Persistent Competition & Legacy Architectures

Morning everyone, call the committee to order. Without objection, the chair made clear a committee in recess at any time. Before we begin today's hearing, I wanna provide a few important reminders. First, today's hearing is being streamed live on the committee's YouTube channel. This open hearing will be conducted entirely on an unclassified basis. All participants are reminded or refrained from discussing classified or other sensitive information. protected from pub public disclosure. For this event members will have five minutes with the witnesses each uh I would ask uh each of my colleagues to keep your questions and witness answers within those allotted five minutes. Time permitting we will conduct a second round and any remaining questions will be submitted for the record. This hearing is focused on examining whether our legacy national security architecture is up for the task of confronting the threats posed by the Chinese Communist Party Russia and other nation states or terrorist groups determined to undermine American national security. It's my pleasure to welcome our witnesses to today's hearings. Uh Frank Salufo, Director of Macquarie Institute for Cyber and Critical Infrastructure at Auburn University. Doctor uh our David Feith, Senior Fellow, Hudson Institute, and Seth Jones, uh President, the Defense and Security Department, Center for Strategic and International Studies. Thank you all for being here. First, by architecture, I'm referring to the interlocking set of laws, institutions, authorities, and decision-making processes through which the US first identifies national security threats, to its sovereignty, interests and citizens, and second, organizes the people, resources and strategies needed to prevent, deter or respond to those threats. The questions we're asking today directly relate to the committee's review of the nine eleven commission over the past year. The bipartisan report of which we released this week that I encourage all here and listening to download and consider as well as our efforts throughout the one hundred and nineteenth Congress on our counter-intelligence posture. Both committee initiatives have detailed how the threat environment has drastically changed over the past twenty years, and the speed of that change is only increasing. Today we ask whether our government architecture is appropriate to respond to this new environment and how we can and must keep pace. We must openly consider where we are succeeding and where we need to change our approach. In two thousand four, Congress passed the Intelligence Reform and Terrorism Prevention Act, established the Office of Director of National Intelligence, National Counterterrorism Center, and the Department of Homeland Security. It was disruptive. But the vulnerabilities illustrated by nine eleven demanded it. Today's hybrid threat env- environment is no less daunting. China and Russia run persistent whole of society campaigns inside the homeland, penetrating networks, compromising supply chains, uh cultivating insiders, and running influence operations across legal, illegal, and the unclear areas often referred to as the grey zone. Foreign intelligence services increasingly collude with cartels, criminals and hackers to de-stabilize the West, and AI is accelerating their reach in ways that remind me of the nine eleven commission's warning about the danger of us having a failure of imagination. Is it possible to counter intelligence equivalent of nine eleven weights undetected because we are failing to adapt a decentralized system where parochial agency interests not national interest determine strategy? The intelligence community must answer such questions to provide decision advantage for strategy. policy, operations and investments. And we as oversight of that intelligence community must regularly step back and ask the big questions rather than wait for a strategic surprise to force our nation to examine institutionalized assumptions as we did prior to September eleventh two thousand one. Maybe the architecture is structured appropriately or the best we can expect from government institutions. Maybe it needs targeted reform. Maybe fundamental change. These are questions we hope to discuss today to avoid thoughtlessly defending the status quo. Again I thank our witnesses and look forward to their testimony. Without I wanna yield to the distinguished ranking member, uh actually Mister uh Krishnamoorthy uh for his opening statement.

Un- undistinguished.

Undistinguished. Um just for clarification, you're highly distinguished.

Highly, okay, thank you. Thank you, Mister Chair, and thank you to our witnesses for being here to share their experiences and expertise with us. Homeland's c- counter-intelligence threats in the twenty-first century pose a persistent threat. for the intelligence community, policy world, and this committee. On the one hand, law enforcement investigation, open source collection, and US focused methods of gathering information show persistent, suspicious activity that may be attributable to our adversaries, from gate crashers at military bases to suspicious land purchases near vital infrastructure. On the other hand, drawing too much from some of these fragments of information, risk keeping the government persistently jumping at shadows, or reaching the erroneous conclusion that our adversaries are somehow ten feet tall. Which brings us to the topic of today's hearing, the legacy of counter-intelligence architecture. There is no question that with the end of the Cold War and then the terrorism focus of the last quarter century our counter-intelligence architecture deserves a hard look. to make sure the government is connecting the dots in our new era of strategic competition. On a bipartisan basis, we have worked with the majority as they focused on this issue. And this open hearing will help advance the goal of an aggressive but measured approach to improving what exists. I look forward to the panel offering thoughts on how to better connect the dots, whether by hardening our cyber defenses, ensuring information collected by law enforcement doesn't stay mired in a case file or conducting CI campaigns in addition to investigations. We look forward to that discussion. Thank you, Mr. Chair, and I yield back.

I thank the gentlemen and now I want to turn to our witnesses and I ask each to keep your statements under five minutes Mr. Salufo you're now recognized for your opening statement.

Chairman Crawford, Congressman Krishman-Nurthy, um and thank you also for your work on the select committee. I think that's been uh very informative to to those of us on the outside. And distinguished members of the committee, thank you for the opportunity to appear today. Uh the committee's recent port uh report that

Chairman, thank you.

uh the chairman mentioned is spot on. Our counter-intelligence posture remains too reactive, and integration should be organized around mission outcomes and not just agency ownership. Today I wanna leave the committee with three points. First, protect America's strategic advantage, not merely its secrets. The traditional mission remains essential, protect classified information, identify foreign intelligence officers and penetrations, and enforce the law. But the target set has changed. Today adversaries may be as interested in engineers, researchers, start-ups, venture capital, and supply chains as they are in classified programs. Frontier artificial intelligence companies illustrate the problem. Their model weights, training techniques, data, compute infrastructure, and specialized talent may be of enormous intelligence value, even if none of it is classified. By the time a technology enters a classified program, its research people, capital, and supply chain may have been targeted for years. Second, we face a fundamental mismatch in how we approach the threat. The Chinese Communist Party runs campaigns. We open cases. Cases matter. Investigations and individual disruptions remain essential. But counter-intelligence often comes down to a hard choice. Do we string them up or do we string them along? Act now or keep watching long enough to expose the broader network and disrupt the campaign? Beijing looks across years. Industries, institutions and technologies pursuing the same objective through cyber operations, investment, research, talent recruitment, supply chains, and intermediaries. If one path fails, it moves to another. They don't organize around our org charts. Pieces of the picture may sit a with the FBI, NCSC, CIA, NSA, Commerce, Treasury, Energy, Defense, DHS, and the list goes on, or the private sector. Uh, each may see something important None see the whole picture and the entire campaign. We must integrate those pieces into a common campaign picture and act on it. My third point is what an effective model must actually do. It must identify what matters, see the campaign, warn those at risk, disrupt the adversary, and measure whether we changed the outcome. We need a dynamic picture of the technology's talent, data, infrastructure, most consequential to national security. We cannot protect everything equally, and not every commercial interaction is a counter-intelligence matter. We must translate intelligence into timely, actionable warning for companies, investors, universities, and researchers outside the classified world. A warning delivered after the technology, talent, or access has been lost is not strategic warning. Warning cannot be the end state. counterintelligence cannot be exclusively protective or reactive. Once we understand a foreign campaign, government should use lawful intelligence, law enforcement, economic, cyber, diplomatic, and regulatory tools to disrupt it, deny access, and impose costs. Our metrics must change beyond cases, arrests, and briefings. We should ask whether the adversary access declined, operations became harder and costlier, and warnings in ar- w- arrived in time to protect what matters. Distributed responsibility can become diluted accountability. Someone must integrate the effort across agency boundaries and answer for outcomes. Do we need major structural change? Perhaps, but form should follow function. Building on CIA's mission center model, an enterprise-wide counter-intelligence approach could organize existing capabilities around priority adversary campaigns, without transferring statutory authorities or creating another agency. This is not an indictment of the FBI, NCSC, or the intelligence community. Their missions and people are essential, but the architecture has not kept pace with the target set or threat. Finally, America's openness is one of our greatest strategic advantages, not a liability to engineer out of our system. The goal is not to put walls around American innovation, It is to prevent our openness from becoming an adversary's operating model. The threat has changed. Our counter-intelligence model must change with it. Thank you, Mister Chairman.

Thank you, Mister Feith.

Thank you. So long. Turn it over. Sorry. It's ten seconds back. Shouting's an option?

Mm. There we go.

Great, thank you. Chairman Crawford, Congressman Krishnamoorthy, and committee members, thank you for the opportunity to testify. Imagine that in a future crisis over Taiwan, Chinese attack drones suddenly rise from trucks, warehouses, or farms deep inside the United States, just across the fence line from our nuclear bomber bases. As US forces mobilize, Chinese origin equipment inside US data centers rapidly shifts its electrical demand destabilizing the power grid across twenty states. Chinese hackers blind parts of America's Golden Dome missile defenses by using AI systems trained on massive volumes of smuggled US data. With a frontier model stolen from a compromised American AI lab, China's military exploits weak points in US networks and knocks US Pacific forces off-line at a decisive hour. None of this is science fiction. We've already seen all the elements. The United States needs a new counter-intelligence approach for the AI age. Today, an extraordinary share of strategically important technology lives in private-owned infrastructure. Frontier AI labs, venture-backed quantum or fusion companies, semiconductor fabs, cloud platforms, data centers, drone manufacturers. China's intelligence, military targeting, and technology acquisition apparatus has every reason to follow American innovation into those places. Our own national security insti institutions must keep up. We have had no shortage of supposed Sputnik moments in the China competition. Hypersonic tests New AI models, military exercises, supply chain shocks. But Sputnik became historic back in the nineteen fifties, especially because America responded. We invested, prioritized, built new institutions. In our day, that Sputnik response is still mostly missing. Consider five ecosystems now requiring greater attention. First, military installations and other critical sites across the United States. Ukraine's operations spider web show that inexpensive drones pre-positioned inside an adversary's territory can produce strategic effects. In our spider web world, nearby farms, warehouses and commercial properties can matter as much to a base's security as its g- gates guards and guns. Recent drone incidents, arrests and suspicious land purchases around Whiteman Air Force Base, Barksdale Air Force Base and other sites demand attention. Second, the power grid, especially as it interacts with data centers and crypto-mines. These facilities draw enormous, in some ways unprecedented power. They are filled with complex hardware and firmware, much of it Chinese-made and remotely controllable. The remote access could de-stabilize our grid across a vast area. Some twenty-seven hundred Chinese research papers study grid vulnerabilities, including hundreds relevant to the military and potential attacks. We should build America's AI infrastructure at speed, but not with an adversary's kill switches buried inside it. Third, our frontier AI labs. Government and industry should organize against cyber penetration, insider compromise, and industrial scale distillation. Some fourteen years ago already, America's then NSA director called China's theft of American intellectual property the greatest transfer of wealth in history. We now risk compounding that failure at AI scale. This time, China could torch the value of America's massive AI investment while acquiring potentially decisive strategic capabilities. As one observer put it, Chinese distillation threatens to bankrupt the US economy. Fourth, advanced compute, meaning semiconductors and the ability to manufacture them. This may be the most important ecosystem of all to protect. China should not be able to buy, rent, smuggle, steal, or build its way around American technology controls. Compute remains China's principal choke point. We should not help Beijing erase America's most consequential technological advantage. Fifth, start-ups. In the movie Oppenheimer, the young physicist is told why the government is watching him. "You're not just self-important," he's told, " you're actually important." Start-ups can undergo a similar transformation almost overnight. A breakthrough can turn an obscure company into the holder of technology essential to US security. But can we recognize when an American company becomes actually important before Beijing does? I would suggest five priorities. First, strengthen the government's technology counter-intelligence mission led by the intelligence community. Second, establish security compacts with frontier AI laboratories. Third, harden the homeland around military installations, power grid and data centers. Fourth, deny Beijing every route to advanced compute with export controls and export control enforcement. And fifth, rebuild critical industrial capacity, because we can't counter-intelligence our way out of dependence on Chinese drones, inverters, and other critical hardware. Also, finally, recognize that we have had and still have extraordinary strengths and advantages. World-leading AI labs, commanding advantages in advanced compute and semiconductor technology, and unmatched companies, capital markets, allies, and talent. Counterintelligence is urgent precisely because we have so much to protect. Thank you.

Thank you, Doctor Jones. Thank you, Chairman Crawford, uh, and distinguished members of the committee for the opportunity to testify. I do wanna thank the committee for two major issues. One is the bipartisan work on this important issue, uh, which I think is a real example, both to Congress and the nation. So thank you for the bipartisan work. And second, thanks for the release of the report this week on the review of the nine eleven commission report, which I think highlights both the the work that has been done after nine eleven and also the work that needs to be done uh in the uh in the future, uh and highlighting some of the key recommendations. I I trust that many of them will come up today. Uh, my bottom line in this uh in this hearing today is that the US homeland is more vulnerable than it has ever been in recent times from a combination of both state and non-state adversaries. I would argue that there is something of an end to sanctuary of the homeland. Uh, the US responded to nine eleven effectively, though after the fact. There were bumps along the road. But in my view, we are not set up to deal with the evolving threat as it stands today, and as it is likely to evolve uh in the foreseeable future. Um Let me just start off with uh an additional issue to what uh the uh those of us on the testifying side have noted today. And and that is I I do think there's a growing conventional and nuclear threat to the homeland which uh is growing significantly concerning. Uh, the Chinese, Russians and North Koreans all have the ability to hit the US homeland with both conventional and nuclear strike. Uh, China possesses a very concerning and rapidly growing arsenal of land-based intercontinent intercontinental ballistic missiles, including the DF-forty-one, which can hit targets across the US. Uh, sea sea-based submarine-launched ballistic missiles, such as the JL-three, which can also be launched. off the coast of the East Coast and West Coast in increasing uh numbers of nuclear powered submarines uh and can hit any target in the uh continental United States. And then obviously aircraft, including the H-sixN bomber that can lau launch land attack cruise missiles and air-launched ballistic missiles against the US homeland. Uh to complicate matters, China is also rapidly building up its space-based capabilities, including ones to strike the homeland with a fractional orbital bombardment system, and then some indications that the Chinese are in development of other space-based systems that can launch projectiles from space to the homeland. Uh, in addition, we see, uh, uh, particularly Chinese concerns and threats, uh, especially from the Chinese Communist Party of subversion inside of the US homeland. Uh, I think, uh, Mister Feith said this earlier, uh the example of Operation Spider-Web is concerning. Uh I believe the US homeland is highly vulnerable to this type of drone attack. Adopting similar tactics, US state or non-state adversary could conceal weapons uh weaponized drones inside of ordinary commercial vehicles like cargo vans, shipping containers, trucks with slideable roofs, and position those vehicles near high-value targets, uh, military, airfields, naval bases, uh, and conduct strikes along those lines in ways that get around air defense and signal jamming measures inside of the United States. I think if you look at our NFL stadiums, uh, concert venues that are outside, they are highly vulnerable to these kinds of attacks. Uh, I think I would also add that the uh uh the addition of commercially available AI, including a agentic AI,

Mm-hmm.

has increased the threat um from disinformation campaigns and cyber offensive cyber operations uh in the uh in the US homeland. We've certainly seen an example of that, and Mister Salufo mentioned this, with volt typhoon and the Chinese penetration of US critical infrastructure networks. In my written testimony I have a number of uh uh recommendations on active and passive defenses. on counter drones, including uh speeding up the training for particularly state and local entities, uh and then also private sector in the United States, uh and then other areas. I would just say finally uh that uh th that the US needs to understand it is essentially in a wartime environment, and I think there needs to be a fundamental shift in mind-set to help make the US population more resilient. With that, Mr. Chairman, I yield. Thank you.

Thank you. I wanna thank um each of our witnesses for your statements. Um I wanna move now to a member of questions. I'll start by recognizing myself. Um George Kennan saw something about Soviet competition that Washington had not yet fully understood. Today many believe the Chinese Communist Party represents the single greatest long-term threat to American security property sovereignty and global global leadership. Beijing is competing with us across virtually every dimension of national power often simultaneously. If this is our Kennan moment, what's staring us in the face today that our national security establishment still hasn't fully grasped and and what should we do about it? And I'll open that question to anyone that wants to take it.

Sure, I'll start. Um, I I do believe this is something of a George Kennan moment. I do believe that the Chinese Communist Party and China represent the most significant threat to the United States. I mean, it is worth noting that the Chinese Communist Party in China itself, the People's Republic of China, is a country that is antithetical to every American value, democracy, freedom of religion, freedom of the press, uh, free uh, free markets that this country was founded on. So whether one's a Republican or Democrat, I think that is a serious threat to the way that our founders established this country. What I don't think we have yet, and I think we need, a- and that followed uh George Kennan's uh recognition of the Soviet threat is the same kind of n- of National Security Council sixty-eight, uh national level assessment and strategy. Uh, President Reagan did the same thing in a National Security Decision Directive seventy-five, uh US relations with the USSR, uh strategy, uh, which has been declassified, argues for an overall strategy of containing and over time reversing Soviet expansionism in including inside the United States, uh, promoting change inside of the Soviet Union, and then also engaging the Soviet Union's in negotiations where it was feasible. In my my assessment, we need to start with an NSC sixty-eight or an NSDD uh seventy-five today, that our entire strategy then fo

Thank you.

Mr Chairman, I I agree a hundred percent with what Seth had said.

Mm.

Can you hit your mike button?

Oh, there we go.

Sorry.

Sorry. Uh, I agree a hundred percent with uh with Seth's prognosis, diagnosis and prognosis there. One of the challenges is that I think we are dealing with here is a lot of our instruments, this isn't just stealing secrets, it's not just the traditional spy versus spy. When you look at it in its ex in its existential nature, we're talking about uh uh it trying to control not only influence from a national security technology standpoint, but the entire ecosystem that makes our economies run. So I think What we have now are individual approaches to a sustained campaign. I think we really do need to get on a campaign footing, and that doesn't necessarily mean a new agency, but you gotta you gotta have someone. There're three things that I think make anything work in DC after all my time here, and please disagree with me, but you have to have three things line up. Authority, you need someone who has the authority, accountability, I don't wanna say one throat to choke, but you need someone held accountable for what uh is happening and outcomes and actions and resources. Policy without resources is rhetoric. So a lot of our instruments, we're doing as best as we can, but we're looking at it one by one by one by one. We're not putting a we're not coming at it from a campaign approach and I think that has to be hinged upon a strategic approach. And and and I do think Congress, I think both HPSI, I also think the select committee have played an important role in all of this, But I think it needs to be matched up uh uh inside the executive branch as well.

Thanks, Mr. Chairman. Uh a few quick ads uh on the on the Kennan example. You know, part of what made the Kennan work so important and influential was that much of it was public-facing. It really helped explain to not just the US government internally, but to the American public the nature of uh the then-Soviet Communist threat. it addressed uh Soviet ambitions and ideology. And I think that our work today in understanding as a government and explaining to uh the American people the nature of the Chinese Communist Party's ideology and ambitions what Xi Jinping says to his own leadership when he's speaking internally, the degree of ambition and hostility to the United States that is found there is something that we uh under-appreciate. Uh a second key uh aspect is that There are uh you know major differences in the capability in terms of technology, innovation, economic power of course between the Soviet Union then and China today. That's not just a problem because China is so much more capable, it's also a problem because our instruments of government uh our architecture was designed still largely for the Soviet contest. Distinctions between the civil sector and the military sector for example that were largely true with weaponry and technology in the Soviet Cold War have been completely and deliberately exploded by China and its military civil fusion strategy uh today. And then thirdly, as a sort of a political observation, uh we start this sort of new Cold War with China in a much different place politically and as a civic culture. In a lot of ways this is a new Cold War really in an age of doubt, whereas the Kennan era was after the World War Two victory, and that's a major political challenge that also is a factor in everything that we do.

Thank you, Mr. Krishnamoorthy.

Thank you for those excellent comments, uh and thank you, Mr. Chair. Uh, Mr. Jones, I wanna dive deep deeper into what you said. In your written testimony you note that adversaries such as China seek to, quote, attack our cyber defenses and target critical infrastructure, but some US cyber defenses, especially among municipalities, are shockingly poor, right? That's what you said, correct?

That's correct.

Let me uh point you to this headline. This summer CBS and others reported that at least twelve states reported cyber attacks on their water systems. An Iranian-linked actor has claimed responsibility. That's what was reported, right, Mister Jones?

Yes, that is what has been reported.

And just last week, Reuters reported that Chinese hackers broke into the DOJ, NASA, the Federal Reserve, the Senate, and other sensitive government agencies. And that was report that was what was reported here as well, right?

Correct.

It's CISA, the Cybersecurity and Infrastructure Security Agency, that serves as the lead cyber security federal agency, right, Mister Jones?

Yes, that is that is one of the notable agencies involved, yes,

I I would say f

correct.

Mister S Schifula, it's like one of those throats to choke. And yet, according to the New York Times last year, the administration cut the CISA workforce by nearly one third. One thousand employees were actually let go at CISA. And so I respectfully submit if we're gonna take this threat seriously with regard to our infrastructure, we c- and our cyber-infrastructure, we cannot downsize CISA. We should be actually resourcing it uh uh more heavily at this point. Um, let me turn to the Baltics. According to the Radio Free Europe, Ra- and Li- Radio Liberty, Baltic commissioners wrote a letter to the European Commission President to sound the alarm on Russian aggression in the Baltics. The letter highlights a " deteriorating security environment amid an" "inf- increased frequency of airspace violations and drone incursions." Mr. Feith, in your written testimony you highlight how direct

Yes, sir.

I think several of you, uh I think all three of you have talked about this at at length. I'm very concerned about how Russia may stage a false flag attack using Ukrainian drones. I was just in Ukraine recently and there's a lot of chatter now about how um the Russians may attack the Baltics to test NATO resolve. Mister Feith, the Baltics are already fortifying their critical infrastructure after Moscow pledged to retaliate against the Baltics after accusing them of helping uh the the Ukrainians. Um what more can be done right now to deter a Russian attack on the Baltics?

Well, I'll happily defer to to my colleagues on some of the kind of the Russia-Baltic dynamic. I would say on the on the drone question uh at home, I would highlight that part of what's been so striking about the speed with which this uh problem has worsened, is that it's not only Ukraine's Operation Spider-Web, which was about eighteen months ago, it's also demonstrations that we've seen uh in Israel's use of drones against Iran and in Iran's use of drones against its uh its neighbors. Um There's a demonstration here not only of the uh the capability uh of, you know, commoditized relatively cheap drones, but the real difficulty in uh mustering the sorts of defenses that we will need for military facilities for stadiums and for much else. It's an enormous problem all the way up the supply chain, by the way, even to things like the semiconductors that we need for counter drone systems.

Got it. Frank?

Uh, I I would just say, counter UAS and UAS, there's so much that has been playing out in recent years that I'm not sure we've absorbed all those lessons. So, I think if you look at it from uh uh protecting our critical infrastructure,

Mm-hmm.

obviously from a surveillance standpoint you have issues, but more importantly you're starting to see in a very regular cadence and occurrence uh uh use of armed drones. And and this is not something that could happen. We are seeing that. Whether it's individual swarm please.

Well, I If you can just direct it against the Baltics, the the threat I think what right what we're seeing is a lot of chatter about a potential drone attack on the Baltics that could then test NATO resolve.

Yep. Uh as a son of a mother who's from Estonia, I care very much about the uh the freedom of the Baltic countries, so yes, and there's no question that Russia will continue to try to uh look to all means of aggression. Now the Baltics tend to be a little further along, like the Estonians are doing a lot in the counter-UAS environment, and - and - and in some cases they are supporting the Ukrainians in the challenges they're dealing with there. But I think your bigger point is, is could it trigger and escalate a response from NATO? And I think it would demand one.

The gentleman's time has expired. Um, Vice-Chairman Kelly.

I - I just kinda wanna make a few comments. I think one of the things that the nine eleven commission and our - our study in the the issue of that was the failure of imagination. And I think we as Americans failed to address what the threats are, who the threats are coming from, and we failed to uh we we won't say it. I- our enemies are our enemies, our friends are our friends,

I see.

and we have a hard time. I look at uh data centers.

Yes.

The Chinese understand that data centers are the key to AI, yet the Chinese are polluting our internet polluting public opinion with all these things and it's all coming from China because they don't want us to have data centers, and so therefore they make it loud. I I remember when October the seventh happened, and the day after, before Israel ever made a strike back towards that, it was stop the genocide before a round was ever fired from Israel towards Palestine. That was a campaign, an information campaign. I think we are losing the information campaign I think the Chinese, the Russians, the Iranians, terrorists. I think they are attacking us in the information spectrum and through public opinion changing the way that we see things and our failure to respond. So I just wanna uh if you can address that, but right now I wanna ask you what is the biggest mismatch between the way China competes and the way our national security enterprise is organized to respond and if you can each respond to that.

Sure. Well, um, I I think on the information uh environment it's certainly a a major challenge. Um, and uh you know it's in the it's in the nature of a of an open society of course to to cherish its openness um including you know to some degree um for uh,

'Kay.

you know, foreign participation in our in our media space. There's no question that that is um you know proper and and uh and long-standing. It is also the case that the nature of the internet and the nature of AI algorithmically driven messaging and influencing campaigns you know through the internet and through social media present certain unprecedented risks. Um you know this congress uh well uh you know uh a congress or two ago uh past of course uh you know an important measure that the China Select Committee was uh central in pushing with respect to uh TikTok looking at the foreign ownership uh vector with respect to uh foreign influence in the American, you know, media and information space. I think that uh TikTok still poses a major threat uh because of the continuing connections in the in the you know post uh divestiture structure of the deal and of the technology. uh that I think will continue to um to threaten and pollute in ways that uh we should continue to have a real kind of eye on and uh and concern for. I think that one uh you know quick answer and then I'll I'll pass to colleagues on the question of the mismatch between kind of our system and China's system relates to this in particular which is that the Chinese Communist Party takes foreign influence and subversion activity extremely seriously not just sort of at the standard uh nation-state level, but really there are kind of cultural and historical qualities to how the Chinese Communist Party focuses and prioritizes on these issues. Some of it goes back to the fact that the Chinese Communist Party began as an underground, uh you know ideological and insurgent organization after all in China. It's part of how the system is structured. It's military, puts an enormous amount of focus on overseas influence activities that face foreign militaries and retired military and governments. And that's true really across their system in a way that uh that often looks quite different from the way that we and other democratic countries are structured, when it comes to information.

G is a great question. Uh, I I'll highlight two mismatches that I think are worth noting. One is um the importance of understanding the two thousand seventeen national intelligence law by China. Article seven, and I'll quote from it, requires that all organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with the law, and shall protect national intelligence work secrets they're aware of." That means Chinese corporations, citizens, and others operating both in China and overseas, including with the United States, have a legal obligation to pass information to the government. That is one that we have to recognize that's rea- and second, the the role of the Chinese Communist Party uh and the it is it's the Leninist system, which means it's centralized, so you've got the People's Liberation Army, the Ministry of State Security, Ministry of Public Security, it is a whole of society uh frontal assault against the US. We are fragmented in response right now, so two big mismatches over. Thank thank you.

M- Mr. Kelly, I know we're out of time, but just two very, very, very quick points. In in my prepared remarks, call for a mission center that's CI focused, it can be built around what the agency does, it gets all the arms and legs of the alphabet soup together. And what makes this one unique, it's not just the committee uh the agencies you you have oversight over, it's commerce, it's agriculture, it's treasury. Everyone has to be part of that approach, cuz that's where many of the instruments lie, both for for good and bad, and that's what's being targeted. Secondly, I think we need to bring back an executive in the White House at the NSC. We need a - an individual who is responsible for this. Historically we've had this. That sorta can get an individual that owns policy above the fray of the uh uh agency set of issues. And - and at the end of the day, and this is not to be trite, we have a lot of tactics masquerading as strategy. We've gotta be strategic about this.

Gentlemen yields, Mister Carson.

Thank you, Chairman. Um, how do we bring state and local partners into counter-intelligence? Um, the China's intel collection is very persistent as you know, and spread across academia, businesses, technology and even local communities. Um, but we we we we still know that the FBI and the IC, they cannot be everywhere. Um, I served in uh Indiana's intelligence fusion center and I know how valuable state and local partners can be in filling these gaps. Beyond more funding, what should we do to better train, connect and integrate those partnerships into our CI system?

Uh thank you for the question. Um I think as you hi as as you note uh the s state and local dimension of this is critical and thank thank you for your work at one of the fusion centers. I would just comment uh that this leads to the answer to the question that the um evolution of both the joint terrorism task forces and the fusion centers after nine eleven in my view were absolutely essential in preventing n a number of attacks against the US homeland uh and in facilitating the uh investigation and arrest of a range of individuals from Najibul Luzzazi to David Headley. The the challenge right now is I still think the the JTTFs and the fusion centers are primarily still focused trained educated um on uh dealing with the terrorism and extremist threat the reality is I think the priority has to be going forward it's not that those those those issues aren't important. But it has to be the state-based threat, Chinese threat, Mm-hmm. there's an Iranian threat, um, Russian threat in the homeland. I have heard repeatedly from folks within the joint terrorism task forces and fusion centers, and you you asked about other than money, yeah, so there certainly is a m is a resourcing issue, but I think there is uh an educational issue on um how what what kinds of issues should they look for that would be indicative of uh acro across the board Chinese activity at AI data centers, Chinese activity in buying property. What kinds of things should state and local entities be looking for? Because they are the first eyes and ears, even more than federal agency, of what is going on within their state, yet they do not feel adequately educated. We've gotten them to a point where they understand the terrorism picture, but not the counter-intelligence picture. Uh so asking for education, understanding, and training just to understand that threat and and I think to continue to share, particularly with organizations like the FBI counter-intelligence, on uh i information that goes back and forth, it's been a problem over the years, sharing of information going in both directions from federal to state and local. I think anybody operating at fusion centers would say that pretty categorically, so the share I would add sharing of information to that as well.

Yeah. Mr. Wilson. Yes, sir. Uh I Yes, sir. I I think it's fair to say, and I think this committee in particular has an appreciation, especially given the the recent work it's done, that state, local, tribal, territorial, they're our first preventers.

That's right.

They're essential. We we could not have we would not be where we are today if they weren't not only part of the equation but a key part of the equation. When it comes to counter-intelligence, they don't necessarily have the, uh as Seth was saying, the the indicators to look for but they have the relationships with the target sets. So if you're at a university in a in a local community and you're doing unique research in a particular set of areas if you're at a obviously Silicon Valley's gonna have a lot of uh uh that's swarmed with every foreign intelligence service but but ultimately you have to find ways to be able to build on relationships that exist not necessarily create new ones. What that needs to then do though is give

Uh yes Congressman, in in in the short time you know I I would note that there are interesting kind of complexities uh between things that go on in the counter-intelligence enterprise as such, and things that go on in law enforcement.

Mm.

Uh it's often easier to do uh cooperation between federal and state and local authorities on the law enforcement side than it is on the counter-intelligence side, including for reasons of you know classification and uh and and authorities and such. I would note though an example largely from the law enforcement side of the of the ledger that I think also can have uh valuable lessons for us kind of across the board, including with respect to CI, was the China initiative that the first Trump administration established in the Department of Justice. Uh, uh, complicated, you know, multi-part, you know, story, uh, uh, i- is the China Initiative, but it certainly had a real value in highlighting the importance of a range of China-related, uh, you know, law enforcement concerns, especially around technology theft, but also around, uh, transnational repression and various other important issues that remain very acute today. And that was not only a reflection of a - of a - I think, a - a - a praise-worthy bit of prioritization from uh you know the federal administration, but it also led in certain very productive ways down to state and local cooperation, uh and also university, another type uh of focus that we have less of uh today.

Thank you all. Thank you, Chairman.

Gentlemen, yields, Mister Lohut.

Thank you, Mister Chairman, and thank you for having this open hearing today. I want to thank the witnesses for your valuable testimony here today, and I'm glad this is in an open setting and not in a skiff so that a really a wake-up call to the American people and uh some of our other colleagues that that that don't serve on this committee um I I just I wanna make a couple observations and uh I have a couple questions I also serve on our select committee on China and winning the AI race and the quantum race is existential to the future of the country um and whether that is it I mean it pertains to national security, it pertains to technology, it pertains to the economy, everything will be affected by winning the AI and the quantum race for the future. Second thing is, um, our CIA director, John Ratcliffe, when he went to his confirmation hearing, uh, ex uh said s explicitly, China has a plan to replace United States, and they're working at it every single day. They wanna beat us technologically, militarily, economically, diplomatically, and it needs to be, again, a wake-up call for the United States. So, um, I say all that because I would I I wanna uh read an article, this is from the Financial Times, August eighteenth, so a couple weeks ago. "Batches of Nvidia's H two hundred chips, one of the company's most powerful and complicated chips have been allowed to enter mainland China." The Financial Times reported on Tuesday citing two people with knowledge of the matter. "ByteDance" and " Tencent", two Chinese companies, have received about ten thousand H two hundred processors in recent weeks. And while while a few other Chinese technology companies could soon similarly have these shipments. Why are we doing this?

Uh, well thanks Congressman, I I agree uh very strongly with the whole thrust of the question, beginning with the AI and quantum premise, and then the specific focus on uh on the sale um of advanced AI chips to China, because the advanced AI chips are the very thing that will fuel China's ability to match us or beat us in the AI and quantum races. I I think that, you know, allowing uh the export of H two hundreds and other advanced chips uh is a policy error that I think that we will regret. And one should note, I think especially for intelligence committee purposes, that the struggles that we have and I think some of the policy shortcomings are not only in those advanced chips like the H two hundreds that we have recently um, decided to allow for export, but also in a failure to stop the really enormous smuggling networks uh into China, typically through Southeast Asia, of chips that remain under US export controls, like the NVIDIA Blackwells. There is really important reporting, uh, think tank reporting, journalistic reporting, and otherwise. There have been indictments out of the Southern District of New York for major and consequential smuggling uh of these chips to China, typically through cutouts in Southeast Asia. This is a problem of our uh that relates to intelligence and law enforcement and export control enforcement of the rules that we have and really speaks to the need to crack down not only on what we choose to license, but on the enforcement of what we choose not to license and also on the remote access issue which for now remains entirely legal but China is accessing massive volumes of those very same chips. in overseas data centers because that's a gap in our current export controls.

So so David you you referenced that w this y that we will regret this policy decision. How long is that gonna take and what's it gonna take s to to stop this?