:13correct? Yes, Kissel. You can't

02:10:17go there. Why are we allowing this

02:10:21to happen? It baffles my mind. We talk about, well,

02:10:25it's going to create jobs. Jobs for whom?

02:10:29I'm very concerned about that, very, and I'm not much for coincidences.

02:10:33I'd like to start. Can anyone explain to me

02:10:37how the Chinese companies are bound to the CCP?

02:10:41When I say that, some folks back home across the aisle

02:10:45think I'm crazy, but am I correct in that statement

02:10:49and can you explain how the Chinese, we'll start with you, Ms. Kissel,

02:10:53how the Chinese companies are bound to the CCP?

02:10:57So I would refer the committee to a speech that Secretary

02:11:01Pompeo delivered on civil-military fusion in San Francisco

02:11:05where he outlined this threat and the laws of China that compel

02:11:09any company based in China to divulge any information to the party

02:11:13at any time in any manner if it's choosing. I believe that all

02:11:17the information that you need is in those remarks.

02:11:21But for the average American listening

02:11:25right now, you're talking to the people of the great state of Michigan.

02:11:29In layman's terms, what does that mean?

02:11:33China is a party state. The function of China

02:11:37is not to better the interests of the Chinese people.

02:11:41It is to promote, strengthen, and expand the power, influence, and reach

02:11:45of the Chinese Communist Party. All activity done

02:11:49by Chinese companies within the Chinese borders

02:11:53proves to the power of the party. But what happens if it's a company here

02:11:57owned by China? There are no independent Chinese companies.

02:12:01So even if they're on our soil, if it's a Chinese company,

02:12:05everything will get divulged at

02:12:09any point in time to the Chinese government. Correct, and I would also note

02:12:13for the Honorable Member that many of the intellectual property thefts

02:12:17suffered by American companies do not only occur in

02:12:21mainland China. I spoke to one Fortune 500 CEO

02:12:25who told me that the greatest Chinese IP threat that he suffered was

02:12:29here in the United States by a party

02:12:33shall we say directed individual. And this is what I

02:12:37need to get our lawmakers in the state of Michigan to understand. China

02:12:41is not our friend. They are not our friend educationally, they are not our friend

02:12:45militarily, and they are not our friend economically. One last question

02:12:49and if we could keep it to a yes or no it would be great. Do you think the

02:12:53Goshen plant is an example of China making a long-term

02:12:57investment in the American business community to

02:13:01advance their interests and perhaps gain

02:13:05information, private information, from American citizens?

02:13:09Yes, but let's not give them too much credit as long-term thinkers. Let's remember they almost

02:13:13destroyed their country several times over. The Cultural Revolution, now with this debt

02:13:17crisis, et cetera. And I really want to push back strongly on that notion

02:13:21that somehow they are these magical long-term planners. They are not.

02:13:25So you mean we could be in danger right now if this plant goes up?

02:13:29We have great advantages as the former Congressman laid out. We should use them. We need to recognize

02:13:33the nature of the threat and we need to construct not just a defensive strategy

02:13:37but an offensive strategy. But it starts with you just can't

02:13:41go there. And with that, Mr. Chairman, I'm over. I yield back. Thank you.

02:13:45I yield back. Chair now recognizes Mr. Fallon from Texas.

02:13:49Thank you, Mr. Chairman. I appreciate it. And I want to thank all the witnesses very much

02:13:53for coming. And we've heard some of the same common themes as far as

02:13:57China is an existential threat. They pose an existential threat to the United States.

02:14:01Do they have a freedom of religion? No. Press? No. Free markets? No.

02:14:05Free exchange of ideas? No. I mean we know these things. But

02:14:09they're far more dangerous than the Soviet Union ever was. And

02:14:13for the folks that look at this realize, but for the folks that

02:14:17are just kind of becoming aware, think about the fact

02:14:21that China has ten times the population as Russia

02:14:25does today. And Russia is a threat, clearly with their thousands of nuclear weapons.

02:14:29But ten times the population and nine times the GDP.

02:14:33That's what gets my attention because the communists

02:14:37before China never had that kind of economic might.

02:14:41And the CCP are nothing more than bullies, but granted dangerous, wealthy, and very

02:14:45well-armed bullies. And it will be a dark day for humanity

02:14:49if the Chinese Communist Party ever reaches their goal of world

02:14:53hegemony. And I shudder at the thought. And we are truly

02:14:57a thin line that prevents that from becoming

02:15:01a reality. And we should never lose sight of that. And we also see with their increased

02:15:05espionage, Chinese nationals being arrested for trespassing at Mar-a-Lago,

02:15:09claiming they're tourists at our military installations on a recurring

02:15:13and repeated basis. We saw the Chinese spy balloon. They are probing

02:15:17and they are testing to see what kind of resolve that we have.

02:15:21And then we've got, of course, the southern border as well.

02:15:25Mr. Malinowski, thank you for coming. Do you believe the Chinese Communist Party

02:15:29will exploit the

02:15:33poorest southern border at any and every opportunity?

02:15:37I would not exaggerate that, though.

02:15:41I agree with your fundamental assessment that they pose a threat to us.

02:15:45I think

02:15:49that the Chinese Communist Party would be very, very

02:15:53happy if we decided to basically pull

02:15:57back from our global commitments and focus entirely on

02:16:01issues like our border, although I agree we have to focus on it.

02:16:05We have to do both.

02:16:09There are a lot of people from a lot of countries exploiting our asylum system right now,

02:16:13as we all know. Do you think this administration has done all it can

02:16:17to secure the southern border? I think it's done all it can, and the focus

02:16:21right now needs to be on Congress passing the legislation that has been put

02:16:25before you, bipartisan legislation. We all know the politics

02:16:29of that and why it hasn't passed.

02:16:33Yeah, the China piece is a small part of that, but if you think

02:16:37that that's important, pass the Langford Act.

02:16:41I would say that when you look at – because I look at data, and under the prior

02:16:45administration we had 11 folks that were apprehended on the southern border

02:16:49that were on the terrorist watch list, and under this administration we've had 362.

02:16:53We hadn't had a month of over 200,000 illegal border encounters

02:16:57in 20-plus years, and yet under this administration we've had 28 of those. We've had

02:17:0128 months in a row of over 150,000 crossing the border, and to give that

02:17:05context, we never had a month of over 300,000 illegal crossings.

02:17:09We had that in December of 2023. We had 300,000 illegal encounters

02:17:13in all of fiscal year 2017, so by that definition it's 12 times worse.

02:17:17And if you even look at the Obama administration and the Trump administration, we had about

02:17:21– at this juncture in their presidencies, about 2 million illegal encounters.

02:17:25Under this administration we've had 10 million. That is not even close to being in the same

02:17:29neighborhood, not ballpark, not even on the same planet, quite frankly.

02:17:33And there were things that this administration did that had nothing to do with Congress.

02:17:37The Wait Mexico policy worked, and yet they rescinded that. And then we had

02:17:41a border wall, part of it ready to go, paid for, labor there,

02:17:45materials there, and it was just stopped. The construction ceased.

02:17:49And then we also left expedited removal on –

02:17:53just left it on the table for some unknown reason.

02:17:57And when you look at Chinese nationals, in 2018 there were 991

02:18:01Chinese nationals that were apprehended on the southern border. In 2023 it was 37,000.

02:18:05Again, not in the same ballpark, not in the same country, not even the same planet.

02:18:09It's a 3,700 percent increase. And then what is China doing?

02:18:13Because Ms. Kissel, you made a very good point about they know what's going on in that country.

02:18:17It is a police state, it is a totalitarian regime, so they know what's happening with fentanyl, and they know who the players are.

02:18:21And they know that they're making precursors there, they're teaming up with the Mexican drug cartels,

02:18:25and they're killing Americans. 76,000 in 2022,

02:18:29which is 270 percent increase from 2017.

02:18:33And they're killing 208 Americans per day.

02:18:37If you look at World War II, we lost 405,000 Americans,

02:18:41and over that course of that nearly four years, that was 299 a day.

02:18:45That is a comparative number. The Chinese Communist Party, Mr. Chairman, is waging

02:18:49asymmetrical warfare on this country, and we need to recognize the threat

02:18:53and act accordingly. I yield back. Thank you.

02:18:57The gentleman yields back. The Chair now recognizes Mr. Cloud from Texas.

02:19:01Thank you, Chairman. And I just first off want to say I want to appreciate

02:19:05my colleagues on this committee and certainly throughout Congress for passing

02:19:09H.R. 90. That was the resolution to

02:19:13demand China return Mark Swannan home. He's from my district,

02:19:17and I know there's many others, too, who are still there who need to come home.

02:19:21Also, being from Texas, I do think it's important to bring up the border

02:19:25because not only is fentanyl coming across our border, we have China working.

02:19:29You don't leave China without China's permission, and so we have a number of Chinese

02:19:33nationals coming across our border. Many of them are, most of them are

02:19:37single adult, military-aged, pretty fit young men who

02:19:41are coming here. Makes you wonder why they're coming here.

02:19:45It's unconscionable to me that

02:19:49we continue to let that be an open sieve. Beyond that,

02:19:53I thought it was great that you brought up unrestricted warfare because

02:19:57unrestricted warfare talks about many of the ways that it goes

02:20:01beyond what we conventionally know as warfare, but it talks about financial warfare, network

02:20:05warfare, trade warfare, biochemical warfare, ecological

02:20:09warfare, but it also talks about resource warfare, economic aid warfare,

02:20:13regulatory warfare, smuggling warfare, drug warfare, media warfare.

02:20:17It goes on to say that, to suggest, could special funds

02:20:21be set up to exert great influence on another country's government by legislature through

02:20:25lobbying? Could buying and gaining control of stocks be used to turn other countries'

02:20:29newspapers and television stations into tools of media warfare and the like?

02:20:33And so, what we see happening on our border, along with

02:20:37some of the lobbying and regulatory regime, you can't help but

02:20:41wonder if this is part of China getting us to burden

02:20:45our own economy, to burden our own aid resources that are

02:20:49meant to take care of those who are very needy

02:20:53in our country and, in a sense, pay for the demise of our own

02:20:57country. I wanted to bring up a 2008

02:21:01National Intelligence Council report

02:21:05that they put out, and it said this, the unprecedented shift

02:21:09in relative wealth and economic power roughly from west to east is now happening

02:21:13and will continue. The United States' relative strength, even in the

02:21:17military realm, will decline and U.S. leverage will become even more constrained.

02:21:21It basically said this transition is a virtual certainty that will continue.

02:21:25It said in terms of size, speed, and directional flow, the transfer of global wealth

02:21:29and economic power now underway from west to east is

02:21:33without precedent in modern history. And, again, it went on to say this is

02:21:37unprecedented and very likely to continue. It said it's happening for

02:21:41two reasons. One, we're sending oil and gas revenues overseas, and we're sending

02:21:45manufacturing overseas. We all want to take

02:21:49care of our environment. We want to be good stewards of

02:21:53creation. You mentioned ESG, and I wanted to get your thoughts

02:21:57in relation to this in the sense of

02:22:01much of the legislation that we're passing is artificially

02:22:05forcing a transition that is distorting the marketplace,

02:22:09it seems to me, in the sense that some businesses that would seek to

02:22:13meet a need, provide a service in the economy, are instead

02:22:17rewriting their business model to go after what has become uncapped business dollars.

02:22:21For example, the IRA was estimated, CBO scored around $600 billion,

02:22:25I believe, and now Wall Street says, no, that's going to be closer to $2 trillion.

02:22:29And what you're seeing in that space as we continue

02:22:33to force-feed a transition that isn't

02:22:37actually meeting the goals it's stated to mention, but that's a different discussion for a different

02:22:41time.

02:22:42Sure. Congressman, I'll try and keep it simple and straightforward, and I'll simply say

02:22:46that incentives drive outcomes. So if the incentives aren't properly

02:22:50thought through, the outcome is going to be terrible. So I think it's incumbent upon

02:22:54the members of this august body to write an incentive policy that

02:22:58actually does make sense.

02:23:00And could you speak to also what's happening in BRICS?

02:23:04One of the things I think that gets lost in this conversation as well is we have a petrodollar,

02:23:08and so the strength of our dollar is based on oil and gas trade

02:23:12right now. Meanwhile, our own government is trying to suppress that

02:23:16industry. We don't have another plan, it seems, to counter that,

02:23:20and BRICS is waning. I know we're still a strong dollar, relatively

02:23:24speaking, but what's going on there?

02:23:27You raise a really good point, and that's something that most

02:23:31Americans should really take stock in. The U.S. dollar as the

02:23:35global medium of exchange is crucially important

02:23:39for the United States. So to put it in perspective, we're 60 percent of the

02:23:43global central bank deposits, if you will,

02:23:47reserves. We're 80 percent of the FX

02:23:51trade. So if you have Colombian pesos and you want to get into euros, typically you have to

02:23:55go through the dollar. And it's something like 80 percent or 90 percent

02:23:59of the world's commodities are denominated in dollars.

02:24:03What China is doing very effectively is quietly

02:24:07and surreptitiously undermining the U.S. dollar.

02:24:11Will we ever lose reserve currency status? I think that's a little bit overblown.

02:24:15But if you take the U.S. dollar from a

02:24:1980 percent to a 60 percent in terms of

02:24:23the denomination for commodities like oil,

02:24:27I think that could cause very serious reverberations to the U.S.

02:24:31And if we can't continue to print money, and we seem to

02:24:35somehow print a trillion dollars every hundred days,

02:24:39what happens? How are we going to finance anything?

02:24:43So this is a very important issue. So thank you for bringing it up.

02:24:47Thank you. And I know from ports to universities to everything that's going on,

02:24:51there's so much to talk about. I appreciate you all being here.

02:24:55I thought you summed up this probably when you said they're not a competitor, they're an enemy.

02:24:59I think that's probably the first thing, is we've got to really, as an

02:25:03all-of-government approach, understand that. And so I appreciate you stating that so clearly.

02:25:07Chair, now recognizes

02:25:11Mr. Higgins from Louisiana. Thank you, Mr. Chairman.

02:25:15Captain Finnell, thank you for your service to our country, sir.

02:25:19In your testimony, you

02:25:23discuss how United States businesses seek

02:25:27economic cooperation and

02:25:31contractual agreement with China,

02:25:35obviously. With your

02:25:39background, have you

02:25:43witnessed or

02:25:47observed the exchange

02:25:51of data and

02:25:55intellectual properties that on the surface would be

02:25:59just American businesses doing

02:26:03business with China, but in reality

02:26:07would be, in essence,

02:26:11American businesses providing the

02:26:15People's Republic of China and the Communist Party of China?

02:26:19The

02:26:23technologies and data that it is using

02:26:27to usurp American dominance

02:26:31in that industry sector, particularly

02:26:35have you been concerned about the CCP or the PRC

02:26:39gaining access at any point

02:26:43to ship designs

02:26:47from our United States Navy shipbuilding endeavors?

02:26:51We use shipbuilders that have

02:26:55ties, in some cases, to China. And then the next thing you know, the Chinese

02:26:59appear to be building a craft that we thought

02:27:03the designs were top secret. What are your thoughts on that, sir?

02:27:07Sir, that's a great question, and it's exactly

02:27:11the concerns that I've had over the last many years.

02:27:15And we can just look at today a couple of examples. The Chinese have just

02:27:19rolled out a number of big deck ships. We call them

02:27:23amphibious ships. Some of them are carriers. Right now, the Chinese

02:27:27third aircraft carrier, the Fujian, is at sea doing sea trials

02:27:31or may be back in port now, but she's in her sea trial process. After being

02:27:35keeled, laid down two years ago, she's now out at sea doing sea trials.

02:27:39That ship has electromagnetic aircraft launch system.

02:27:43It's a system that we're just experiencing on the

02:27:47USS Gerald Ford, and we've had a decade of more

02:27:51design and work and development, and now

02:27:55in our fleet, trying to get it ready to be operational in the fleet, and it is

02:27:59now, but it's taken an exceptionally long time and cost us billions of

02:28:03dollars in cost overruns to be able to put the Ford to sea without

02:28:07a lot of problems. China went from having its first two

02:28:11carriers that were ski jump ramps, no catapult launch mechanism

02:28:15or system, just the wind over the deck and go off the ski jump,

02:28:19which is what they got from the Russians, the Soviet design, and the Kuznetsov

02:28:23class that they got in their first two carriers, the Liaoning and Shandong.

02:28:27They then went from those two carriers to the

02:28:31Fujian with this electromagnetic aircraft launch system.

02:28:35They skipped steam catapults.

02:28:39That's important because I spent 20 years on carriers with steam

02:28:43catapults. American Navy developed, over almost 80 years,

02:28:47steam catapults, and China because of that.

02:28:51They stole that and they jumped that.

02:28:55So please speak to the difference. What I'm getting at here is that

02:28:59we should be concerned, as a Congress and as a nation,

02:29:03with the protection of our intellectual

02:29:07properties. When we have

02:29:11built-in pathways to exchange

02:29:15sensitive and even classified

02:29:19technologies, then we should

02:29:23vigorously protect that technology.

02:29:27It's one thing if China steals

02:29:31technology the old-fashioned way through espionage. It's another

02:29:35if we do not address

02:29:39a built-in means by which China is just absorbing

02:29:43our technological data and our intellectual properties.

02:29:47In my remaining half a minute, would you address

02:29:51that, including as it perhaps relates to our universities and our

02:29:55research and development laboratories, sir? Yes, sir. That's

02:29:59exactly the problem. We have around 400,000

02:30:03Chinese students in the United States today, every year.

02:30:07400,000. And they are studying in our high-tech STEM

02:30:11arenas in our advanced universities, learning this

02:30:15technology that's going back and feeding this new PLA

02:30:19across the board. And so we have to be on guard against that.

02:30:23The example of the carriers is just one of hundreds, if not thousands,

02:30:27of areas where we are losing and having our technology given away

02:30:31by us freely. And that's a crime.

02:30:35Thank you, sir, for your insightful answer. Mr. Chairman, I yield.

02:30:39Gentleman yields back. Chair, now recognize Mr. Burchett from Tennessee. Thank you, Mr. Chairman.

02:30:43Thank you all for being here. My buddy Tom Malinowski.

02:30:47Good seeing you again, brother. My question

02:30:51I have a piece of legislation

02:30:55that I'm curious if you all would comment on. And it deals with genetic

02:30:59material or testing, actually, that is being

02:31:03disclosed to the Chinese Communist Party. They're actually

02:31:07purchasing it from a lot of our

02:31:11businesses, this findyourancestor.com.

02:31:15You find out your great-great-grandfather was an African king

02:31:19or something, and you go back and these people find, most of us just find out

02:31:23like me, we're just a bunch of mutts. I think I heard President Obama say that one time

02:31:27that he's just from all over, and that's probably most of America. And I'm wondering

02:31:31what your thoughts are on that, us limiting or excluding

02:31:35them from having our genetic material. Tom?

02:31:39I mean, I'd love to look at your bill. I'll tell you

02:31:43just personally, I've always wanted to use one of those

02:31:47services, because I'm curious to know how you and I may be

02:31:51distant cousins somewhere. But I haven't done it for

02:31:55this reason. I find it creepy that

02:31:59that's how the data may be used.

02:32:03And there are other issues related to human rights in China. There are American companies

02:32:07that have helped the Chinese police state

02:32:11develop genetic databases of their own citizens. That's actually much more

02:32:15sinister, because the Chinese government can't imprison me.

02:32:19They can't imprison their own citizens. What if they were to develop some kind of

02:32:23biological entity that could say, hey, I want to wipe out

02:32:27females of child-bearing ages

02:32:31or something? I mean, the mind just can wander.

02:32:35I don't want us to wander too far, because the reality is bad enough in terms of what they're doing

02:32:39to their own people. But I do think

02:32:43I never talk about legislation. I haven't read. But it's a legitimate concern.

02:32:47All right. Ms. Kissel? That rhymes with missile.

02:32:51Thank you. Yes, ma'am. Well, I concur

02:32:55with what was just said. One of China's

02:32:59weapons is the number of people that they have.

02:33:03They can use AI and big data to collect

02:33:07information and to develop more sophisticated technology

02:33:11and weapon systems to just suppress their own people, but also

02:33:15to attack us, our friends and our allies.

02:33:19I think there are gray areas as well, not just, for instance,

02:33:23genetic material, but let's say location services.

02:33:27Why would China, for instance, through TikTok, want to know

02:33:31where Americans are going? I mean, I've had clients say to me, who cares, Mary,

02:33:35if I have TikTok on my phone, who am I? Well, you may not be

02:33:39a target yourself, but if they have aggregate data on tens of millions

02:33:43of Americans, how they're all related to one another,

02:33:47if you go, for instance, if you're using this app, they can also

02:33:51listen to you. It's not just about dissemination of propaganda, it's about

02:33:55listening to what you say and seeing where you are. So it's genetic

02:33:59information, it's location information, it's all manner of things

02:34:03that can feed their big data and their AI that should

02:34:07be of concern to us. I had breakfast one time with your boss

02:34:11and I remember he told me, he said, Tim, they have, you know, they know

02:34:15how many paper clips you all are using in the Longworth building.

02:34:19I thought that was doubly creepy because I didn't tell him I was in Longworth

02:34:23but anyway. Mr. Beth, I haven't

02:34:27heard from you all day, brother, so please.

02:34:31The company I think you should spend a lot of time focusing on is BGI,

02:34:35Beijing Genomics Institute. That's the entity that

02:34:39Ancestry and 23 and me and others use to

02:34:43process the DNA. It

02:34:47may perhaps not shock you that in

02:34:512021 BGI was working, it was found out that

02:34:55BGI was working with the Wuhan Institute of Virology.

02:34:59Perhaps that's coincidental, I'm not sure. But to Mary's

02:35:03point about TikTok, we should really understand

02:35:07what TikTok is. It's not about watching funny cat videos or, you know,

02:35:11twerking or whatever. It's really an app that's looking

02:35:15at what you're looking, what you're viewing and it's monitoring your facial

02:35:19expressions and your pupil dilation and it's sending you more

02:35:23videos that elicit the same response. So after a certain period of

02:35:27time, they have an imprint of who you are, right?

02:35:31So they have genetic data, the data of who you are, your

02:35:35location data, how can that be good? And yet we can't

02:35:39conjure up a way to ban TikTok?

02:35:43I think I'm out of time. I'm out of time.

02:35:47I'm sorry, Mr. Fennell. Can I just say one thing? If you just butt in like

02:35:51that, you can. Go ahead. Yes, sir. I would recommend everybody to

02:35:55read a State Department document from March of 2023 by Dr.

02:35:59Dave Dorman and Dr. John Hemmings, Understanding Xi Jinping's

02:36:03Digital Strategy for China. They've done some outstanding open source

02:36:07research. We talk a lot about Xi's Belt and Road and all these

02:36:11initiatives, but also he started in 2023 Digital

02:36:15China, which is all related to what we're talking about.

02:36:19Very good. Thank you. Gentleman yields back. Chair recognizes

02:36:23Mr. Garcia from California. Thank you, Mr. Chairman, and thank you to our witnesses that are here.

02:36:27Obviously, we've talked a lot about the Chinese threat, which we all know is real here

02:36:31in this country. I also think it's important that if you're talking about Chinese political

02:36:35warfare, that one of the prime threats that we have, as far as I'm concerned,

02:36:39is Donald Trump, who we know has a history of working with China

02:36:43on a variety of different, in my opinion, unethical and illegal

02:36:47matters. Now, briefly, Mr. Malinowski, has China funneled

02:36:51bribes and payments to leaders and heads of state as part of their

02:36:55foreign influence operation? Just briefly? Yes. And thank you. And these

02:36:59are exactly the kinds of threats that our founders had in mind when they wrote the emoluments

02:37:03clearance clause of our Constitution. Isn't that correct, Mr. Malinowski? Absolutely,

02:37:07yes. And let's be clear about the facts. The former president spent his time in office

02:37:11collecting payments from China and many other countries through his businesses.

02:37:15He refused to divest from his businesses and broke decades of precedent.

02:37:19Now, we all know that the Constitution has a specific prohibition from receiving payments

02:37:23from foreign governments. Our committee, this committee, actually had an investigation that

02:37:27documented cash flowing directly from the Chinese government's state-owned businesses

02:37:31into the businesses and pockets of the Trump family.

02:37:35Here is just some of that. We know that the People's Republic of China, including

02:37:39state-owned enterprises, sent more than $5.5 million

02:37:43to the Trump Organization. And just to be clear, it's a minimum

02:37:47of $5.5 million because we only have data and

02:37:51a few of the Trump locations. It is likely much, much

02:37:55higher a number that China actually spent money and

02:37:59drove money into the Trump Organization, of course, while Donald Trump was

02:38:03the president. This is unconstitutional and threatens our national security.

02:38:07Now, these, of course, aren't the only favors that the Trump family got from China. Just months

02:38:11after he took office, the Chinese government suddenly reversed long-standing

02:38:15policies and awarded Trump 38 new trademarks in China for industries

02:38:19related to restaurants and advertising. And, of course, this went beyond

02:38:23just Donald Trump himself. In April of 2017, with Trump's

02:38:27White House in chaos, many people, including the Chinese government, were all

02:38:31trying to gain influence during this time. Ivanka Trump, who was working

02:38:35in the White House, got preliminary approval for three Chinese trademarks

02:38:39on the same day that Donald Trump had dinner with Xi Jinping

02:38:43at Mar-a-Lago. And remember, Ivanka never divested

02:38:47her company while she was working in the White House. Now, President Trump

02:38:51also overruled our own security officials in our own government

02:38:55and publicly promised to save jobs at a Chinese government telecom company

02:38:59which was facing sanctions. And the list goes on and on

02:39:03and on. I think we should all be very concerned that the president of the United States

02:39:07at the time, Donald Trump, decided to actually let corporate criminals off the

02:39:11hook while he was claiming to fight for Chinese jobs. And you also

02:39:15don't have to take my word for it. John Bolton, who was Donald Trump's

02:39:19right-wing national security advisor, a strict conservative,

02:39:23wrote about Trump, and I'll quote, that he co-mingled the personal

02:39:27and the national, not just on trade questions, but across the whole

02:39:31field of national security. This is actually from the

02:39:35Washington Post. John Bolton even reported, John Bolton, the

02:39:39extreme right-wing former member of the administration, that Donald

02:39:43Trump told President Xi, and I quote, make sure I win

02:39:47during a dinner at the G20 conference in Osaka, Japan.

02:39:51Now, Mr. Malinowski, if John Bolton's story is true as

02:39:55reported by the Washington Post, Donald Trump is

02:39:59literally inviting Chinese political warfare. Isn't that right?

02:40:03Yes, and I have no reason to believe

02:40:07that John Bolton would be making any of this up. He would have no reason to do

02:40:11that. Thank you, sir. I completely agree with you. The fact that John Bolton

02:40:15is essentially laying out that Donald Trump was inviting

02:40:19Chinese political warfare is shameful, and that should be

02:40:23investigated here as part of this committee. But we know the conflicts go on and

02:40:27on. Jared Kushner was paid $2 billion by Saudi Arabia

02:40:31just a few months after leaving office, after he and Trump pursued radical

02:40:35pro-Saudi policies during their time in the White House. And we know that the

02:40:39attacks on our democracy continue, not just in Trump's

02:40:43actions around China, but in the numerous other payments to other foreign governments

02:40:47that happened while Trump was in office, and that is happening now to the

02:40:51Kushner family post-White House. Now, we've all been working to investigate this

02:40:55conflict of interest for months, but the majority hasn't moved or joined us.

02:40:59This is unacceptable, and we should continue to demand answers. And with that,

02:41:03I yield back. Chair now

02:41:07recognizes, I thought we were recognized, Mr.

02:41:11Burleson from Missouri. Thank you, Mr. Chairman.

02:41:15When China first opened its doors, its economy

02:41:19in the 1980s, former Chinese Communist Party leader

02:41:23Deng Xiaoping was able to penetrate the financial interests of U.S.

02:41:27firms, the media, think tanks, and individuals, including

02:41:31politicians. In essence, he used what was called the invisible hand

02:41:35to get Americans to do work for the CCP. This practice of elite

02:41:39capture continues at a rapid rate today.

02:41:43Mrs. Kissel, Ms. Kissel, could you explain what

02:41:47elite capture is and how it's employed by the CCP today?

02:41:51So, the topic of this hearing is defending America

02:41:55from the Chinese Communist Party's political warfare, meaning their

02:41:59influence operations, and I spoke about how they do that at the State Department with our

02:42:03diplomatic elites. What you're referring to is the

02:42:07organized activity of CCP directly linked

02:42:11and indirectly linked organizations to capture

02:42:15our elites to convince them to work on behalf

02:42:19of the party and the party's interests. This is done

02:42:23through overt ways, by, for instance,

02:42:27payments or contracts, and ways that are in what I would

02:42:31deem the gray zone, and I spoke about this in my written testimony, where

02:42:35they would, for instance, invite corporate CEOs to China

02:42:39through business chambers, give them a red carpet treatment, grant them audiences

02:42:43with Xi Jinping and other top leaders. This is a way both to

02:42:47capture them, but also to circumvent any tough conversations

02:42:51that they might have with our U.S. government leadership. That's something

02:42:55that I believe that this committee should investigate, not just

02:42:59the influence on the federal agencies, but CCP influence on our state

02:43:03and local government officials. That's also a big problem for us.

02:43:07When you elaborate on the business partnerships, are they

02:43:11direct? You said the word overt. Are they direct in saying

02:43:15we'll do business with you if you provide

02:43:19information for the CCP? How does that usually operate?

02:43:23Again, I think context is important. For 40 years, Republican and Democrat

02:43:27administrations alike encouraged U.S. businesses

02:43:31to outsource to China, and they did so.

02:43:35This happened over a long period of time, and we've only recently woken up

02:43:39to the threat. How does this capture happen? It happens

02:43:43through flattery. Come to China and be lauded and have these

02:43:47high-level audiences. It happens through their own pecuniary

02:43:51interests. They're rewarded, as Eric, I think, spoke to, their fiduciary

02:43:55obligations to their shareholders to make money. They also

02:43:59prey on the fact that there isn't the kind of patriotism in corporate America

02:44:03that we used to see. Look at what Jamie Dimon, for instance, the head of JPMorgan

02:44:07said recently. He said, I'm a patriot. If the U.S. government tells me

02:44:11to get out of China, I'll get out of China. So this is a country that's

02:44:15committing crimes against humanity and genocide against its own people,

02:44:19and yet he's not going to get out of China until he's told

02:44:23to do so. Now our firm isn't involved in China because we have

02:44:27owners who are patriotic Americans who wouldn't do business there.

02:44:31There are many other Americans like that that you don't hear about, but this

02:44:35elite capture is a significant problem because these figures,

02:44:39be they diplomats, be they CEOs, chairmen of boards,

02:44:43or politicians, they have significant influence on

02:44:47you all. And so it's why transparency and clarity and

02:44:51talking about this regime are so, so important. So what are some of the most

02:44:55egregious examples that you've seen with politicians?

02:44:59Well, again, I don't want to make this a partisan discussion because I think that this

02:45:03transcends politics. I can do that for you.

02:45:07So let me ask this. Would sleeping with a Chinese spy

02:45:11be an example of elite capture? Yes.

02:45:15President Biden claimed that his family never

02:45:19took money from China. Is that accurate?

02:45:23Again, I'm not here to have a partisan political discussion.

02:45:27We talk about many aspects of the

02:45:31threat from China. Here's something that I would say.

02:45:35Let me ask in a different way. If money, $40,000

02:45:39flowed through different bank accounts that were

02:45:43associated with a family member, would that be an example of elite capture?

02:45:47It flowed into a personal bank account. Here's what I wish we would discuss.

02:45:51We are facing an enemy with 400 nuclear weapons,

02:45:55a million-man army, the third largest Air Force, the world's largest

02:45:59Navy, a probable chemical and biological weapons programs. They attack our

02:46:03satellites every day. They're cutting cables. We have threats to our

02:46:07infrastructure here at home. And as the topic today is, we have influence

02:46:11operations. You're in the United States. You're absolutely

02:46:15right. That's the issue. You're right. I just want to recognize, though,

02:46:19that we have a responsibility to investigate the outcome

02:46:23of the millions of dollars that have flowed in from the Chinese

02:46:27energy company to Biden and family members. Thank you.

02:46:31Gentlemen, yields back. Chair now recognizes Mr. Langworthy

02:46:35from New York. Well, thank you very much, Chairman Comer. China has invested in

02:46:39and built relationships with the highest levels of the American business community

02:46:43to advocate and advance the CCP interest in the United States

02:46:47for decades. However, I recently saw that the Chinese e-commerce giant

02:46:51Alibaba is ramping up its global expansion with new

02:46:55services aimed at attracting small businesses in the United States.

02:46:59Small businesses are the backbone of many communities

02:47:03across the United States, especially in a district like

02:47:07mine, New York's 23rd congressional district. These are family-owned

02:47:11operations. They often don't have the resources to compete with large

02:47:15corporations and could easily be persuaded to be seemingly

02:47:19receiving a helping hand, so to speak, from a Chinese

02:47:23partner. Ms. Kissel, do you see this aggressive outreach

02:47:27to American small business by Chinese conglomerates like Alibaba

02:47:31as something that we should be concerned about? Yes.

02:47:35And beyond Alibaba, could you expand for us today on any efforts

02:47:39that you're aware of by the CCP to influence America's small business

02:47:43sector, our local chambers of commerce, or even local governments

02:47:47to gain greater access to communities in small-town America?

02:47:51Well, when I worked at the State Department,

02:47:55the Secretary made a concerted outreach to

02:47:59state government officials. For instance, I'd refer you to

02:48:03the speech that he made in, I believe it was Wisconsin,

02:48:07talking about how that was a direct

02:48:11effort of the United Front organizations to capture

02:48:15and to influence policymaking on a state level. Now, to your

02:48:19question about small business, small business, as you

02:48:23suggest, is a very vulnerable target. And that is why

02:48:27in my written testimony, I suggest that one of the things that the State Department could do

02:48:31is to educate subnational groupings,

02:48:35so state legislatures, chambers of commerce, and others

02:48:39to these gray zone tactics, which, by the way, the Chinese

02:48:43don't hide. They speak very openly

02:48:47about their so-called magic weapons, namely their efforts

02:48:51to co-opt and influence a wide swath

02:48:55of not just our diplomatic and political community, but our business

02:48:59community as well. And I'll also speak to my personal experience.

02:49:03As I said before, I serve on two publicly traded company boards of directors.

02:49:07Most directors of American corporations are former executives,

02:49:11they're accountants, they're operational experts.

02:49:15They're not schooled in Chinese political warfare

02:49:19tactics. It's why we have to speak openly, honestly, and

02:49:23often about how they're trying to advance their interests so that we

02:49:27can equip our diplomats, politicians, and business people

02:49:31with the knowledge that they need to then act appropriately.

02:49:35Thank you. Where do you see a role for the federal government in helping businesses

02:49:39large and small to avoid political or other pressures

02:49:43from the CCP? Well, State Department has the ability to issue

02:49:47business advisories. It's a loud megaphone

02:49:51that they can use to talk about the risks of doing business there and

02:49:55encourage the diversification of supply chains. We have other arms of our

02:49:59federal government that can enforce transparency, be it in

02:50:03accounting practices, for instance. We talked about rating agencies earlier

02:50:07and the role that they play with their protected status, allowing

02:50:11investors to outsource their due diligence to S&P and Moody's.

02:50:15I believe the more transparent we are about the threats that we face, the

02:50:19more rational decisions U.S. investors and U.S. companies will make.

02:50:23And we're starting to see this with the foreign direct investment numbers

02:50:27which have fallen off of a cliff, which suggests to me that even

02:50:31absent clear guidance from the U.S. government, that U.S. businesses

02:50:35are starting to appreciate the depth

02:50:39and the breadth of the risk that they face from doing business in China.

02:50:43My time is limited here today, but if you could briefly state what resources

02:50:47are currently available at SBA for small businesses to consult

02:50:51regarding China's attempts to infiltrate small family-owned businesses.

02:50:55Where do you see the gaps? I'm not an expert in the SBA,

02:50:59but I do not believe that there is a single source where U.S. businesses

02:51:03and the investment community can go to fully appreciate and understand

02:51:07the risks that they face. And again, we've talked a lot today about

02:51:11the complexity of the problem. That's why we need, as our other panelists

02:51:15have suggested, a whole-of-government approach, but it has to begin with recognizing

02:51:19the nature of the regime. It's not a competitor, it's an adversary.

02:51:23Thank you. We would hope that the

02:51:27guidance should come from SBA soon to prevent further Chinese access to

02:51:31our communities. The threat China poses to the United States cannot be

02:51:35emphasized enough. I commend this committee, the House Oversight Committee,

02:51:39our Chairman James Comer, for continuing to dive deeper into China's efforts

02:51:43and I look forward to working with my colleagues to bring more attention to this

02:51:47very real threat. And I yield back, Mr. Chairman. Thank you. The gentleman yields back.

02:51:51The Chair now recognizes the Ranking Member from Maryland.

02:51:55Thank you kindly, Mr. Chairman. I want to thank all the witnesses

02:51:59for their excellent testimony today.

02:52:03Congressman Malinowski, you made an interesting point

02:52:07earlier when you distinguished between the various

02:52:11means that are used by China to

02:52:15assault the American democratic system

02:52:19and what the ends are. And I wonder if you would say a little bit more about what you think

02:52:23the ends are. I mean, if you are

02:52:27a Chinese political planner, where do you see all of this

02:52:31going when you look at the world situation with

02:52:35America and Europe, I think trying to

02:52:39stand for political freedom, and then Russia and North Korea

02:52:43and Hungary and other illiberal

02:52:47democracies or authoritarian regimes? Thank you for asking

02:52:51what I think is the key question. And look, some of their ends

02:52:55are pretty short-term and mercenary. Of course they want to steal our intellectual property.

02:52:59If they have an opportunity to hurt us, to make us sicker, whatever,

02:53:03absolutely. But we need to ask ourselves

02:53:07what is it that they, if they are trying to influence the United States, what is it

02:53:11that they would like to influence us to do? And I think the answer

02:53:15to that is fairly straightforward. They want us to pull back

02:53:19from our alliances around the world, in Asia, with Japan, with South

02:53:23Korea, with the Philippines, from NATO. They want us to stop

02:53:27supporting Ukraine. They want us to have a lower military budget,

02:53:31obviously. They want us to stop investing

02:53:35in the revival of our domestic manufacturing. Mr. Groffman

02:53:39was talking, I'm glad he acknowledged it, that there is a massive revival of manufacturing

02:53:43in Wisconsin, in part because of policies we pursued. They want us to

02:53:47stop doing those things. They would love us to repeal our clean

02:53:51energy subsidies under the IRA. How do I know that? Because they are suing us

02:53:55in the World Trade Organization to get us to do that.

02:53:59And of course they want us to hate each other and

02:54:03to be at war with ourselves so that we are incapable

02:54:07of countering their aggressive actions around the world and so that we

02:54:11look bad to the rest of the world. And so my simple

02:54:15answer to the question of what we should do, and I agree on a lot of the little

02:54:19things that my former Republican colleagues have raised, but the

02:54:23big answer is we should do the opposite of what China

02:54:27wants us to do on those big strategic questions.

02:54:31There are more than a million Uyghurs who have been

02:54:35incarcerated in re-education camps and subjected

02:54:39to mental and physical torture, sexual abuse, deprivation

02:54:43of food. President Biden signed

02:54:47the bipartisan Uyghur Force Labor Prevention Act in December

02:54:51of 2021. And this was a

02:54:55break from the prior administration where

02:54:59the former president told President Xi to go ahead

02:55:03with the building of these camps and said it was the right thing to do.

02:55:07Will you just explain what difference

02:55:11that makes in terms of our willingness to

02:55:15confront human rights violations? As I've tried to do

02:55:19throughout the hearing, I want to distinguish between

02:55:23the Trump administration, which had plenty of officials who were

02:55:27disgusted by the genocide in Xinjiang and tried to do something about it

02:55:31and the former president. And it's a critical distinction

02:55:35because no matter how hard a State Department under a Republican

02:55:39or Democratic administration tries to stand up for human rights, if

02:55:43the leader, if the president says to a foreign dictator

02:55:47I don't mind your concentration camps, I envy

02:55:51your power to execute people, I like you because you rule with

02:55:55an iron fist, it completely undermines

02:55:59what everyone else in our country is doing to advance

02:56:03human rights. Is that a demonstration of what's been called elite capture

02:56:07today where the use of flattery? I don't know

02:56:11if it was flattery or corruption or if he just shares

02:56:15Xi Jinping's values going in, but the effect

02:56:19is catastrophic to our moral authority in the world.

02:56:23It seems to me that the point you've made is

02:56:27correct, which is that we need to strengthen and celebrate

02:56:31democratic institutions and democratic freedom, but it's a very difficult thing to do

02:56:35because it's that freedom which also creates the openness

02:56:39and the porousness that authoritarian regimes like Putin or

02:56:43the CCP exploit in order to

02:56:47come in and to try to create problems in our country.

02:56:51That makes it complicated, but we should have confidence that our democratic system, our open

02:56:55democratic system, is a greater threat to Chinese autocracy than the other

02:56:59way around. Thank you very much, Mr. Chairman. I yield back to you.

02:57:03The gentleman yields back, Chair recognizes Mr. Frey from South Carolina.

02:57:07Thank you to our witnesses for being here. Fortunately for you, I'm the last guy.

02:57:11You're next to last, but go ahead. Just kidding, I didn't want

02:57:15to get your hopes up. Mr. Bethel, I want to start with you. It's no

02:57:19secret that China has exploited international organizations and the U.S. government

02:57:23in order to defeat its global ambitions. Our world stands threatened by the

02:57:27rise in China's authoritarian practices and its increasing

02:57:31aggression. Through China's Belt and Road Initiative,

02:57:35we have seen China creep into the backyards of the United States, our trade partners, and

02:57:39our allies. It is therefore essential that we commit ourselves, our efforts in

02:57:43Congress and across the federal government to undercut China's growing influence

02:57:47worldwide and refocus our institutions on the actual threat that

02:57:51Communist Party of China represents. From your experience, how have U.S. capital

02:57:55and taxpayer dollars contributed to China's growing influence

02:57:59in South America and other emerging markets?

02:58:03Thank you, Congressman. Great question. Let me begin

02:58:07with my personal experience at the World Bank. U.S.

02:58:11taxpayer dollars fund the World Bank

02:58:15and we, to a great degree, backstop the World Bank. You have to ask yourself

02:58:19how an institution with a AAA credit rating can have that rating

02:58:23when you're loaning money to developing countries.

02:58:27So the United States is the largest shareholder. The United States wields

02:58:31a tremendous amount of influence in an institution that is meant to do good in the

02:58:35world. It's meant to take people out of poverty and to promote

02:58:39shared sustainability.

02:58:43Now, unfortunately,

02:58:47what I witnessed when I was at the World Bank, and that may have since

02:58:51changed, is that China was the largest recipient of World Bank loans.

02:58:55And you ask yourself, why? You're the number two economy in the world.

02:58:59And if you think about it, what happens is when you get money from the World Bank,

02:59:03it's not the money itself, but it's what the money represents that's important.

02:59:07It represents that you are a developing country. And if you're a developing country,

02:59:11then you get special benefits at the World Trade Organization,

02:59:15Universal Postage Union, etc.

02:59:19And so that also allows you

02:59:23a backstop in the event that, say, a

02:59:27developing country can't pay their loan to China, well, perhaps the World Bank or the

02:59:31IMF can. And so the third point I would mention

02:59:35is that of the procurement contracts, of the tens of billions

02:59:39of dollars every year that go out the door of the World Bank to fund

02:59:43great projects, roads, hospitals, schools,

02:59:47around 40% went to China, Chinese contractors. And less than 1%

02:59:51went to American contractors. And so I saw China's...

02:59:55Investing, by default, are adversaries, right? That's right.

02:59:59Established a decade ago, the Asian Infrastructure Investment Bank

03:00:03now poses a potential disruption in the dominance of the U.S. and the

03:00:07World Bank. How does the PRC balance its engagement with the World Bank

03:00:11while being the predominant power in the Asian Infrastructure Investment Bank?

03:00:15So the AIIB was created

03:00:19to be a direct competitor to the World Bank. I won't regale

03:00:23you with how it came into existence, but it's a very interesting story.

03:00:27The World Bank actually, in many ways,

03:00:31assists the AIIB in its overseas

03:00:35loan portfolio. It helps source and originate

03:00:39deals for the AIIB. It provides a lot of the back office and

03:00:43cash management and custodial work for the AIIB. And, in effect,

03:00:47it's helping to subsidize it. So the World Bank is working

03:00:51to help a competitor and a rival succeed.

03:00:55Thank you for that. That's actually very

03:00:59fascinating to hear. How concerned are you about the obvious ties between

03:01:03the World Intellectual Property Organization and the CCP?

03:01:07You may recall in the latter part of the Trump

03:01:11administration, and I think Mary can address this more effectively than

03:01:15I, there was a vote

03:01:19to determine who was going to be the head of the World Intellectual Property

03:01:23Organization, and China was fielding a

03:01:27very good candidate, and it looked like they could win,

03:01:31which is insane on the face of it, if you think about intellectual

03:01:35property. I'm not sure if you want to...

03:01:39Go ahead, please. Thank you. I think it's a great example of how the State Department could

03:01:43be wielded for good. We stood up, effectively, a political

03:01:47type campaign. We didn't put up an American. We backed

03:01:51an allied countries candidate, and we effectively ensured that

03:01:55the Chinese will not get a chance to run WIPO for, I believe, the next 50

03:01:59years, because the chairmanship cycles through different regions of

03:02:03the world. And it was the International Organizations Affairs Bureau at the

03:02:07State Department that went around the world talking to our allies and ensuring that

03:02:11we got that outcome and that win for the United States. Chairman and the Ranking Member,

03:02:15with your indulgence, I have one more question, since it seems like we're waiting on somebody else, if that's

03:02:19okay. Can institutions like WIPO and the World Bank reverse course, or are they

03:02:23beyond help at this point?

03:02:31It goes to a point I made earlier, and that is

03:02:35what do we want? And let's begin on a first principles basis. We need

03:02:39to understand what is it that we want out of these institutions, and then work backwards,

03:02:43because if you don't know what you want, then we just

03:02:47flounder.

03:02:51If I could just quickly jump in. We've got a basic choice with all these international

03:02:55organizations. We can either lead and win or leave like losers.

03:02:59I prefer staying, fighting, as you guys did,

03:03:03as this administration has done in similar cases, and when we do

03:03:07that, we win most of the time.

03:03:11We have two basic guidelines, as Eric and the former congressman suggest,

03:03:15and under the Trump administration, we asked two basic questions of

03:03:19all international institutions. Is it

03:03:23providing and moving toward fulfilling its mandate?

03:03:27Is it fulfilling its core mandate, as stated when it was created,

03:03:31this institution, and is it serving the interests of the member states

03:03:35who are members of the institution? Very simple

03:03:39core questions. And then we would ask, okay, if the answer

03:03:43to those questions is no, then can we fix this organization?

03:03:47And if we can't fix it, then we should exit

03:03:51it, and we should construct organizations that are effective in fulfilling

03:03:55their mandates and serving the interests of the member states that created them.

03:03:59Thank you. All three of you, thank you for that. Mr. Chairman.

03:04:03And I am the last questioner.

03:04:07Captain Fennell, you testified about the national security community's

03:04:11failure to recognize and combat the CCP threat.

03:04:15How has the U.S. intelligence community fallen prey to influence

03:04:19by the CCP?

03:04:23Chairman Comer, in my experience in the IC,

03:04:27what we had was this, and I mentioned it before,

03:04:31this threat deflation. That's a creation of my co-author and I,

03:04:35but the message behind it is that

03:04:39we were getting information about China, and

03:04:43we were seeing things happen, but because of this kind of

03:04:47overriding engagement policy that we've had

03:04:51as a nation towards China since the opening up

03:04:55to China, there was this idea that if we engaged with them, that

03:04:59they would change their behavior at some point in time. And because of that

03:05:03mindset that permeated Washington and our institutions,

03:05:07the IC became ensnared with that, and so they were less

03:05:11likely to make the connections to see what was happening.

03:05:15And I have examples. For instance, we saw what happened in 2012

03:05:19at Scarborough Shoal in the South China Sea. We couldn't believe that China

03:05:23was going to take sovereign territory from a treaty ally.

03:05:27In 2013 to 2015, they started dredging up sand

03:05:31to build these seven artificial islands, three of which

03:05:35are the size of Pearl Harbor. And they did that, but the IC

03:05:39was reluctant to call that out until it was so painfully

03:05:43obvious. And we did that over and over and over again, over

03:05:47decades, over various programs, not just in the naval arena,

03:05:51across the board.

03:05:53Mr. Bethel, you testified that the CCP has infiltrated top levels of

03:05:57international institutions. Could you explain why China's

03:06:01influence at the World Bank and other international institutions

03:06:05matters to American security?

03:06:09Well, I addressed some of that earlier in my remarks

03:06:13to the Congressman. But consider

03:06:17that U.S. taxpayer money is being funded

03:06:21to an institution that is getting people out of poverty, and at

03:06:25least while I was there, one of the preeminent

03:06:29recipients of money was China. And it would then

03:06:33leverage having a developing country status to gain

03:06:37advantage in other multilateral institutions like the World Trade Organization

03:06:41and the Universal Postage Union.

03:06:43Do you remember roughly how much American tax dollars we're talking about here?

03:06:47It's a complex question because

03:06:51we have something

03:06:55it's a very complex question, which I can take offline with you, but we

03:06:59effectively backstopped the institution, or at least our share of it,

03:07:03to the tune of hundreds of billions of dollars.

03:07:07Ms. Cassell, who is the CCP

03:07:11targeting when it engages in elite capture? I know you mentioned that a little bit. Let's

03:07:15get it into perspective here.

03:07:19That's a complex answer because they're not targeting a single type

03:07:23or class of individuals. They have a very, very large

03:07:27United Front operation and affiliated organizations who target

03:07:31everything from our political class, state, local, and federal

03:07:35to our top CEOs, to our chairs of boards of directors,

03:07:39universities, think tanks, business chambers.

03:07:43It's a long list, sir. So what role does the State Department

03:07:47play in protecting American businesses from CCP

03:07:51influence and becoming so-called corporate hostages? What role does it play

03:07:55or should it play? I think the State Department, as I outlined in my written

03:07:59testimony, has a number of tools to inform

03:08:03and educate all of those groups that I just

03:08:07mentioned, sir. I think also even something

03:08:11like Consular Affairs, where they're issuing travel

03:08:15warnings. I just saw, just to give you an example the other day, there's a Wall Street

03:08:19research firm, I won't mention, who's advertising for U.S.

03:08:23investors to go with them to China. I believe that's a dangerous thing.

03:08:27And why do we allow it? Well, we can't ban people from going to China,

03:08:31but I think it's incumbent for the safety and security of Americans

03:08:35to inform them of the risks. That's just one small example.

03:08:39Based on your testimony today and the many briefings we've had with federal agencies,

03:08:43it really doesn't seem that there's a cohesive government-wide

03:08:47strategy to combat the CCP

03:08:51influence in American communities.

03:08:55Do you believe we have an effective government-wide strategy

03:08:59in place?

03:09:03Not yet, but it took us, how many decades did it take us to have

03:09:07an effective strategy against the Soviets? It takes a long time as a democracy.

03:09:11My concern is that we don't have the luxury of time.

03:09:15And you agree that we should have a strategy?

03:09:19What would that look like, in your opinion?

03:09:23Well, we probably will. Obviously, we take this very seriously.

03:09:27We understand the threat, and we

03:09:31sincerely want to address this issue.

03:09:35My time has expired, but I'll say this. I think this has been a very substantive hearing.

03:09:39Obviously, we have very credible witnesses here today, and hopefully

03:09:43we will continue this issue. This is a priority for the House Oversight

03:09:47Committee for the majority. We want to work with the minority.

03:09:51There are certain members that I think had very substantive questions,

03:09:55and there were some that regurgitate

03:09:59their usual animosity towards the

03:10:03former president. But at the end of the day, I think that we can come together

03:10:07in a bipartisan way to try to address this situation. It begins by

03:10:11making certain that our government agencies know and understand the

03:10:15CCP threat, and I don't believe they do. In two hearings, I don't believe we have

03:10:19a single government agency that truly understands

03:10:23the threat and has a plan to alleviate that threat.

03:10:27So hopefully we can continue these hearings and come together

03:10:31as a Congress and make

03:10:35effective change.

03:10:39In closing, I want to thank our witnesses again for your testimony today.

03:10:43With that,

03:10:47without objection, all members will have five legislative days within which to submit materials

03:10:51and additional written questions for the witnesses, which will be forwarded to the witnesses.

03:10:55If there is no further business, without objection, the committee stands adjourned.

03:10:59Thank you.

James Comer Chairs House Oversight Committee Hearing On Dangers Of The CCP In The U.S.

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