Transcripts For CSPAN2 Hearing On China And U.S. Economic Policy 20240712

Good morning. This hearing will now come to order. I am pleased to welcome our distinguished panels of Witnesses Today on the economic subcommittee focusing on a very important topic and i think theres a lot of bipartisan interest in and that is the economic geostrategic challenge with the rise of china poses for the United States not just today but in the future. The calmness party led peoples republic of china through unfair treatment practices and intellectual property theft market manipulation and very prominently in my view not reciprocal treatment not just in the economic realm but in many realms has been a force in the Global Economy that undercuts the resiliency of the u. S. Economy. Its been one of the worlds fastestgrowing economies averaging close to 10 growth from 1979 to 2015. In 2014 china overtook the United States as the Worlds Largest country in reducing power according to the International Monetary fund. I believe there is a strong bipartisan interest and hopefully we will see that today and establishing a longterm economic United States strategy with our allies that focuses on reciprocity, intellectual property theft and ultimately from the United States person if outcompeting chinese. In may the white house issued its document called the United States strategic approach to the peoples republic of china. This document stated quote the Chinese Communist party expanding use of economic political and military power to compel acquiescence from nationstates across the globe armed vital American Interest and undermines the sovereignty and dignity of countries and individuals around the world. This document is part of the Broader National Security strategy issued a couple of years ago by the Trump Administration and National Defense strategy issued by the department of defense. These documents in my view has very strong bipartisan support in the congress for laying out the challenge that our nation faces with regard to china. But they lack right now is implementing documents, implementing strategies particularly as it relates to economic challenges that china poses. What our hearing intends to do today is to start the focus on the implementation and execution of these strategies. As i mentioned i think these strategies have broadbased bipartisan support but we are going to need to reintegrate our government and society together for the longterm, literally decades like we did in the cold war with the soviet union if we are going to execute these in a way that protects American Interest their workers are economic and National Security interest that im hopeful that is the path that we are big inning on in the Trump Administration and cabinet members in the last two weeks have started to lay out the strategy. I know secretary pompeo as we speak is testifying on the Senate Foreign Relations Committee and im hopeful with their two panel of Witnesses Today government witnesses and experts from the private sector and inc. Tank community we will be able to start informing the congress on this issue with the think is one of the most important issues facing the United States. That is our goal and im excited to have Ranking Member markey as my Ranking Member here and we feel the same on a lot of issues regarding the challenges that china poses and with that i will turn to the Ranking Member for his Opening Statement. Senator markey. Thank you mr. Chairman. Thank you so much for appearing and for your continued hardship on the subcommittee and i want to thank our witnesses for their willingness to participate today. The Ranking Member i believe meeting the china challenge should he have bipartisan priority. We must defeat beijings efforts to unfairly tilt the Playing Field against American Workers and businesses. Those actions include support for companies as well is increasingly using multilateral institutions to set standards that privilege Chinese Companies and technology appeared china also uses economic tools to threaten freedom around the world. Beijing is already exploiting the size of its market to coerce american citizen sent Business Leaders as well as foreign governments. To selfcensorship to protect official Chinese Government messaging. We know china is using exports and foreign assistance including the initiative to in bed around the world not only surveillance technologies but also the values and practices that activate those technologies for a torah terion use for it as we engaged in the competition we must remember that the Chinese Government is testing their authoritarian tools first and foremost of the people of china. I want to make clear in todays hearing and otherwise we are focused on the threats posed by the chinese. We are focused on the threats posed by the Chinese Government. While countries around the world lead an International Coalition to push back on chinese aggression they know the United States has retreated from our historic support of democracy and human rights as a key p for. They know the trump restriction has abandoned International Institutions and the World Health Organization while the Chinese Government has stepped up there and puts campaign and they know this administration is unprecedented support for it or terions over air allies. Pulling together Global Coalition to combat chinese policy directives is a is pursued aggressive approach that swings between pandering to china including an apparent greenlight from president trump. The closing of the chinese consulate in houston without any clear reason or explanation of what we seek in return. We cannot consider china policy in a vacuum but every policy decision on the past three and half years impacts how the rest of the world use us to dissect ss these policies for its clear to me that we have veiled to rise at this moment. As china steps up its Propaganda Campaign in the midst of the coronavirus is hard for United States to point fingers when our own virus response has been so inept. The presence inexplicable failure to lead a National Response to the Coronavirus Crisis and its attacks against science has left the United States flailing as other countries lead in responding to the pandemic rear as china continues to dominate manufacturing and required reporting on sharing of intellectual property in cutting domestic spending has not raised spurred economic involvement that. We should be investing in our research and development and Technology Sectors and putting money into education for a particular focus on s. T. E. M. Agree should be utilizing the defense production act which mobilizes the economy during the pandemic. As china engages in a conference of campaign to exploit International Institutions for their own purposes we have retreated even further from the world stage. United states is absent on the world stage in china is only too happy to fill the void. Or a competition with china is fundamentally about free society versus authoritarian. We must utilize at our disposal making the nice is competitive and resilient as we work with democratic countries around the world to push back in a connected way at the values would hold so dear and the challenges. The stakes are too high and the United States cannot ordered this so thank you mr. Chairman for this very important hearing. Thank you to all of the witnesses who are participate in today as this is really a very important subject. Senate thank you senator markey and i appreciate her ship on the subcommittee where we have spent a lot of hearings and a lot of overall bipartisan agreement particularly as it relates to china. I noticed the chairman of the Commerce Committee senator richter is here and i would ask him to give an Opening Statement as well. Mr. Chairman. Thank you mr. Chairman. I appreciate leadership on this issue and Ranking Member markey has been an ambitious two Panel Hearing this morning and should be quite valuable. The focus is the Chinese Communist party and their predatory economic is and their impact on American Companies both at home and abroad. Protecting our economic advantages in the future will require an aggressive u. S. Government response by congressional action and oversight. Today the white house published its whole of government Response Plan in a document called the United States strategic approach to the peoples republic of china. Todays hearing will look is on the economic overall u. S. Strategy but as the white House Strategic ward points out the ccp uses a variety of weapons to undermine americas economic competitiveness with Cyber Attacks political property that Technology Transfer and illegal subsidies for stateowned enterprises. I hope our witnesses will describe in particular the impacts of the China Campaign with respect to the Commerce Committees jurisdiction such as telecommunications Maritime Aviation and space. Americas future of Economic Trust 30 is not the only thing at stake in the strategic competition as the covid19 pandemic continues chinas apparently using tactics permits military playbook against our Public Health sector. Last week the Department Justice justice for a widespread cyber attack supported by the chinese intelligence service. The target allegedly included at least four u. S. Armistead akel tax working on a covid19 related vaccine and treatment project rate it has revealed unacceptable vulnerabilities by years of letting the ccp be an ott hopefully thats about to change. During the initial phase of the covid19 outbreak chinese exporters and shipping ground to a hault and he was the scissors were forced to go without supplies. In particular the United States pharmaceutical industry has been shown to be over reliant on the chinese buyer. We cannot tolerate economic liabilities. The dcp is unlikely to stop its legislative practices. Therefore the u. S. Government should help congress become more resilient against constant pressure from beijing could i would ask her witnesses from the state department and the Commerce Department to detail the measures they are taking to support they can play a significant role in supporting the efforts of the executive branch. An ott the shtick here and trusted Communications Network act known as rip and replace. Their funds in the face for proposal by the majority leader in this regard. This law will help attacked american Communications Networks threats posed by ct by supporting their mobile update and we welcome suggestions from all of you to bolster the administrations effort rate mr. Chairman and Ranking Member markey you are both champions in this regard and i appreciate your bipartisanship and i think the witnesses. Thank you very much. Thank you mr. Chairman and want to welcome our witnesses. I have instructions here that say the witnesses have not taken their seats please ask them to do so. We have no witnesses here in the room but i think they have taken their seats virtually. I can see them on the screen and i want to welcome mr. Michael wessel commissioner of the u. S. Economic Security Review Commission and mr. Rush doshi director of the China Strategy Initiative has the brookings institution. Gentleman you each will have five minutes to deliver an oral statement or an and your written statement will be included for the record. Thanks again for being here and mr. Wessel we will begin with you. Thank thank you for the annotation to appear before you today. The topic of todays hearing directly affects every one of our citizens could my name is Michael Wessel and im appearing before you today at the the commission of u. S. China economic and security review condition but as a normal washington im speaking for myself although my comments are informed by my service and other works have been involved with for several years todays hearing raises the critical issue of how to respond to the china challenge. While chinas policies are the greatest threat to our competitive posture of innate nations are watching americas response to determine whether they should immolate chinas actions or whether america will stand tall and defendant. Last week chinas foreign minister said quote the Current Situation in chineseu. S. Relations is not what china desires to see. United states is response to for all of this unquote but i agree we dont want to current relations to continue but i strongly disagree that the u. S. Is solely responsible. Years of repeated attacks on our Industrial Base and continuous eft of our intellectual property, countless unfair trade practices massive subsidies statesupported entities and many other predatory and rejectionist policies along with chinas human rights abuses current actions in hong kong and projection of the South China Sea and elsewhere require that we more seriously confront china. Chinas actions with regard to their policies for chinas leadership is made clear their intentions through policy pronouncements and neck cavities. They dont pose their approaches being winwin but the chinese come his partys policies contributed to the halting of reduction that dangerous reliance on sometimes risky supply chains and resilient super countless jobs and lost. In my prepared testimony i outlined many of the policies and practices that form the basis for our concerns. They are welldocumented. We are dependent on china for medicines personal protective equipment but that dependence exists in many other sectors and could increase if the ccp achieves its stated goals. As a relates to policy failures in the west it must be addressed. Our inaction on certain fronts and actions on others have contributed. After the recession of china the World Trade Organization u. S. Businesses began to set up a recent with the stated goal of serving the Chinese Market. Despite facing requirements for joint ventures Technology Transfer and other policies the amount of investment by u. S. Firms in china increased as did their climate which rose by almost 600 to 1. 7 Million People by 2017. U. S. Firms in china have increased an average of 13. 6 her year since 2003 were double the rate of their domestic orders. The promise of serving the Chinese Market has not claimed benefits. Research shows 60 of chinas exports in the u. S. Emanate from foreign invested enterprises. Not all of those are u. S. But any art. Now with chinas rising debt load the capital is beginning to open its Financial Sector to foreign firms its serving its own needs. The risk to Foreign Investors is significant in economic terms of advancing chinas military and technological capabilities. Hundreds of billions of dollars have will flow to china of the next years with strict scrutiny. We should examine some policy options to promote our interests are in my testimony identifies several recommendations made by the commission as well as several of my own. We need a conference of approach and i believe immolating the congressional effort in the autonomous on the best trading act of 1998 which this committee played a role in his work considering. We not only need to confront the policies fostered by the ucc but need to invest in our own competitiveness that will advance our interests. We also need to focus not only in todays challenges but those over the horizon. I thank you for the opportunity to appear before you this morning i look forward to your questions. Singh thank you mr. Wessel and i would like to now ask mr. Doshi for his Opening Statement. Smit thank you representatives sullivan and members of the committee. Thank you for the privilege of being able to testify on the efforts to build u. S. Real resilient think about it. I focus my room or in three subjects. Beijings ambition to Global Technology beijings connectivitys and challenges they pose to Technology Leadership and policy recommendations that ulster competitiveness. First i will talk about chinas technology and patience. A robust statebacked effort in Global Technology leadership. We are in the middle of the fourth congressional revolution by Artificial Intelligence but it wants to lead that revolution. Its also driven by geopolitical. Beijing argues the last three industrial revolutions left some countries and japan local leaders [inaudible] the overview that history argues the First Industrial revolution brought power to build technical empires making the United States a leader in Information Technology could aging missed out on these revolutions and now it hopes to lead in Global Leadership trait china agrees to colleges domain between the us and china. That leads to the second subject what is china doing to seize local first chinas spending award in some cases equal to ours if not greater than that china has a smaller con me for the Technology Central to the fourth industrial resolute revolution china may be outspending us. Second beijing believes its industrial policies has a 1. 42 in dollar deal with chinas launched and initiatives tend sectors of a national revolution. And of course it has technology plans with varying degrees of success but we engage in predatory behavior to close the gap in the United States. Chinese sources agree or are rather argue although the u. S. Is has better innovation we cant or products to market without factories which gives china an opportunity to use reverse engineering and surpassing that states. Beijing understands post covered the free world is trying to diversify supply chains away from china and for that reason general secretary xi jinping has agreed the printing is protecting supply chains is a pop ready. Chinas indicate the vest and remembers are not china is the Worlds Center of supply chain and keeps those companies adversely affecting our security and technology will revolution but at least a third and final question what can we do about this . In my submitted testimony [inaudible] its a community of people thinking of how to compete. We need information and we need to know where we are vulnerable to beijing and that requires an entity to build an institutionalized knowledge. Second we need to better coordinate and. We dont have a National Strategy for competitiveness and resilience. Taiwan is inspired in this regard prepared only government thats been successful in penalizing from china were 33,000,000,001 with the data was to have one office served as a onestop shop for all this is is. Congress could consider pushing corporations of dan quarterly hearing cycles for example tax policies that hold equity positions on committee procompetition for purchase as well. Innovation Frontier Companies are making big on the future can only have one company in hightech industry net makes the wrong bet on semiconductors where out of luck if we have multiple companies we have multiple options and thats an advantage we can uniquely have. Finally we should reinvest in americas strength in the immigration system [inaudible] and closing our superpower marathon with china is not as much about what we do at home but will we do broaden this committee will be at the center of those efforts. Thank you very much for your time and consideration. We have some general openended questions but i spent a lot of time in china have working on the relationship from a lot of different perspectives but one core principle that i think we need to focus on again something that is very bipartisan is the issue of reciprocity right now in the u. S. China relationships across so many spheres to relationship is not difficult at the end of the day reciprocity is an issue of fairness. What we enable chinese journalist or businesses or academic institutions to do in america we cant do over this creates a very long list across many spheres of the relationship ended my meetings with the chinese they sometimes even acknowledge this. Remarkably what they do when they say their relationship is nonreciprocal they say well and ive heard this is u. S. Centric and i. Another positions senator is because we are still a developing country. I have heard that a year and a half ago. Its a ridiculous statement but id like the two of you to comment on this issue of the lack of reciprocity and reciprocity as a corporate small that we need in the relationship between the United States and china and secondly if you can talk about an issue that i refer to as promised fatigue. This is the issue of over the last three decades almost every major agreement that the chinese have undertaken with regard to the United States, they dont follow through on. Two examples during the Obama Administration president obama led the effort to have a comprehensive agreement on intellectual property theft and the Bush Administration prior to the Obama Administration did this. They continue at higher levels. In 2015 xi jinping in the rose garden with president obama said we will not the South China Sea. Within weeks they were that promise but if you look at reciprocity promised fatigue its in the opening question. Thank you for that excellent question which really goes to the heart of the relationship at this point and the challenges we face. Let me first go to promised fatigue and then i will address the question of reciprocity. I am a democrat but one of the great statesman Ronald Reagan said trust but verify and i think we have failed to have the kind of provisions in place that would do just that meaning that when the promises made we need to implement automatic provisions to ensure that from us as our capped. Too often we rely on those promises and hope for the best and find out many years later or even quicker sometimes that the promises are broken and then we look at what tools might be available to fix that. We need more automatic trade measures and provisions to put into place. Number two, and i rely on my colleague who is skilled in the chinese language we need to have a better understanding of what china actually says. That means it requires reading core documents. When one looks at the Bilateral Agreement on cyber hacking for example it was the fundamental misunderstanding here because the chinese said that they would not have for economic benefit alone. The fact is they view economics and military security is inextricably intertwined and the result is when they hacked for economic gain to does for military and National Security gain so we were talking, we were using different definitions. Finally kuechly on reciprocity at think reciprocity is an appropriate tool to use in certain sectors potentially not acrosstheboard. We dont want to be like the chinese that we want them to understand that when they take actions that are adverse to our interests they have to expect the same here. I believe reciprocity has a role and that number of sectors. Before i have mr. Doshi answer that on reciprocity i spoke to the chinese when i was in beijing a couple of years ago and i propose the lack of reciprocity in areas like journalism, they have hundreds if not thousands of journalists in our country pretty much free roaming. We dont have that. They have confucius institutes that are universities through when i was in beijing the investors told me you can get on the campus of beijing University Without we should be able to have James Madison institute of freedom and liberty. I just made that term up but the point was there is not a reciprocal relationship. Their answer was confucius institutes only teach culture and language and the James Madison institute of freedom and liberty would teach propaganda. I think thats a fundamental misunderstanding of James Madison but these are examples of the lack of reciprocity. Mr. Doshi would you care to comment on these questions quickly before he turned to some of the other senators who have questions for you . Thank you very much senator predator will simply say reciprocity should be the cornerstone of our relationship. The question is where we want that reciprocity. Ill note after the cold war the u. S. And china had reciprocal relationships when it came to journalists. We had equivalent numbers. We dont have that approach down some could say the benefits in a state have this more access but its unlikely china and would provide reciprocity. The chinese calmness party is so for them or reciprocity becomes a direct challenge to everything that is what they are and it becomes difficult for us. Sorry to interrupt. They looted a bunch of our journalists recently. Its in our interest to say what you get five chinese journalist. A lot of them are mouthpieces for the Chinese Party anyway and some of them arent even journalists but would that make sense if we were to say you get five journalists in america . The case that the five journalists of the have the United States, would not do nearly as much for china as for the United States in beijing. They were able to talk more that was happening on the craft. The perfect reciprocity, now particularly not as effective. There journalists can be particularly effective in beijing for the media coverage. And you raise a very important question freedom not sure i have a perfect answer for it. And do you have a view on the other before we turn it over to senator colby char. Theres so many products that have been been broken across this. And it goes back to trust. Senator colby char. You very much german sullivan and for holding this very important hearing today. I have long been critical of chinas unfair methods of competition. I hit right at home in northern minnesota. I think we know it is not just manufacturing and trade in which we need to be vigilant. China is using both old and new tools including expansion owned businesses. Required disclosures from private companies to business in china and outright theft of intellectual property. And as we have seen during this pandemic our dependence on china has highlighted weaknesses in ensuring access to critical medical supplies. I will start with you mr. Russell. I mentioned the field something. And under the Obama Administration at the very end, you took the segway and actually made a difference in a continued into the advocacy that i have made with the Trump Administration on this issue. Do you agree with the importance of standing up to philly on them unfair trade practices that harm our workers in the illegal fuel coming. I could not agree more. The fact is that when our workers work hard and play by the rules, they deserve to know that those rules will be enforced in the have a fair chance to compete. China has not only stolen but in so many industries, they have across contractiodesign not toe women but to win and dominate. That is a perfect example example where you know, they will have close to a billion metrics tons of capacity, far more than they need and far more than the Global Community needs. That overcapacity is simply skewing Market Forces and undermining the ability of our companies, and our workers to survive. The steel, fiber optics, rubber, and probably 50 17 different sectors. So standing up to their non market activities, is vital for the preservation of our own industry but also for our economics. A good. In your testimony. I dont reports the intellectual property acroscustomer gets up a year. In a cast for most of that loss in china. Do you believe the administration that intellectual theft it is enough to protect our community from harmful influence. I believe they have taken some initial steps that are helpful. But as i pointed out and 70 alice and myself included believe that stage one for phase one of their agreements was insufficient. It does not get too many of the structural issues, subsidies and state owned enterprises. In the basic core structure of chinese nonMarket Forces. It is also somewhat problematic to believe that intellectual property will change as a result of the phase one agreements. We have already seen the indictments that continue to be issued virtually every day. And continued cyber hacking and theft and etc. In the cost of doing business in china is still depended on joint ventures and 70 sectors. Those joint ventures often require u. S. Companies to share their intellectual property. It is cost of doing business and then is unchanged. Exactly so this would mean trade alliances another thing to try to push these issues. China and i think you would agree that continuing beginning of u. S. Alliances and disengagement around the globe as an opportunity to fill the vacuum left by the u. S. Leadership. How should the u. S. Respond to that first by china. To expand its influence with our largest Economic Partners in regions around the globe. Specifically what will strengthening alliances in the u. S. Leadership and myself entered by date lateral, doing active work with the rest of the world are just boulogne with this in china. A. I think we have seen that going alone is not working as well as it should. We are engaging as you have seen recently, Great Britain is turning the corner i believe on the question of what wa huawei. We have to reform organizations like the wto to make sure they work for us. And i think we are past the point where as well as the past that are allies would we bloodied our nose, they realize now increasingly realizing that the china challenge is not disposed to u. S. Interests for their own as well. They need to come to the front, to the forefront and work with us. If they dont, we need to go it alone because we need to protect our industry and our people. And i think the world is waking up. We have to work on reforming those organizations. Doubling down and participating where we could be helpful for what we need to go alone. We have to do it for people. Thank you. Thank you chairman. So both of the panelists. A couple of questions. One is what is china done in their effort to make it difficult for us to have ownership in other things in china the makes it easy for us to leave. And to is how the dramatic graphic changes in china going to impact their ability to continue to compete, to keep wages low, in a country that will dramatically change in terms of what it looks like. How is that going to affect their global position in their continuing economic model. Start with mr. Wessel. Thank you for that question. It really is a key question in terms of how china will approach its own future. As we have seen, they have an aging population. Fewer replacement workers overtime. That will put new stresses and strains on their system. One where we have seen one of the most evident changes is in healthcare where there 1. 4 Million People aging quickly, or aging at a faster pace than at expected. That is why theyre trying to dominate the biotechnology Synthetic Biology and medical supply areas to make their own needs. And also to dominate worldwide. And also of course was enormous stress on the needs for them to promote economic growth. Productivity and efficiency and as a result they are trying to move up the value chain in terms of products that they produced when china entered the wto, the old view was it was about toys and textiles and now its about computing and bio technology, ai and other Critical Industries. So all the demographic changes are helping influence their economic choices. Thank you server that question. I think thats exactly the question that the president is worried about. The general sector in china. First, make it hard for the companys, running in china and that is to their advantage. So there hoping to get a smart manufacturing. Hoping to make sure that they use and prevent companies from leaving. The person theyre trying to do is to make sure that they have dominance in the supply chain. The second area, the demographic challenges are enormous. The least favorable demographics of any great power in the world today. The worried about it. They are worried the good old before the get rich and is exactly why theyre stepping up to a distro policy and produce to target our Hightech Industries because they are hoping they can graphs that bind before they let go of the last one which is lower wage manufacturing. So they have enormous challenges. And this moment of transition. In many ways why we are taking so much money spent on Chinese Industrial policy. What about the impact of what we have been doing so far. I heard the comment that we need to have more help coming. Certainly australia, and some of our friends have stepped up to resist the chinese inability to be willing to work with others. What about moving forward and where are the likely friends to end this economic bite that we should be making come next. Are they the transpacific countries are coming what you think happens. And again, both of you. Will senator, that is a great question. And again his i had sent him i think countries by now beginning to appreciate better than china challenge, for a long time. They look to the u. S. To lead. Whether it was a wto or elsewhere. And they would not always follow and so on. In overcapacity where there were multi level talks. We got little to no help from our allies. I think the last two or three years, and certainly what is happened with the pandemic has woken or awoken our trade partners in many of our allies to the dangerous vulnerabilities. Lack of resiliency. Unacceptable like dependence on chinese supply chains. I think we are entering an era where there is opportunity to have greater la support. But we need to chart a course that they see themselves winning in as well. When you have institutions which are able to enforce those measures. Those enforcement measures and institutions, are limited. Thank you senator. China believes there allies are the single biggest advantage. They think the Alliance Structure is most important thing that we have. But were actually going to work with them critically in the economic space. And as he just mentioned, post covid19, the ratings for china were plummeting around the world. Including countries that we have very close ties with, european, india, pacific. To work with those countries to create a coalition. In the technology, people talked about the coalition of democracies to Work Together on five g. But theres no reason we cannot expand that and work with other countries. On a variety of issues. Biotechnology to medical supply chains to Artificial Intelligence. So is there any way of the future of the technology is going to be coalitional. I think that is gradually began moving. Largely accelerated by chinas own policies of covid19. Thank you mr. Chairman. Thank you. Senator rosen. Good morning mr. Chairman. Thank you for holding this important hearing today. Thank you for the witnesses, not just for the here but your thoughtful testimony. And what we need to learn from it and the lessons we take away from it. And i want to talk about the shortfalls. Technology is increasingly at the center of u. S. China competitions. But i think we can all agree that our competitiveness with china, we must invest in the capable workforce. It continued to be the most innovative country in the world. We need to maintain a workforce which we can innovate. In the United States, excuse me. Is expected to get shortfall. Nearly 3. 4 million skilled technical workers in just a few workers, by 2022. A recent study found that less than half, there getting any cyber related education. So to promote this, i have introduced multiple bipartisan bill. Was a prepare the students for careers in Stem Education. Excuse me. I apologize i have something stuck in my throat. Mr. You point out that the trade deficit with china is eliminated million americans jobs. In the manufacturing and agricultural sectors. These jobs have not migrated to other industries. What kind of programs you think we should be investing in. And better prepare our students to enter the workforce. Thank you for the excellent question. And you are spot on in terms of the question of the need to invest in our children are young adults and are workers. And not just them but of course lifelong learning. We need to make sure that her workers have the skills to compete in the world economy. It also requires though that we fight more som for some of those hightech jobs the new jobs of the future whether they are in biotechnology or quantum computing or anything else. So the investments that workers make in their own success, the families have with their students. So that they can achieve a good return they know that they have. They know they have a Bright Future ahead of them. But without the skills, we dont have the critical input we need to succeed. In every industry now. It is an advanced industry whether a nest agriculture which as you know, the farms in iowa, for portions of the summer. Every tractor is hightech. And when you look at any factory, theres computerassisted support. It is very different from the factories 100 years ago. We need to constantly upgrade our skills in Stem Education. That is one of the ingredients. I will ask both of you. China prioritizes stem at the National Security issue. The mandate at the primary schools. They have an action plan. In the United States in contrast, doesnt mean we include stem. It doesnt include are nonprofits or are industry partnerships. So for both of you, how can we best help our states, our School Districts and schools. What can we get an invest in the private partnership, government. With legislation, grants and health. Looking we do to create an action plan of our own. And really support our schools. Thats where the learning is what happened. I think that is exactly the right question. Your diagnosis of china. That is exactly right. My belief is that a research and Development Spending has historically supported stem research. An education. In fact that her universities come from our federal grantmaking institution when it comes to science and technologies to support graduate students and we can support the more effectively if we have more funds. Many of us know, our spending is. 6 percent of gdp at the federal level. That is far lower than at any point during the cold war. Its also interesting to be lower than what we spent. On scientific knowledge he sectors. Were actually below now. Theres a lot we can do there. Ev even if the simple money money. If we can raise i. They would make it possible to better educate our population. They are complementary in my view. I believe my time is expired i would like to think of this as an investment. That has a calculated return. And we can project the economic return by investing in stem early in all levels. Universities, and if we dont do it, we will be left behind. Thank you chairman. And Ranking Member. As we know this is a very complicated meeting. [inaudible]. Can you hear me okay. I have little feedback. Okay were good. It is complicated. Chinese officials, phase one trade agreements. As you know, there remain ongoing. Sources have been brought to my attention subsidized, still company was recently acquired by chinese steel manufacturer. They have still production. Continues to acquire and make direct investments into European Countries such as the one that i mentioned in the uk. As a commission conducted a research and in fact that china direct investment in the uk would have on our own domestic fuel industry. Thank you for that question. Know the commission has not yet addressed that. Let me just point out quickly. I also am least after the labor advisory committee. Which advises the department of labor. Another issue has come up. The the question of whether a chinese stateowned entity which is acquired as you point out, the largest Steel Company in Great Britain. They will be dealt with in the u. S. , the uk agreement. In our trade policies need to deal with not only what is happening in our own brackets, but has been ground zero for much of this but also what is happening with our partners like potentially u. S. Uk agreement. So let me just ask you in terms of the say take ourselves out of uk for negotiating other trade agreements say with any another countries. Are we digging down to the active ownership issues. Although i dont think their passive ownership. Yes that something of concern whether or not, the net the primary owner. Louise this is a funneling material through other countries. How do you address that issue. I think it is a fundamental problem. And you are right. It is a problem this going to be increasing the importance. So thank you for raising it. How China Investment the globe, with a do to support those entities. So the uk or india. They can be providing either zero or no cost financing. They be providing inputs like green pipe which goes only minor transformation in that country. And then comes here dramatically higher prices our own firms. That has to be dealt with in these trade agreements. We cannot allow non market activities that china seems to export and create a platform and another company. Our country, be used as a platform to undermine our interests. It. I have great concerns about that but a lot of different levels. Im going to go to a different product. Applicable to west virginia, hard word lumber. They have been very hardhit by the chinese tariffs. In response to Section Three oh one investigations. When the phase one negotiations positive news on both of those. Theyre still not living up to their purchase agreements. To think that is tied to this overall economy or is this something that is consistent across all product lines and what could the hardwood and those to expect in the future whether they will live up to the purchasing agreement. Senator, thank you for the question. I have to say i have to do a bit more research on this particular product. Another is where i have looked for example, soy. We saw that china was actually buying soy rather from brazil rather than from the u. S. Each product is different. But again as i said earlier, as the chairman raise in terms of a promise, we need to make sure that the promises made to the industries and workers in your state are kept. If not, there is a swift response. I think that is absolutely critical. And i think that is something that will impact all of the product all across the state. Unless things that i would mention prayed and is something that we see popping up. Recently our state, to individuals who were tied to china, were prosecuted for income tax, fallout and other things. But they were heavily connected to chinese universities and to china in general. I think that is cascading across the country as you look at what is happening in our universities and colleges. This is part of what you look at. Or i might out of a real house here. [laughter]. We do look at that. On both a classified and unclassified reporting scenario every year. Clearly, the fbi and other Law Enforcement as well as Intelligent Services have been diving much deeper over the last two or three years. Into the activities of individuals. We have seen the various universities. As you point out, researches, etc. We need to have a much clearer understanding of what is going on. In my testimony, talk about re engaging between the fbi had our universities systems. So they have a better understanding of what normally the rules are but was a look out for. And we need to have a much more coherent strategy. Some of that has been done but much more remains to be done. It. A very supportive of that in the realization that a lot of these things have been invented. Theyre not just for a couple of years but maybe even as many as decades. So thank you very much for your service. I thank you mr. Chairman. Thank you. Denman, i will continue on with a few more senators who will be attending this questioning of this first panel. But in the meantime, the may ask followup questions. From missouri. Interesting discussion. Of course there are challenges. But any relationship that will be sustainable. This regards the economic relationships between the United States and china. We talked about the Trump Administrations phase one approach with regard to trade. And that was something that i was quite involved in trying to ensure the president , the u. S. Trade rep. The entire team was focused on many different sectors of this economy including our history sector. Them something that i was very focused on. The superpower of seafood as i like to call it. Over 60 percent of all seafood harvested in the United States comes from alaska waters. And we export a lot. So you may have seen when the president announced phase one. He did talk about the aspects of that agreement. That includes chinas commitment to dramatically increase its purchases of american seafood. Dramatically increases that. However, i worry then that we might be in another promise fatigue moment with regards to phase one. Neither of you talk about how we press really many ways, reevaluating the relationship but still look at opportunities for market workers american fishermen, farmers, to take advantage and benefit from the market. It is a balance. Isnt that correct. I will open that up to both of you. Thank you for the question. Seafood. Im talking beyond seafood. Just talk about the market. I understand. Legacy seafood has been underappreciated and does deserve particular attention has chinese incomes have risen. The desire or the demand for sources of protein rises with income. So there are new markets for u. S. Seafood. Youre aware of not only of all of the products, lobster and many others. China has a critical problem. In his fisheries areas. Primarily around the seafood safety. Because of their factory farming techniques. As youre well aware, many of their shipments of seafood to the u. S. Have been denied entry because of concerns about the safety and healthiness of their products. But china needs to understand that if it doesnt opens market to our products. It will have an increasingly difficult time selling here to the u. S. And we need to work with our allies as well to make sure they understand from your initial question that were Market Access has to be the approach that is taken with china when they have selflimited access. We need to take a responsible approach. Thank you. Given opportunity or of you on that in the many challenges. Thank you senator for that question. I agree very much with the commissioner. There are a lot of opportunities particular in economies with china. They have the dependence on the United States. In partial dependence. If you look at this Food Security in china, its a major concern for the leadership and would like to be able to make sure the more secure in every aspect. And of agriculture. So you see them, read and put that and have stability. Its very long way of saying that there are places where there are opportunities for x to export to them. And i think will be able to make progress on those if are able to speak a more clear way for the trade disagreements. And in addition to export commodities those also the question of High Technology exports. And industrial goods etc. In this piece as we much more direct competition with china. In working out specific areas of agreement. Some american titanic technology. We rightfully are able to provide. So there are areas that we can make progress with. We have be very careful about managing the risks and the rewards pretty. Thank you mr. Chairman and i am so happy we are doing this hearing today. And i know that it is difficult many times for you all to join us virtually. But we do appreciate that youre doing that. I want to ask you all and this is a question for the panel. Some of it appreciate a response from each one. Looking at the budgets for r d. As we talk about china, constitution. This ability china in effect you never know where the commercial conflicts. And where they begin and end. China has traditionally brought about new products in the country. No by innovations. Thats from them, but when they do is to reverse engineer and a steel information and looking at what they have spent on the r d. They were not spending much on r d at all since 2000. They have gone through some explosive throws with her r d budget. In 2017, i was looking at what the commitments was from the u. S. Party for r d. And it was 549 billion. And in china, they spent or hundred and 96 billion. On r d. So each of you can you comment on the potential consequences that this will help if we look at the next century. As we look at great power competition. And we talk about their digital silk road initiative. And also as we talk about what huawei, that is worthy of our time to discuss. Lets look at those r d numbers. And then i would like to hear from yall. I would like to hear your take on the consequences of the expenditures. Thank you. This is such an important question and is one i think about that as well. We have r d, we have the federal component in the business component. We have this together, u. S. And china are actually according to some estimates even there, the china even though has a smaller economy, is concerning. Well be such a redundant upon it. They support Research Also supports Stem Education. In a wide variety of science. Our federal component has been followed in the gdp for a long time. Right now its lowest level in six years. Worse china, things that u. S. Had an r d system and the cold war, a good one. And in many ways a safe we should do a little bit more with the United States as. And United States stops doing what he does offering a very concerned about this. And relatively small amount of money or even an increase would make a monumental difference. Just add onto that. If you would address, where are they primarily focusing their r d. Or do you know. Is it intel communications. Incident super communing. Artificial intelligence. What is getting their attention. Thank you senator. Theres been a lot of capacity about where these funds go. We have some big numbers. As the documents suggest those numbers cannot give the answers the documents indicate. That a lot of that investment or other r d spending is going to the technologies of the so called, Artificial Intelligence, is probably the top of the list. Manufacturing manufacturing very high up there. Tele communications is high. Telecom five g all across china. In many extraordinary advanced soccer entrance sectors. Many of them are identified in chinas in 2025 plan which targets transpacific sectors for r d settings for state support. I can give you more specific answer after the hearing. We would appreciate thats pretty clear very concerned about the national labs. And the focus that is there with our national labs. In tennessee, we have the worlds fastest computer. We are looking at those applications to hypersonic summit 21st century warfare. Artificial intelligence, autonomous vehicles. So Additional Information would be appreciated. Senator blumenthal. Thank you mr. Chairman. And thanks to both of the witnesses who are here today. This morning, we are sending a letter to the department of justice requesting a National Security investigation into zone and tiktok. As tens of millions of americans turned to both zoom and tiktok. A few of them know they are vulnerable to surveillance, data harvesting and censorship. By the Chinese Government. There are now a number of reports that zoom and tiktok engaged in censorship on behalf of the Chinese Government. Those reports are reliable and truly alarming. In early june, several chinese prodemocracy activists including, basin United States were suspended by zoom following a demand by the Chinese Communist party. For the crimes. Holding a peaceful commemoration. There were demonstrations on zoom. In their calling in on other members of congress that repeatedly sought answers from both companies about who had access to the personal data of the american users. And how the content moderation are made. And tiktok and so have utterly failed to answer even the most basic questions about their business operations. Zoom has still failed to answer information to the Chinese Government. About people who attended that meeting. And that failure among others supports the request that we have made for investigations by the department of justice. So my questions to both of you is, do you prove me about zoom and tiktok entering and collecting information, disclosing information to the Chinese Government based on request from that government are, alarming and need investigations. Thank you red and thank you for your leadership along with senator holly and us. And others. This is a critical issue. We seen it not only with these two platforms but others. Putting the very lives of citizens at risk. As well as our own economic intelligence and security interests. So what you are doing is critical. For me, i quite rightly dont trust the answers of those companies because chinese basic law requires the National Security law, requires that any chinese firm hanover when requested, the information that the government requests. We have seen over many years, criticisms of the security and confidence we can have it chinese based platforms of equipment. Huawei, tiktok and others as you know. In time after time we have seen from Law Enforcement and the Intelligence Community but also the private sector continuing cyber intrusions. And the lack of security. The espionage. A shipment of data through multiple acts of u. S. Citizens that for those of uncommon many others. The very lives. Thank you. Thank you senator for your leadership on this party dont just want to add the Chinese Communist party has a discourse on the social media platforms and instruments like them and argues clearly that according to control his platforms, if it doesnt, it simply will be an information content provider. You need to actually control it in order to shape it. It simply information that might be stolen but also the possibility of interference should tiktok become more centralized. And come to be more popular social media. Think about three comments. I think there is really strong bipartisan agreements that the United States needs to protect our privacy, and our liberties from this kind of invasive and potentially illegal action. Demand for investment is currently considering new conditions. And how it operates tiktok. But so far, this government has failed to act to protect americans. In this way believe that investigation by the department of justice and actions is necessary. Im so glad that you are supporting it. And how we can have actions by this committee as well. Thank you pre work on these important issues. I agree with you the vast majority of this is bipartisan. I think we should keep it this way. And this is important to the future of our own nation. And have it turn into a partisan issue. Someone asked the witnesses as we get ready for our second annual. I was asked speech at the heritage foundation. Last september. And entitled the speech, winning the new cold war with china and how the United States should respond. I emphasized five areas of response that i thought they would gain bipartisan support but we talked about a number today. I would like each one of the witnesses to comment on these and what you see is an important element of the strategy. And im sure we are missing things. Over those be that i would also submit the speech for the record without objection braided to focus, in my remarks . Demanding reciprocity. Weve already talked about this next one. Reinvigorating american competitiveness. To outcompete china. Rebuilding our military strength and capability. We have not talked about that. Deepening and expanding our Global Network of alliances. We have talked about that. And importantly, i think it was a critical element of winning the cold war. Employing our Democratic Values as a comparative advantage in countering chinas global authoritarian influence. I think also the authoritarians, at the end of the day i think they fear their own people and look at what is going on in hong kong. And i think this is an enormous advantage that we have. It certainly benefited us during the long twilight struggles of the cold war. With the soviet union, who also feared their own people. Would you gentlemen care to comment on any of those. These key aspects of the strategy and what we think or what you think we are missing. Thank you. For your questions and leadership in looking at this across the various platforms sectors. And of policy that are critical. I think you and all of the major areas and appreciate that. And theyll need to be dealt with at the same time with an understanding of what a clear comprehensive and consistent policy is. The fact is that weve failed on the last point to identify consistency to the chinese at times. And also our people. So they know what her plans are. What are red lines are, and what our objectives are. So in each of the areas you identify, we need to be clear. We need to have more comprehensive identified plans of what the limits are. Without plans are. It has been noted from your colleagues, everything from Stem Education to dealing with the surveillance platforms etc. Braided so the china understands what we view as acceptable and unacceptable behavior. Again, these a fairly automatic response when those lines are crossed. Thank you. You have any views on that. Thank you senator. I do have yes. I think you for your leadership. Our murray speech. I think its externally comprehensive not only a very small point which is simply this will be a longterm proposition. It will continue for many years to come as you mentioned afraid and wanted to ask a rather indicate is important and will be public support for this as well. In this debate consistent approach and the Trump Administration and that will often i think the houses of congress. And has in spite of the large partisan cooperation. We snacks on hong kong. In all that to me indicates there is a greater consensus which is going to be the bedrock for sustainable grand strategy going forward. I will simply leave it there. But i think the important thing will be having consistency. And make sure that we continue to make progress in each of those five areas of the systematic ways. Currently strategy containment which defined our relationship with the soviet union. That was very bipartisan. And it was consistent over decades and ended up successfully winning the cold war. Correct. Yes absolutely. Thats exactly when thinking about the kind of consistency that we sometimes more so the past and it will take multiple parts of society. And consistent bipartisan leadership which in many ways we already have. Thank you predict. Let me ask one final question before we turn your next panel. Both of you have testified of the importance of securing our supply chains. In the National Defense authorization act, i was proud to have a provision included. It is very strong bipartisan vote. Just last week on the bill that passed the senate. Critical minerals. Which we rely on. We rely on it too much with china and yet we have in our own nations, certainly have my own great state of alaska where we mine and process and produce in a much more environmentally responsible way than the chinese deal. And yet, we continue to rely on ties elements and other things. Of course the supply chain, theres been a big focus with regard to medicines and with ppe in the pandemic and the republican heels act that we are debating now and hopefully have compromises with her democratic colleagues to get through some additional relief for the people wearing this pandemic. And again broad bipartisan support i believe in some of the issues that were discussed today but on making sure that we are not relying on china for medicines, for ppe eat. For Semi Conductors, for Critical Minerals. Theres a lot of legislation like i said. In my, a bill that we cosponsored is in the current version of a bill that we are debating and trying to move forward on in the senate now. Im Critical Minerals pretty can youtube talk briefly about the importance of the longterm importance and benefits to america of securing our supply chains and ways were not so vulnerable china. And we can enhance manufacturing help our brothers pretty to me it is the silverlining of this pandemic they were already starting to see Bipartisan Legislation on. I think we need to continue it. Thank you senator for your leadership but the mba they and with other actions that you and the community has taken as well. I think the American Public has woken up because of the pandemic is too hard dangerous dependence in reliance on china. China is you will know, your state and several others has shown his willingness to weapon eyes supply chains to achieve its goals. It did that with an otherwise as we also saw with this pandemic. He used ppe as a diplomatic tool to try and gain access and concessions from many of our allies. In fact is we do have the ability to reclaim some of the supply chains. If we have a concerted plan. And we have the ability to have a fully magnet strategy. We used to produce here not only at a facility in california but we also had indiana, they did the shuffling and the production of maintenance. In 1996, as you know, we sold that facility to the chinese. I believe that was shortsighted. In the chinese predatory practices put california going into bankruptcy. Lift make clear what a long term needs are. What are key to our economic success and our technological military competitiveness. And we need to invest in short that we have the ability to meet our needs. With allies at times but clearly meet her needs were the interest of the American Public park. Thank you very much. That was an excellent answer and under your service on these issues. In this very commendable. Thank you. Wanted to add to to his excellent point. A few thoughts predict china recognizes it has a position in our supply chains. They want to keep that position. So we will have to work with them. It will be a long term competition sort of thing. The slight change. There are indications of the Chinese Media has suggested that we face repercussions from some of the political stances when it comes to ppes rated in the official and unofficial levels. So many different approach what concerns me the most would be that were not always sure exactly where we are vulnerable to beijing. So we need more entities that can effectively audit. In the same way with that we stress and the Financial Institution and build those interconnections. I think if we have that, will be in a better condition to compete but also a little bit more effectively but how the Global Economy will center on china and were taiwan has been very inspiring. [inaudible]. With over 30 billion. And we can learn lessons from their approaches. Thank you for that very detailed and wise cancer. On the think of witnesses again. I think this is exactly what we need. Not only in the senate but with regard to as you mentioned the American Public. There is growing bipartisan support. You sought in the strong participation of numerous senators on both sides of the aisle. In this first panel. And expertise. And i want to both of the witnesses who showed very strong expertise. And insight on what i believe is when be an issue that is really of the forefront of american domestic and foreign policy. Fifty 100 years. We need to wake up to it. We have. We need to address attend executed in a bipartisan way. And i think we are. Thats an important beginning. But again, to our first panel of witnesses, thank you again. Im sure this would be additional questions for the record. And you are now excused. We are going to turn the second part of our hearing today. Im very pleased actually happen the hearing room, two Senior Administration officials who can talk more specifically with regard to the policies that the Trump Administration is not only formulating but beginning to implement. And that is mr. Keith who is the undersecretary of state. For economic growth, energy and the environment and is been given a very Important Role in the executive branch on the development and implementation of americas u. S. China strate strategy. Particularly as it relates to the economic and geostrategic realm. And the assistant secretary for Industry Analysis from the u. S. Department of commerce. And she is also an expert in this area. So i want to welcome them. Mom to walk them physically here. About the committee and the secretary, you will have a fiveminute Opening Statement. In your longer written statement will be submitted to the record if you so desire. Mr. Secretary welcome. Thank you. You need to turn your micron. Thank you. I appreciate the opportunity to discuss the china challenge. Because his the epicenter. The Economic Security threat. Last week and landmarks and what secretary pompeo said. Today we are seeing where and why are mass and watch the pandemic body count rise. Reading headlines every day. Same staggering statistics of chinese trade abuses. Watching the Chinese Military go stronger. On the backs of stolen americans innovation spread of experience Economic Warfare firsthand. I grew up in smalltown ohio where my father ran a machine shop. I saw china wills of mass production getting my fathers shop. When im to be a Vice President of General Motors rendered when you build a plant in china can be good access to the market. You dont just have them the blueprints. You give them and you train their labor force. I spend the rest of my career in Silicon Valley where i had my intellectual property ripped off and i saw firsthand, china strategy of seducing with money while reinforcing with intimidation and retaliation. Every big company, now the largest 7 trillion of commerce conducted over the network last year. I remember the late 90s, we welcome chinese visitors to our airports. Only to have them steal one of our concepts. Couple years ago, i spent two weeks in china explain what that might be working opportunity spread been going there since 1981. But this time it was different. I met with members who spoke so passionately about global domination. I saw how cleverly the d position the United States spread then i got an in depth look at their technology. That is when it hits me. As soon as i get back, i went to washington. And i spoke to anyone who would listen. And asked, do you understand the country with the best technology. Usually when. And thats what i was asked to serve. And that is why am here today because of china challenge. My first week on the job, secretary pompeo, the global strategic plan, and chinese aggression. Strategy we have developed as three pillars. The first is the turbocharged economic evidence by driving productivity and prioritizing emerging technology. Securing these will require the u. S. And partners to demand reciprocity, transparency and enforcement of loss. We must also understand they have used our assets against us including our openness and our values. We must view every chinese action with skepticism. As secretary pompeo recently said, this trust and verify. The next part of the plan turns the table on ccp by reclaiming our core freedoms as our strength. We will answer secretary pompeos call to build up a new alliance of democracy to oppose china. We would envision this to be comprised of likeminded countries, companies, and Civil Society that operate under a trust principles for all areas of economic collaboration and those trust principles are American Values. Things like integrity, accountability, transparency, reciprocity, expect respect for rule of law, respect for property respect for sovereignty of nations, respect for the planet, respect for human rights. When i talk to my counterparts in other countries about this concept, their reaction is, its about time. We have been waiting for an alternative as one of the Southeast Asian nation said to chinas one belt one way toll road to beijing for the new alliance of democracy represents a unified and equitable clean alternative. Speaking of twain. Let me update you on the Clean Campaign which is unlocking the global movement. Secretary pompeo also said last week we urge countries to be clean country said the citizens, private information does not and in the hands of the chinese commonest party start with the 5g Clean Network. For years they strongarmed nations to purchase 5g infrastructure while way is the backbone of ccb surveillance state and extends the oneway china firewall where data comes in and doesnt go out the truth does not come in. There leading by example to Clean Path Initiative entering or exiting the diplomatic in transit across trusted equipment paid were making a difference and join the 5g clean path and turning the path against them and clean vendors as result those are evaporative reseller earlier this month but the uk and last week with france. There are now about 35g Clean Companies in many of the Largest Companies have become clean. Also recently the top three in singapore in the top three in canada. So the Free Campaign is been so successful that we are preparing to expand it beyond just Clean Networks and clean systems for including clean apps, clean store, clean cloud , clean cable and clean currency. Its also important clean supply chains of clean labor. Recently state department joined other agencies to issue a Business Advisory regarding supply chain exposure to those enforced labor labor and other human rights abuses. As i said in a followup letter to all u. S. Ceos, and their boards said your institutions have a moral responsibility perhaps a fiduciary responsibility to establish clean Governance Principles and divest from companies that contribute to human rights abuses. They should at a minimum disclose the Chinese Companies they invest in. Soon, president trumps working group will make recommendations to the present on the transparency of chinese Public Companies to enhance Investor Protection and ensure American Exchange remains the Gold Standard for the world. So senators come in conclusion, tackling the many passages of the chinese child required all three branches of the government. Secretary pompeo said a new alliance of democracies, americas moment is now. And choose a path, a clean path to the future for the sake of our children and grandchildren. Thank you very much, and i look forward to your questions. Submit thank you mr. Secretary. Thank you chairman, Ranking Member and members of the subcommittee good morning and thank you for the opportunity to testify. We are at a historic crossroads in the u. S. china relationships. In the steps we take now will chart the course of u. S. Economic and technological leadership for decades to come. In 2017, the u. S. Began, for the first time to confront head on the challenges posed by china predatory practices those practices have been ignored for decades and as a result the United States lost capabilities in sector after sector in manufacturing and technology there are so critical to this nation security. In order to understand the prc predatory Economic Strategy it is important to understand the specific tactics or tools that it deploys. And indeed chinas most effective tools by design are those that are governed by week or nonexistent International Rules and discipline. Case in point. The prc takes advantage of the absence of International Rules over state owned enterprises to funnel massive amounts of resources to x ot with the intent of Downing Strategic sectors worldwide. The government also distorts prices and costs throughout its economy to sort of land, property, wages, Raw Material Prices in order to export undervalued goods and services worldwide. The goal is to underpriced competitors to force them out of the market. The goal is to hollow out our industry. That is the prc government takes advantage of the rules governing global overcapacity to flood World Markets with good at home prices. This has been a strategy in steel, aluminum, chemicals and optimum fiber cables of 5g. I fear Critical Industries xmi conductors in many parts of the china 2025 plan will be target next. The prc has further exploited opportunities abroad to monopolize your teaching assets. For example the prc increasing control of the raw material necessary for hightech products by purchasing mines abroad. Cobalt, graphic, lithium, nickel and platinum to name a few. The impacted countries are denied with the allies. And because the Critical Materials are finite assets or cannot be replaced, chinas able to exert influence over the rest of the world by withholding access to them. Next to be known the prc regularly supports and directs step since appropriation of u. S. Intellectual property paris this is well understood. But what is left to discusses this even when chinese firms are perceived to collaborate in Technological Development takes for example the announcement is planning to build in the uk optical Fiber Research facility its only one sided. Companies will benefit from collaboration with International Scientists abroad and then repatriate the technology to china to generate overcapacity to eliminate competition and obtain monopoly in sectors like 5g were optical cables provide the infrastructure the National Security implications are obvious. Chinas engagement and International Standards as a way to influence Global Technology market is also of great concern. Finally, its worth emphasizing that because china is a sovereign state, foreign laws can never be sufficient to fully address its conduct. It is not an actor that is shown a great interest in adhering to International Laws at all. Course the pass policies, to build a seemingly sufficient supply chain with the low cost producers straight on this intellectual property and change for shortterm profit. As a result we willingly transferred debt with their Manufacturing Capabilities and jobs to a non market economy or market principles and transparency do not exist. By doing this, we created a Global Economy or distorted prices and nonmarket conditions are allowed to proliferate rather than marketbased. By understanding whats left with the erosion of the supply chain it stands to reason that comprehensive strategy must remedy those causes. At the outset, the United States must systematically identify all items that are critical to our National Security to assess importance for this administration on behalf of the white house had begun to do this. We need to continue to do this on a permanent basis. A second essential component is incentivizing inward investments in domestic rad and Manufacturing Capabilities. Begun doing this in tax cuts to boost innovation growth and lets do more. Third, u. S. Government authority. This is critical to providing capital to new American Investments and to generate immediate demand for those new production operations for this will compel companies to take a leap of faith and reinvest in the United States. And it is of course that u. S. Invented assessments to grow we must have a strategy to fight back against editorial import competition lowcost imports it mean to undercut u. S. Growth for these foreign elements essential. It will need a whole of government approach but i can tell you as a trade lawyer and economist they will be effective in rebuilding supply chains that are robust and are resilient i like to conclude by emphasizing the Global Economy of the 20th century was developed by the United States. And although china is aggressively seeking to shape the economic global order of the 21st century it is not too late to ask. Our supply chain vulnerabilities are to great to wait another security crisis that may expose this country to even more peril. Thank you. Thank you secretary and mr. Secretary think i want to begin with you on a really i think critical question here. And that is this issue of alliances. Some of my colleagues have been critical of the Trump Administrations approach i believe that certainly in our Previous Panel mentioned something that i believe we are an ally at nation. Chinas and ally poor nation. Maybe koreas early true ally in a strategy of deepening and expanding our alliances is one i think its very important. I actually think this administration has been working hard on that in areas such as vietnam, india. But your statement about a new coalition the Previous Panel actually talks about the idea of a democracy coalition. Can you talk about that in more detail . And what you and sec. Pompeii were starting to do in that regard . And the success you are starting to see . And how we come in the senate, think their strong bipartisan support to help you with this. How we can support that. I just want many anecdotes of course we see a number of World Leaders and senior officials from all over the world come to the senate. A number of them have been saying it has to be the United States. The lead on this coalition against china paris what it to happen. But if we step out, we, smaller country, we feel that we will get really creamed by the chinese. If the United States leads, we will support that under u. S. Leadership. So can you give us a little more detail what you talked about in your opening testimony which i think is very promising. We will have support in the senate. So you are absolutely right. The biggest elephant in the room is chinas retaliation. It terrifies countries and terrifies companies. This is the whole reason for an alliance of democracies. Which would also include the private sector. Because there is strength in power. In unity and solidarity. And if you look at chinas tactics they are bullies. You believe the panelists that testified before china recognizes that this is our ultimate strength right now . Are longterm, deep Global Network of alliances that we have and they pretty much dont have it all . By the way if you look at what our strategies are comprised of. Its taking our comparative advantages and amplifying those and create a compound advantages. And the big one is our likeminded partners and our friends. Until its time to turn the table on them. When used that against actually china. Because they have been using it against us. I think the biggest dealt in terms of opportunity strategy is, and i said this when i got confirmed, is further strengthening our relationships in france. Leveraging the innovation and resources of the private sector and amplifying the high of American Values to combine that all into one is huge and bullies back down when they are confronted weve all experienced that at some point. And they really backed down if you have your friends by your side. Thats why for example when they said were going to reconsider that decision that was a few months ago you can see immediately the retaliation by the ccp, beijing threatened them back in the chinese uk ambassador threatened to take away their 100 billiondollar Infrastructure Investment in the uk. Secretary pompeo stood right up and said look, we stand with our allies. We stand with the uk against this. We will stand up for anybody whatever we need to do. And that is the most powerful concepts. Because what china has done, they have fragmented. They go after the week gazelle of the herd. So we are starting to see success in that realm in terms of Building Coalition in democracies and other. What we see in this coalition is a network of trusted partners the fastest way to build the network so heres some things that go on. Is it Blue Dot Network for infrastructure highquality, private, private sector led infrastructure around the world. Particularly in developing nations. Another one is the 5g delete initiative. That works as well for there is another when in Rare Minerals that we announce, secretary pompeo sent last year. Nine initial nations covered all about. We envisioned Energy Security network as well. And also a healthcare and prosperity network. And really, if you think of it the pandemic really kick that into big gear. Look at the Different Networks its all areas of collaboration. It is investment, its commerce its energy into digital its Infrastructure Research those things were taking advantage of that momentum. And its going to be based on those trusted principles and as they said they are trying to take over to take over International Standards. The way to counter that is or have an overriding set of press principles at all of these standards have to comply with Given National intelligent request for Chinese Company or citizen to turn over any proprietary technology, intellectual upon request or suffer the consequences, need not apply. Well just talk about networks that will have strong support here with bipartisan support here your focus on Critical Minerals thats important to my state of alaska but important to America Center to young. Grateful for the Incredible Service you are doing. We know that a new power competition is unfolding before the eyes of the world. Americas predominant challenge or china is an unscrupulous authoritarian regime that is not share our values. In fact their values inverse of our own. To meet these challenges we have to once again show america has the resiliency and dynamism that has shown over the past century. We can harness our economy. We can renew the american project itself if we make the right moves during this moment in history. The endless frontier act is a peace of legislation i coauthored with senator schume schumer. And we believe it will provide the rocket fuel for americas innovators and entrepreneurs moving forward. In this bill we propose bolstering leadership and tech innovation, boldly increasing premarket investment in emerging tech. We propose providing 100 billion of strategic investment Tech Research and to deliver 10 billion to establish regional tech hubs around various areas of the country where there is existing pockets of expertise, particular sectors and technologies that will lead to the launching of innovative companies, reviving American Manufacturing in the creation of new jobs across the country. And in coming years that will strengthen american power. It will increase our prosperity, and it will carry on americas never ending quest to continuously improve the world through innovation. Weve done this before. See the 20th century. Undersecretary crop do you believe the United States should ramp up investment in largescale domestic innovation efforts to ensure American Leadership in tiki technology. Absolutely and that by the way went to thank you, senator young, as well as senator schumer for the endless affront tiers act. Because that will tremendously move the needle in these ten critical National Security sectors. And, will be a great catalyst. We are kicking off that sputnik in moment that i talk about. And one thing ive learned out in Silicon Valley is that america innovation, entrepreneurs are the best in the world. But you also have to give them time and time equals money. Unser talking about 100 billion is huge. As we discussed before we believe we could get some serious matching the private sector. We believe if we choose we can get it from our allies too. Whats explore that a little further. How could we utilize our relationships. Arguably our greatest geopolitical resources as a country which those alliances that we have developed. How can we leverage those relationships with close partners and allies to speed up development and broaden the base it innovation . An example, and i think chairman sullivan alluded to a similar concept. We called it the td10. Techno ten. Ten of our ten closest technological allies. Really with two main objectives. One is to protect strategic assets for these allies paid but the other would be from an offense of position in terms of joint collaboration, joint research, all of that as well as collaboration in terms of export controls and investment screening. There is no doubt about it, but in the china competition the battlefield is high tech. Their soft underbelly as they need our currency. And to be able to put this amount of funds and to get coupled with the private sector is going to dramatically move the needle. Says he think about competition with china, what i hear you saying is we need we shouldnt only play defense , not only apply tariffs although tariffs have a role. Not only encourage her partners and allies to courseware the technologies there is a fear of a backdoor, not only ensure our partners and allies are aware of the implications of foreign aid but also invest in ourselves, outgrow, outcompete out innovate the chinese which is argued by the most important thing we did to take down the soviet union. By the way that is by far the most important thing. If its one thing ive learned about economic in Silicon Valley with the best defense is the best offense. This puts us on the offense and get this out of a reactionary posture. This is the commonness parties biggest fear that we really turn up the heat on developing these new technologies. And put a serious amount of money behind it. So let me change my line of inquiry momentarily. You have been very thoughtful as we have met privately on this matter before. Do you envision, mr. Undersecretary, future were countries around the world have to choose between either the United States or china . Can we avoid this, some call it decoupling, this economic decoupling between china and the United States. You know, we envision for example the alliance of democracies is we are not asking them to choose between the United States and china. Youre giving them an opportunity to participate. We probably had 85 meetings with my foreign counterparts, i would say how is your relationship going with china . Whats it like . And they will go whatever their big trading partner. Then they will lean in, the look both ways. But we dont trust them. And you know, if you look at those values that we talk about. Those American Values and principles they form the basis of trust. And you do business with people you trust. So think about it. If you think about, i refer to arguably our greatest geopolitical resources that alliant system. I challenge people, name one ally the Chinese Communist party, the peoples republic of china has. They have none. North korea. They have basilar states. They have facile states, mr. Chairman, like north korea. They dont have genuine alliances. So i did and wall street journal about the tyrannical twins between china and iran. Here are two countries they have not honored in agreement. Plus like a stall and packed. Your absolute right. Your point is carbo poland. Thats not an alliance. Thats a marriage of convenience subject to divorce it anytime. And that is why you hear the developing nations describe the one belt road is a oneway one toll road because theyre doing their resources sucked up, theyre getting their hard currency sucked up, theres a lot of things they are gone. Thank you for your support and encouragement as it pertains to the endless frontier act. Grateful for the service of you and your team over there at ee. Youve clearly elevated that department. I know colonel sullivan served there before, i didnt think it could be elevated any further. But no, i mean, its especially important. Of time to make sure economic statecraft is properly scoped. And im grateful for your presence here today. I yield back. So thank you, senator young for your leadership and its important you are highlighting how important he is section of the u. S. State department is that the undersecretary leads. Secretary blumenthal. Thank you, mr. Chairman. Thank you both for being here today. Thank you for your service to our country. I dont know whether you were here with the last panel, to hear my questions, but let me repeat them for you. This morning, senator hawley and i wrote to the assistant attorney general of the United States department of justice, john demers, asking for an investigation of zoom and ticktock because of their reported, and repeated surveillance of United States citizens possible censorship, of participants on their platforms, and essentially suppression of rights and liberties by people in this country. And those reports of censorship and other abuses led us to ask for an investigation by the justice department, senator hawley and i and other members of congress have asked repeatedly to zoom and ticktock asking them about their practices of collecting information about americans and about providing it to china, the government of china. They both failed to answer the basic questions. So we have turned to the United States government to protect the United States citizens. The is the administration aware of the cooperation between zoom and ticktock in the company that of apparently owns it with the peoples republic of china . And what do you plan to do about it . I think that picks up right where i was talking about the 5g clean program. If you look at apps like ticktock, we chat, if you look at the cloud providers. If you look at drones. If you look at underwater cable. Its all part of that nervous system of chinas surveillance of base. And that is why we are preparing plans now, not just to Clean Network site, the 5g side, but the entire system. And i could not agree with you more. What these are our appendages. Too that surveillance state. So you know, what i think if you are going to see a Similar Campaign to what we did with 5g. And i just could not agree with you more, senator. So i appreciate that. I think that support is very meaningful. And i hope you will take that view to the. Department of justice. Because if the administration is really going to put its money where its mouth is so to speak, an investigation by the foreign justice has to begin right away. It has to be swift, sure, fair. This kind of surveillance and censorship and the tracking of americans, the providing of data to the government of china is a direct intrusion on our civil liberties. I hope youll be in touch with the department of justice. So and they have been great allies. There actually working arm in arm with us in defining the clean apps, clean cloud, clean store, and all these different areas. They have been great, they really have. Theyve been great partners. Im glad theyve been great. I hope they will send a message and respond to senator hawley and myself and respond favorably. But i am glad that you will support it. I appreciate your public endorsement of it. Let me ask you, are there measures such as a review that could impose on chinese firms collecting information about america . Real assurances the data will not wind up in hands of the Chinese Government . Can you state your question again mr. Senator . I didnt quite catch it. Are there measures like a review by the committee on Foreign Investment in the United States that would impose on chinese firms collecting information about americans a barrier prohibition against sharing that information with the chinese. Yes. By the way i think there are a number of tools United States government. Obviously thats a good one. And by the way on that dimension its everchanging landscape. Even since i have been in office ive seen a change. Theres all kinds of ways to get around mitigation and those kinds of things. The other is the executive order with regard to the ict industry, in particular in china. I think that is a great tool. I do not want to get out ahead of the president on that one. But that pretty much gives us all the tools we really need to do a what youre talking about. You mentioned drones. Tell us why wish should be concerned about drones . 80 of the worlds drones are made by the chinese, theyre sold in the United States they collect information and send it right back to the chinese, correct . Stomach they do. So if you look at this company dgi they have 90 ownership. Imagine your drone hobbyist or doing summit with your son or Something Like that. You know, you want to take the video from up there. Those feeds go directly back to china unless youre pretty tech savvy indigo through about seven different menu pics and you can have it download right to your iphone. Otherwise its going there. And obviously Drone Technology is some military technology. By the way that was one of the things i saw on my last trip to china. As i saw their swarm Drone Technology. By the way, i dont know who defend against it. I know were working on it and by the way thats one of the other ones we are working on is clean drones. Because those are dangerous. Its one more thing. You dont know how we defend against it. So from a military aspect i dont want to get into that with swarm Drone Technology. Im on the Armed Services committee such as senator sullivan. I am trying but ordinary civilian users. 90 of the market. So i am too for the drone hobbyist at the same thing ticktock is, sending your video feeds back. So they are collecting information on our children but ive got five children i dont want to chinese spying on my children. So she would just ban chinese drones . So by the way i think that is a very important thing to heavily consider. Once again i dont want to get out in front of it. But it is on the table. So we need to be able to manufacture our own. So and that his back to senator young. The best defense is a best offense. We have to invest in our drone business. Last i checked, i think they have about 90 market share. We held a hearing on that topic in the subcommittee. And i might just say senator sullivan is absolutely right. In order to ban the product we have to be able to manufacture it in this country. I would submit its a matter of National Security that we do its in this country because that is the only way to in fact to defend or protect our rights and liberties but that is easier said than done. As you well know a company with 90 of the market share can undersell or outcompete. In fact in predatory pricing to squelch competition. So i would like to know from you in the future when you say its on the table, i am hoping that you will report back to us. I ask you for a report back on what is planned. By the way you got it. Strict thank you. Senator because you are absolutely right. We have the technologist, we have the entrepreneurs to market drone companies. The problem is, she pointed out chinese subsidized. It takes capital. It takes money. The way china works it all comes out of the same pot. And i deeply appreciate what the congress is doing to make sure we get those funds. Another great examples of Semi Conductor business. It was her godgiven right to have a Semi Conductor in the United States. We invented it. What happened was Asian Countries came over and they bought it from us. And they subsidize the Semi Conductor between 30 and 50 . We were able to get taiwan Semi Conductor to kind of bet a little bit on it so to speak. On past the chips act, 96 41 100 in the house. And that money goes for the entire Semiconductor Industry to bring it back onto United States shores because only 12 of Semi Conductor fabrication is done in the United States. Thats the key for our Semiconductor Equipment manufacturers. So these things make a difference. And its a tipping point. It boils down to money. So let me turn to senator cruz here. Mr. Secretary. Senator cruz. Thank you, senator blumenthal. Thank you, mr. Chairman, thank you to both of your witnesses for your service and your testimony today. Alright, i want to start with something that was discussed in the first panel as well which was supply chain issues. I am deeply concerned about chinas control of our supply chain. Particular lee insofar as it pertains to infrastructure. One area that poses a serious National Security threat to the United States concerns rareearth and critical mineral supplies. Ive introduced legislation for the on showing a rare earth act to bring rareearth mining back to the United States. How does the Administration View a threat of chinese control of rareearth minerals customer and what should we be doing to fix the problem . So absolutely. Can we collaborate on this one together. [inaudible] please turn on your bike. Rareearth has been one of a comprehensive reassuring strategy. The comprehension of reassuring strategy been led by the white house, my office is taking the lead on it. Cannot underscore the emphasis on this. And really when you look at rareearth, Critical Minerals, our supply chain vulnerability is great. China was threatened to withhold access to rareearth. Too basically have country sent to its will be cant stand for that. This is the solution which is what we are discussing the administration is going to have certain pillars, right . One of the first pillars is really providing financial incentives and process United States. That is what gives companies a leap of faith to invest in the United States. The next part of it is Technology Sharing with our allies. One of the things that i am personally trying to stress is that if our supply chains are located far away we decide with any adversaries that tensions were going to escalate, we will not have enough ships to fight a war and ship rareearth back to one another. We need to enhance the processing and the Technology Associate with clean processing for both our self and her allies to get there collaborate on all fronts in every country of the u. S. And her allies. We have to basically be able to be selfreliant. Finally, we have the investments for r d to incentivize investments but at the end of the day, what company is actually going to invest in the United States if they know the cheap rare earth from china will ultimately displace them. Then we need to look at how do we, what are the costs what measures are going to seriously think about . I know this is taboo and nobody likes to talk about restricting imports or tariffs or whatever. But what is the other alternative . Im speaking as an economist. When chinas predatory low prices as a key strategy to displace. We need to have a serious conversation about that. And certainly we need to look at the facts rareearth are more expensive under think about the financial incentive. To bolster those companies that rely on rareearth sector. And what are some of the other measures we can put in place i can printed poorly priced and eroding our base. So i appreciate what youre doing, we studied this to the economic and legal lens a lot. I think these are the steps civil give us the resilient supply chain. I think you made a very important point that chinas strategy here in terms of slashing prices, their objective is not profit maximization. In the way the chinese commonest government has approached the United States is i believe they are engaged in a battle for global domination. And they have deliberately identified key vulnerabilities of america and theyve determined to dominate so when they are pricing it is not simply predatory pricing in the antitrust context. It is in fact, these are not money making endeavors. Their objective is not to earn a profit. These are military dominant efforts. So their efforts are to attack america someone watching at home as a practical matter, why do rareearth and Critical Minerals matter . Why should we care china has a stranglehold . Because they are essential. They are essential to our microelectronics, tour defense systems, really everything that is today critical to National Security. I want to raise an interesting quote which i think youre going to very much appreciate. We almost treat the china hollowing out the industry is a new thing. I have this in my statement actually has with the cold war khrushchev said we need the kind of soviet bloc to declare war upon you in the United States. In the peaceful trade United States mughal win. And from khrushchev. We, again referring to the common estates, valued trade for economic reasons and most for political reasons for this is in the hearing transcript of the 1962 trade act. Interestingly, the trade act, statements and purpose one of the purposes is two trade agreements the 48 mutual trade benefit to prevent the communist economic penetration. This is a problem that was back in the 60s and the 1962 trade act. It is the same problem we are dealing with today. And guess how much progress weve made on it, zero. And the administration i think for the first time and rightfully so tackling all of these problems simultaneously. Looking very hard at it were looking closely at it we welcome congressional support because these are complex problems that are decades in the making and guess what, time is not on her side we need to do it now. Thank you very much. Thank you, senator cruise i want to comment on the rareearth and other Critical Minerals. We have them in america. We certainly have them in my state. And by the way, our record on mining them and producing them is much higher in terms of the environmental standard than the chinese by far. So if we have them and its good jobs and support for National Security we have a strong record on Environmental Protection on mining them, then we should utilize that. I would say you are absolutely right. In United States Rare Minerals are not that rare. But with the chinese have done this they put out processing plants out of business by subsidized pricing. I agree few cruz, their aim is not just to compete. Their aim is to drive you out of business then they can do two things. They can jack up prices and feed that china and do it to the next sector. Theyre very good at this, its of strategic points underlying everything. The one thing i must say its been great to see in this administration coming in, is that when you look at what the work is been done in congress, what we are doing in state in terms of analyzing strategic bench point in the supply chain, i dont know if it was ever done before. At then you have to get to a level of specificity were whats the plant . Whats the company . Whats the product . And how do we get them over here . How do we get them in her allies hands . Its in the United States. And you really have to really, really dig in. I want to thank cruz again for his leadership on rareearth and Critical Minerals and important way. Let me turn to one final question mr. Secretary, madam secretary both of you would like your comment on this very challenging issue that we have seen really over decades. And that is the temptation i would call it by u. S. Companies that want to access the Chinese Markets. And then what ends up happening is that the u. S. Companies are either forced to transfer their technology me on probably what they want to do, or they in some way kowtow to chinese interest, like the nba on broader statements that china finds objectionable and we have American Companies and organizations that start to tow the china line. So it is a dilemma because a lot of this has taken place in decades in the private sector. Ceos making these calls may be for shortterm profit, access to china market. But longerterm in terms of u. S. Strategy it might be undermining our broader strategic goals as a nation if some of our best companies are selling out their own ipr to gain access to the Chinese Market. So what should we, as a government, this is beyond just state or commerce, do about this very important issue for our private sector is leveraged to get access to the market of china but then has to give up things. Or, tow the line on broader issues related to taiwan or other things where they are almost forced to make statements that are in line with Chinese Communist party objectives. I like to hear from both of you. I will start and then just to kind of get the economists perspective. When you are a company and you have no choice but to deal with chinese undervalued exports, your only way of survival is actually to go into the Chinese Market and benefit from the same distorted cost structures. So what ends up happening, you not only have to transfer your technology but also now youre even flooding the Global Market even more with distorted prices. So in many ways the companies in terms of Market Access as you said are in order to compete with their own chinese competitors have to walk to that market which is really interesting that i noticed happening is a few things. China announced the implementation the share of a Corporate Credit Rating System kind of like social Credit Rating system were at any time it can ask companies, operating in china to hand over their data their most Sensitive Technology in their ip. The European Chamber of commerce steam those to be essentially life or death for companies because if you dont you will be sanctioned by the Chinese Government and companies are starting. Two, with respect they made some pretty significant threats against nokia and ericsson. European companies but they basically said if europe is going to bond huawei from the 5g network its going to put restrictions on the exports of nokia and ericsson from china so now its causing nokia and ericsson to rethink their operations. So what should we be doing in terms of government policy this mistake taking place in the sphere of the private sector. What should we be doing . Theres one deal we should punish her own companies for doing it. Think that might backfire. What is the government of the United States, the executive branch view that we should be doing to brilliant some ways give the ceo backbone not to comply this comes to reciprocity. Certainly dont do this to Chinese Companies. But as government policy what should we be doing . I need assistant answer. This is exactly what i was getting at. If its cheaper to operate in china, to compete with chided that weve got to figure out how to get these Companies Financial booster they can now compete if they offshore to another country. Two, we have to amplify us u. S. Government the risks of doing business with china now. Given everything ive said with the European Companies and u. S. Companies, amplify the risk and give them a way to be cost competitive if they leave china. Thank you. Mr. Sec. Give a view on that . Im sure youve seen it in both your government position but also in the private sector. Yeah. I would make three points. You hit on them really, really important issue. And so when i hosted sec. Pompeo in the Silicon Valley for four days at the beginning of the year, one of the things we did in my home in San Francisco i had like 36 i said guys we say corporate responsibility, social responsibility its also National Security because its a real and urgent threat to democracy. Thats a real and urgent threat to companies. Because they want to put you out of business. Now, the elephant in the room is retaliation. And so its all about standing up to that bully with your friends behind you. And so if you think of the laws we put in place in terms of anticorruption. U. S. Company its illegal to give a bribe. Either way, we might think of some of the things where the u. S. Companies need to be able to say to china, i cant do that, its against our law. Because they will obey the laws. In so doing that and getting her allies to do that would give us leverage globally over chinese practices that we certainly dont want to help promote. But we want to prohibit. But if we do it with our allies, you think that the leverage point . So it is huge. Its also one where i might recommend in terms of developing models like this, collaboration with the private sector. Because they will tell you because its got to be crafted just right. Because it is a big point spread the other thing we have to do, we have to shine the light on china, yes. But sometimes we have to shine the light on ourselves. I mean, if you look at what Chinese Companies on our American Stock Exchange is, these are the only companies that dont obey sarbanesoxley , and cant get audited. Theres three guys public that kind of makes me mad but thats up the points. The point is it puts our american investors at risk. And by the way it also creates an unlevel Playing Field for our companies because anybody, anybody Business World understands a Financial Strategy the key part of your Financial Strategy. This allows them to misstate their earnings, hide subsidize revenue, count things as perpetual revenue versus not, coffee lost 300 american investors lost it. So gives chinese competitive advantage. The third thing is it sacrifices the Gold Standard of our American Exchanges. The other thing too, the average american bondholder has financed the one way road. And the emerging index funds. Its all buried in there. By the way, thats one of the things that i wrote, is it is incumbent on u. S. Companies to disclose who are the Financial Institutions who are the Chinese Companies that invested the state pension fund . University endowments question mutual funds . I think shining that light in terms of disclosure is a great tool. Just like reciprocity is a great tool. Just like enforcement is a great tool. So we should really use that to the full extent we can. Because those concepts are just simple, right on, and easy to understand. Will listen, want to thank you. Others a number of other senators who will be submitting questions for the record here. I want to thank both the witnesses. I think as i mentioned, this is the important beginning of not only laying out the strategy, but the implementation and execution for it i believe it is very bipartisan if you saw from the number of senators both sides of the aisle focusing on many of the same concepts. And to both of you, we are hoping this really starts to begin to establish a policy that can be utilized and implemented for decades. Like the containment policy against the soviet union that was wellregarded, well accepted and continued throughout administrations. I think at the beginning at that moment in our country. And i think this sharing is a helpful beginning. So with that the record will remain open for two weeks. For this hearing during this time senators may request submit questions and upon receipt we respectfully ask the witnesses to submit written answers as soon as i can back to the committee but no longer than august 14 but i want to thank both of our witnesses again for appearing here, for educating the broader American Public on these challenges. We have a lot of work to do, but i think we are finally realizing the challenge and we are off to a good start. With that, this hearing is adjourned. [background noises] [background noises] [background noises] [background noises] [background noises] [background noises] the conversation, part of Liberty University Freedom Summit conference