HEARING

The select committee will come to order, and good morning everyone. Uh thank you for being here, and uh before we begin I wanna acknowledge a new member of the committee, our good friend from New York, Representative Tom Swasey. Welcome. It's great to have you on the committee. Uh, today's hearing is on the Chinese Communist Party's economic espionage and malign influence, targeted at the subnational level. This is an active threat and we will examine how these activities have accelerated in scale intensity and sophistication over the past decade. The CCP's professed desire for constructive relations, its pursuit of so-called win-win outcomes, and its supposed respect for the sovereignty of other nations are all promises the CCP breaks. The CCP is engaged in an epic campaign to undermine the United States here at home, spanning economic and traditional espionage, state-directed cyber intrusions, talent recruitment programs, information warfare, covert influence networks, legal and illegal lobbying, blackmail, infiltrating our critical infrastructure, and transnational repression aimed at the Chinese diaspora. In fact, the CCP is the largest oppressor of Chinese people in the world, and it has targeted Chinese Americans who courageously speak out against it. Just last month, Eileen Wang, the mayor of Arcadia, California, which is home to sixty thousand people, was arrested for acting as an illegal agent of the Chinese government for activities undertaken before she was mayor. She pled guilty and is now in prison. This Chinese government agent, acting at the direction of PRC government officials, took advantage of our free and open society carry out an agenda on behalf of the CCP. This is an alarm bell for all of the us that the CCP's malign influence must be confronted. United Front work, one of the CCP's primary instruments for political influence, is a core component of this strategy. What makes it uniquely concerning is that it is not simply a foreign intelligence activity conducted from afar, It is a comprehensive influence operation that reaches deep into communities, businesses, and institutions across the United States, often those seemingly benign cultural, academic, or commercial engagement. It operates by exploiting these three primary levers, access, coercion, and incentives. First, it seeks to access state and local officials. business leaders, university researchers, and community organizations. In many cases, this access is earned through partnerships that appear mutually beneficial, trade delegations, sister city relationships, student exchanges, or local investment initiatives. However, these channels can be repurposed to collect strategic information, shape local decision-making, or identify individuals who can be influenced or co-opted. Second, coercion plays a central role. The CCP cruelly exploits vulnerabilities among diaspora communities, including family ties in China, business dependencies, or immigration concerns. Individuals may be pressured, subtly or directly, to support party-aligned positions, silence criticism, or pass along information. These coercive tactics are often deliberately obscured, making them difficult for local authorities or community organizations to detect let alone counter. Third, the CCP employs a wide spectrum of incentives. These include commercial benefits, political access, or opportunities for personal advancement. Yet these promises often come with expectations, that local officials will support PRC-backed initiatives, that academic partners will share research, or that community leaders will echo narratives favorable to Beijing. The CCP does not distinguish between national and subnational targets. State legislatures, municipal governments, school boards, public universities, local businesses, and community associations are all soft targets. A strategic investment pitch to a mayor a partnership with a local university, or outreach to a diaspora civic groups can yield long-term advantages for the CCP's objectives. Because these engagements often occur far from Washington, they can unfold with limited oversight, inconsistent safeguards, and even uneven awareness of the risks involved. This gap between federal insight, and local exposure represents one of our most significant vulnerabilities. Closing it requires sustained collaboration across all levels of government. Federal agencies must share actionable intelligence and best practices with state and local partners in ways that are clear, accessible, and timely. Local leaders from mayors to university administrators to community officials must be equipped with guidance that helps them distinguish legitimate engagement from attempts at manipulation or exploitation. Above all, our response must reflect the same whole-of-society approach that the CCP employs. Protecting our economic competitiveness, safeguarding our research, and strengthening the resilience of our communities requires participation from government and industry, academia, civil society, and diaspora communities. The goal is to have an honest and open cultural and economic exchange that is transparent, secure, and mutually beneficial. Today's hearing will highlight the CCP's continuing abuse of the United States' sovereignty and the divergence between the CCP's words and their deeds. The hearing will focus on two fronts, of this battle that demand action from Washington, the CCP's economic espionage, and its malign influence at the state level. More importantly, we hope that today's hearing will provide an important step toward building that coordinated nationwide response. Thank you. And I now recognize the ranking member for his remarks.

Thank you, Mister Chairman, and I appreciate the bipartisan way you have conducted uh this committee and uh your leadership. Uh I uh share the concerns about uh China's economic espionage. It is undisputed that they have stolen uh intellectual property from American manufacturers that they required a coercive joint venture agreement. Our companies went there uh and basically to have access to the market were required to give up intellectual property. Uh, and they have, uh, tried to get, uh, intellectual property from our, uh, technology companies and our manufacturers. And we need to stop that. We need to stop the offshoring of our jobs to China, the offshore offshoring of our industrial base to China, uh, and certainly, uh, make sure that, uh, we have a level, fair playing field. Uh, we don't steal China's technology. They shouldn't be stealing ours. We don't have economic espionage with China. they shouldn't be having economic esp espionage with us. And we need to have self-reliance on critical industries uh in this country. And so I look forward uh on that uh to to working on a bipartisan basis. But I do wanna also, as a Asian American, as a son of immigrants, uh speak to the United States troubled history uh with discrimination based on race or national origin. And I appreciate uh Mister John Yang being here to help provide that perspective which is so important as we consider the real threats, uh, that the United States faces. You can go back to Frederick Douglass, uh, from his composite nation speech in eighteen sixty-nine, where he stood up for the rights of, uh, Chinese immigrants. And soon after Douglass's, uh, uh, urging that we have Chinese immigrants in the United States, unfortunately the country went in a different direction. They had the eighteen eighty-two Exclusion Act, Uh, we have had a history of discriminating against, uh, Asian, uh, immigrants to be citizens, to own land. Uh, and, uh, we had this awful thing called the China Initiative, uh, which Mister Yang has done, uh, incredible work on, w- which basically went after Chinese American, uh, professors and Chinese American scientists, uh, and made them feel, uh, unwelcome, made them feel profiled, uh, harassed them. Uh, and now it's been discontinued because they recognize that, uh, Chinese Americans actually contribute to the United States. Did you know that of the top AI researchers in the United States, thirty-eight percent of them are of Chinese origin. We would not have Silicon Valley if we did not have the Chinese origin uh top AI researchers in this country. Jensen Wang, uh, was who who's leads the entire AI revolution is uh someone who was of Chinese origin. Uh, the reality is that, uh, the top seventy-two percent of, uh, uh, of, of STEM graduates, uh, seventy-two percent of them come from, uh, countries, uh, outside the United States. So, uh, I am very, uh, very passionate, Mister Chairman, that as we look at the legitimate threats that Chinese government poses to America's economic independence, we do not in any way conflate it. uh with the harassment of uh Chinese immigrants of Chinese Americans of Chinese students and we recognize the incredible value and role that they play uh in the United States so I look forward to uh that conversation and hope we can keep that distinction in mind.

Thank you ranking member and I totally concur with making that distinction and and our goal is really to have policies that protect Chinese Americans and make sure they have uh their constitutional rights, just like every American should have and free from the CCP's malign influence. So, uh I think we're in total agreement on that. Um, I also just wanna recognize uh today that we're joined by uh our friend, uh Representative Jason Smith, who is the Chairman of the Ways and Means Committee. And we are honored to have you here with us today and I ask unanimous

Thank you, Ch- thank you, Chairman Molinar, um, Ranking Member Khanna. Um, it's a it's a true honor to be here with you all this morning. Thanks for having me. I commend you and your your fellow committee members for the important work you all have been doing um to expose efforts by the the Chinese Communist Party to infiltrate and influence our nation's economic activities as well as our political and public discourses. I particularly appreciate the working relationship our two committees, the Select Committee on China and the Ways and Means Committee, have had when it comes to combating combating China's harmful influence. That includes the letter that Chairman Molinar and I led to Treasury Secretary Besson and IRS C CEO Bissingano earlier this year, calling on Treasury and the IRS to examine tax-exempt organizations right here in the United States that have close ties to the CCP. Specifically, we raised concerns about China's united front tax-exempt organizations that are peddling communist propaganda propaganda in influencing our elections in violation of their tax exempt status. The Ways and Means Committee has spent years, years investigating tax exempt organizations. We have found that several of these organizations, which enjoy generous, generous financial benefits due to their tax exempt status, have been causing chaos. and stoking violence in our communities while also interfering in our political system. What's even more shocking is the level to which these U. S. based organizations are funded by foreign nationals that are influenced by foreign governments, most notably China. Our oversight investigation into the Chinese Communist Party's efforts to meddle in our public discourse has uncovered a large network of US base tax exempt organizations tied to Nivelle Roy Singham, a wealthy American tech mogul who operates his net network out of Shanghai. Shanghai Singham enjoys close ties to the CCP and shares office space with a Chinese propaganda company which says its goal is to quote " tell China's story well". Mister Singham has also participated in a workshop about promoting the CCP internationally. During a hearing of the Ways and Means Committee earlier this year, an expert witness testified to how the Singham network mobilizes, trains and amplifies protests to vandalize property, burn our flag, assault local law enforcement officers, shut down airports and bridges in major cities like New York City and Los Angeles, all in an effort to harm our institutions and disrupt our way of life. The Ways and Means Committee is seeking information and documentation from the three Singham network organizations, Breakthrough News, Tri-Continental, and the People's Forum. The People's Forum alone received over twenty million dollars from the Syngham network. We have made it clear to all three that we will use every tool at our disposal, including congressional subpoena powers, to conduct our oversight responsibilities. Most recently, though, Mister Chairman, foreign money from C C P aligned sources has flowed into US non-profits, protesting, data centers, in what can only assume is an attempt to undermine America's position as the global technology leader. China would like to dominate the future of artificial intelligence. And it is clear that they are actively seeking to exploit Americans' legitimate, Americans' legitimate concerns and sow discord in our own backyard for one purpose, and that is to seize this techn- technological advantage for themselves. Americans have every right to question the size, the scale, and scope of projects in their backyard. But we cannot, Mister Chairman, allow the U S tax code, to be weaponized against our national security interest. We will follow the money and get to the bottom of the dark web of funding sources and fiscal sponsorships that support rogue tax-exempt organizations, often at the behest of the Chinese Communist Party. I want to thank you again um to all the members of the China Select Committee, Chairman Molinar, Ranking Member Khanna, uh for continuing to investigate. the harmful influence China and its proxies are having on American communities. This work is is incredibly important not only to protect the integrity of our tax laws that govern and provide generous benefits to many of these organizations, but also to the safety and security of our communities and the health of our soc- society. Thank you once again for having me.

Thank you, Chairman Smith. Uh, if any other member wishes to submit a statement for the record, without objection, those statements will be added to the record. I'd now like to welcome and introduce our three witnesses today. Uh, Mister David Shedd served as Acting Director of the Defense Intelligence Agency following a distinguished career in the intelligence community. He is off- also the author of a new book published this year, the great heist, China's epic campaign to steal America's secrets. Mister Michael Lucci is the founder, CEO, and chairman of State Armor, which is doing important work in equipping state and local governments with the necessary legal tools and policy solutions to deal with global security threats. Mister John Yang is the president and executive director of Asian Americans Advancing Justice, which focuses on civil rights for Asian Americans through advocacy, education, and litigation. And with that, I want to welcome all of our witnesses today, and thank you for being here this morning. Uh, Mister Shedd, you are now recognized for your opening remarks.

Thank you, Mister Chairman. Chairman Molinar, Ranking Member Khanna, distinguished members of the select committee on China. Thank you for this opportunity to speak today about one of the most pressing threats in the free world. China's unprecedented campaign of industrial espionage, that is. As former acting director of the Defense Intelligence Agency who spent decades in the intelligence community, and on the National Security Council staff, I wanna thank you for the opportunity to speak today about this, uh, epic campaign to steal America's industrial secrets. In nineteen eighty-four, Deng Xiaoping, the successor to Chinese Communist Party Chairman Mao Zedong, reset the strategic direction of the CCP. His vision has been implemented by successive Chinese leaders, including Xi Jinping, since twenty twelve. Deng underscored that China would retain ideological stability, code words for the CCP's single-party rule, but would introduce managed capitalism under socialist guardrails to enable social transformation. China's economic transformation took off in earnest once China joined the World Trade Organization in December two thousand one, during the period that I was in the uh White House uh NSC staff. Since then, China has orchestrated a highly strategic, highly accelerated and multifaceted effort to steal commercial and technological secrets from the United States and and other Western nations. The campaign, which blends cyber espionage, human intelligence, academic collaboration, and commercial investments has been instrumental in propelling China's rapid economic and military rise. Since joining the WTO, China has transformed from an economic backwater into a global superpower, leveraging stolen technology and property to dominate critical technologies such as telecommunications, artificial intelligence, quantum computing, hypersonic weapons, biotechnology, and yes, even in the agriculture sector. No commercial area is out of bounds for China's reach. China's approach is unique and revolutionary. Unlike traditional espionage that I know a little something about, which typically targets government-to-government classified information, Beijing has adopted this whole of society strategy. Under Xi, the security and intelligence capabilities of the Ministry of State Security have ballooned in size, vastly outstripping the CIA, the NSA, the DIA and the FBI. Their mandate is to carry out the world's greatest uh and grandest larceny. The CCP's strategy fuses military and civilian collection objectives. And the People's Liberation Army has the first rights to use purloined commercial proprietary intelligence to enable its vast military modernization. Corporate America, professors, academic researchers are all fair targets for the MSS. The CCP has weaponized venture capital, private equity, and academic partnerships to acquire sensitive technology, research and development, and intellectual property, that it could not obtain legally. This decentralized but highly strategic collection method, combined with theft, graft, hacking operations, has allowed China to leapfrog the West in key areas of innovation. The implications of the campaign, this this campaign is profound. Emerging technologies are the battlegrounds of great power competition today, and China's theft of secret threats Threat- the theft of the secrets threatens not only the national security of Western nations, but also the competitive standing of their companies in the global marketplace. As former Attorney General Eric Holder aptly stated, there are only two categories of companies affected by the trade, uh, secret theft from China, those who know that they've been compromised and those who don't. Yet many private sector leaders remain oblivious to the long-term consequences of fueling Chinese economic superiority in pursuit of short-term profits. Western governments and security apparatuses have failed to react appropriately to safeguard against the CCP's steadily evolving campaign of theft. Traditional legal and regulatory frameworks are ill-suited to address the modern tactics employed by China, making prosecution of trade uh theft cases difficult, even when evidence is overwhelming. As Secretary of State, Marco Rubio has warned American companies are committing corporate suicide, and I quote, " by failing to prioritize IP security and guard their assets." This is not just a commercial war. It is a unilateral campaign by China to reshape and dominate the global order. In The Great Heist, my co-author Andrew Badger and I document the systematic campaign driven by initiatives such as Made in China twenty twenty five, which was launched in twenty fifteen and represents, according to former FBI Director Chris Wray, the largest transfer of wealth and knowledge in history, estimated to be about six hundred billion dollars annually. While direct military confrontation is not inevitable, the risk of a hot war over Taiwan grows with each passing day. CCP Chairman Xi has declared his intent to reunite the island by twenty twenty seven. And of course this would ha- could happen even sooner. Such a conflict would likely involve deployment of new lethal technologies, and could target the American homeland itself. I urge policymakers and US corporate leaders to recognize the gravity of these PRC-CCP actions and take decisive actions to protect our national interests and secure the future of the free world. I welcome your questions and once again thank you for the opportunity to be in a part of this very important hearing. I yield back.

Thank you very much. Mister Lucci, you may proceed.

Chairman Molinar, Ranking Member Khanna and members of the committee. My name is Michael Lucci. I'm the founder and CEO of State Armor, a non-profit that works with state governments to protect the American homeland. My message is simple. The American homeland is contested. States are on the front lines of this contest. And the Chinese Communist Party is exploiting vulnerabilities at the state and local level that can go overlooked here in Washington, D. C. My remarks will focus on pre-positioning near critical assets, influence operations, their impact on state institutions, state protective responses with a focus on Nebraska and Texas, And finally, the pressure campaigns that have been put upon the state lawmakers who have enacted these protective responses. First on pre-positioning, federal leaders have been very clear that the Chinese Communist Party is pre-positioning on critical infrastructure and creating vulnerabilities in our supply chains. What state leaders find is that they are also physically pre-positioning near military installations. I'll give just a few examples. A former officer in the People's Liberation Army bought a hundred and forty thousand acres near Laughlin Air Force Bay base in Texas, where he tried to directly access the Texas energy grid near the base. Huawei equipment surrounded nu- nuclear missile silos in western Nebraska. Fufon group was building a grain silo twelve miles from Grand Forks Air Force base, until the Air Force itself said that this was a clear national security threat. Governor Cox of Utah removed a CCP front company from its industrial location near a weapons testing facility in Utah. And then property owners tied to Chinese intelligence have been found with properties that literally touch the fence lines of Whiteman Air Force Base and Barksdale Air Force Base in Missouri and in Louisiana. Such pre-positioning allows for surf- surveillance. Someday it could allow for sabotage of those assets. States have taken action to mitigate these threats that they see in their backyard. On influence operations to penetrate state institutions, from our view, the penetration of universities is a national security crisis. The interference operations in state houses, which I'll discuss later, is a scandal. Reports from this committee have documented thousands of federally funded military focused grants that go to American universities who then turn around and partner with entities in China tied to China's military and defense industrial base to develop military technologies. So the way we see it is, we are funding their military modernization through our Pentagon grants, Department of Energy grants. These partnerships are inex inexcusable, but from what we've seen, they are the tip of the iceberg for infiltration of our universities. In terms of state responses, Nebraska and Texas have been the leading states. Most of this work has been bipartisan. In Nebraska in particular, Republican Governor Jim Pillen partners with uh State Senator Elliot Bostar of Lincoln, uh a Democrat, for the best model of bipartisan teamwork at the state level. In Texas, Governor Abbott has led with executive orders and the legislature has enacted overwhelming bipartisan responses to protect state assets in Texas. I'll give you a few examples of what's occurred in these states. Creation of committees to prepare for the fallout, the domestic fallout, of a specific conflict. Military, critical infrastructure, and supply chain protections. Foreign agent registration for adversary nations. Bans on Chinese Communist Party funds in lobbying and state houses. The first laws in the country on transnational oppression came first in Texas and then second in Nebraska. Protections of research security and campus integrity, pension divestment, and protecting genetic data of Americans from the People's Liberation Army. Finally, Texas even created a state cyber command to counteract threats that are hitting small communities across Texas rural and otherwise. In addition, the attorneys general of these states, Mike Hilgers in Nebraska and Ken Paxton in Texas, have driven consumer fraud cases against Chinese technology providers based upon the claim that these technologies conda- contain backdoors or dangerous malware that is not disclosed to the consumer. They've worked with the FCC on this project. Yet when states push back against threats, they encounter sophisticated pressure campaigns. Jamestown Foundation's Sheryl Yu describes how the Chinese Communist Party's united front system co-ops individuals, nonprofits, and businesses to advance party interests. This happens in state houses. State Senator Elliott Bostar testified earlier this month, before the CECC, that he personally received threats from a large Chinese business in the state of Nebraska about what might happen to the economy of Nebraska if Senator Bostar's foreign agent registration bill advanced. Governor Pillin of Nebraska has come out and said that he would prefer that Chinese Communist Party companies engage this behavior just leave the state of Nebraska. Digital threats have been sent to people who testify in front of committees in Nebraska. Omaha reportedly has a United Front service station. In Texas, lawmakers and Chinese Americans who testify in committee in favor of these protective measures have received threats. Chinese Communist Party state media talking points are repeated in hearings for hours in Texas even when they have no relation to the underlying bill. Pastor Bob Fu in Texas has been a victim of transnational oppression. There was even a hearing of Texas's equivalent committee of your committee, so Texas had a committee on on foreign adversary threats. That hearing was shut down by a cyber-attack in September of twenty twenty four. This is not normal advocacy. It is a pressure campaign from a non-democratic actor acting within our democratic system. It happens across the country, although I highlight just the examples of Nebraska and Texas today. Our openness is a strength. So is our federalist system. But our open system cannot endure endless attacks and exploit exploitation from state actors who do not agree with our democratic values. Thank you for addressing these concerns. Thank you for interest in influence operations at the subnational level. And I look forward to your questions.

Thank you. Now let's turn to Mister Yang.

Thank you very much. Thank you, Chair Molinar, Ranking Member Khanna, and members of the select committee. Good morning. My name is John C. Yang. I am the President and Executive Director of Asian Americans Advancing Justice. which is a national advocacy organization that advances the civil and human rights of Asian Americans and seeks to promote a fair and equitable society for all. This committee was created to confront the ser- security challenges that the Chinese Communist Party presents to the United States. We do not dispute that this challenge is real, just as the challenges posed by the Putin regime and any other autocracy is real. These governments are autocracies and dictators, and they do not respect civil rights, human rights, or democracy. That said, my purpose here today is to help this committee address these challenges repea- without repeating the mistakes that our country unfortunately has sometimes made in the past substituting ethnicity-based suspicion for evidence-based enforcement in the name of national security. When we in the United States have failed to recognize the distinction between governments and the people subjugated and ruled by those governments, we have subjugated people in our country, often our own citizens and residents, to harm and discrimination. Unfortunately, Asian Americans have too often been the victim in the name of national security. Now this risk is not hypothetical. We saw the lynching of Chinese Americans and the passage of the Chinese Exclusion Act when some believed that Chinese laborers, some of the same laborers that helped to build the transcontinental railroad were taking jobs from from white Americans. We saw the incarceration of Americans of Japanese descent during World War Two and the murder of Sikh Americans and countless hate crimes against Arabs, Muslims, uh Middle East and South Asians after nine eleven. More recently, we experienced tens of thousands of hate incidents, not to mention physical violence against the Asian American community because of COVID-nineteen. In each of these cases, there were legitimate concerns related to foreign affairs. But in each of these cases, our domestic community, our fellow Americans were harmed. Unfortunately, this is not a vestige of a bygone era. but rather manifests itself in policies today. As many of you know, your colleague, Representative Judy Chu, has been faced with accusations of divided loyalty simply for her stalwart advocacy on behalf of the Chinese American community. More recently, Maryland delegate Chow Wu has been slandered in part simply because he has an a- accent. These are not the profiles of foreign Asians. These are the profiles of Americans serving our country. Policies and initiatives have likewise unfairly targeted the Chinese American and broader Asian American community. The Department of Justice's China Initiative, launched in twenty eighteen, shifted from targeting people acting on behalf of the Chinese government to targeting scientists and researchers who simply had a nexus to China. Most cases involve no espionage charges at all, but rather involve administrative errors on disclosure forms. When considering policies meant to combat state-based espionage and subnational influence, I would ask lawmakers to engage in a thorough cost-benefit analysis, with the nuance necessary to develop real s- solutions to precise problems. Saying that a policy will benefit national security is too simplistic and does not lead to effective results. On the other side of the ledger, the cost to the Asian American community is clear. Surveys conducted by Pew and the Asian American Foundation found that one in two Asian Americans no longer feel safe because of their race or ethnicity. The number of scientists and students that are interested in coming to the United States not just from China for but from countries all over the world, is dwindling. This brain drain does not benefit national security. National security is not only about keeping back the a- bad actors out, it's also about keeping good innovative contributors in. I offered this community, com- I offered this committee five specific recommendations for developing policies that will have a net benefit to America without unnecessary cost. First, Let's predicate policies on specific articulable evidence of conduct, not ancestry, and ensure that anyone charged with enforcing those policies have the proper training and expertise to determine wrongful conduct. Second, avoid over-criminalizing administrative errors and ensure that resources are devoted to investigating issues where s- security is truly threatened. Third, tailor ownership or lending restrictions to actual indicators of foreign government control. not ordinary immigrant family ties. Fourth, for build anti-bias training, so writes due process protections, along with a reporting mechanism that ensures transparency in our system. And fifth, invest in language access and education to ensure that our communities receive the information they need to contribute to our economy and our security. Finally, I urge this committee to pair enforcement with renewed people-to-people exchange. Asian Americans are not a security liability to be managed. We are in an asset, a community uniquely positioned to rebuild the scientific, academic, and business ties that have historically reduced the conflict between nations. A targeted approach is not necessarily a softer approach. Rather, it is a more effective one. Thank you very much. I look forward to your questions.

Thank you. Uh, now we'd like to turn to questions, and I'll recognize myself for five minutes of questions. Uh, Mister Shedd, you've discussed the importance of protecting the crown jewels of American technology, including our cutting edge AI models. This week news broke that Alibaba targeted Anthropic with a distillation attack, to steal Anthropic's intellectual property. Given your expertise in China's espionage methods, what does this tell us about how China is targeting our technology?

Thank you for, thank you for that question. Uh, you hit on a key word, distillation. And perhaps the audience doesn't know the term, but essentially it is, uh, simplifying uh, the data that's in very expensive models that have been built by Anthropic and others uh in terms of artificial intelligence. That then the Chinese are taking that data and, if I can use the term, dumbing it down, in order so that they can put it on the market at a much lower cost, and with greater accessibility to it. So it tells me that we are looking at the CCP's ability to generate new requirements and new capabilities around uh uh uh adopting to the transformation and the growth of AI. So when we look backwards and look at DeepSeek as an example, when they rolled that out, their capabilities surprised many in terms of of having their own version of ChatGPT. And in doing so, it told me that they are on the path of monetizing, but then also accessing the data of all users that would have anything to do with these models, that then they distill from these much larger and expensive models. But the bottom line is financial, as much as it is the intelligence collection as well. They're able to bypass the investment that these large AI companies in the United States have put into it, whether they're still in private equity or outside of that, or in the on the path to becoming uh an IPO. And and therefore don't have to invest in that area and simply leapfrog into having it. So it tells me that their great heist continues in the area of both data and technology with i- with regards to uh to what they've uh appeared to be doing with uh anthropic and the distillation of these models.

And following up uh on a related topic, but if there was one action that Congress could take today, to raise the cost of the CCP's malign influence operations against the United States, what what would it be? What would the one thing we could do be?

Um, to me, I um, I have looked at the deal with uh TikTok and ByteDance, which is the parent of TikTok, and the arrangement of a twenty percent or nineteen point five percent ownership by ByteDance, still of TikTok. being able to carry out what was the mandate of Congress in closing down TikTok would be a great step forward. It would do a couple of things. It would obviously cut off the access to data, but by extension, and my witness colleagues may speak to this more in terms of malign influence, the ability to control the uh the clicks associated with it. But it would also signal to the Chinese that that is an an acceptable flat platform to have in the United States of which there is a hundred and seventy million users and one point seven billion globally. And that would be one action, but would be taking the action that Congress and the mandate that Congress gave to that in c- in shutting it down.

Thank you. Uh, Mr. Lucci, giving the CCP's whole of society mobilization through its United

Chairman, uh, I think that what states could use a lot more of is expertise from the federal government about what these operations look like. So they're, they're dealing with, uh, things ad-hoc. They see very strange activities in state houses. They see Chinese DASHPRA being targeted in places like Houston. And i- it's a new problem for them to deal with. I've spoken with law enforcement at the state level on the issue of, say, transnational repression, and what they'll say is, " We know it's a real thing. When people talk to us about it, we - we know it's happening, we know it's likely a state actor behind it, but we've really kind of never trained on this stuff as you would train on any number of other issues in your law enforcement training." And so that's the type of thing, um, I - I know that there are proposals on transnational repression from this committee and others. uh that could help state leaders understand from a national security Washington DC level what to understand and look for in these threats and how to counter these threats so that they're not kind of having to deal with it ad hoc as they see and learn about it in process, that they could actually train on it and learn about it. Some states, Utah, Texas and otherwise are creating their own trading modules to counter transnational oppression, but I think that they would all seek federal expertise on that issue.

Thank you very much, and now I'd like to recognize ranking member Khanna for five minutes of questions.

Thank you, Mr. Chairman. Mr. Lucci, a few months ago you tweeted out, quote, two Chinese Americans accused of attempted bombing at MacDell Air Force Base gained US citizenship via birthright. They are not loyal to the USA. There are one million and five hundred thousand more, quote, Chinese Americans essentially born in

Uh, Congressman, what I'm referring to are, uh, Chinese folks who are just born in a U. S. territory, and then go immediately back to China. They lived their whole life in China. The estimate of one point five million comes from a book that came out that they

I'm just asking you a simple question. Do you believe these people should be denaturalized? It's a US law that anyone born in a US territory is a American citizen. Do you believe they, that one point five million should be denaturalized?

I think that if they're loyal to the Chinese Communist Party

I'm not asking, I'm saying they're born here, do you think they should be d- denaturalized? One point five million.

Congressman, I understand under the current laws that they have an citizenship as your name.

And and you think that should be changed?

I think that if they have practically zero nexus to the United States of America, other than they were born in a territory, I think it's worth considering that, yes.

Do you believe Chinese Americans uh are more disloyal than uh other Americans?

Congressman, there are seven Chinese Americans who live in my household. I do not think that they are more disloyal than other Americans.

Or you just think that they should be denaturalized even if they were born here?

If the so there are there are two types of of issue we're talking about here. There are folks who are born here, they're just raised here, they're they're Americans like you and I. Uh, it's a very different thing when you have folks, my understanding is about fifty thousand per year, are just born in a territory, they're there for a couple weeks, and then they go back and they're raised in China. I think that the section is very different.

You're saying one point five million.

Right, there's fifty thousand, and then you add it up over years, fifty to a hundred thousand per year, it's going on fifteen to twenty years of this. So I think that, uh, I actually think that this is a very clear security threat because we've seen this, so there's a a gentleman

Are you r- are you saying this for, so are you saying any American born here who then goes to a foreign country and is raised there uh should be denaturalized? Is that your position?

That's not my position.

What what is your position then?

When the federal government defines adversaries, which the federal government does, and then the federal government says, uh, these adversaries pose a national security risk to us, And then when you have

You're not you're not talking about it, you're talking about a blanket statement. You're saying basically in your tweet you say and you're I can't believe you're not walking it back. I I fundamentally find it fundamentally racist. I mean I and I don't use that word, I don't think I've used that word in ten years in a committee hearing. But the reality is that you're basically saying that if you're Chinese American, uh and you're born under US law, uh in a territory, you're you you should be denaturalized. And I'm asking you, is that just applied to China? or are you saying anyone who's born in a US territory uh if they then go to live in another country and uh are there raised till eighteen that they should be denaturalized

Congressman let me restate my household has eight people in it

I don't really care about your household that's like saying I have friends

that's enough that's enough

with someone who's black but I'm still a racist I wanna know what your actual

you Congressman

policy is

Congressman you you accused me of racism against my family

Yes I do I think you're a racist I think you are a racist

Well

So you're accusing me of racism against my wife and my children.

I'm not accusing you, I'm saying the actual statement, I think your statements are racist against Chinese Americans, and I'm trying to understand whether you believe that this is just Chinese Americans who should be denaturalized, or whether you believe that anyone born here who goes to a foreign country and is raised should be denaturalized.

The second part, certainly that's not what I said. What I said was that when folks are born in a territory, they're there for a week or two, they go back to communist China, they have no real nexus to the United States of America, that we should consider that. I think that that's it creates a clear so,

But are you saying that just for Chinese Americans or for anyone born in the

for example

United States who goes and is raised in a foreign country should be denaturalized?

I would consider it for foreign adversary nations as defined by the federal government. That's where the federal government says

So you wanna denaturalize Iranian Americans, you wanna denaturalize Russian Americans, you wanna denaturalize Korean Americans, North Korea, I mean, where does this

If w- when when folks have no my point was in the number of one point five, obviously there are way more people of Chinese descent born in the United States of America, birthright through that. Um, one point five is the estimated number of people born just in a territory, they're there for a very short amount of time, and then they're raised in China, loyal to the Chinese Communist Party. I think that that's a clear security risk. But I'll repeat, um, I I I take, you know, direct defense. You're saying I'm racist against my own family. My family is largely of Chinese ethnicity.

You think you're racist against Chinese Americans? Yes, I do.

I, uh, Congressman, with all due respect, I think that's no, that makes no sense.

We we'll put out this exchange and uh the American people can decide when you're talking about eliminating birthright citizenship for Chinese Americans, whether they think you're a racist. I think a lot of Asian Americans and many Americans will think you are.

I think that when people see that I have a Chinese wife and four Chinese children,

I don't think that excuses racism.

Chinese and lost, I don't think they're gonna see,

No, it's famous.

I don't think they're gonna see racism in that, sir.

Representative Johnson.

Thank you, Mr. Chairman, uh my uh line of question will be for uh Mr. Shed. Course one of the reasons that we know the American economic system is superior to that of China is that, by and large the priorities and the market conduct of our companies are determined by managers and owners as opposed to government officials. Now, of course that being said, I I do understand the real value that come from properly constructed export controls and other uh IP IP protections. But I just wanna I wanna uh chat with you a little bit about how do we strike that right balance? How do we get the Goldilocks spot? I think a number of members of the committee have been properly captivated by your Crown Jewels doctrine. Um, how do we ensure that we don't overstep with the regulations around uh American company behavior? And are there some things that we should uh, endeavor to not do as we attempt to, uh, uh, make sure that companies, uh, in America, that their interests are well aligned with our national security interests.

Thank you very much for, uh, your question, Congressman. I am struck by someone who, uh, grew up for a period of time in Chile under communism, nineteen seventy to nineteen seventy, late nineteen seventy-two. And I can tell you, uh, it wasn't the world.

I'm sorry, perhaps the gentleman could pull the microphone just a little closer. Thank you.