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"Strengthening America" Republican Study Committee US Congressional Strategy Document

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THE RSC NATIONAL SECURITY STRATEGY STRENGTHENING AMERICA & COUNTERING GLOBAL THREATS Since the end of World War II, the United States has been the dominant force on the global stage. The strength of our national character and our economic and military might cannot be matched, and we have used our position as a force for good, fostering a world order rooted in our values of freedom, human rights, the rule of law, and open markets. The fall of the Soviet Union in the early 1990s left the U.S. as the sole remaining superpower, and the loss of our competition gradually caused a shift in our national security strategy. America is still the freest, most powerful, and most prosperous nation in all the world. However, over the past two decades, U.S. dominance has increasingly been challenged by numerous rising threats to the U.S.-led global order. These threats point to the reemergence of powerful competition, the likes of which we have not seen since the Cold War, and they require us to reevaluate our national security strategy once again. There is perhaps no bigger threat to continued U.S. dominance than China. For decades now, the prevailing foreign policy consensus on that nation has been misguided. Conventional wisdom was that a narrow strategy of simply integrating China into global markets and facilitating a more robust trading relationship would transition Beijing away from communism and toward freer markets. Instead, China has exploited its opportunities to double down on authoritarianism and use international markets to amass enormous economic and military strength, often by nefarious means. Beijing now leverages this strength to undermine the U.S.-led international order by replacing our leadership with their own distorted worldview. The recent COVID-19 crisis has clearly illustrated the danger of allowing this to happen. Meanwhile, throughout the last decade in particular, Russia has aggressively reasserted itself as a global power with its own clear intent to undermine the U.S.-led international order. Under the leadership of dictator and former KGB agent Vladimir Putin, the Kremlin’s goals are to advance authoritarianism both at home and abroad. It has invaded and occupied several neighboring democracies, helped prop up other authoritarian regimes, used its vast natural resources to blackmail its neighbors, and sought to undermine Western democracies, including the U.S., with disinformation campaigns. Russia also maintains a military that is capable of challenging the U.S. and has worked to undermine NATO, the most successful alliance of democracies in the world. While the rise of China and Russia pose the biggest strategic threats to the United States, rogue regimes like Iran remain extremely dangerous as well. Iran continues its pursuit of nuclear weapons, seeks Israel’s destruction, and stands as the world’s most prolific sponsor of terrorism. More broadly, Salafi-jihadist groups like ISIS and Al Qaeda have grown in a number of new theaters and remain a top security concern. These growing threats require Congress to adopt new policies focused on advancing America’s interests at home and abroad. Protecting the liberty, security, and prosperity of the American people is the most fundamental role of our government, and it must be done efficiently and effectively. A strong America is essential because our strength enables us to counter threats, oppose tyrants and terrorists, and advance the ideals of peace, freedom, and prosperity around the globe. By contrast, the Russian and Chinese governments seek to dominate their own people and assert control over the other countries of the world. Congress has an important, but too often underutilized, role in the development and execution of national security policy. This report by the Republican Study Committee’s National Security & Foreign Affairs Task Force presents a comprehensive blueprint for how Congress can fulfill its responsibility and includes more than 130 policy recommendations focused on strengthening America and countering our global threats. PAGE 7 COMMUNIST CHINA A NEW STRATEGY FOR COUNTERING AMERICA’S TOP THREAT Section One 1 The COVID-19 pandemic, which originated in Wuhan, China, has caused a renewed focus on the challenge that China poses to the United States. From the beginning of the outbreak, the Chinese Communist Party (CCP) has worked to conceal events and manipulate the narrative. China silenced doctors and journalists who spoke out and pressured international organizations such as the World Health Organization (WHO) to defend the country’s pandemic response and even disseminate Chinese government talking points.2 Chinese officials then created an alternative narrative, fueling a conspiracy theory, peddled through state sponsored outlets, that the virus was created by the U.S. military.3 Yet, China’s coercive and deceptive actions should not be surprising. China, after all, is a communist nation that seeks to overtake the United States as the world’s preeminent power. It is a strategic competitor and the foremost national security challenge that the United States faces today. It has worked to displace the United States in the Indo-Pacific region, expand the reaches of its state-driven economic model, and reorder the region in its favor.4 But, as President Trump’s National Security Strategy notes, China also seeks to both challenge America’s overall power and influence and shape a world that is antithetical to U.S. interests. In November 2012, at the 17th CCP Congress, China’s President Xi Jinping, the country’s most authoritarian leader in modern memory, first announced his vision for achieving “the Chinese dream of national rejuvenation” and military and economic dominance.5 Five years later at the 18th CCP Congress, Xi explained that “the dream of the Chinese people is closely connected with the dreams of the peoples of other countries; the Chinese Dream can be realized only in a peaceful international environment and under a stable international order.”6 This dream, as many experts have noted, is for the CCP to replace the American-led international system with one under CCP leadership.7 Former Under Secretary of Defense for Policy John Rood has noted, “China wants not only to become the world’s largest and most influential economy, but also to be the world’s largest and most influential nation in all spheres of life.”8 China is on its way to achieving that dream, primarily through rapid economic growth and military modernization. China currently has the world’s second-largest economy in terms of nominal GDP ($14.14 trillion) and the largest in terms of purchasing power parity (PPP) GDP ($27.31 trillion).9 In 2000, China controlled only four percent of the global economy, and the United States controlled 31 percent. Today, China stands at 15 percent, and the United States’ share has dropped to 24 percent.10 “The PRC’s [People’s Republic of China] rapid economic development and increased engagement with the world did not lead to convergence with the citizen-centric, free and open order as the United States had hoped. The CCP has chosen instead to exploit the free and open rules based order and attempt to reshape the international system in its favor. Beijing openly acknowledges that it seeks to transform the international order to align with CCP interests and ideology. The CCP’s expanding use of economic, political, and military power to compel acquiescence from nation states harms vital American interests and undermines the sovereignty and dignity of countries and individuals around the world.” – The White House, U.S. Strategic Approach to the People’s Republic of China 1 PAGE 8 The growth of China’s centrally controlled economy has been fueled largely by tools of economic coercion, including intellectual property theft and economic espionage of U.S. companies. In 2019 alone, one in five North American-based companies said that Chinese firms had stolen their intellectual property (IP) within the last year.11 Between 2013-2017, the economic damage of IP theft totaled $1.2 trillion.12 The CCP also deliberately sends thousands of Chinese students to the United States and other nations under the guise of international scientific collaboration to systematically target critical technologies to advance China’s national security interests. Secretary of Defense Mark Esper has stated that China “is perpetrating the greatest intellectual property theft in human history.”13 As part of the “Chinese dream,” China aims to become the world’s science and technology leader by 2050.14 If current trends continue, the National Science Board estimates that China may become the leading global investor in research and development in just a few years.15 Much of this growth is due to China’s theft of IP. As Secretary Esper has noted, China is combining “direct state investment, forced technology transfer, and intellectual property theft to narrow the gap between U.S. and Chinese equipment, systems, and capabilities.”16 A report by the Center for a New American Security (CNAS) has noted that, while the Soviet Union was never able to match the American technological superiority, the same may not be true for China.17 China has, in turn, used this wealth and technology theft to embark on an ambitious project of military modernization.18 The Department of Defense’s 2019 Report on the Military and Security Developments Involving the People’s Republic of China notes that “China uses a variety of methods to acquire foreign military and dualuse technologies, including targeted foreign direct investment, cyber theft, and exploitation of private Chinese nationals’ access to these technologies, as well as harnessing its intelligence services, computer intrusions, and other illicit approaches.” According to The Heritage Foundation’s 2020 Military Index, China is the “most comprehensive threat that the U.S. faces,” being both “formidable” in its military capabilities and “aggressive” in the scope of its provocative behavior.19 In addition to its economic aggression and military modernization, China conducts political warfare and disinformation campaigns against the United States and other democracies. It frequently targets academia, the media, business, and cultural institutions to suppress criticism and promote positive views of the CCP.20 It uses so-called “Confucius Institutes,” Chinese-language centers in American universities, to peddle pro-Chinese political narratives to college students. A 2019 Senate Permanent Subcommittee on Investigations report found that Confucius Institutes are located at more than 100 American colleges and have received more than $150 million in support from the Chinese government.21 The CCP has also used its increasing wealth to pursue “financial diplomacy” through state-directed investment projects overseas. While on their face, these initiatives seem to simply finance infrastructure improvements in developing nations, the CCP uses them as a direct attempt to “counterbalance” the United States and advance a China-centric vision.22 Its efforts include more than $48 billion in infrastructure investment between 2000-2016 in East Asia alone.23 China’s One Belt One Road Initiative—the centerpiece of this strategy—plans to invest over $1 trillion in infrastructure across the globe.24 For the CCP, foreign assistance and involvement in international organizations are a means to cast its political system and approach to economic development as superior alternatives to those of the United States and other democratic countries. As part of this approach, Beijing has increased pressure on foreign countries, companies, and even individuals to conform to its worldview.25 China’s soft power strategy has paid dividends, including being appointed to bodies such as the United Nations (U.N.) Human Rights Council, where it possesses the ability to vet candidates for critical U.N. human rights posts.26 The CCP’s aggressiveness abroad is in many ways rooted in its authoritarianism at home. Xi has concentrated more power than any Chinese leader since Mao Zedong. In March 2018, the National People’s Congress voted nearly unanimously to amend their constitution to remove presidential term limits. Under President Xi, China has become even more totalitarian in its cen- PAGE 9 sorship of media and the internet and has established an elaborate system of surveillance of its citizens.27 It has also undertaken a strategy of “sinicization” of all religion, which attempts to control and manipulate all aspects of religious faith into a socialist mold with Chinese characteristics. This has been particularly evident in the Muslim-majority province of Xinjiang and the Buddhist-majority province of Tibet, which, in the words of the U.S. Commission on International Religious Freedom (USCIRF), “increasingly resemble police states.”28 Christians have also faced increasing persecution from the CCP, including forced church closures, the jailing of pastors, and even the issuance of a state-sanctioned translation of the Bible, which promotes a “correct understanding” of the text that emphasizes compatibilities with communism.29 Additionally, the CCP has worked to quash democracy in Hong Kong despite assurances to the international community that it would respect “One Country, Two Systems.”30 In May 2020, China announced that it would be taking over Hong Kong by instituting a national security law that would apply mainland Chinese law to the special administrative region. This action would essentially mean the end of the “One Country, Two Systems” framework.31 China’s actions in Hong Kong are just the latest example of how the CCP fears liberal democracy more than anything else and views itself in ideological competition with Western democratic values. Shortly after Xi took power in 2012, the General Office of the CCP circulated a document entitled the Communiqué on the Current State of the Ideological Sphere or–Document No. 9–that made clear the CCP’s authoritarian vision sees itself at war with the American values of constitutional democracy, free markets, rule of law, and human rights. The document states that promoting Western democracy is an attempt to undermine the system of socialism with Chinese characteristics, that promoting “universal values” is an attempt to weaken the theoretical foundations of the CCP’s leadership, and that promoting civil society and free markets are an attempt to undermine the CCP.32 In sum, the Chinese grand strategy of achieving the “Chinese dream” entails transforming the international system to one under CCP leadership. Industrial espionage, intellectual property theft, malign political influence in democratic nations, making developing countries dependent on Chinese loans and construction projects, and discrediting liberal democratic notions of human rights are all tools China has used in its effort to assert international dominance.33 The CCP’s goal was probably best described by former Vice President Dick Cheney’s national security adviser Aaron Friedberg as “making the world safe for authoritarianism.”34 The old way of thinking about China has failed. A strategy limited to trade and economic integration alone has not caused China to democratize or grow less aggressive in its behavior. On the contrary, the CCP has grown more authoritarian and aggressive. The Task Force believes that Congress must adapt to a new strategy, one which seeks also to push back against the CCP and its efforts to undermine U.S. interests, remake the world order, and promote an alternative form of governance. The CCP’s efforts are multifaceted and require reforming existing laws and enacting new legislation in a broad variety of areas. The Task Force knows that Congress must take the lead in pushing such a strategy forward. Pushing back against China must begin by advancing policies in at least five different areas. First, we must push back against China’s industrial espionage and intellectual property theft and malign economic behavior. Second, we must stop China’s malign political influence and disinformation campaigns. Third, we must stand up to China’s human rights violations. Fourth, we must counter China’s global military modernization. Fifth, we must strengthen our alliances in the Indo-Pacific region. COUNTERING CHINA’S INDUSTRIAL ESPIONAGE AND INTELLECTUAL PROPERTY THEFT “The Chinese government is determined to acquire American technology, and they’re willing to use a variety of means to do that—from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information. If China acquires an American company’s most important technology— the very technology that makes it the leader in a PAGE 10 field—that company will suffer severe losses, and our national security could even be impacted.” – FBI Director Christopher Wray35 The CCP is undertaking a project of massive intellectual property theft and industrial espionage in an effort to surpass the United States technologically and economically. According to the 2017 Commission on the Theft of Intellectual Property, China is the world’s top intellectual property infringer.36 This problem was made worse by President Obama, who failed to respond forcefully to China’s hacking of the Office of Personnel Management network, which was the greatest theft of sensitive personnel data in history. In response to the cyberattack, President Obama refused to impose sanctions on China or publicly blame them for the attack, opting instead to negotiate a failed diplomatic agreement with Xi to end cyber espionage. 37 In recent years, Congress has taken a number of important steps to combat Chinese IP and technology theft. It has passed key statutes, such as the Defend Trade Secrets Act (DTSA), which allowed private rights of action against Chinese companies in certain circumstances; the Export Control Reform Act (ECRA), which gave the Committee on Foreign Investment in the United States (CFIUS) authority over “emerging” and “foundational” technologies; and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which expanded the scope of covered transactions in CFIUS’ jurisdiction. The Trump administration has also made protection of American IP a high priority. For instance, it has elevated IP protection as a major issue in U.S.-China trade talks. Phase One of the Economic and Trade Agreement signed by the two nations forces China to make major IP-related concessions, including limiting its ability to require foreign companies to transfer intellectual property to Chinese entities as a condition for doing business.38 In February 2018, the Department of Justice (DOJ) also announced a “China initiative” to combat economic espionage through a number of new enforcement actions, including bringing more actions for theft of trade secrets and intellectual property.39 Thus far, this initiative has brought forth a spike in prosecutions, with over 1,000 investigations currently open, according to FBI Director Wray.40 During the Obama administration from 2013-2016, the DOJ did not charge a single person with spying for China. In contrast, since announcing its China Initiative in 2018, the DOJ has filed over 20 criminal cases pertaining to economic espionage, trade secret theft, and export controls.41 While these measures have been a good start, the Task Force believes that Congress can do a great deal more to combat China’s theft of intellectual property and industrial espionage. A number of reforms supported by the Task Force are listed below. Congress should enhance the ability to bring cases for IP theft by ensuring the Defend Trade Secrets Act applies extraterritorially. In 2016, Congress enacted the Defend Trade Secrets Act (DTSA) to create a new civil private federal right of action for companies to sue for trade secret misappropriation. Previously, trade secret misappropriation was handled through criminal enforcement under the Economic Espionage Act (EEA) of 1996.42 The EEA’s criminal penalties apply extraterritoriality if “(1) the offender is a natural person who is a citizen or permanent resident alien of the United States, or an organization organized under the laws of the United States or a State or political subdivision thereof; or (2) an act in furtherance of the offense was committed in the United States.”43 Congress, however, was silent on whether civil cases under the DTSA applied extraterritorially. Fortunately, some federal courts have recently ruled that the EEA’s extraterritoriality provisions also apply to private civil claims under the DTSA, allowing American courts to gain jurisdiction over overseas companies involved in trade secret theft.44 The current ambiguity in the DSTA may create problems down the line if the statute is challenged by Chinese or other foreign companies. The Task Force, thus, believes that Congress should amend the DTSA to explicitly clarify that it applies extraterritorially to ensure that the DTSA remains an important tool for U.S. companies to protect their trade secrets from misappropriation occurring in China. PAGE 11 Congress should require Chinese businesses to assign an agent for service of process in the United States. Kevin Rosier of the United States-China Economic and Security Review Commission (USCC) has argued that Chinese businesses participating in the United States can effectively operate behind a firewall that can keep them largely immune from the jurisdiction of U.S. courts and regulatory agencies.45 This can leave U.S. partners, competitors, and investors vulnerable. Rosier notes that if a U.S. plaintiff files a complaint against a China-based firm, the typical first response from the Chinese firm is that it is not subject to U.S. jurisdiction. Since China-based companies typically do not keep a representative of their company in the United States, domestic companies have little recourse to pursue complaints against China. Although international protocols, such as the Hague Service Convention and the Hague Evidence Convention, are supposed to facilitate the pursuit of claims brought by U.S. companies, in practice such litigation is costly, and China interprets its obligations in a way which protects its firms from litigation.46 The Task Force recommends that Congress strengthen U.S. laws to ensure Chinese companies that have harmed U.S. citizens and businesses cannot evade accountability in U.S. courts. In particular, Congress should require companies from China, and other nations that skirt the rule of law, to assign an agent based in the United States to accept service of process as a prerequisite to access U.S. markets. By doing so, aggrieved U.S. entities will have an avenue for immediately establishing personal jurisdiction against a Chinese firm. Congress should address sovereign immunity abuses to better enable private sector litigants to seek legal redress against Chinese companies for IP theft. The 2017 U.S.-China Economic and Security Review Commission report noted that “The application of the sovereign immunity defense to commercial cases presents a potential risk for U.S. businesses and individuals, allowing Chinese state-owned enterprises (SOEs) to conduct unlawful activity in the United States without legal consequences. Some Chinese SOEs are evading [civil] legal action in the United States by invoking their status as a foreign government entity under the Foreign Sovereign Immunities Act.”47 Thus, as the USCC notes, Chinese firms often disguise the actual or beneficial owner to make them appear as a Chinese SOE. This then places the burden on American firms to prove that one of the FSIA exceptions of sovereign immunity applies, such as the commercial activity exception.48 Robert Spalding, President Trump’s former Director of Planning at the White House National Security Council has stated, “Typically, the first thing Chinese companies do is try to deploy the Foreign Sovereign Immunities Act to protect themselves against American companies.”49 Spalding described the Chinese approach as “lawfare,” a form of warfare that exploits U.S. law to deter private parties from exercising their rights. He explained that the CCP will use every obstacle necessary to hemorrhage the resources of American companies until they can no longer afford to do battle.50 American firms often do not have access to the same level of resources as their Chinese counterparts, which has a “chilling effect” that deters lawsuits.51 The Task Force endorses the recommendation by the 2017 U.S.-China Economic and Security Review Commission report that Congress amend the FSIA to allow U.S. courts to hear cases against a foreign state’s corporate affiliates under the commercial activity exception. The Task Force also supports the Commission’s recommendation that the SEC require Chinese firms to waive any potential claim of sovereign immunity if they do business in the United States. This would force Chinese state-owned companies to play by the rules rather than continue to exploit U.S. law to get away with theft. It would also galvanize private sector litigants to go after Chinese companies that steal IP. Congress should reform the evidentiary requirements of Section 337 of the Tariff Act to facilitate cases for cyber theft of trade secrets. Section 337 of the Tariff Act of 1930 allows U.S. companies to protect themselves from imports that infringe on IP rights by filing a complaint with the International Trade Commission (ITC).52 While the ITC cannot award damages, it can direct Customs and Border Protection PAGE 12 (CBP) to block infringing products at the ports of entry.53 The ITC can serve as an important tool to protect U.S. companies from infringing foreign imports but it can be limited in its ability to sufficiently deter government-backed cyber theft of trade secrets. In particular, it is difficult to gather evidence in cyber theft cases when countries, such as China, direct state-sponsored hackers to steal IP from U.S. companies and then go on to pass that information to Chinese firms that then export products using the IP into the United States. Thus, companies may be unable to prove that products were developed as a result of theft from Chinese government-backed cyberattacks.54 This is compounded by the problem that the Chinese government entities that commit the cyberattacks are often different than the companies who end up benefiting from and using stolen IP.55 The Task Force recommends that Congress should examine the feasibility of reforming the burden of proof in cases when an American company has been the victim of cyber intrusion, including by state-sponsored entities. In such cases, if the complainant can show that it was the victim of cyber theft that compromised a trade secret and that a subsequent import relies on fundamental elements of that trade secret, Congress could statutorily shift the burden of proof to the foreign importer to show that the product was developed independently. Most obviously, this could be accomplished by documenting its own research and submitting this evidence to the ITC. The ITC could also be allowed to consider patterns of behavior, in particular, if a sector has seen multiple findings of cyber theft in a short period of time. The Task Force is cognizant of the potential concern that shifting the burden in such a manner would encourage filing frivolous claims. Thus, Congress should also consider instituting reasonable penalties for the filing of claims with questionable merit, which may include increasing the availability of attorney’s fees awards for an innocent defendant. These measures will help make it more difficult for Chinese firms to continue to export products developed with stolen IP as a result of cyber theft into the United States. Congress should sanction companies that steal American IP and require an annual report identifying such companies. The Trump administration has used tariffs as a tool to pressure China to stop its theft of IP. However, as Derek Scissors of the American Enterprise Institute has noted, “Tariffs hit all makers of selected products, not just bad actors. ‘Snapback’ tariffs if China keeps stealing IP would also punish everyone. The thieves at least might get what they’re chasing; firms which obey U.S. laws just get the tariff. Tariffs are the wrong tool on IP.”56 Rather than use tariffs, the Task Force proposes introducing new legislation authorizing the Department of the Treasury to sanction foreign individuals, institutions, organizations, and companies that are involved in significant theft of IP or cyberespionage or that directly benefit from or use stolen IP. As Eric Lorber of the Foundation for Defense of Democracies (FDD) has noted, using targeted sanctions as a tool against China, especially on issues of intellectual property or cyberespionage, would signal to Chinese companies that engaging in such activity entails significant risks.57 The Commission on the Theft of American Intellectual Property has aptly stated, “No foreign entity that steals IP should be able to access the U.S. banking system.”58 The Task Force proposes first requiring an annual report by the Department of the Treasury identifying which companies have significantly stolen IP from U.S. companies or have directly benefited from the use of such stolen IP. Such a report could put Chinese companies on notice that their theft of IP and technology will no longer be tolerated and give Congress more insight into the scope of the problem. Treasury could then be required to warn these companies to stop. If they did not stop within six months, they would be sanctioned as Specially Designated Nationals (SDN) and cut off from the U.S. financial system. If a Chinese company was proven to have stolen IP at a later date, Treasury could immediately impose sanctions. Congress should codify the Department of Commerce’s Denied Persons List as well as other tools, short of sanctions, to punish foreign companies with a pattern of breaking U.S. laws. The Department of Commerce’s Bureau of Industry and Security’s (BIS) Denied Persons List is a list of people PAGE 13 and companies whose export privileges have been denied. It is prohibited for American companies or individuals to participate in an export transaction with a person on the Denied Persons List. This is different from the Entities List, which identifies foreign parties that are prohibited from receiving some or all items subject to BIS’ Export Administration Regulations (EAR) unless the exporter secures a license. Essentially, a denial order is a tool that is stronger than putting a person on the Entities List but weaker than sanctioning someone as a SDN. Denial orders create a formal option to prohibit doing business with a company that has a pattern of behavior with multiple occasions of breaking U.S. laws, such as ZTE, which regularly evaded export laws and sanctions for years.59 The Task Force believes that the Denied Persons List should be codified by Congress to formalize this important tool for the Department of Commerce. Still, the Department of Commerce should have additional, more tailored authority to reprimand foreign companies displaying an egregious pattern of breaking U.S. laws. The current options at the Department of Commerce’s disposal are not flexible enough. The Entity List and the Denied Persons List have serious drawbacks because they only restrict exports from the United States and not imports. On the other end, an SDN designation, which is enforced by the Department of the Treasury, more closely resembles criminal punishment and includes asset seizure. The Task Force believes that Congress needs to create another option giving the Department of Commerce new authorities to address foreign companies breaking U.S. laws, one that is more comprehensive than the Entity and Denied Persons Lists and less severe than the SDN list. In particular, such a new option should grant the Department of Commerce the ability to go after any business, especially two-way investment, rather than just exports. In this way, such a new option would fill the existing gap to give the Department of Commerce a range of choices to fit the situation. COUNTER CHINA’S IP THEFT AT AMERICAN RESEARCH INSTITUTIONS AND ACADEMIA In recent decades, China has utilized a number of underhanded methods to pilfer the IP of the United States and other Western nations. The U.S. Senate’s Committee on Homeland Security and Governmental Affairs noted the following in a November 2019 report: American taxpayer funded research has contributed to China’s global rise over the last 20 years. During that time, China openly recruited U.S.-based researchers, scientists, and experts in the public and private sector to provide China with knowledge and intellectual capital in exchange for monetary gain and other benefits. At the same time, the federal government’s grant-making agencies did little to prevent this from happening, nor did the FBI and other federal agencies develop a coordinated response to mitigate the threat.60 China’s Thousand Talents Program (TTP) is one of the primary avenues by which the Chinese have sought to reap the benefits of Western research and innovation. Under this program, China induces international experts who are engaged in research and development, including in the United States, to take the knowledge and research to China in exchange for salaries, research funding, lab space, and other incentives.61 A report by the Hoover Institution found that, according to the Chinese government’s own websites, more than 300 U.S. government researchers and more than 600 U.S. corporate personnel have accepted TTP money.62 The FBI has also found that China sends student spies to the United States to obtain sensitive research and trade secrets.63 According to the FBI, the Chinese government has used some students and professors in science, technology, engineering, and math (STEM) fields as “non-traditional collectors of intellectual property.”64 The Task Force understands, as the FBI has pointed out, that “the vast majority of the 1.4 million international scholars on U.S. campuses pose no threat to their host institutions, fellow classmates, or research fields. On the contrary, these international visitors represent valuable contributors to their campuses’ achievements, providing financial benefits, diversity of ideas, sought expertise, and opportunities for cross-cultural exchange.”65 Still, President Obama may have made the problem of student spies worse by extending Chinese student visas from one year to five years and by extending the PAGE 14 amount of time foreign STEM students could remain in the United States to work through the Optional Practical Training program. These two policies were reversed by the Trump administration.66 The Task Force believes a number of measures should be taken to prevent China’s IP theft from American universities and research institutions. Congress should enact a visa disclosure requirement for foreign students receiving funding directly or indirectly from the Chinese government. The Task Force believes that more needs to be done to ensure our vetting mechanisms are working properly to prevent technology and IP theft by China through foreign students. The 2019 U.S.-China Security and Economic Commission (USCC) report raised the idea of looking into the feasibility of a visa disclosure requirement for foreign students, indicating whether or not they are receiving funding from the Chinese government or an intermediary entity acting in support of China’s government.67 The Task Force supports implementation of such a disclosure requirement. Congress should require a report on the efficacy of the Department of State’s visa screening mechanism to mitigate Chinese IP theft and require the creation of a list of research institutions associated with China’s People’s Liberation Army and Ministry of State Security. The Department of Defense’s Defense Innovation Unit Experimental (DIUx) noted in a 2008 report that the Department of State does not consider “the protection of critical technologies” when vetting visa applications.68 The Task Force, thus, supports the 2019 USCC Report’s recommendation to have the Government Accountability Office (GAO) conduct an assessment on the efficacy of the Department of State’s visa screening mechanism to mitigate the risk of IP and technology theft by China. This report should include the number of foreign students and researchers from China studying in STEM fields, past and current affiliations, primary areas of research, duration of stay in the United States, and subsequent employment. The report should also identify whether federally funded university research related to emerging technologies may have been unlawfully appropriated by individuals acting on behalf of Chinese entities and identify the risks posed by China’s efforts to co-opt U.S. researchers or students at U.S. universities for unlawful appropriation of IP. 69 Finally, as Bradley Bowman of FDD has suggested, Congress should also require the production of a report containing a comprehensive, unclassified list of research, scientific, and engineering institutions associated with China’s People’s Liberation Army and Ministry of State Security to help prevent granting visas that will be used for exploiting U.S. universities and research centers.70 Congress should require student visa holders to report to the Department of Homeland Security if they change majors and require periodic revetting upon reentering the United States. Current visa screening mechanisms apply before a foreign student has entered the United States and end after the student has entered the country. This creates a vulnerability where students may come to the United States originally wanting to study in one field but then a few years later switch majors to STEM-related fields or may intern with a major U.S. company with technology-related trade secrets. To remedy this, the Task Force proposes that foreign nationals be required to self-report to the Department of Homeland Security under certain circumstances. These circumstances should include whenever the student changes field of study— notably the fields of robotics, aviation, and high-tech manufacturing—or undertakes research, employment, an internship, or volunteer activity with an American company significantly involved in one of these fields. Congress should also require the Department of Homeland Security (DHS) to undertake periodic revetting of students upon reentering the United States. Congress should end visas, particularly student and tourist visas, for Chinese government officials, active duty members of the Chinese military, and senior officials in the CCP, as well as their immediate family members until China ends IP theft from American universities and research institutions. PAGE 15 A detailed report by the Australian Strategic Policy Institute found that since 2007, approximately 500 Chinese military scientists were sent to the United States to study. According to the report, China’s People’s Liberation Army (PLA) has been sending its soldiers to study science and engineering in Western universities, including in the United States, as part of a widespread effort to collect military technology.71 It should go without saying that Chinese government officials and senior CCP officials and their family members should not be able to study in the United States while China undertakes a campaign of IP theft and economic espionage against the United States. The Task Force proposes that members of the Chinese cabinet, active duty members of the Chinese military, and senior officials of the CCP be prohibited from studying in the United States until the president certifies that the CCP has ceased its efforts to steal U.S. IP through American universities and research institutions. The CCP is a large organization of over 90 million members, which many Chinese citizens are forced to join.72 A blanket prohibition on visas to CCP members could lead to unintended consequences. However, it would be appropriate to include the senior leadership including the Politburo of 25 members,73 the Central Committee of 205 full members and 171 alternates,74 and all 2,280 delegates of the 19th National Congress of the CCP,75 and their spouses and children. Congress should impose conditions on the ability of foreign students to be involved in sensitive federally funded research and enact the Protect Our Universities Act. The Task Force recommends enactment of the Protect Our Universities Act, sponsored by Rep. Jim Banks (RIN), which would address Chinese economic espionage in American universities by establishing an interagency task force led by the Department of Education to address the vulnerabilities present on college campuses. This task force would also manage a list of Sensitive Research Projects, which would be based upon the Commerce Control List,76 the U.S. Munitions List,77 and foundational principles developed for advanced military technologies. This would prohibit students from China, as well as Russia, Iran and North Korea, from participating in sensitive research projects funded by the Department of Defense, the U.S. intelligence community, and the Department of Energy unless those students received a waiver from the Director of National Intelligence (DNI). In addition, this bill would prohibit the technology developed by the Chinese and Russian governments, including Huawei, ZTE, and Kaspersky, from being used in federally funded sensitive research projects. Congress should require Department of Defense research grant applicants to certify that no recipients have ever participated in a Chinese talent recruitment program. The Senate Homeland Security Committees’ investigation into the TTP revealed the extent to which Chinese talent recruitment plan members “misappropriated U.S. government funding, provided early basic research ideas to their Chinese employers, stole intellectual capital from U.S. basic research before it was published, and engaged in intellectual property theft.”78 Section 1286 of the Fiscal Year (FY) 2019 National Defense Authorization Act (NDAA) required the Secretary of Defense to undertake an initiative to support protection of national security academic researchers from IP theft, undue influence, and other security threats. The Task Force believes that U.S. law needs to go further and that applicants for Department of Defense research grants should be required to certify that no individuals who would be funded by the grant have ever participated in any talent recruitment programs operated by China. If funding recipients could not provide that certification, the Task Force believes the Department of Defense should deny such grants. This is similar to an amendment proposed, but not adopted, by Rep. Mike Gallagher (R-WI) to the FY 2019 NDAA.79 Congress should require a report detailing the extent China has benefited from U.S. taxpayer funded research and from Chinese funding of U.S. research institutions. According to the Senate Homeland Security Committee, in 2008, there were more than 35,000 foreign nationals, including 10,000 from China, conducting re- PAGE 16 search in the Department of Energy’s National Labs.80 According to the Department of Education, “one university received research funding from a Chinese multinational conglomerate to develop new algorithms and advance biometric security techniques for crowd surveillance capabilities,” while another “had multiple contracts with the Central Committee of the Communist Party of China.”81 The Task Force believes that Congress should require a report on: (1) the extent to which U.S. taxpayer-funded research has benefitted China; and, (2) the extent to which China’s funding of U.S. taxpayer-funded research institutions has benefitted China. This information could give Congress more insight into the issue. Congress should enact the Safe Career Transitions for Intelligence and National Security Professionals Act. A major threat to the security of state secrets is the recruitment of federal workers with newly acquired security clearances to work at private entities with questionable ties to nefarious governments. Security clearances are a state privilege, and many companies are seeking consultants with clearances under the guise of innocuous purposes in order to exploit their access to classified information. With the current debate raging over Huawei as an example, the threat of foreign government affiliated companies exploiting access to America’s secrets through individuals with limited experience cannot be overstated.82 In fact, President Obama’s Senior Director for Cyber Security Policy is now a lobbyist for a Chinese government shell company.83 The Safe Career Transitions for Intelligence and National Security Professionals Act, sponsored by Rep. Banks, is a leading proposal to address this issue.84 This legislation would ban companies that are barred from doing business with the federal government, such as Huawei and ZTE, from being able to hire former civil servants with security clearances. It would also give the DNI the ability to add companies to the list. EXPOSING CCP-LINKED CORPORATE SUBTERFUGE According to the American Enterprise Institute (AEI) and The Heritage Foundation’s China Global Investment Tracker, the United States received over $180 billion in Chinese investment between January 2005 and December 2019. Chinese investment does support American jobs and has many benefits for the American economy. However, as the two think tanks have noted, “China is not a friend. The U.S. certainly should not ban Chinese investment, but, as Congress has directed, Chinese firms and individuals should not be permitted to buy advanced technology that could have military uses. Chinese firms that receive stolen intellectual property should be punished.”85 Moreover, Chinese SOEs are directly connected to the CCP, which uses investment as a tool to further Chinese national security interests. The Task Force recommends the implementation of the following measures, which are designed to enhance the federal government’s ability to control technology transfer to China, as a means of addressing key challenges posed by Chinese investment in the United States without stymieing its domestic economic benefits. Congress should establish an Office of Critical Technologies and Security to help prevent the transfer of critical emerging, foundational, and dualuse technologies to countries of concern. The federal government currently lacks an office that can coordinate the whole variety of aspects of security policy related to preventing the transfer of critical emerging, foundational, and dual-use technologies to adversarial nations, including China. Instead, the responsibility overlaps between the National Security Council, the National Economic Council, and a multitude of federal agencies and state and local entities. As Sen. Marco Rubio (R-FL) has noted, establishing a central Office of Critical Technologies and Security would help protect the United States by streamlining efforts across the government.86 To that end, legislation, co-led by Sen. Rubio in the Senate and Rep. Mike Conaway (R-TX) in the House, has been introduced to establish the Office of Critical Technologies and Security. Under the bill, the office would be required to develop a long-term strategy for U.S. technological superiority; coordinate a whole-of-government response to protect critical emerging, foundational, and dual-use technologies; and effectively enlist the support of feder- PAGE 17 al agencies, the private sector, and other scientific and technical hubs, including academia, to support and assist with such response.87 The Task Force strongly endorses this legislation. Moreover, the federal government should examine ways to emphasize the increasing importance of neuroscience and its application in the development of dual-use technology, including by better coordinating existing federal efforts to develop this emerging technology. Congress should enact legislation requiring Chinese companies to disclose internal CCP committees and financial support provided by the Chinese government. The Task Force supports the 2019 U.S. China Economic Commission’s recommendation to require Chinese companies to disclose any CCP committees within the company and disclose financial support provided by the Chinese government.88 American and European companies involved in joint ventures with state-owned Chinese firms have been asked to give internal CCP cells an explicit role in decision-making.89 As Ashley Feng of the CNAS has written, Western governments cannot tell if Chinese firms work for the CCP. Tech companies, such as Baidu, Alibaba, and Tencent, have police-embedded cells within them that hand over sensitive information to the Chinese government. Feng notes that “Chinese companies still have some autonomy. They’re able to direct their own research and development, decide where to expand, and have control over most everyday decisions. But when the party comes calling, they have almost no power to resist direct requests, lest they want to lose their privileged positions.”90 Chinese companies that want to operate in the United States should have to disclose their ties to the CCP. Not only is such information material to American investors, it also affects the national security interest of the United States.91 Congress should enact the Holding Foreign Companies Accountable Act to require Chinese companies to adhere to U.S. laws as a condition of being listed on American stock exchanges. As of February 25, 2019, there were 156 Chinese companies listed on the NASDAQ, New York Stock Exchange, and NYSE American, with a total market capitalization of $1.2 trillion. There were at least 11 Chinese state-owned companies listed on the three major U.S. exchanges.92 The Securities and Exchanges Commission (SEC) oversees the Public Company Accounting Oversight Board (PCAOB), which, in turn, is the principal U.S. regulator that oversees the audits of public companies and SEC-registered brokers and dealers. The PCAOB is required by U.S. law to conduct regular inspections of all registered public accounting firms, both domestic and foreign, that issue such audit reports or play a substantial role in the preparation of them.93 However, according to a joint statement by the SEC and PCAOB from December 2018, “China’s state security laws are invoked at times to limit U.S. regulators’ ability to oversee the financial reporting of U.S.-listed, China-based companies.”94 On May 20, 2020, the Senate passed the Holding Foreign Companies Accountable Act by unanimous consent, legislation which would prohibit securities of a company from being listed on any of the U.S. securities exchanges if the company has failed to comply with the PPCAOB audits for three years in a row.95 As Rep. Conaway—sponsor of a similar bill in the House—has stated, “Beijing shows no apprehension while obstructing attempts to audit Chinese companies or breaking U.S. law. Without the EQUITABLE Act, the Chinese government will only escalate this malicious pattern of conduct.”96 Congress should enact the Promoting Secure 5G Act to establish a U.S. policy to oppose international financing for 5G networks that lack appropriate security measures. 5G is the newest generation of wireless networks to enable faster data speeds. Chinese company Huawei, the world’s biggest telecommunications equipment maker, is a leader in 5G equipment. In January 2009, Huawei was indicted by the DOJ for the theft of trade secrets.97 According to Ajit Pai, Chairman of the Federal Communications Commission, Huawei takes direction from the Chinese government in accordance with Chinese law PAGE 18 and could be compelled to spy on individuals and businesses or install malware or spyware on networks.98 If Huawei, a Chinese state-directed company with a history of IP theft, gains a foothold in global 5G networks, some fear China could have an unprecedented opportunity to attack critical infrastructure and compromise intelligence sharing with key allies.99 To counter the threat of Huawei’s dominance in next generation 5G networks, the Trump administration has pressured U.S. allies to reject the use of Huawei equipment in developing 5G systems. Australia has already banned Huawei from supplying equipment for 5G networks as of 2018.100 Unfortunately, however, in January 2020, the European Union rejected an outright ban on Huawei equipment in developing its 5G networks. Furthermore, the United Kingdom granted Huawei a limited role in developing its 5G systems. However, on May 24, 2020, Britain’s National Cyber Security Centre (NCSC) announced it would conduct a new review into granting Huawei such a role.101 The Promoting Secure 5G Act of 2020, sponsored by Rep. William Timmons (R-SC), would leverage U.S. aid to international financial institutions, such as the International Monetary Fund (IMF) or the International Finance Corporation, to discourage recipients from using Huawei in their 5G networks. The bill would specifically make it U.S. policy to only lend to such countries for infrastructure, wireless technologies, and policy reforms through multilateral organizations only when those countries take sufficient security measures in their networks. It would also encourage cooperation with U.S. allies to strengthen support for secure wireless technologies. STOPPING CHINA’S MALIGN POLITICAL INFLUENCE AND DISINFORMATION CAMPAIGNS “China conducts influence operations against cultural institutions, media organizations, and the business, academic, and policy communities of the United States, other countries, and international institutions to achieve outcomes favorable to its security and military strategy objectives… China harnesses academia and educational institutions, think tanks, and state-run media to advance its soft power campaign in support of China’s security interests.” – Department of Defense, Military and Security Developments Involving the People’s Republic of China 2019102 GAO identified one or more colleges or universities with a Confucius Institute GAO did not identify a college or university with a Confucius Institute All but Six U.S. States Have at Least One Confucius Institute on University Campuses CONFUCIUS INSTITUTES ACROSS AMERICA Source: GAO analysis, as of January 2019, of Confucius Institute agreements, school documents, and Department of Education National Center for Education Statistics data | GAO- 19-278 PAGE 19 China’s spread of disinformation about the origins of COVID-19 and false accusations blaming the U.S. military for creating the virus in a lab have introduced many Americans to China’s malign influence and political warfare operations.103 Yet, Chinese disinformation operations have long targeted multiple facets of American life to shape a narrative favorable to China and, in the process, have created a sophisticated network throughout the United States to spread its malign influence—a network which can be used at any time to shape public perception.104 China does this through building a presence in educational institutions, think tanks, media, and the business community. While the United Front Work Department, the CCP’s agency in charge of the coordination of influence operations, directs most of these efforts, it is, according to Larry Diamond of the Hoover Institution, “one of many institutions within the Chinese party-state involved in influence operations.”105 Other institutions include seemingly private civil society, academic, Hollywood, or even religious groups, that ultimately take direction from the CCP.106 In recent years, Confucius Institutes have come to the forefront as one key tool used by the CCP to influence public perception.107 In April 2017, the National Association of Scholars (NAS) released a comprehensive report illustrating how Confucius Institutes infiltrated American colleges and universities to enhance China’s image and educate a generation of American students to know nothing more of China than the regime’s official history. The Chinese government approves all teachers, events, and speakers in the institutes.108 Since Confucius Institutes provide financial support for universities to run free Chinese language programs, colleges become hesitant to allow activities on campus that would draw the CCP’s ire and engage in self-censorship.109 As Peter Mattis has said in testimony before the House Foreign Affairs Committee, “CCP programs, like the Confucius Institutes, are less important for their specific content in dealing with U.S. universities than for establishing a relationship. By facilitating U.S. universities investment in facilities, research collaboration, or programs, the CCP creates a vulnerable relationship that can be used to apply pressure to the university unless the latter is prepared to walk away.”110 Congress passed legislation in August 2018 as part of the NDAA to prohibit the Department of Defense from funding Chinese language programs at institutions that host Confucius Institutes except in cases in which the institutions have obtained a waiver.111 Since then, some universities have closed their institutes. According to the NAS, there are now 86 Confucius Institutes in the United States, with five more set to close in the summer of 2020.112 While this is a step in the right direction, more needs to be done to counter the threat that Confucius Institutes and other propaganda tools pose. The Task Force believes that the following steps by Congress can enhance efforts to counter the CCP’s malign political influence. Congress should create new authority to sanction state-backed disinformation networks and mandate placing such sanctions on the CCP’s United Front Work Department. Congress should amend the Global Magnitsky Human Rights Accountability Act (Global Magnitsky Act), which authorizes the President to impose sanctions on individuals and entities engaged in gross violations of human rights and significant corruption, to also allow the President to designate state-backed networks purveying harmful disinformation campaigns. The United Front Work Department is a fundamentally malign entity used to confront any source of potential opposition to the authority and policies of the CCP.113 Xi has even called the front a “magic weapon” for the “Chinese people’s great rejuvenation.”114 It is also used to harass, spy on, and co-opt Chinese citizens in the United States. According to the 2015 Central Committee, this is actually its primary mission.115 Confucius Institutes are funded by Hanban, an organ of the United Front, and were founded in 2014 by the former head of the United Front, Liu Yangdong.116 In countries like Australia and New Zealand, where the problem of CCP malign influence is much more pervasive, United Front affiliates have even held political office and controlled important media outlets.THE RSC NATIONAL SECURITY STRATEGY STRENGTHENING AMERICA & COUNTERING GLOBAL THREATS Since the end of World War II, the United States has been the dominant force on the global stage. The strength of our national character and our economic and military might cannot be matched, and we have used our position as a force for good, fostering a world order rooted in our values of freedom, human rights, the rule of law, and open markets. The fall of the Soviet Union in the early 1990s left the U.S. as the sole remaining superpower, and the loss of our competition gradually caused a shift in our national security strategy. America is still the freest, most powerful, and most prosperous nation in all the world. However, over the past two decades, U.S. dominance has increasingly been challenged by numerous rising threats to the U.S.-led global order. These threats point to the reemergence of powerful competition, the likes of which we have not seen since the Cold War, and they require us to reevaluate our national security strategy once again. There is perhaps no bigger threat to continued U.S. dominance than China. For decades now, the prevailing foreign policy consensus on that nation has been misguided. Conventional wisdom was that a narrow strategy of simply integrating China into global markets and facilitating a more robust trading relationship would transition Beijing away from communism and toward freer markets. Instead, China has exploited its opportunities to double down on authoritarianism and use international markets to amass enormous economic and military strength, often by nefarious means. Beijing now leverages this strength to undermine the U.S.-led international order by replacing our leadership with their own distorted worldview. The recent COVID-19 crisis has clearly illustrated the danger of allowing this to happen. Meanwhile, throughout the last decade in particular, Russia has aggressively reasserted itself as a global power with its own clear intent to undermine the U.S.-led international order. Under the leadership of dictator and former KGB agent Vladimir Putin, the Kremlin’s goals are to advance authoritarianism both at home and abroad. It has invaded and occupied several neighboring democracies, helped prop up other authoritarian regimes, used its vast natural resources to blackmail its neighbors, and sought to undermine Western democracies, including the U.S., with disinformation campaigns. Russia also maintains a military that is capable of challenging the U.S. and has worked to undermine NATO, the most successful alliance of democracies in the world. While the rise of China and Russia pose the biggest strategic threats to the United States, rogue regimes like Iran remain extremely dangerous as well. Iran continues its pursuit of nuclear weapons, seeks Israel’s destruction, and stands as the world’s most prolific sponsor of terrorism. More broadly, Salafi-jihadist groups like ISIS and Al Qaeda have grown in a number of new theaters and remain a top security concern. These growing threats require Congress to adopt new policies focused on advancing America’s interests at home and abroad. Protecting the liberty, security, and prosperity of the American people is the most fundamental role of our government, and it must be done efficiently and effectively. A strong America is essential because our strength enables us to counter threats, oppose tyrants and terrorists, and advance the ideals of peace, freedom, and prosperity around the globe. By contrast, the Russian and Chinese governments seek to dominate their own people and assert control over the other countries of the world. Congress has an important, but too often underutilized, role in the development and execution of national security policy. This report by the Republican Study Committee’s National Security & Foreign Affairs Task Force presents a comprehensive blueprint for how Congress can fulfill its responsibility and includes more than 130 policy recommendations focused on strengthening America and countering our global threats. PAGE 7 COMMUNIST CHINA A NEW STRATEGY FOR COUNTERING AMERICA’S TOP THREAT Section One 1 The COVID-19 pandemic, which originated in Wuhan, China, has caused a renewed focus on the challenge that China poses to the United States. From the beginning of the outbreak, the Chinese Communist Party (CCP) has worked to conceal events and manipulate the narrative. China silenced doctors and journalists who spoke out and pressured international organizations such as the World Health Organization (WHO) to defend the country’s pandemic response and even disseminate Chinese government talking points.2 Chinese officials then created an alternative narrative, fueling a conspiracy theory, peddled through state sponsored outlets, that the virus was created by the U.S. military.3 Yet, China’s coercive and deceptive actions should not be surprising. China, after all, is a communist nation that seeks to overtake the United States as the world’s preeminent power. It is a strategic competitor and the foremost national security challenge that the United States faces today. It has worked to displace the United States in the Indo-Pacific region, expand the reaches of its state-driven economic model, and reorder the region in its favor.4 But, as President Trump’s National Security Strategy notes, China also seeks to both challenge America’s overall power and influence and shape a world that is antithetical to U.S. interests. In November 2012, at the 17th CCP Congress, China’s President Xi Jinping, the country’s most authoritarian leader in modern memory, first announced his vision for achieving “the Chinese dream of national rejuvenation” and military and economic dominance.5 Five years later at the 18th CCP Congress, Xi explained that “the dream of the Chinese people is closely connected with the dreams of the peoples of other countries; the Chinese Dream can be realized only in a peaceful international environment and under a stable international order.”6 This dream, as many experts have noted, is for the CCP to replace the American-led international system with one under CCP leadership.7 Former Under Secretary of Defense for Policy John Rood has noted, “China wants not only to become the world’s largest and most influential economy, but also to be the world’s largest and most influential nation in all spheres of life.”8 China is on its way to achieving that dream, primarily through rapid economic growth and military modernization. China currently has the world’s second-largest economy in terms of nominal GDP ($14.14 trillion) and the largest in terms of purchasing power parity (PPP) GDP ($27.31 trillion).9 In 2000, China controlled only four percent of the global economy, and the United States controlled 31 percent. Today, China stands at 15 percent, and the United States’ share has dropped to 24 percent.10 “The PRC’s [People’s Republic of China] rapid economic development and increased engagement with the world did not lead to convergence with the citizen-centric, free and open order as the United States had hoped. The CCP has chosen instead to exploit the free and open rules based order and attempt to reshape the international system in its favor. Beijing openly acknowledges that it seeks to transform the international order to align with CCP interests and ideology. The CCP’s expanding use of economic, political, and military power to compel acquiescence from nation states harms vital American interests and undermines the sovereignty and dignity of countries and individuals around the world.” – The White House, U.S. Strategic Approach to the People’s Republic of China 1 PAGE 8 The growth of China’s centrally controlled economy has been fueled largely by tools of economic coercion, including intellectual property theft and economic espionage of U.S. companies. In 2019 alone, one in five North American-based companies said that Chinese firms had stolen their intellectual property (IP) within the last year.11 Between 2013-2017, the economic damage of IP theft totaled $1.2 trillion.12 The CCP also deliberately sends thousands of Chinese students to the United States and other nations under the guise of international scientific collaboration to systematically target critical technologies to advance China’s national security interests. Secretary of Defense Mark Esper has stated that China “is perpetrating the greatest intellectual property theft in human history.”13 As part of the “Chinese dream,” China aims to become the world’s science and technology leader by 2050.14 If current trends continue, the National Science Board estimates that China may become the leading global investor in research and development in just a few years.15 Much of this growth is due to China’s theft of IP. As Secretary Esper has noted, China is combining “direct state investment, forced technology transfer, and intellectual property theft to narrow the gap between U.S. and Chinese equipment, systems, and capabilities.”16 A report by the Center for a New American Security (CNAS) has noted that, while the Soviet Union was never able to match the American technological superiority, the same may not be true for China.17 China has, in turn, used this wealth and technology theft to embark on an ambitious project of military modernization.18 The Department of Defense’s 2019 Report on the Military and Security Developments Involving the People’s Republic of China notes that “China uses a variety of methods to acquire foreign military and dualuse technologies, including targeted foreign direct investment, cyber theft, and exploitation of private Chinese nationals’ access to these technologies, as well as harnessing its intelligence services, computer intrusions, and other illicit approaches.” According to The Heritage Foundation’s 2020 Military Index, China is the “most comprehensive threat that the U.S. faces,” being both “formidable” in its military capabilities and “aggressive” in the scope of its provocative behavior.19 In addition to its economic aggression and military modernization, China conducts political warfare and disinformation campaigns against the United States and other democracies. It frequently targets academia, the media, business, and cultural institutions to suppress criticism and promote positive views of the CCP.20 It uses so-called “Confucius Institutes,” Chinese-language centers in American universities, to peddle pro-Chinese political narratives to college students. A 2019 Senate Permanent Subcommittee on Investigations report found that Confucius Institutes are located at more than 100 American colleges and have received more than $150 million in support from the Chinese government.21 The CCP has also used its increasing wealth to pursue “financial diplomacy” through state-directed investment projects overseas. While on their face, these initiatives seem to simply finance infrastructure improvements in developing nations, the CCP uses them as a direct attempt to “counterbalance” the United States and advance a China-centric vision.22 Its efforts include more than $48 billion in infrastructure investment between 2000-2016 in East Asia alone.23 China’s One Belt One Road Initiative—the centerpiece of this strategy—plans to invest over $1 trillion in infrastructure across the globe.24 For the CCP, foreign assistance and involvement in international organizations are a means to cast its political system and approach to economic development as superior alternatives to those of the United States and other democratic countries. As part of this approach, Beijing has increased pressure on foreign countries, companies, and even individuals to conform to its worldview.25 China’s soft power strategy has paid dividends, including being appointed to bodies such as the United Nations (U.N.) Human Rights Council, where it possesses the ability to vet candidates for critical U.N. human rights posts.26 The CCP’s aggressiveness abroad is in many ways rooted in its authoritarianism at home. Xi has concentrated more power than any Chinese leader since Mao Zedong. In March 2018, the National People’s Congress voted nearly unanimously to amend their constitution to remove presidential term limits. Under President Xi, China has become even more totalitarian in its cen- PAGE 9 sorship of media and the internet and has established an elaborate system of surveillance of its citizens.27 It has also undertaken a strategy of “sinicization” of all religion, which attempts to control and manipulate all aspects of religious faith into a socialist mold with Chinese characteristics. This has been particularly evident in the Muslim-majority province of Xinjiang and the Buddhist-majority province of Tibet, which, in the words of the U.S. Commission on International Religious Freedom (USCIRF), “increasingly resemble police states.”28 Christians have also faced increasing persecution from the CCP, including forced church closures, the jailing of pastors, and even the issuance of a state-sanctioned translation of the Bible, which promotes a “correct understanding” of the text that emphasizes compatibilities with communism.29 Additionally, the CCP has worked to quash democracy in Hong Kong despite assurances to the international community that it would respect “One Country, Two Systems.”30 In May 2020, China announced that it would be taking over Hong Kong by instituting a national security law that would apply mainland Chinese law to the special administrative region. This action would essentially mean the end of the “One Country, Two Systems” framework.31 China’s actions in Hong Kong are just the latest example of how the CCP fears liberal democracy more than anything else and views itself in ideological competition with Western democratic values. Shortly after Xi took power in 2012, the General Office of the CCP circulated a document entitled the Communiqué on the Current State of the Ideological Sphere or–Document No. 9–that made clear the CCP’s authoritarian vision sees itself at war with the American values of constitutional democracy, free markets, rule of law, and human rights. The document states that promoting Western democracy is an attempt to undermine the system of socialism with Chinese characteristics, that promoting “universal values” is an attempt to weaken the theoretical foundations of the CCP’s leadership, and that promoting civil society and free markets are an attempt to undermine the CCP.32 In sum, the Chinese grand strategy of achieving the “Chinese dream” entails transforming the international system to one under CCP leadership. Industrial espionage, intellectual property theft, malign political influence in democratic nations, making developing countries dependent on Chinese loans and construction projects, and discrediting liberal democratic notions of human rights are all tools China has used in its effort to assert international dominance.33 The CCP’s goal was probably best described by former Vice President Dick Cheney’s national security adviser Aaron Friedberg as “making the world safe for authoritarianism.”34 The old way of thinking about China has failed. A strategy limited to trade and economic integration alone has not caused China to democratize or grow less aggressive in its behavior. On the contrary, the CCP has grown more authoritarian and aggressive. The Task Force believes that Congress must adapt to a new strategy, one which seeks also to push back against the CCP and its efforts to undermine U.S. interests, remake the world order, and promote an alternative form of governance. The CCP’s efforts are multifaceted and require reforming existing laws and enacting new legislation in a broad variety of areas. The Task Force knows that Congress must take the lead in pushing such a strategy forward. Pushing back against China must begin by advancing policies in at least five different areas. First, we must push back against China’s industrial espionage and intellectual property theft and malign economic behavior. Second, we must stop China’s malign political influence and disinformation campaigns. Third, we must stand up to China’s human rights violations. Fourth, we must counter China’s global military modernization. Fifth, we must strengthen our alliances in the Indo-Pacific region. COUNTERING CHINA’S INDUSTRIAL ESPIONAGE AND INTELLECTUAL PROPERTY THEFT “The Chinese government is determined to acquire American technology, and they’re willing to use a variety of means to do that—from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information. If China acquires an American company’s most important technology— the very technology that makes it the leader in a PAGE 10 field—that company will suffer severe losses, and our national security could even be impacted.” – FBI Director Christopher Wray35 The CCP is undertaking a project of massive intellectual property theft and industrial espionage in an effort to surpass the United States technologically and economically. According to the 2017 Commission on the Theft of Intellectual Property, China is the world’s top intellectual property infringer.36 This problem was made worse by President Obama, who failed to respond forcefully to China’s hacking of the Office of Personnel Management network, which was the greatest theft of sensitive personnel data in history. In response to the cyberattack, President Obama refused to impose sanctions on China or publicly blame them for the attack, opting instead to negotiate a failed diplomatic agreement with Xi to end cyber espionage. 37 In recent years, Congress has taken a number of important steps to combat Chinese IP and technology theft. It has passed key statutes, such as the Defend Trade Secrets Act (DTSA), which allowed private rights of action against Chinese companies in certain circumstances; the Export Control Reform Act (ECRA), which gave the Committee on Foreign Investment in the United States (CFIUS) authority over “emerging” and “foundational” technologies; and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which expanded the scope of covered transactions in CFIUS’ jurisdiction. The Trump administration has also made protection of American IP a high priority. For instance, it has elevated IP protection as a major issue in U.S.-China trade talks. Phase One of the Economic and Trade Agreement signed by the two nations forces China to make major IP-related concessions, including limiting its ability to require foreign companies to transfer intellectual property to Chinese entities as a condition for doing business.38 In February 2018, the Department of Justice (DOJ) also announced a “China initiative” to combat economic espionage through a number of new enforcement actions, including bringing more actions for theft of trade secrets and intellectual property.39 Thus far, this initiative has brought forth a spike in prosecutions, with over 1,000 investigations currently open, according to FBI Director Wray.40 During the Obama administration from 2013-2016, the DOJ did not charge a single person with spying for China. In contrast, since announcing its China Initiative in 2018, the DOJ has filed over 20 criminal cases pertaining to economic espionage, trade secret theft, and export controls.41 While these measures have been a good start, the Task Force believes that Congress can do a great deal more to combat China’s theft of intellectual property and industrial espionage. A number of reforms supported by the Task Force are listed below. Congress should enhance the ability to bring cases for IP theft by ensuring the Defend Trade Secrets Act applies extraterritorially. In 2016, Congress enacted the Defend Trade Secrets Act (DTSA) to create a new civil private federal right of action for companies to sue for trade secret misappropriation. Previously, trade secret misappropriation was handled through criminal enforcement under the Economic Espionage Act (EEA) of 1996.42 The EEA’s criminal penalties apply extraterritoriality if “(1) the offender is a natural person who is a citizen or permanent resident alien of the United States, or an organization organized under the laws of the United States or a State or political subdivision thereof; or (2) an act in furtherance of the offense was committed in the United States.”43 Congress, however, was silent on whether civil cases under the DTSA applied extraterritorially. Fortunately, some federal courts have recently ruled that the EEA’s extraterritoriality provisions also apply to private civil claims under the DTSA, allowing American courts to gain jurisdiction over overseas companies involved in trade secret theft.44 The current ambiguity in the DSTA may create problems down the line if the statute is challenged by Chinese or other foreign companies. The Task Force, thus, believes that Congress should amend the DTSA to explicitly clarify that it applies extraterritorially to ensure that the DTSA remains an important tool for U.S. companies to protect their trade secrets from misappropriation occurring in China. PAGE 11 Congress should require Chinese businesses to assign an agent for service of process in the United States. Kevin Rosier of the United States-China Economic and Security Review Commission (USCC) has argued that Chinese businesses participating in the United States can effectively operate behind a firewall that can keep them largely immune from the jurisdiction of U.S. courts and regulatory agencies.45 This can leave U.S. partners, competitors, and investors vulnerable. Rosier notes that if a U.S. plaintiff files a complaint against a China-based firm, the typical first response from the Chinese firm is that it is not subject to U.S. jurisdiction. Since China-based companies typically do not keep a representative of their company in the United States, domestic companies have little recourse to pursue complaints against China. Although international protocols, such as the Hague Service Convention and the Hague Evidence Convention, are supposed to facilitate the pursuit of claims brought by U.S. companies, in practice such litigation is costly, and China interprets its obligations in a way which protects its firms from litigation.46 The Task Force recommends that Congress strengthen U.S. laws to ensure Chinese companies that have harmed U.S. citizens and businesses cannot evade accountability in U.S. courts. In particular, Congress should require companies from China, and other nations that skirt the rule of law, to assign an agent based in the United States to accept service of process as a prerequisite to access U.S. markets. By doing so, aggrieved U.S. entities will have an avenue for immediately establishing personal jurisdiction against a Chinese firm. Congress should address sovereign immunity abuses to better enable private sector litigants to seek legal redress against Chinese companies for IP theft. The 2017 U.S.-China Economic and Security Review Commission report noted that “The application of the sovereign immunity defense to commercial cases presents a potential risk for U.S. businesses and individuals, allowing Chinese state-owned enterprises (SOEs) to conduct unlawful activity in the United States without legal consequences. Some Chinese SOEs are evading [civil] legal action in the United States by invoking their status as a foreign government entity under the Foreign Sovereign Immunities Act.”47 Thus, as the USCC notes, Chinese firms often disguise the actual or beneficial owner to make them appear as a Chinese SOE. This then places the burden on American firms to prove that one of the FSIA exceptions of sovereign immunity applies, such as the commercial activity exception.48 Robert Spalding, President Trump’s former Director of Planning at the White House National Security Council has stated, “Typically, the first thing Chinese companies do is try to deploy the Foreign Sovereign Immunities Act to protect themselves against American companies.”49 Spalding described the Chinese approach as “lawfare,” a form of warfare that exploits U.S. law to deter private parties from exercising their rights. He explained that the CCP will use every obstacle necessary to hemorrhage the resources of American companies until they can no longer afford to do battle.50 American firms often do not have access to the same level of resources as their Chinese counterparts, which has a “chilling effect” that deters lawsuits.51 The Task Force endorses the recommendation by the 2017 U.S.-China Economic and Security Review Commission report that Congress amend the FSIA to allow U.S. courts to hear cases against a foreign state’s corporate affiliates under the commercial activity exception. The Task Force also supports the Commission’s recommendation that the SEC require Chinese firms to waive any potential claim of sovereign immunity if they do business in the United States. This would force Chinese state-owned companies to play by the rules rather than continue to exploit U.S. law to get away with theft. It would also galvanize private sector litigants to go after Chinese companies that steal IP. Congress should reform the evidentiary requirements of Section 337 of the Tariff Act to facilitate cases for cyber theft of trade secrets. Section 337 of the Tariff Act of 1930 allows U.S. companies to protect themselves from imports that infringe on IP rights by filing a complaint with the International Trade Commission (ITC).52 While the ITC cannot award damages, it can direct Customs and Border Protection PAGE 12 (CBP) to block infringing products at the ports of entry.53 The ITC can serve as an important tool to protect U.S. companies from infringing foreign imports but it can be limited in its ability to sufficiently deter government-backed cyber theft of trade secrets. In particular, it is difficult to gather evidence in cyber theft cases when countries, such as China, direct state-sponsored hackers to steal IP from U.S. companies and then go on to pass that information to Chinese firms that then export products using the IP into the United States. Thus, companies may be unable to prove that products were developed as a result of theft from Chinese government-backed cyberattacks.54 This is compounded by the problem that the Chinese government entities that commit the cyberattacks are often different than the companies who end up benefiting from and using stolen IP.55 The Task Force recommends that Congress should examine the feasibility of reforming the burden of proof in cases when an American company has been the victim of cyber intrusion, including by state-sponsored entities. In such cases, if the complainant can show that it was the victim of cyber theft that compromised a trade secret and that a subsequent import relies on fundamental elements of that trade secret, Congress could statutorily shift the burden of proof to the foreign importer to show that the product was developed independently. Most obviously, this could be accomplished by documenting its own research and submitting this evidence to the ITC. The ITC could also be allowed to consider patterns of behavior, in particular, if a sector has seen multiple findings of cyber theft in a short period of time. The Task Force is cognizant of the potential concern that shifting the burden in such a manner would encourage filing frivolous claims. Thus, Congress should also consider instituting reasonable penalties for the filing of claims with questionable merit, which may include increasing the availability of attorney’s fees awards for an innocent defendant. These measures will help make it more difficult for Chinese firms to continue to export products developed with stolen IP as a result of cyber theft into the United States. Congress should sanction companies that steal American IP and require an annual report identifying such companies. The Trump administration has used tariffs as a tool to pressure China to stop its theft of IP. However, as Derek Scissors of the American Enterprise Institute has noted, “Tariffs hit all makers of selected products, not just bad actors. ‘Snapback’ tariffs if China keeps stealing IP would also punish everyone. The thieves at least might get what they’re chasing; firms which obey U.S. laws just get the tariff. Tariffs are the wrong tool on IP.”56 Rather than use tariffs, the Task Force proposes introducing new legislation authorizing the Department of the Treasury to sanction foreign individuals, institutions, organizations, and companies that are involved in significant theft of IP or cyberespionage or that directly benefit from or use stolen IP. As Eric Lorber of the Foundation for Defense of Democracies (FDD) has noted, using targeted sanctions as a tool against China, especially on issues of intellectual property or cyberespionage, would signal to Chinese companies that engaging in such activity entails significant risks.57 The Commission on the Theft of American Intellectual Property has aptly stated, “No foreign entity that steals IP should be able to access the U.S. banking system.”58 The Task Force proposes first requiring an annual report by the Department of the Treasury identifying which companies have significantly stolen IP from U.S. companies or have directly benefited from the use of such stolen IP. Such a report could put Chinese companies on notice that their theft of IP and technology will no longer be tolerated and give Congress more insight into the scope of the problem. Treasury could then be required to warn these companies to stop. If they did not stop within six months, they would be sanctioned as Specially Designated Nationals (SDN) and cut off from the U.S. financial system. If a Chinese company was proven to have stolen IP at a later date, Treasury could immediately impose sanctions. Congress should codify the Department of Commerce’s Denied Persons List as well as other tools, short of sanctions, to punish foreign companies with a pattern of breaking U.S. laws. The Department of Commerce’s Bureau of Industry and Security’s (BIS) Denied Persons List is a list of people PAGE 13 and companies whose export privileges have been denied. It is prohibited for American companies or individuals to participate in an export transaction with a person on the Denied Persons List. This is different from the Entities List, which identifies foreign parties that are prohibited from receiving some or all items subject to BIS’ Export Administration Regulations (EAR) unless the exporter secures a license. Essentially, a denial order is a tool that is stronger than putting a person on the Entities List but weaker than sanctioning someone as a SDN. Denial orders create a formal option to prohibit doing business with a company that has a pattern of behavior with multiple occasions of breaking U.S. laws, such as ZTE, which regularly evaded export laws and sanctions for years.59 The Task Force believes that the Denied Persons List should be codified by Congress to formalize this important tool for the Department of Commerce. Still, the Department of Commerce should have additional, more tailored authority to reprimand foreign companies displaying an egregious pattern of breaking U.S. laws. The current options at the Department of Commerce’s disposal are not flexible enough. The Entity List and the Denied Persons List have serious drawbacks because they only restrict exports from the United States and not imports. On the other end, an SDN designation, which is enforced by the Department of the Treasury, more closely resembles criminal punishment and includes asset seizure. The Task Force believes that Congress needs to create another option giving the Department of Commerce new authorities to address foreign companies breaking U.S. laws, one that is more comprehensive than the Entity and Denied Persons Lists and less severe than the SDN list. In particular, such a new option should grant the Department of Commerce the ability to go after any business, especially two-way investment, rather than just exports. In this way, such a new option would fill the existing gap to give the Department of Commerce a range of choices to fit the situation. COUNTER CHINA’S IP THEFT AT AMERICAN RESEARCH INSTITUTIONS AND ACADEMIA In recent decades, China has utilized a number of underhanded methods to pilfer the IP of the United States and other Western nations. The U.S. Senate’s Committee on Homeland Security and Governmental Affairs noted the following in a November 2019 report: American taxpayer funded research has contributed to China’s global rise over the last 20 years. During that time, China openly recruited U.S.-based researchers, scientists, and experts in the public and private sector to provide China with knowledge and intellectual capital in exchange for monetary gain and other benefits. At the same time, the federal government’s grant-making agencies did little to prevent this from happening, nor did the FBI and other federal agencies develop a coordinated response to mitigate the threat.60 China’s Thousand Talents Program (TTP) is one of the primary avenues by which the Chinese have sought to reap the benefits of Western research and innovation. Under this program, China induces international experts who are engaged in research and development, including in the United States, to take the knowledge and research to China in exchange for salaries, research funding, lab space, and other incentives.61 A report by the Hoover Institution found that, according to the Chinese government’s own websites, more than 300 U.S. government researchers and more than 600 U.S. corporate personnel have accepted TTP money.62 The FBI has also found that China sends student spies to the United States to obtain sensitive research and trade secrets.63 According to the FBI, the Chinese government has used some students and professors in science, technology, engineering, and math (STEM) fields as “non-traditional collectors of intellectual property.”64 The Task Force understands, as the FBI has pointed out, that “the vast majority of the 1.4 million international scholars on U.S. campuses pose no threat to their host institutions, fellow classmates, or research fields. On the contrary, these international visitors represent valuable contributors to their campuses’ achievements, providing financial benefits, diversity of ideas, sought expertise, and opportunities for cross-cultural exchange.”65 Still, President Obama may have made the problem of student spies worse by extending Chinese student visas from one year to five years and by extending the PAGE 14 amount of time foreign STEM students could remain in the United States to work through the Optional Practical Training program. These two policies were reversed by the Trump administration.66 The Task Force believes a number of measures should be taken to prevent China’s IP theft from American universities and research institutions. Congress should enact a visa disclosure requirement for foreign students receiving funding directly or indirectly from the Chinese government. The Task Force believes that more needs to be done to ensure our vetting mechanisms are working properly to prevent technology and IP theft by China through foreign students. The 2019 U.S.-China Security and Economic Commission (USCC) report raised the idea of looking into the feasibility of a visa disclosure requirement for foreign students, indicating whether or not they are receiving funding from the Chinese government or an intermediary entity acting in support of China’s government.67 The Task Force supports implementation of such a disclosure requirement. Congress should require a report on the efficacy of the Department of State’s visa screening mechanism to mitigate Chinese IP theft and require the creation of a list of research institutions associated with China’s People’s Liberation Army and Ministry of State Security. The Department of Defense’s Defense Innovation Unit Experimental (DIUx) noted in a 2008 report that the Department of State does not consider “the protection of critical technologies” when vetting visa applications.68 The Task Force, thus, supports the 2019 USCC Report’s recommendation to have the Government Accountability Office (GAO) conduct an assessment on the efficacy of the Department of State’s visa screening mechanism to mitigate the risk of IP and technology theft by China. This report should include the number of foreign students and researchers from China studying in STEM fields, past and current affiliations, primary areas of research, duration of stay in the United States, and subsequent employment. The report should also identify whether federally funded university research related to emerging technologies may have been unlawfully appropriated by individuals acting on behalf of Chinese entities and identify the risks posed by China’s efforts to co-opt U.S. researchers or students at U.S. universities for unlawful appropriation of IP. 69 Finally, as Bradley Bowman of FDD has suggested, Congress should also require the production of a report containing a comprehensive, unclassified list of research, scientific, and engineering institutions associated with China’s People’s Liberation Army and Ministry of State Security to help prevent granting visas that will be used for exploiting U.S. universities and research centers.70 Congress should require student visa holders to report to the Department of Homeland Security if they change majors and require periodic revetting upon reentering the United States. Current visa screening mechanisms apply before a foreign student has entered the United States and end after the student has entered the country. This creates a vulnerability where students may come to the United States originally wanting to study in one field but then a few years later switch majors to STEM-related fields or may intern with a major U.S. company with technology-related trade secrets. To remedy this, the Task Force proposes that foreign nationals be required to self-report to the Department of Homeland Security under certain circumstances. These circumstances should include whenever the student changes field of study— notably the fields of robotics, aviation, and high-tech manufacturing—or undertakes research, employment, an internship, or volunteer activity with an American company significantly involved in one of these fields. Congress should also require the Department of Homeland Security (DHS) to undertake periodic revetting of students upon reentering the United States. Congress should end visas, particularly student and tourist visas, for Chinese government officials, active duty members of the Chinese military, and senior officials in the CCP, as well as their immediate family members until China ends IP theft from American universities and research institutions. PAGE 15 A detailed report by the Australian Strategic Policy Institute found that since 2007, approximately 500 Chinese military scientists were sent to the United States to study. According to the report, China’s People’s Liberation Army (PLA) has been sending its soldiers to study science and engineering in Western universities, including in the United States, as part of a widespread effort to collect military technology.71 It should go without saying that Chinese government officials and senior CCP officials and their family members should not be able to study in the United States while China undertakes a campaign of IP theft and economic espionage against the United States. The Task Force proposes that members of the Chinese cabinet, active duty members of the Chinese military, and senior officials of the CCP be prohibited from studying in the United States until the president certifies that the CCP has ceased its efforts to steal U.S. IP through American universities and research institutions. The CCP is a large organization of over 90 million members, which many Chinese citizens are forced to join.72 A blanket prohibition on visas to CCP members could lead to unintended consequences. However, it would be appropriate to include the senior leadership including the Politburo of 25 members,73 the Central Committee of 205 full members and 171 alternates,74 and all 2,280 delegates of the 19th National Congress of the CCP,75 and their spouses and children. Congress should impose conditions on the ability of foreign students to be involved in sensitive federally funded research and enact the Protect Our Universities Act. The Task Force recommends enactment of the Protect Our Universities Act, sponsored by Rep. Jim Banks (RIN), which would address Chinese economic espionage in American universities by establishing an interagency task force led by the Department of Education to address the vulnerabilities present on college campuses. This task force would also manage a list of Sensitive Research Projects, which would be based upon the Commerce Control List,76 the U.S. Munitions List,77 and foundational principles developed for advanced military technologies. This would prohibit students from China, as well as Russia, Iran and North Korea, from participating in sensitive research projects funded by the Department of Defense, the U.S. intelligence community, and the Department of Energy unless those students received a waiver from the Director of National Intelligence (DNI). In addition, this bill would prohibit the technology developed by the Chinese and Russian governments, including Huawei, ZTE, and Kaspersky, from being used in federally funded sensitive research projects. Congress should require Department of Defense research grant applicants to certify that no recipients have ever participated in a Chinese talent recruitment program. The Senate Homeland Security Committees’ investigation into the TTP revealed the extent to which Chinese talent recruitment plan members “misappropriated U.S. government funding, provided early basic research ideas to their Chinese employers, stole intellectual capital from U.S. basic research before it was published, and engaged in intellectual property theft.”78 Section 1286 of the Fiscal Year (FY) 2019 National Defense Authorization Act (NDAA) required the Secretary of Defense to undertake an initiative to support protection of national security academic researchers from IP theft, undue influence, and other security threats. The Task Force believes that U.S. law needs to go further and that applicants for Department of Defense research grants should be required to certify that no individuals who would be funded by the grant have ever participated in any talent recruitment programs operated by China. If funding recipients could not provide that certification, the Task Force believes the Department of Defense should deny such grants. This is similar to an amendment proposed, but not adopted, by Rep. Mike Gallagher (R-WI) to the FY 2019 NDAA.79 Congress should require a report detailing the extent China has benefited from U.S. taxpayer funded research and from Chinese funding of U.S. research institutions. According to the Senate Homeland Security Committee, in 2008, there were more than 35,000 foreign nationals, including 10,000 from China, conducting re- PAGE 16 search in the Department of Energy’s National Labs.80 According to the Department of Education, “one university received research funding from a Chinese multinational conglomerate to develop new algorithms and advance biometric security techniques for crowd surveillance capabilities,” while another “had multiple contracts with the Central Committee of the Communist Party of China.”81 The Task Force believes that Congress should require a report on: (1) the extent to which U.S. taxpayer-funded research has benefitted China; and, (2) the extent to which China’s funding of U.S. taxpayer-funded research institutions has benefitted China. This information could give Congress more insight into the issue. Congress should enact the Safe Career Transitions for Intelligence and National Security Professionals Act. A major threat to the security of state secrets is the recruitment of federal workers with newly acquired security clearances to work at private entities with questionable ties to nefarious governments. Security clearances are a state privilege, and many companies are seeking consultants with clearances under the guise of innocuous purposes in order to exploit their access to classified information. With the current debate raging over Huawei as an example, the threat of foreign government affiliated companies exploiting access to America’s secrets through individuals with limited experience cannot be overstated.82 In fact, President Obama’s Senior Director for Cyber Security Policy is now a lobbyist for a Chinese government shell company.83 The Safe Career Transitions for Intelligence and National Security Professionals Act, sponsored by Rep. Banks, is a leading proposal to address this issue.84 This legislation would ban companies that are barred from doing business with the federal government, such as Huawei and ZTE, from being able to hire former civil servants with security clearances. It would also give the DNI the ability to add companies to the list. EXPOSING CCP-LINKED CORPORATE SUBTERFUGE According to the American Enterprise Institute (AEI) and The Heritage Foundation’s China Global Investment Tracker, the United States received over $180 billion in Chinese investment between January 2005 and December 2019. Chinese investment does support American jobs and has many benefits for the American economy. However, as the two think tanks have noted, “China is not a friend. The U.S. certainly should not ban Chinese investment, but, as Congress has directed, Chinese firms and individuals should not be permitted to buy advanced technology that could have military uses. Chinese firms that receive stolen intellectual property should be punished.”85 Moreover, Chinese SOEs are directly connected to the CCP, which uses investment as a tool to further Chinese national security interests. The Task Force recommends the implementation of the following measures, which are designed to enhance the federal government’s ability to control technology transfer to China, as a means of addressing key challenges posed by Chinese investment in the United States without stymieing its domestic economic benefits. Congress should establish an Office of Critical Technologies and Security to help prevent the transfer of critical emerging, foundational, and dualuse technologies to countries of concern. The federal government currently lacks an office that can coordinate the whole variety of aspects of security policy related to preventing the transfer of critical emerging, foundational, and dual-use technologies to adversarial nations, including China. Instead, the responsibility overlaps between the National Security Council, the National Economic Council, and a multitude of federal agencies and state and local entities. As Sen. Marco Rubio (R-FL) has noted, establishing a central Office of Critical Technologies and Security would help protect the United States by streamlining efforts across the government.86 To that end, legislation, co-led by Sen. Rubio in the Senate and Rep. Mike Conaway (R-TX) in the House, has been introduced to establish the Office of Critical Technologies and Security. Under the bill, the office would be required to develop a long-term strategy for U.S. technological superiority; coordinate a whole-of-government response to protect critical emerging, foundational, and dual-use technologies; and effectively enlist the support of feder- PAGE 17 al agencies, the private sector, and other scientific and technical hubs, including academia, to support and assist with such response.87 The Task Force strongly endorses this legislation. Moreover, the federal government should examine ways to emphasize the increasing importance of neuroscience and its application in the development of dual-use technology, including by better coordinating existing federal efforts to develop this emerging technology. Congress should enact legislation requiring Chinese companies to disclose internal CCP committees and financial support provided by the Chinese government. The Task Force supports the 2019 U.S. China Economic Commission’s recommendation to require Chinese companies to disclose any CCP committees within the company and disclose financial support provided by the Chinese government.88 American and European companies involved in joint ventures with state-owned Chinese firms have been asked to give internal CCP cells an explicit role in decision-making.89 As Ashley Feng of the CNAS has written, Western governments cannot tell if Chinese firms work for the CCP. Tech companies, such as Baidu, Alibaba, and Tencent, have police-embedded cells within them that hand over sensitive information to the Chinese government. Feng notes that “Chinese companies still have some autonomy. They’re able to direct their own research and development, decide where to expand, and have control over most everyday decisions. But when the party comes calling, they have almost no power to resist direct requests, lest they want to lose their privileged positions.”90 Chinese companies that want to operate in the United States should have to disclose their ties to the CCP. Not only is such information material to American investors, it also affects the national security interest of the United States.91 Congress should enact the Holding Foreign Companies Accountable Act to require Chinese companies to adhere to U.S. laws as a condition of being listed on American stock exchanges. As of February 25, 2019, there were 156 Chinese companies listed on the NASDAQ, New York Stock Exchange, and NYSE American, with a total market capitalization of $1.2 trillion. There were at least 11 Chinese state-owned companies listed on the three major U.S. exchanges.92 The Securities and Exchanges Commission (SEC) oversees the Public Company Accounting Oversight Board (PCAOB), which, in turn, is the principal U.S. regulator that oversees the audits of public companies and SEC-registered brokers and dealers. The PCAOB is required by U.S. law to conduct regular inspections of all registered public accounting firms, both domestic and foreign, that issue such audit reports or play a substantial role in the preparation of them.93 However, according to a joint statement by the SEC and PCAOB from December 2018, “China’s state security laws are invoked at times to limit U.S. regulators’ ability to oversee the financial reporting of U.S.-listed, China-based companies.”94 On May 20, 2020, the Senate passed the Holding Foreign Companies Accountable Act by unanimous consent, legislation which would prohibit securities of a company from being listed on any of the U.S. securities exchanges if the company has failed to comply with the PPCAOB audits for three years in a row.95 As Rep. Conaway—sponsor of a similar bill in the House—has stated, “Beijing shows no apprehension while obstructing attempts to audit Chinese companies or breaking U.S. law. Without the EQUITABLE Act, the Chinese government will only escalate this malicious pattern of conduct.”96 Congress should enact the Promoting Secure 5G Act to establish a U.S. policy to oppose international financing for 5G networks that lack appropriate security measures. 5G is the newest generation of wireless networks to enable faster data speeds. Chinese company Huawei, the world’s biggest telecommunications equipment maker, is a leader in 5G equipment. In January 2009, Huawei was indicted by the DOJ for the theft of trade secrets.97 According to Ajit Pai, Chairman of the Federal Communications Commission, Huawei takes direction from the Chinese government in accordance with Chinese law PAGE 18 and could be compelled to spy on individuals and businesses or install malware or spyware on networks.98 If Huawei, a Chinese state-directed company with a history of IP theft, gains a foothold in global 5G networks, some fear China could have an unprecedented opportunity to attack critical infrastructure and compromise intelligence sharing with key allies.99 To counter the threat of Huawei’s dominance in next generation 5G networks, the Trump administration has pressured U.S. allies to reject the use of Huawei equipment in developing 5G systems. Australia has already banned Huawei from supplying equipment for 5G networks as of 2018.100 Unfortunately, however, in January 2020, the European Union rejected an outright ban on Huawei equipment in developing its 5G networks. Furthermore, the United Kingdom granted Huawei a limited role in developing its 5G systems. However, on May 24, 2020, Britain’s National Cyber Security Centre (NCSC) announced it would conduct a new review into granting Huawei such a role.101 The Promoting Secure 5G Act of 2020, sponsored by Rep. William Timmons (R-SC), would leverage U.S. aid to international financial institutions, such as the International Monetary Fund (IMF) or the International Finance Corporation, to discourage recipients from using Huawei in their 5G networks. The bill would specifically make it U.S. policy to only lend to such countries for infrastructure, wireless technologies, and policy reforms through multilateral organizations only when those countries take sufficient security measures in their networks. It would also encourage cooperation with U.S. allies to strengthen support for secure wireless technologies. STOPPING CHINA’S MALIGN POLITICAL INFLUENCE AND DISINFORMATION CAMPAIGNS “China conducts influence operations against cultural institutions, media organizations, and the business, academic, and policy communities of the United States, other countries, and international institutions to achieve outcomes favorable to its security and military strategy objectives… China harnesses academia and educational institutions, think tanks, and state-run media to advance its soft power campaign in support of China’s security interests.” – Department of Defense, Military and Security Developments Involving the People’s Republic of China 2019102 GAO identified one or more colleges or universities with a Confucius Institute GAO did not identify a college or university with a Confucius Institute All but Six U.S. States Have at Least One Confucius Institute on University Campuses CONFUCIUS INSTITUTES ACROSS AMERICA Source: GAO analysis, as of January 2019, of Confucius Institute agreements, school documents, and Department of Education National Center for Education Statistics data | GAO- 19-278 PAGE 19 China’s spread of disinformation about the origins of COVID-19 and false accusations blaming the U.S. military for creating the virus in a lab have introduced many Americans to China’s malign influence and political warfare operations.103 Yet, Chinese disinformation operations have long targeted multiple facets of American life to shape a narrative favorable to China and, in the process, have created a sophisticated network throughout the United States to spread its malign influence—a network which can be used at any time to shape public perception.104 China does this through building a presence in educational institutions, think tanks, media, and the business community. While the United Front Work Department, the CCP’s agency in charge of the coordination of influence operations, directs most of these efforts, it is, according to Larry Diamond of the Hoover Institution, “one of many institutions within the Chinese party-state involved in influence operations.”105 Other institutions include seemingly private civil society, academic, Hollywood, or even religious groups, that ultimately take direction from the CCP.106 In recent years, Confucius Institutes have come to the forefront as one key tool used by the CCP to influence public perception.107 In April 2017, the National Association of Scholars (NAS) released a comprehensive report illustrating how Confucius Institutes infiltrated American colleges and universities to enhance China’s image and educate a generation of American students to know nothing more of China than the regime’s official history. The Chinese government approves all teachers, events, and speakers in the institutes.108 Since Confucius Institutes provide financial support for universities to run free Chinese language programs, colleges become hesitant to allow activities on campus that would draw the CCP’s ire and engage in self-censorship.109 As Peter Mattis has said in testimony before the House Foreign Affairs Committee, “CCP programs, like the Confucius Institutes, are less important for their specific content in dealing with U.S. universities than for establishing a relationship. By facilitating U.S. universities investment in facilities, research collaboration, or programs, the CCP creates a vulnerable relationship that can be used to apply pressure to the university unless the latter is prepared to walk away.”110 Congress passed legislation in August 2018 as part of the NDAA to prohibit the Department of Defense from funding Chinese language programs at institutions that host Confucius Institutes except in cases in which the institutions have obtained a waiver.111 Since then, some universities have closed their institutes. According to the NAS, there are now 86 Confucius Institutes in the United States, with five more set to close in the summer of 2020.112 While this is a step in the right direction, more needs to be done to counter the threat that Confucius Institutes and other propaganda tools pose. The Task Force believes that the following steps by Congress can enhance efforts to counter the CCP’s malign political influence. Congress should create new authority to sanction state-backed disinformation networks and mandate placing such sanctions on the CCP’s United Front Work Department. Congress should amend the Global Magnitsky Human Rights Accountability Act (Global Magnitsky Act), which authorizes the President to impose sanctions on individuals and entities engaged in gross violations of human rights and significant corruption, to also allow the President to designate state-backed networks purveying harmful disinformation campaigns. The United Front Work Department is a fundamentally malign entity used to confront any source of potential opposition to the authority and policies of the CCP.113 Xi has even called the front a “magic weapon” for the “Chinese people’s great rejuvenation.”114 It is also used to harass, spy on, and co-opt Chinese citizens in the United States. According to the 2015 Central Committee, this is actually its primary mission.115 Confucius Institutes are funded by Hanban, an organ of the United Front, and were founded in 2014 by the former head of the United Front, Liu Yangdong.116 In countries like Australia and New Zealand, where the problem of CCP malign influence is much more pervasive, United Front affiliates have even held political office and controlled important media outlets.
 

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The Republican Study Committee's strategy document is antagonistic to China

Editor's note: Andrew Korybko is a Moscow-based American political analyst. The article reflects the author's opinion, and not necessarily the views of CGTN.

The Republican Study Committee's National Security and Foreign Affairs Task Force published a 120-page policy proposal on June 10 about "Strengthening America & Countering Global Threats." A full 25 pages of the document deal exclusively with recommendations for countering China, all of which would amount to unprovoked hostilities against it that would naturally intensify what some have begun to regard as the new Cold War if any of them were to enter into effect.

For instance, recommending the extraterritorial expansion of the 2016 "Defend Trade Secrets Act" could lead to American businesses suing their Chinese counterparts all across the world, which in turn could result in U.S. courts demanding the seizure of their assets inside the country as compensation or even sanctioning some of their employees in the worst-case scenarios. Amending the "Global Magnitsky Act" like they want to do could end up providing the American government with yet another "justification" for harassing Chinese media.

Other equally antagonistic moves include the call to sanction officials from Hong Kong, Tibet, and Xinjiang; a proposal that deals with clinching a series of trade agreements with various countries all across the so-called "Indo-Pacific" in order to strengthen the U.S.' anti-Chinese alliance system; and a related request concerning the arming of India as a pro-American military counterweight to China.

Quite clearly, the Republicans are doing everything in their power to portray themselves as the most anti-Chinese political force in the country.

A lot of that probably has to do with the upcoming election since the party has an interest in distracting the masses from the president's failure to properly respond to the COVID-19 pandemic and his controversial handling of the ongoing unrest that's broken out all across America in the aftermath of George Floyd's death during his arrest late last month.

It's unfortunately common in the U.S. for the two main parties to exploit the concept of the so-called "other" for political gain, which in this instance is China, portrayed as the U.S.' "enemy."



President Donald Trump speaks during a campaign rally at Bojangles Coliseum in Charlotte, North Carolina, the United States, March 2, 2020. /AP

What's so dangerous about their strategy document, however, is that Trump might be tempted to implement some of their recommendations for that very same reason of distracting Americans. He might also wager that it's politically expedient for him to capitulate to the most anti-Chinese hawks in his party in order to secure their full support for his re-election when considering that some of his fellow Republicans are uncertain about the wisdom of endorsing him for a second term in office.

These interconnected political calculations suggest that there's a credible chance that at least some of the Republicans' antagonistic policy recommendations against China might enter into force. Both Trump and his party members want to distract Americans from the epidemiological, political, and security turmoil that's currently convulsing the country. The anti-China hawks want the president to act more aggressively against China, and he needs to be absolutely sure of their full support for his re-election.

China is therefore being objectified as an electioneering tool instead of being treated as the sovereign country that it is, which could lead to destabilizing consequences for the entire world if Trump surrenders to the demands of his party's more hawkish figures.

The promulgation of any of the many antagonistic policies that the Republicans recommended in their strategy document would almost certainly lead to a response from China, one that would be entirely justified for defending both its interests and its dignity.

The world doesn't need an intensification of the new Cold War. What it needs is a new detente between China and the U.S., which could give the international community the opportunity to collectively counter the COVID-19 pandemic instead of being caught in the political intrigue that America is provoking.

Trump should therefore have the courage to dismiss his party's recommendations irrespective of the political gain that he hopes to achieve by implementing them and instead be brave enough to discuss a new detente with China.

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