Transcripts For CSPAN3 Fmr. 20240704

C the select committee will come to order. Welcome everyone to the select Committee Hearing or the leveling the Playing Field how to counter the Chinese Communist party or economic aggression. Who when i looked at the staggering economic relationship thats a word that comes to mind. One small example the American Pacific northwest salmon are frozen sent to china to feed tboned by hand and refrozen and shipped back to u. S. Grocery store sometimes miles from where the fish were copied the economical links between the u. S. And china are dizzyingly complicated that theres another word that comes to mind. Naivete. There were prescient dissenters for the last 25 years or both parties largely made the same naive bet on china that Economic Engagement would lead the Chinese Communist party to political liberalization. Beijing saw our quintessentially american optimism is an opportunity to exploit and their treaties and International Commitment are but not for me. I will enter video into the record and if the clerk will play the video. The Chinese Communist party will it be the next worlds last great communist dragging click the wto will move china in the right lane advanced americas for the past three decades. China is a full member of the wto and will be a full partner in the Global Trading system. We will it be than next great capital . [inaudible] [inaudible] [inaudible] u. S. Deputy chief in geneva says this as transparent as the government subsidy. We will seek faster progress to join the wto. [inaudible] chinese hackers outnumber cyber personnel by elise 501. We remain committed to developing free trade in investment. Promote trade and investment in the facilitation. We must remain committed to developing free trade. The ttp took advantage of our technology our knowhow and are capital. Once they felt ready they began to decouple from us or they began to decouple from us because it was never about reciprocity. Now the air of Wishful Thinking is over. The Economic Warfare uses any and all that rich to course us and our allies in its time we defend ourselves and the free world. In so doing its important to remember theres no such thing as a truly private business in china. Business like Everything Else serve the Chinese Communist party has political goal. The National Intelligence amended counter espionage laws and are all clear evidence it hand wringing in this discussion in the media about what we call our new economic relationship with china decoupling derisking interwitnesses i would say call it whatever the heck you want. Lets stop admiring the problem and actually get down to a solution. You will hear a lot of economic jargon. Section 301 tariff capital control. Easy to get lost in acronyms in the jargon but i find it helpful however to have policy principals in mind to get her hands dirty in the minutia. A caveat furnished this complex all principals need healthy doses of pragmatism and humility. One, we need to stop fueling our infrastructure. This means we shouldnt fund pla modernization and wish to protect their Sensitive Research and Critical Technology and not sacrifice National Security for shortterm profits. Two we need to take off the blindfold and open our eyes. American business shouldnt be complicit in the ongoing genocide in American Capital should not investment manager especially pension and Retirement Funds cant ignore their fiduciary duty through the past few months the ttp is criminalized repeated Due Diligence making a mockery of the system of transparent disclosures that that undergirds her Capital Market and undermines the rule of law. Three, we need to reinforce or economic sovereignty. That means reassuring her most critical supply chains like pharmaceuticals. We need a positive collective resilience with our partners and allies and open new markets for American Companies. No one is talking about a full decoupling of china at the strawman is propagated by the pro engagement if we use these principals to craft a policy agenda along with technical recommendations from experts like the ones testifying before us tonight i believe we can chart a new course for american prosperity in the 118th congress and without i recommend roger krishnamoorthi for statement. Thank you. Tonight we are getting to the heart of the strategic constitution with ttp. This is the fundamental question who will be the economic innovation leader for the remainder of the 21st century . We will the america or the ttp . The 1978 when the prc began to open the economy america four times more steel than the prc and now the prc produces 12 times more steel than we do. In 1978 americans had now the prc is the Worlds Largest automaker. It produces nearly three times more than america. In 1978 america was the worlds leading economy with a gdp of 12 times that of the prc which ranked 10th in the world. Today we remain the worlds biggest economy in the prc is the second biggest economy and they are aiming to be number one. If the trajectory of the prc is not a wakeup call let me give you one more step. The prc leases 37 and 44 technologies that many consider to be important for the future of our world. That includes 5g and that includes nanoscale manufacturing and commercial drones among other things. Lets be clear the ccp is catching up economically and they want to move ahead of us. As chairman xi jinping is at the ttp seeks to lead the world in terms of comprehensive power in international scale. Want to level the Playing Field for the American People and remain her place as the Global Economic leader for the rest of the 21st century and to protect herself from unfair competitive trade practices by the ccp. At the same time we must up our game and enhance their own competitiveness. Tonight we are going to hear from three impressive witnesses about how america can regain momentum and retake the lead in so many fields important to our economy. As a think about how to put america on track to win strategic competition with the ccp a i respectively submit for your consideration three keys, people, production and partnership. First, people. Americas biggest advantage has always been its people whether we were born here or like my own family came here from Distant Shores seeking the american dream. The American People have always been our biggest competitive advantage bar none. Making sure people are better prepared to lead is critical in attracting the best and the brightest talent from around the world is essential to making sure america remains number one. The second is production. We have seen over the past few years the impact of the supply chain abroad can have on our working families here at home. Hardening our supply chain by producing more here in america will ensure that our Economic Future is not left to the whims of competitors and will make sure america remains number one. Third and finally, partnerships. None of these things happen without partnerships. Partnerships with other nations partnerships to retain the public in the private sector and partnerships between republicans and democrats working together to fuel innovation on Nextgen Technology like ai and quantum computing and robotics will ensure we set the pace for the future can keep america number one. Finally i want to leave you with two more. These matters need to be pressing priorities for our entire country. We are going to to hear lot tonight about things that sound like Science Fiction or the distant future. It may seem like we can wait for whole of government approach to tackle ai and quantum and biotechnology but we cannot. The moment to act is not in 10 years or five years for next year, its now. Its now. That means whatever we discussed i hope we act upon. In the house, the senate in corporation with the frustration and the deed with the private sector as well. I look forward to hearing from our witnesses and her fellow members to help us on a path to win the strategic competition. I yield back the balance of my time. Thank you Ranking Member and if any other member has a statement. There being then we have a great lineup of witnesses each of them bring in them bring an important sector to how we encounter first ambassador robert lighthizer. Ambassador ambassador lighthizer served as 18th u. S. Trade representative where he helped shepherd the u. S. Mexicocanada agreement and the chinabased 12 and we are happy to host tim. We have had spirited conversations and i appreciate those discussions. The next is Roger Robinson who helped us untangle the web of financial ties between the u. S. In the prc. Mr. Robinson served as a top architect under Ronald Reagan Economic Strategy against soviet unions and went on to chairs the china a review commission and chairman and cofounder of the Prague Security Institute and finally we are privileged to be joined by a doctor eric schmidt is done more to advance american technological leadership should. Doctors schmidt served as ceo and chairman of a Small Tech Company called google and its Parent Company alphabet. Its most recent initiative to competitive study project is a bipartisan Nonprofit Institute with a Clear Mission to make recommendations were ai and other emerging technologies reshape our National Security and our connie and society. Welcome to all of our witnesses and thank you for being here this evening. Please raise your right hand and i will now swear you in. Do you swear or affirm under penalty of perjury the testimony youre about to give his true and correct to the best of your knowledge so help you . You may may be seated. Let the record show that witnesses have answered in the affirmative and ambassador lighthizer you may begin. Chairman gallagher Ranking Member krishnamoorthi members of the committee i would like to thank you for inviting me to testify today and it would like to thank the house leader should for establishing this Important Committee and all of you serving on it. I believe china is the most dangerous threat that we face as a nation. Indeed it may be the most perilous adversary it ever had. That state actions are increasingly totalitarian and targeted at us. China believes it is destined to be the world only superpower and that we are in the way. When the sessinger economic relationship with china its important to put our analysis in the broader context. And i will not repeat examples of military espionage and other acts demonstrating their intentions to challenge americans. And i will not repeat their own words about america being in decline and their preparation for changes nothing in 100 years. I only ask when you think about their Economic Activity please remember they are openly adversary. It is not an exaggeration to say the Chinese Communist party is waging economic war against United States for decades. In this economic war they use all the tools plus many more. Parent higher Economic Policy is designed to be an integral part of their overall global dominance. That policy produces huge trade surpluses obtained technology by whatever means. Turn it at a plate of currency and uses industrial subsidies and maintains a close market only allowing access when they determine its in their interest. It uses among other things tariffs and discriminatory Regulatory Regime and riggs product safety standards. They force a the company to turn over technology to them and when they dont do it they steal a baby or the number one source of industrial espionage in the world. They have banking and labor systems to limit domestic consumption and subsidize production and exports. They take advantage of very low environmental standards. They target u. S. Businesses that are trying to monopolize the supply in the world. In short if this is not economic or what is it . Also please remember these actions to the communities and more partly the destruction across america nothing whispered perhaps the worst part of this story is they appear to be succeeding to dwell waging this economic war on the u. S. Their gdp has gone from 1. 2 trillion in 2000 when we granted them favored nation statement to now a 14 fold increase in their Technology Sector has grown to the point that it challenges ours. Their success was largely done with our money. Lets consider how much of our treasure is transferred to china every year. First we give them 330 billion in trade surpluses. Their Technology Theft probably nets another three to billion dollars a year. They make tens of billions of dollars every year sending fentanyl mostly through mexico. We have transferred over 5 trillion in the last 22 years and probably 3 trillion lost technology. When one considers the compounding effect of these wealth transfers over so long a period its fair to say much of the ccp economic miracle has been the result of taking advantage of america. I believe its far past time to engage in the United States should begin to process and phase and the decoupling of our economy from theirs. I did not espouse cutting off economic relations but thats unrealistic and probably counterproductive. Strategic decoupling would include several policy changes. First we need to balance trade and we should raise tears on the products to a level that one sure way by approximately as much from them as we sell to them. Sounds trade will reduce the effects of their unfair practices and stop the transfer of our wealth. Second way to take steps to disentangle our Disk Technology from theirs and me to expect if we should develop new technologies on our own and with our allies. Third we should limit their investment in our country and only allowed when theres a demonstrated benefit to the United States. Outbound u. S. Investments in china should be severely defunded. This policy is submit a so softer version of exactly the policy that china has towards america. The way im calling for reciprocity. Obviously this is aggressive recommendation but i believe honest people who look at all the facts in this relationship realize the status quo cannot continue. This is not the time for half measures. This is a time to be bold and Congress Must make this happen. Thank you. Thank you sir. If he hear a gentle thats me in my miss the wisconsin nice way to enforce the fiveminute rule. I understand it is impossible to summarize her testimony in five minutes. Im a very old 39yearold. Members get mad if i dont try to keep it in. I dont mean to be. Mr. Robinson. Mr. Chairman and members of the committee i greatly appreciate the opportunity to appear before you today to describe was arguably the largest strategic financial scandal in modern history to consist of the multitrillion dollar underwriting by our democracy of an authoritarian regime bent on undermining our fundamental values and way of life. Aided by some fiduciary malfeasance wall street firms and certain conflicting u. S. Government regulators at the toplevel stuff that toplevel stuff up Treasury Department the securities and Exchange Commission of the National Economic council. Over 20 years the u. S. Has allowed the cavalcade of thousands of ccp controlled chinese publicly. Companies to enter their retirement and investment portfolios of average americans with precious little if any diligence concerning who these enterprises and their subsidiaries are for the human rights and National Security abuses including already u. S. Sanctions of Chinese Companies. None of these roughly 5000 chinese corporate security. Traded adequate material risk transparent financials corporate shareholder rights the rule of law and other requirements for their american informant foreign corporate counterparts for rick is just her Pension System administrators and other fiduciaries are protecting our risk related interest not just seeking returns. This is often not the case. Providers like msci have products littered with risky sanctions and other chinese corporate bad actors using crude human rights and National Security fenders for the same mr. Regarding certain large American Asset managers which have included these bad actor companies in their funds and other passive Investment Products benchmarked against these industries through the list of chinese corporate wrongdoers at state level and other investment portfolios as long peer tragically includes equipping concentration camps, trafficking and forcing labor aiding and abetting genocide building chinese aircraft carriers hypersonic glide vehicles and other advanced Weapons Systems from doa as well as Companies Engaged in i. T. And Technology Theft, espionage and environmental to spoilage. Imagine the damage caused to American Economic competitors by the trillions of u. S. Investment dollars that have been funneled through the coffers of the ccp instead of remaining productively invested here. This is arguably the single most troubling consequential issue in u. S. China relations. My written testimony provides a dozen specific conditions. Soomro full of maligned or unfit chinese corporate securities. Those controlled companies that fail to meet the sensible criteria should be delisted and deregistered from our exchanges including the overthecounter market in no more than 180 days and americans should be prohibited from holding their securities including by mutual funds and other passive Investment Products. There are well over 100 million americans holding the stocks and bonds of u. S. Sanctions and other chinese corporate bad actors. Do we really believe the American People would want to be holding unwittingly the stocks and bonds of soviet companies are the supporting germany . Do we really believe that my former boss Ronald Reagan would have stood by and permitted the multitrillion dollar funding of those in the ccp that would destroy our democracy and everything we hold dear. As the director of interNational Economic affairs i was in a position to know and i can assure you he would not for a moment. If Congress Passes the necessary laws that i outlined in my testimony and if we take a stand as individual americans in defense of where our money is going and how it is being used by wall street firms and other Fund Managers who often do not see beyond their quarterly quotas and bonuses we can ultimately prevail in our struggle against this fascist dictatorship in a relatively short number of years. Remember always money often kills in the hands of authoritarian police state. We must act now before it is too late in scores of millions of our nations investors face debilitating financial losses are more likely when and not if the first shots are fired at Taiwan Strait as soon as next year it will be too late. We cannot wait another day to largely decouple financially. Together we can make the american defunding of the Chinese Communist party the 21st century equivalent of our our thank you mr. Chairman. Mr. Schmidt you are recognized for five minutes. I would offer the rule its never too late to stop a speeding car. I think the most important issue is exactly what you were doing at the technology between china and the u. S. Is the defining moment and that Artificial Intelligence ais epicenter this competition. In 2016 i was present when computer thieves, to an 80 million Chinese People were watching on tv as it became clear that it was losing big shot off coverage. Thats how serious they take this threat and as a result of this we know that china is now dedicating enormous resources in u. S. Technology is particularly ai and we arent talking about it tonight. Basically quantum cyber ai biology Computer Science and new energy are also on the list and they are all strategic and all under attack. I think we can win but we need to act. Ai is my current choice of discussion because of the Foundational Technology in making the sign scientist martyr and making system smarter has the pervasive platform improvement of capability and scaling enough for the fight for ai is important. The good news is at the moment where head did a remarkably good decisions by the Trump Administration the biden demonstrations, hardware and i hope you all will have good judgment on all these other things you are seeking as well. Working well so far. The chinese understand with their top planning their economic maneuvering they have taken the lead of the United States and several Critical Technology areas. For example huawei 5g tik tok and 90 of all the new energy of an batteries are made in china and the number one manufacturer of electric vehicles are the chinese and not in the United States. We invented the stuff by the way its quite. Nevertheless its true. In may of 2022 china revised its plan and alarming first in the prc history to focus on the bio economy as well so the other fields are also important. The bio economys multitrillion dollar area of Economic Growth which again america invented. We must organize around innovation power and innovation power is my way of saying away the way you win is to innovate ahead of the competition. Americas Great Success economic success over hundreds of years has been the unique partnership between government the private sector universities and so forth, risk o. Smart people taking global risk and essentially dominating the Worlds Technology platform. This is crucial that we continue it. Imagine if the Technology Platforms we use today were chinese made. Would you be comfortable being in this room . Look at the tv and imagine it would be very comfortable. Lets make sure that does not happen. This uniquely American Innovation ecosystem is still the worlds and being i want is to make it stronger. Ive never sank the rapid gains we are seeing now. We lead in the world is turned to catch up and we are still ahead. Lets continue. We have this ability to out innovate our global rivals with this unique american system that im still proud to be part of 10 i want is to make a stronger pick three should act to do a weekend to make that work. Where do we start . First we have to invest in science and Technology Research at the National Security commission ai which you appointed the chairman of a while ago and we recommend we increase the nondefense and a i r d funding to 32 billion by 2026. So far we are still a 2 billion thats a problem. Congress must Pass Technology focused legislation each year because chips were successful but you have to do it again and again and again to make sure we have the necessary governmental support in order to do this. We have to invest in our talent and all the obvious ways and you know this. For example we propose Additional Service academies to get more people in the civilian parts of our government and the military does a good job on this, to do this. We have to fix the h1b visas and let me tell you what we need. We need physics math chemistry biology Computer Science ph. D. We need a stronger Defense Strategy with technology. We have to develop these technologies with Democratic Values in mind and we have to act to make sure the ai tools we reflect americas values and family we have to work with our partners. This in might view as the defining competition of our time. This is my opinion. The rest of our lives we will be dealing with this. I want us to win. Thank you. We have copies of your recent article in the back. I would recognize myself for five minutes. Mr. Robertson as you know we have the service committee. As far as i can tell no one is considering american investors capitalizing on chinese firms traded 30 tfn mutual funds as Outbound Investment. Id be curious to get your sense of that and what did the same restriction should be placed on these entities as it was for direct act of investment in Critical Technology sectors. Spare tire sure your impression. After all this is the money. I mean yes technology and security remains for most in our minds and so much of whats being covered in the Outbound Investment portfolio is sensible and necessary. It is ironic that here we have chinese Mainland Companies for the most part, some 4000 of them in our portfolio subtracting the funding of the largely unwitting american investors to the tune of hundreds of billions if not trillions of dollars over time and bringing it back for the exact competitive advantages they are seeking to gain that have been discussed by many fellow panelists. Money is essential as a topic here four or inclusion i should say as Outbound Investment. It has a familiar ring to it. How is it that so few in the congress and among our fellow americans are aware of this Capital Market saga and trillions of dollars moving from the investment portfolios of some 150 million americans into the coffers of Chinese Communist party as i mentioned. This is an acute problem and i believe you are right markets have to be included in our investment to ambassador lighthizer in the ongoing genocide we had testimony to the effect that actors excluding the de minimis loophole to get around the intent of labor and prevention act in your testimony talked about is a mechanism to get Illegal Drugs out of United States and how should congress confront this issue . Thank you mr. Chairman. Everyone have to rap their head around what kind of mistake this was in 2015. Nobody thought this would ever happen and now we have packages coming in, 2 million packages a day almost all from china. We have no idea what is in them. We dont really know what the value is and theres no way to check any of it. Nobody ever dreamt of this. Theres a recent study has come out saying the value of this could be as much as 190 billion a year largely additional trade deficit with china. That comes to about 550 billion, 3 of their entire growth is being transferred to the United States. In my opinion that congress should completely get rid of the de minimis ruling go back to what is meant to be and that is 50 or 100. Even that wont work because all of these companies who are billion Dollar Companies that exist solely because of his loophole, these are companies that literally would not exist except for this one loophole and they are putting people out of work in stores and putting people at work in manufacturing. To me if you cant repeal it entirely go back to taking it away from china and any other country that can improve transfers in from canada. That would include by the way mexico and canada. Like amazon was shipping things to canada divided in smaller groups. Theres another company that ships and stuff from long beach puts it in a van and takes into mexico and ships it out at mexico and it never goes through u. S. Customs but we dont know where this drugs are counterfeit but what we know its probably a couple hundred billion dollars. I am not a time and i have to abide by my own rules. They recognize Ranking Member chavez. Spare thank you mr. Chair. Id like to turn her attention to this chart. Since 1979 the piercy is experienced with the world bank has called expansion by major economy. In this chart we see rapid growth of the prcs economy but on the bottom are the red dots corresponding to the domestic product by year and the top is the u. S. You can see chinas growth is rapid but it has not converge at yet. Dr. Schmidt in order to progress the ccp has invested heavily in Postsecondary Education in developing the Worlds Largest technical workforce. In fact in 2021 the most common Postsecondary Education degree in the prc is whats called a shortterm vocational degree with almost 82 million chinese having them. The corresponding number in the u. S. Is 19,000,082,000,000 there and 19 million here. You would agree with me that an emphasis on technical and Vocational Education in the prc has helped to propel its growth over time, right . Yes, youre exactly correct and its important to know china produces more ph. D. In Artificial Intelligence for example than we do. They are now producing more papers than we do pick they have four to five times the number of stem graduates than the United States. Unless you think somehow this will prevent them from being more intelligence which is clearly false we have a structural problem of scale. We have more people more investment and they are delivering. If we were to have a similar emphasis for insistence on Vocational Education and the practitioners its possible our own economy could take up as well. Isnt that right . You are exactly right. More importantly we seem to have forgotten that we should start manufacturing stuff in the way you start manufacturing step is you need the people who manufacture things. Typically people who are not given a liberal college education. Rather at Technical Education high school and college and they are very valuable in their salaries are very high. In addition to developing her own talent who must attract the worlds best talent whatever it is. Turns out according to the science article they pulled 20. Scientists around the world to find out where they would like it to live and 56 they would consider moving to america. Only 8 said they would consider moving to china. Scientists and stem graduates would want to come to america because report after report shows our Defense Industrial base and innovation and technology of the future requires stem graduates. You might be wondering where are the stem graduates . Dr. Schmidt ive chart here that shows where the stem graduates come from among our closest friends and allies. Dr. Schmidt immigrants in america helped create more than half of the startups and account for more than 70 of graduate students in Artificial Intelligence; they are related fields. And less we attract the stem graduates from here and around the world we will be harming our ability to compete with the ccp. We need to accelerate a thing you just said as fast as they can in specific fields and id like if ive may to say theres a notion that somehow is a its not necessary in u. S. We did a study in the top we need them and america and wanted to keep them in america. Makes no sense to educate them and ship them back. As an example the way chinese quantum occurred with took persons and educated them and ship them back and now they are creating how to decrypt their messages. Said thats. An executive nscc Party Newspaper said that u. S. Efforts to lure global town would pose a huge challenge for china. Sir one congressional report stated the following dr. Schmidt the u. S. Quote needs to continue attract the best and brightest stem talent from around the world and you would agree with that, right . It turns out that was from the house Gop China Task force and i happen to agree with that point that the gop made and i hope we as a committee followup on this particular issue. Thank you and i yield back. Mr. Wittman for five minutes. Smith thank you mr. Chair and i thank her witnesses for joining us today. Id like to start with you the department of Treasury Committee on Foreign Investments in the United States is charged with safeguarding our National Security by screening this inbound Foreign Investment United States to make sure their connections to congress as long consider what we do to modernize cfius and addressing these modern challenges to what was supposed to be a committee that protected our technology and how those investments were taking place. Recently the Treasury Department determined cfius didnt have jurisdiction to review a prc firms transaction of land in near an air force facility in north dakota. Let me get your perspective. What cfius can reforms can we put in place to accelerate our ability to review prc statedirected investment in the United States and secondly do you think we have the tools necessary to do sufficient Due Diligence on second and third Year Companies and Shell Companies and the effort by china to circumvent the controls and cfius that advanced our lacking and how concerned are you about the potential gaps that we see today in cfius jurisdiction related to new and emerging technologies . This was never intended to cover the rampant excelling ration of what we see in areas like autonomy artificial Artificial Intelligence so what is your perspective on those three areas . Thank you for that question. I can tell you we have dedicated a lot of our effort to that committee and on more than one occasion. In my opinion if thats from the prc, if you cant demonstrate that the United States should not be limited to just National Security and ought to be Economic Issues as well and the notion even with the current standard the notion that you cant stop buying farmland near an air force base or get the place we develop a hard drones which are so important and you know more about it than i do, that the National Security issues away think every dimes worth of Chinese Investment should be notified and it should only be permitted if you can demonstrate its for the night say. Your point about shell corporations is a very good and i will always be a problem. Well have to be vigilant and we have to be able to unravel any deal that we later find out has any connection. This strikes me really as the most obvious thing in the world and i can imagine not having it passed overwhelmingly with democrats and republicans. And when editing this notion of agreements is another huge mistake. The notion is we dont thank you should go forward with it but we will create a mitigation of that situation and put former colonel in Accounting Firm and theyll make sure the data doesnt go to china. I just dont believe it works think its a mistake. Thank you mr. Ambassador. Mr. Robinson i appreciate your perspective on things. You spoke to a small group of us from the Armed Services committee in the financial Services Committee about this exact subject about u. S. Investment going into these etfs and then he spoke to about investments in bonds that are since we issued by the ccp. Can you give us a broader perspective on that because we see a lot of funds that have exceptional returns that are aging bond market funds but it seems much of those bonds are issued by the ccp. Give us your perspective in that area where investments in the United States is going to see as you say first i like the cfius questioned our much and think about financial cfius because theres never been any screening whatsoever as to the identities and activities of those Chinese Companies coming to our Capital Market. Getting to your question chinese sovereign bonds as we know bonds are discretionary cash. You give somebody a Maturity Date and in magistrate and they give you billions of dollars in return. These are issues directed by the Chinese Communist party did they come to our market two or three times a year. They go oftentimes seeking 2 billion but then they have the glamor of it being oversubscribed as they say on wall street by 11 times so they walk away with over 20 billion. If you do this three times you have 60 billion is just to keep the seat warm in the United States. They are led by our largest banks and you know the names very well. Its not as though these are foreign entities bringing the market. The problem is again this discretionary cash i call them antiliberty bonds. Remember is our sovereign bonds that helped us win world war i into. That the gentlemans time has expired. Smith thank you mr. Chairman thank you to our witnesses for being here. In 2021 and 2022 Democratic Led Congress and President Biden took major steps to strengthen americas economy and our workers to invest in domestic manufacturing infrastructure and cleaner super energy. The Inflation Reduction Act chips for science act have really together helped ramp up americas competitiveness with a Strong Foundation to Counter China. In fact its heartening to see the factory opening announcements that job creation thats happening at pace. We have got to do more. Dr. Schmidt would you identify in those important laws the strategic part that are helping to boost their competitiveness to Counter China. What is working that we can build on and what are the gaps . Again good news from by samsung in mexico and arizona. They are incredibly strategic for National Security. If you look at the ira the incredible investments in retooling the way Climate Energy systems work is very positive. The it is a race and those are steps in the race but we are done but for this notion that we pass laws to win at the constant call petition. Im quite convinced investing the primary part of my its such a Foundational Technology for thing else. Says semiconductors, clean energy investment. Youve identified gap in talent of updating our broken immigration system investing in basic science. But you have also laid out in your testimony a way for congress to rethink how we invest in r d on an annual basis likely due and in National Defense authorization act every year. So you are saying we need to now think about doing something on technology r d every year . As someone i would suggest is the nation needs a list like the ccp lists. Ai, biology Biotech Energy and a few other systems and includes surveillance. We need an updated list and needs to be in front of you when they make these important decisions. If i could give you a dichotomy there is plenty of trade with china thats important to people but its not strategic and doesnt determine huge outcome but a semiconductor plant, Computer Network the way people communicate has huge strategic implications on our democracy. We need to make sure we are doing it with our values. Ambassador what do you see as the strength and the strategic parts of the package of laws now that we have enacted that are helpful . Not that anybody cares but i support the chipsets. I should say we should be really careful what we are subsidizing. The initial reaction should be its a bad idea. Having said that in the areas that dr. Schmidt is talking about in my judgment the Congress Passed the act and we have to subsidize. Fore sure; theres this one. If you want a pretty good idea of what the field is look at those 10 things. You are so right. I get that by the way. [laughter] sorry, i interrupted. Thank you very much and i yield back. Thank you mr. Chairman. Mr. Ambassador do you know the dollar amount in china right now . In a word, no. Let me talk about access. Assets. Were talking about manufacturing assets, inventory and money sitting there being invested in these things. We havent had the bandwidth because we are concentrating too much on the financial piece alone. Okay. What would happen to the assets and we have been talking about china invading taiwan and if we sanctioned taiwan or china would is the action of china do you think . I think the greater concern might be our reaction in the sense that if there is a conflict in the Taiwan Straits i think one of the first things that congress will do on a bipartisan basis is recognized that its all over for Chinese Enterprises in the u. S. Capital markets. The advantages that they are attaining here in terms of not just hundreds of billions of dollars in funding but the prestige of being in the worlds deepest and most voluminous markets is a Good Housekeeping seal of approval that they take around the world to leverage in other markets or in other words its a fantastic prestigious event for them and we want to deny that the money as well as the prestige. The question then comes as to what kinds of losses are the american investors going to take . As i mentioned we are in the 100 million to 150 million americans here who have this unwitting financial risk exposure to those thousands of Chinese Companies and no one to my knowledge has any handle at treasury or ill swear as to what is the total amount of financial risk exposure of the American People to those chinese Corporate Enterprises in our Capital Markets not to mention the sovereign bond that we just talked about. So its a big number. No one really knows for sure. That is my greatest concern that if we dont act to a least excise sanctioned bad actors for goodness sakes we are going to have a financial crisis and folks will be coming to you asking for grace. Then grace. And even bailouts of the American People because they hit the American People are taking is so draconian. Wait a minute, we have a chance right now to do something about this. Why is it that we always have to wait until we are electrocuted before we get the picture . That would be my strong feeling. What youre saying is you believe should those actions take place the closing down of the markets a loss by the American People of all the investments in china and therefore their savings or retirement whatever was there is gone. So what youre saying . That is my concern, yes. Today in bloomberg theres an article wall streets biggest banks they should face a harsh really check in china. They are content to look at and think about their investments in their position which is interesting. We need to keep the pressure on everybody. These folks are starting to think twice about their investments there. Mr. Robinson how do we prepare the American People for this . Do we start by saying these Asset Managers and investors have a fiduciary responsibility to disclose the people investing in china or should we just let them go ahead. Surely list china as a organization as an enemy of the state to prohibit the investment they are . How do we control the ability to invest their think about the money to keep slowing this country that underpins all the activities of the Chinese Communist party including detaining their people building their military etc. . We have to enforce the rules. After all these are fiduciaries. They are supposed to be seeing companies that are compliant with u. S. Federal securities laws. None of the chinese are. You have to have corporate governance. Theres no such thing for a rule of law or any kind of proper riskmanagement. Youve got one abuse after the other in an area of Investment Protection but but this is very unusual. China has gotten a free ride ride acrosstheboard for way too long. The Public Company oversight waiver is one example. We dont have time to get into that right now. These are among the things that we can do to help protect the American People from that day and get that risk exposure way down. Trust me, none of this can stand the light of day when you see it the way i have. Thank you. Mr. Carson. Send a thank you chairman rookie member. Dr. Smith in a written testimony you advocated for adjustments to our immigration policies to ensure the u. S. As the top destination for foreign scientists, technicians and emily technicians and emmett technicians and emmett innovators. In addition to your suggestions on reforming each one of these visas and creating a new innovator of these and qc issues on the horizon be it economic or cultural or even social that would make it harder for us to recruit and retain top talent and if so what shall we do to get ahead of it . So i published an article yesterday in foreign affairs. If you look at the uk and canada not only do they have a high skills visa program but they also make it relatively straightforward for a green card. Heres an idea for you all. For friendly nations to think of to start with us identify people and say if you get a degree you have the quick path to a green card and at that point theres no ambiguity that they are going to learn, live and found companies and work on american soil and pay taxes and all of that. Remember the top people have choices. I want them to choose the u. S. To comment that was made the dysfunctional nature gives them to me disincentives. At least lets start with their best friends and invite them to the party and keep them at the party and if that works expand to others. On the domestic front how do we pursue students in the square is . Theres so much money being made in my field theres a financial incentive there. What we really need to do is to get more money to the entities doing the research that matters. You have in front of you and National Research enterprise proposal around building computing hardware for universities for research and so forth. Thats just one of many that have been recommended that would make our universities Even Stronger and innovation. From my perspective a young person who has a. I. D. And they work in the lab and most of them dont make of it but one or two and boom billions of dollars are created. Leslee chairman have representative district with a proud manufacturing tradition. The state of indiana we have more than 8400 Manufacturing Companies with nearly 600,000 workers. How do we invest in this industry and industries for the future . Could i add to its well worth visiting. We have got people in your state that can transform the entire nation and each of the state to represent you have the people. I yields back chairman. Thank you mr. Chairman. I want to thank our guests for being here this evening. Honestly youre making my head on so many things and be concerned about. I have questions and i threw them all out the window which i guess is a good thing but a fascinating discussion mr. Chairman i think we need more than five minutes for each. I want to start with you ambassador with the concept of Foreign Ownership of our agricultural entities and one of the things i wanted to ask you about whether some of the National Security implications that you see in some of the things we should be concerned with whether its military installations or National Security issues around our food supply. Also there are other implications we have them put a lot of thought into either perhaps issues surrounding our Water Supplies and Natural Resources and issues as well so i wanted you to expound on that. I thank you for that question. First of all i agree with you there are a lot of things about National Security and the food supply is one of them. I am troubled by certainly chinese ownership of farmland. I think thats literally a nobrainer. And obviously their military bases. Do you think you can go to china by farmland . Theres not a chance in the world. Im also troubled by the Food Production ownership by china. I dont know what the person does and im sure you know because this is your field but its a High Percentage of our processing is owned by the chinese. This is very dangerous. Among other things all of this stuff creates all of that feeds into their ai. We are very vulnerable in this area and i have no idea how we got to this stage but the notion that hundreds of thousands of acres could be owned by communist china is to meet unimaginable and remember none of these investments come here for economic reasons. Everyone of them is approved by the state. These arent some guy who was in the food business saying im going to go by a little farm wherever. No, this is the state saying you can spend this money on this because we view it within our interests. I read what you said and i saw saw what you said saw what you said unless hearing and im in complete agreement with respect to land but also with respect to processing of food. The whole food stream is very troubling to me. Id love to talk to you more about that and maybe we will have a chance in the second round. Mr. Robinson i guess we consume much of the capitol going from this country to china is going into all kinds of things and ai included im guessing. All kinds of investments there. We went through an exercise recently, what would happen to all of that u. S. Capital in the event beijing invades taiwan . Thank you. Youve heard my best guess which is business as usual is over instantly when the first shots are fired because our men and women in uniform are going to be in the line of fire virtually and instantly. We then obviously are going going to look at this multitrillion dollar Free Lunch Program in a whole new way really quick and its not going to be pretty for the American People because this thing has been allowed to get so ive control. Remember black rock and others who extorted the American People to triple our exposure in china. And it wasnt long ago. Its not as though they presented that idea so again their big fees involved here and there is this what i call in my written testimony the grail for wall street and that is going and having a chance to go in to Mainland China and sell their Investment Products, their services Wealth Management and the like to average, more average at lees chinese institutional Retail Investors. These are dangled in front of our wall street friends and they are buying into it every time. Mr. Chairman . Mr. Moulton. Senate thank you mr. Chairman thank you all of you for your service to our country. Mr. Schmedley card alot in the last two months in particular about how much closer we are getting to a generative ai and the impact it would have on our society and economy. Could you describe for us why it matters who wins the Technology Race between the u. S. And china and how it might impact geopolitics and how can we mitigate the risks . One way of understanding what we are trying to do is we are trying to build systems that amplifier powers individuals and society. If you can imagine its one by china imagine how different they would behave. How would their view of privacy in the things we die maker free speech all of the things we hold so deeply as americans that are core and furthermore once you are ahead in these areas you can stay ahead in this is why its so important that currently that im very proud of them all of you should be for making this possible and continuing it. With respect to potential conflict we are seeing ai be inc. Into our defense establishment in china right now is investing three times the amount in ai in their Defense Budget as we are. What happens if they set the rules for how ai is used . We have a set of rules known as men in the middle, men in charge and you are very familiar with this. Imagine that the chinese use these techniques to build automatic Weapon Systems and they just do their thing. We dont understand command and control and the rules and wouldnt necessarily abide by them anyway. So its crucial that our military and National Security apparatus attached with the rest of the commercial market. We are behind for many reasons including they dont have quite the right people. This should be a very high priority and im pleased with the recommendations were largely adopted by the naa and moving in that direction. Its important or are ai leadership is. In china every time you visit a chinese commercial company you have to see it as a building next door and the same people in the military and theres no separation. You can imagine a slightly less talented autonomous Weapon System in china with no restrictions on it could be much more deadly than our Weapons Systems that have the moral guardrails that are so important to our fundamental values. Its incredibly important that these systems not be allowed to make life and death decisions without human decision. You can imagine an automatic Weapon System that started the global war and we would respond to it. Its crucial that our values be adopted. As a marine if i made such a mistake i be held accountable. Texting 3000. Nine. How do we get china to follow the rules for ai . My own view is this this will up by step. If you look at the industry of nuclear in 1951 the original discussions it to go well for people to agree on common goals. The First Agreement we can have a china in my opinion is that no surprises rule. You wont a Weapon System that could kill everybody without it being mentioned. If you are building that the other side has incentive to destroy it. Thats a destabilizing structure. I would certainly argue we have the leverage to propose and pursue some these treaties when we are a little bit ahead. Mr. Robinson i dont have much time left for you. Your Economic Strategy is china and if we succeed in competitively crushing shall we say that Chinese Communist do you think chinas economic challenges may be more less likely that they pursue an invasion of taiwan . Im not targeting you mr. Robinson. If im right that china is in the midst of economic and financial implosion now due to an inadequate growth rate and not to mention Real Estate Debt and although we can talk about but theres a syncing going going on and they are addressed. All i can say is is that deteriorates and we become more prudent in the way we handle our money and transference of that money into the coffers of the ccp that could make them more interested in stirring up nationalist fervor and changing the subject is authoritarian regimes tend to do and it could make it somewhat more likely. Thank you very much mr. Chairman. Mr. Moolenaar. Thank you mr. Chair. Thank you very much to all of you. This has been a fascinating discussion that i want to start with ambassador lighthizer followed by representatives wittmans discussion on cfius and what can be done to improve it. One of the things that struck me when you were talking and im not overly familiar and in the room following this process but it almost appears to me like we have a process where things will be approved unless there is some glaring issue with respect to Chinese Investment in the United States. What i heard you saying was that you think it should be reversed to say it should be approved only if there is an economic benefit or demonstrated National Security. Am i right in understanding what you said . Some of that is my position yes congressman and i believe there is a tendency to go ahead and assume its going to be approved and theres an industry in washington that does this and they make a lot of money. Theres this, and if you are the government guide doing this today tomorrow youll be working for me anyway so i think there is this incentive and its very troubling. Okay thank you and can you comment on mitigation agreements with respect to treasury and allowing cfius to go through with mitigation agreements . I was never in favor of mitigation. Whenever we thought it was a bad idea we wanted to be stopped and once again the center she has a tendency of wanting meta creations agreement and i literally said to one of the people at one point how many do we have . What is the last time we did a review of them and i finally got the study and it was like six months and there are hundreds of them. And they are like a treasury guy in the Defense Department guide. Theres an Accounting Firm involved in the notion is taking keep the owners of the company from getting access to various things and im sure in some cases they can but i was never convinced they could do it all cases. You may mitigation agreements didnt make much sense and there may be a sense were im wrong but for the most part i thought it was a mistake. The presumption is we are going to approve that and take care of the problem with mitigation. The washington d. C. Process and you also mentioned the entire chinese economy serve to strengthen the Chinese Military. Im wondering how you would evaluate usbased subsidiaries of Chinese Companies because we have a situation where states are offering incentives to bring in partners partially owned by subsidiaries of chinesebased companies. In my judgment every single one of them is integrated into the overall strategy of china becoming the dominant power everything to one of them for that is to say everything they do is for that reason. Whenever called upon they do it. Remember almost all of these companies have Chinese Communist party cells. Their management is checked every day or every few days and all of their decisions. They are reporting back to the state to their own communist party cells and thats juan this point, there are no private companies. I make this as clear as i can, this is a mistake. They use that term and we think of it in our way. Dr. Schmidt real quickly given that china is stealing data of American Companies and citizens do you think it makes sense to ban american researchers and Health Care Providers from using equipment made by ccp control companys . I would probably not put our broadband but a National Security band up around it. Any such ban should be extremely targeted. The principle i would offer a small piece of land with a big fence around it try to figure out what that land is. The gentlemans time has expired. Mr. Camp. Mr. Camp. Thank you mr. Chair. Ambassador lighthizer and like to start with you and drilled on the questions you may so central to your testimony about ccp comp coupling. You are recommending broad effort raising tariffs to level the balance across our bilateral. Mag and talked about efforts we can do in a range of different sectors of the parts, pharmaceuticals and the National Security talked about but also agriculture and manufacturing. Am i understanding that correctly . Yes. I wanted to just, i really think this gets to the heart of what this committee can try to do and thats what the chairman said in his opening. Dr. Schmidt i read some of your material and it sounds like you may have a different vision of this. Am i correct in understanding this that your thoughts about this action we should take is not necessarily that brought across erica entire economy. Something more targeted. Tim i getting that correct here . I want to refer to the other panelists that understand it better than i do. The area we work in is crucial that we went global battles around platforms and innovation readership and is listed aia, chips, 5g, Quantum Energy storage and basically smart manufacturing. If we lose those things can we lose the Global Platform and if we lose the Global Platform all those economics dont work because america is a huge exporter on all this technology. I want to be dependent on the chinese for any of these. I agree with you on that front and thats something we can all agree upon and theres a question we have been asking about how do we make sure we arent going to small on this and how do we make sure we are not having an issue of not doing enough for dr. Schmidt i wanted to ask ask again some of the things i read from you it sounds like theres a risk of pushing this type of separation too fast and too far. Is that correct . Im not in favor of the decoupling cloak really. I think all would do is take nonstrategic components which would make things less competitive. Im interested in making sure we have it on player in the area such as name. I dont worry too much about the others. They are going to determine the power outcome. In terms of american dominance the list that i gave you is the list. Our example where the leaders and distributing computing autonomy and so forth and the best Weapon Systems. I think thats something us that all this thing through to understand where that calibration is and i think sometimes this is what frustrates me about this concept of strategic decoupling because it has a lot of vagueness to it and it in some way stresses the sense that we are talking about full but but this committee cany to dive into into understand how do we narrowed that to get a better sense of what that means and mr. Lighthizer the end of your testimony you said this life here come you said quote policies essentially the policies that china has in the United States im advocating for a policy of reciprocity. With all due respect i wanted to push back on that and disagree here but i think we should be careful here to make sure we arent necessarily talking about steps for the United States to take that would behave more like china. I do believe there is action needed but i want us to think through and be grounded in what made america successful and we should really assess the cost of these different actions in different sectors and have an opportunity to the cost benefit for our country and that we think through these efforts in terms of not just the restrictions upon china but also recognizing a lot of what we need to do is about investing in ourselves to mr. Schmidt i wanted to end with this here we talk about this issue about positive investments that we can have in terms of innovation and our economy and workforce and we are talking about restrictive type actions against china to hold them back from so many gains. I know we will try to do both but in your mind as we are trying to in this comedy cherry our system privatized and which one you say is the one thats more fundamentally important to our ability to compete . I take the position if you invest and innovate ahead of everybody else who always when i start with that as a premise. I do think the chinese as the other panels have discussed are critically dependent on some things in the west and making it harder for them to obtain them will make it that much harder but thats a strategic benefit to the United States in a very reasonable strategy. So far the systems in place theyve been quite successful and well targeted. We could should can we should continue that policy. Thank you. My time has expired. Civic i want to thank the witnesses for your valuable testimony. Ambassador lighthizer under your readership a ustr you put a priority on protecting u. S. Economic security by challenging unfair and discriminatory barriers in trade and helps the protections for u. S. Businesses workers and our economy. So far under the biden gave large left in place the status quo of tariffs and other trade policys that were present at the end of the Trump Administration but to some extent this speaks to the bipartisan support you are and for many of your trade policy see it developed when youre here. However myself and many others are concerned to stagnate incautious trade policys are inadequate currently to defensively Counter Chinas economic manipulation on the global stage or two offensive to Counter China with working proactively with partners and allies around the world to advance our interests. Can you comment or give us an opinion to agree with the buy demonstration stagnant approach to trade enforcement with china and what would you recommend in terms of utilizing additional trade enforcement tools like the mechanism used in phase 1 . Thank you congressman. First of all with respect to the tariffs we put in place i think its a compliment to the Biden Administration that they have kept them in place and like every demonstrations thereve been people who understand this issue and there are some who dont understand it and theres the same mix that other administrations do. Their two questions and one is what else would i do in two how would i work with allies . So let me say first of all as ive said in my written testimony i believe china is not in compliance with the agreement catered into and if i were in government i would use the authority under u. S. Law to raise tariffs on them and to further this process of decoupling which i believe we started and where we really started in a bipartisan way. I would testify and i would quote the former speaker and others who were in agreement without position. If i were in government i would now raise those tariffs acrosstheboard and take the next step and decouple them. That is what i would recommend that the president would make the decision and in terms of working with allies we need to have a positive agenda. I am not one however that believes we need additional fta is or that we should be doing anything to help our allies like is more by giving more u. S. Jobs away. Theres an assumption that to have that discussion that is in fact my view. I think theres a positive agenda he can have an a lot of things you can talk about in technology and we ought to be doing and some of them by the way this administration is talking about and personally for example i would want to see people come together and have some kind of a carbon border adjustment and not a carbon tax. There are things in trade Law Enforcement and a lot of things you could do with allies to create kind of a brand that i think is helpful. Doctor smith, technology stuff, because those are the areas in my car, and understanding them to an end by judgment, with that a respect, i think reciprocity is a good policy by the way across the board with everyone all the timt in my judgment, there is no justifications but if somebody could help at when i was a Close Construction on so thats why i was of vague about that and i think that the direction to be to limited to substantially the wisdom of this committee, is is as good as any other to decide where the morning to be drawn and are not going to say that i know the answer to everything minimizing reasonably, with you cross the lines and say they are a hostile adversary turned bring us down, once you cross that line, and it all looks different. In this one thing that looks different is is not about whether some guy in new york convey big boat with the money that he made on some deal. It is not whether or not reported have her kids have this kind of the country and grandkids have it and thats what its about in thats not the same kind of things were me i would say, sort of guy new york and we just have to deal with about that you havent avoided learn more about the woman with a hard hat on to work. Michelle. Thank you. And you the longterm anticompetitive action china including see transfers illegal and currency manipulation as well as a truly actions of the Chinese Communist party they have taken in the genocide against the weaker people combined with the really capricious zero covid19 policies instituted by the stated goal in the mirror of selfsufficiency in the manufacturing projection of goods and services and rain in 2025 policies, that is only the work of this committee, enter the American Economic competitiveness in the Global Economy incredibly finally sat our country has already seen a against as weve moved to invest in highend chip Manufacturing Capabilities to the chips in the science act as well as cutting edge like a vehicle battery productions, reduction act, and as a result of this legislation, with businesses that they have announced private investments of 210 million in semiconductor manufacturing, many billion dollars in electric vehicle and battery production. Averages the past two and half years pretty so ambassador, we are really singing the renaissance of American Manufacturing the combating chinas economic conversion winning the global competition, meaning at the forefront of the technological prince here will really require a unified economic diplomatic strategy across the entire federal government nation with our allies in the indo pacific and in europe and weve already seen try to take the expanding its economic influence worldwide to the belt in the Road Initiative in that specific regions and and regions of the regional copperheads of Economic Partnership. So sort of a strong example of the critical need for multilateral Economic Engagement with our allies to capture china cover the Biden Administration earlier this year negotiated a deal with japan in the netherlands to join our export controls against chinas Semi Conductor industry. In a separate has been critical into grading the advance manufacturing and r d sectors by depriving them of the modern tech and inputs needed to grow and expand however, with that the joint efforts of our allies, youve unilateral expert controls could really be abated and sometimes rendered to listen so occurred here today and i think it weve seen this from the administration as well the previous administration, this desire to reassure a lot of American Manufacturing and support American Business. But we also need our allies in this fight to i think present the strongest possible counter to chinese encouraging across the world and how do you balance that you were talking a little bit about it and you said, well we have to do have got to do and then we got it we are doing to bring our allies along with us at any that is probably what jake sherman said a little bit off but is there more that we can do with our allies, not pre and freetrade agreements about some stuff that we could take to sort of help bring them along with us. So that is a good question and fundamental russian and think you would first of all let me just say that when you talk of this manufacturing. In these things being done all of which of course are true and keep in mind, that a lot of this started because of the tariff that we put in place and so we put 25 percent tariffs on all of this stuff. Answer the doctor does far more about the effects and i do the effects were on initially, all the technology and then sort of read beyond that and so in addition to the industrial policy that youre talking about these tariffs and i would suggest, higher tariffs across the board, are also a contributor so if you look at why does apple go to india for the phones, will you know, there is a poll stance of wealth this is an unstable relationship between the United States and china. In a tariffs or whatever and the classic ones but the next thing the would point out and im sorry for hijacking your minute for both are quickly. So, do i think that we should work with allies for sure indo i think we should give up access to the u. S. Market in order to get in the door, no. Do i think we should not act unilaterally because the allies want to gray i think you act unilaterally you try to bring them along if you can read it is too important i am also about the allies, we can talk maybe in the next roundabout, the europeans do not see themselves as marking behind the American Flag against china, they see themselves as a third fool. There trying to gain both of us now are they on our side fundamentally in the sense that we are democracies and though i guess, but i think somehow singing to get the idea that they are more on board with us and recently youve seen it the comments and adjournments coming to get sort of a sense that they dont necessarily see themselves as following our lead singer time has expired inducted on. Thank you mr. Chairman me and my thanks for prior members of the committees for this mammals enemies witnesses, i cannot remember we had a more interesting discussion. In washington and as my calling was mr. Neuhaus that chemist little disturbing as well. An ambassador white house in your Opening Statement provided some key insights that will coming for this committee and i strongly agree with the sensory need for trade regime and our workers in the country and strides 200 technological immanence regulates incoming and outgoing investments for us. And this is a National Security of Economic Prosperity and as our trade deficit continues to grow, the Global Threats continue to emerge, we must not continue to transfer the wealth to an adversary. And ive actually done a great job outlining your testimony and ive enjoyed your points in the congressional reform of the minimus tariff threshold making it hard for ccp to deliver customs. In the minimus being the threshold in the going to affect and currently 800 per person per day in the United States and it is gaining her loss for the expert as you mentioned, the excess of markets for free when the importations lesson 800 are they rated jim into a country that enjoys that and right now china is doing this show came with her exports to the United States by laundering them through mexico and canada thereby dodging essentially all duties and specifically, baja fulfillment is particularly an example of bad actors but i think it is just one example as well. In this has to stop. So if your excellency, looking promise to to edit chinas show themes and trade. Wow, i two minutes and 57 seconds. [laughter] and so, for me, this is why ive been thinking about forever, you just have to put the tariffs on the decoupling any figure out the Technology Logo along with whatever you come up with you cannot keep transferring hundreds and hundreds of billions of maybe 500 billion and install technology, maybe it comes to 800 billion a year and their economies only 17 trillion words, every year youre giving them while i think it is fair to say that as i said him this economic miracle is really just our economic divinity. And not crossing that fine and realizing, what is at stake. This is really really serious stuff and eventually, eventually we will have strategic decoupling from theres no question about it. Before or after is to lie convincingly issuing so what i do, i would put tariffs on. And so, when when you think about this and ive been they have these large surpluses every year. I did that happen. Some stuff we can identified this you cheating on this or cheating on that one of the things are a lot and a lot of it is systemic and it is the deficits in and of themselves when they are massive and they are continual they are themselves protectionists. In their absolute proof that theyre not playing by those rules. They discourage consumption them entering the put all of the many new exports. What that does is is it forces the rest of the world including us, to go into depth. So how do you counter that coming up two ways you either continue to go into debt or you put tariffs on pretty just literally come theres nothing else, besides us, we can put some other kind of area between the have a barrier. Are you going to date and this is happening across the world to me, somehow you have to change that in my opinion and at some point reporting of the ws we cant continue to go into debt to china. You are less. Least of all her tshirts all this stuff. It does not make any individual you are all going to say that we have to change. So i think what im going to do, 262nd thoughts i think instead of committed to swear that you will help us in the future, speed dial and follow these ideas and also your panelist because those are great ideas here insights. Summa thank you very much for taking the time to spend some time with us. Really appreciate it and anthems of the others do as well, because i know roger and i met Ceo Eric Schmidt and you are to just call and there is senior staff person who wants to call chemical. This is really important to all of you text or email. [laughter] [laughter] and ill provide the witnesses the cell phone numbers on national tv. [laughter] [laughter] and for the record. [laughter] ms. Stevens. So inflation is out, well note that in going to the Grocery Store and birds in the pocket a lot more that i thank you so fair to say that we have gone through a heckuva four years or five years on the trade front and passing u. S. Mca and thank you so much for your leadership and that he giving is an north american content to government to be able to sell and compete bubbly sell our American Goods in countries like china and of course, we implemented it 301 tariffs we now seen in the last year, that the trade deficit is only ballooned to astronomical levels and finally, the cost are coming down to the consumers and according to cato institute, the u. S. Imports all shoes sold in. Markets, all shoes sold in u. S. Market are imported in particular in an unsafe they all come from china but many do. An attorneys footwear manufacturers have good access to machines unity only have their Energy Company really, pretty much my large and the program manufactured money to go and visit these manufacturers. The small and c c manufacturers in my district and often only employing 20 people. I geek out with them and see what they are making and i learned as a coming help detroit bikes, there was a Company Called that is only bike manufacturer coming in the United States of america because all were coming from china. They were faced with the tariffs they dealt with the presentation of me the machine that they were making some parts of the bikes in one point, machines work written in english that in turn to chinese and their owners just decided to pull the company rated so i would love to ask you, how would put into place the power fees and trade policies and power allow us to compete economically, with the ccp, they do not disadvantage are small manufacturers handle trying to be insulting because you are all amazing and this is been brilliant but none of you are small manufacturers. You about today in their shoes and doctor Ceo Eric Schmidt your career trajectory and Technology Policy coming your leadership obviously big Global Tech Companies decided not to sell into china had decided not to have a presence in the cdp and is so noted. And china has a stunning lead and 37 out of 44 critical emerging technologies and according to a recently released Australian Strategic Policy Institute report also noted to what we have heard dr. Schmidt say that we need a plan and to determine if the Key Technology areas that we wanted compete in and if we are looking at the broader industrial policy in the excessive chips in science and legislation come i think that we can call it a success, 52 billion for the chip manufacturing in the United States and to get 200 billion of private sector contributions and dr. Schmidt can you help us think about when you said in your testimony, 2 billion never spending right now, in ai and recommending recommending to a 32 billion and what is that look like you envision there. There is plenty money in the companies. There is not enough money in universities and the government. In the labs and that is where a lot of the innovations going to happen as a resume agenda, in order to do the work that i care about, these universities needed data centers and they need new hardware lease are allamerican made all the kindest of the needed in the well quote i was doing the stuff, it was kind of three people in the dog, and he cant do science that way just cost more money and complicated, so thats where the two 32 billion comps from and we benchmarked that against attorneys numbers are higher than that and so getting to go back to germans comments about the scale, the Ranking Members comments about the competition and the level of investments, this tim telling, or investment in these areas has to overcome the fact that they have many more people in more capitol already were still winning in a coming. And we dont need to do it just because theyre doing, we want to do it in our unique Public Partnership model and it gets more private sector investments. And when you will essentially we did a whole tour chips act in one of the points and we had was eventually resulting in 500 billion of capitol for the 51 covering the chips act pretty and i think that we still think thats true i think that when you build the system some if you do it right, thank you guys for passing it, you get such leverage from the private sector, the genius of america, is her deep capitol markets in the experts a real competitive advantages for our country but you can raise the capitol and you cannot do it and most of the other democratic system. Thank you and with that i yelled back and appreciate you dr. Schmidt see map for white house are, weve heard bipartisan compliments to you for year olds mca tonight, and are there lessons that we wouldve learned from that experience we could apply in the indo pacific. Things in the u. S. Well i guess the notion is that should we have unit with the countries in the indo pacific is the kind of the question. The nature of the negotiations and ill admit that i was little surprised by written and verbal testimony, that you were skeptical of additional freetrade agreements legally for the countries that are already eyeing and selling a lot with us think it was i understand the strategic decoupling when youre talking about are friends come i just kind of serve the bear entered basic economic rule of the voluntary transactions benefit both parties and so why not more trade with reference seven globe im not against more trade with them in the underlying notion that youre going to get allegiance because you transfer more of your wealth to them. Okay was not focus on allegiance, but prosperity for both. So im a product of the 60s and you know the beatles but is you cannot buy me love and i do not think. [laughter] [laughter] i dont think transferring our wealth to these peoples when make them like this anymore. Dont forget loyalty allegiance, lets just focus on wealth and economic roll is voluntary transactions can enrich both parties, couldnt america be server through additional freetrade agreements with our allies that pretty. I are talking about our allies as opposed to other countries in the pacific and so which allies would you have us on happy to reanalyze us and tell me which ones. Will i think the work you did on the phase i deal for japan is highly regarded having probably made us more free and safe and more prosperous and add to deals like that through out the indo pacific. To make you talking about countries like the countries with the exception really mexico and canada and japan. Internet malaysia and vietnam and i think vietnam is a classic example in writing our traded vietnam is a proximally as follows, their gdp is 400 billion they Services Goods they send like 140 that to us and i 33 percent of every single thing that they do in vietnam comes the United States have trade robust up 100 billion i do not see how increasing that helps me at all what i am worried about, is a regarded balancing things everyone can we do not think why think that if you can buy love and respect then we would have it with him now in making their decision about china for reasons unrelated to the trade maybe because they have 900 or mile border,. Okay, lets drill down. And want to give up additional access here and cost jobs in your neck of the wood. Bolus focus specifically mr. Soybeans about 60 percent of her soybeans are exported is a big deal for americans export as you know better than i do. Half of american ag thanks for sending the given your were as likely as not to run an ag trade surplus okay so you do a lot for soybeans and Market Access so thank you got here from our producers all of the time and i agree with them coming we do not want to be so dependent on china in mr soybeans go there but if youre not going to seven to china we got a seven someplace but we cant eat that many beans and were really good at growing them. So what other markets and were not going to freetrade agreements, you just going to get stuck with a whole pot loaded beans. [laughter] [laughter] so this is really good question and glad that you have spent and im glad we have the exchange and so if you are saying, first of all, we cannot overstate how important the soybeans are currently really really really are important to him pretty and you save yourself country x, similar the seller soybeans and one not in my reaction is incentive and you can have a little bit of the luckiest jobs and instead of saying i have an idea if you take her soybeans hard to correct something you have no inner into me for 100 million in the case of malaysia for 30 billion a year. Get rid of the barriers and you know a lot more than with attended go to a few different places to go to europe because brazil is with china and the market for soybeans is complicated. Important and complicated that if there are barriers to soybean exports or pork or other Agricultural Products and this is exactly what we did with japan because of such a point given pretty good deal 770 billion surplus and were defending you and we got a great deal we have all the agriculture stuff. And it didnt really cost us anything and he did not have to put anybody out of work in michigan to do it. Celeste just like another approach. But this was fun. [laughter] [laughter] thank you chairman and to our superb witnesses and ive learned a lot in written testimony and oral today i certainly agree with an overarching theme was that the United States build a rules based order and welcomed financial would raise an internal response into it by cheating we need to stop it but this practice should not devolve into zerosum protectionism the guides of industrial policy thats very popular now. An engineer American Economic competitiveness both democrats and republicans, proposing tariffs and bands and subsidies and regulatory selfdealing set i dont policies and governor the Information Technology and Foundation Last year that it is time didnt this argument about free markets versus industrial parlor into policy and marketing policy for mostly economy and strategic industrial policy for select sectors in the sounds reasonable, season like even have any washington seem to agree these days, but i do not agree. Mr. Dickinson envisions that a congressional joint tajik Industry Committee publication of the Commerce Department in the National Security council will select which sectors are strategic and then steal them a masterful technocracy created their industries will divert money from the scientists and engineers to the lobbyists and lawyers in washington will be noisy with rent sinking claims and strategic signal will be drowned out in this even supposing that politicians strep taxi strategic and general entrepreneurs are better to detecting and responding and take for example unit which im sure dr. Schmidt knows more about the name on here, and it computes getting a ji they originally developed for the videogames a quarter of a century ago into American Business and American Businesses excellent innovation especially when sound policy keep the sectors competitive, not concentrated and overall, despie concentration in some sectors of the last 30 years, u. S. Economy has been a dynamo and raised his hero g7 gdp 40 percent up to 60 percent by quarter of global output and less than 5 percent of global population and has been steady over the last three years despite chinas rapid growth and raising tariffs into that approach on the contrary and farsighted trade policies help build up powerhouse Economic Partners like south korea is present congress recently welcome to the kia life tenuous competition with the Chinese Communist party. And out to many in washington want to start off this path i followed chinas lead of commandandcontrol economics and probably should instead doubled and i with United States does best, by dedicating our economic agenda to bring industry agnostic comparatives and first we should launch a whole of society ever to ensure that every american Elementary Students of every walk of life course proficient in math and quality math instruction develops the brain executive function in early numerous instrumental not only to later successes but also to literacy and critical reasoning. Getting better at math promotes individual economic mobility and collective Economic Growth and we should double to 6 Percent International rv intensity the semi public and private r d the percent entered percentage of gdp at tremont you have this in your written testimony as well and the Biden Administration edge national r b, just about 3 percent, and clean energy Semi Conductors in those tax credits and public goods and market shaping mechanisms are all imported tools used surgically to address like pollution to unlock private investment they need to privatize basic science and accuracy peerreviewed research of the private sector will fund the Public Sector for the last 50 years has underfunded and for the hundred and 70 size portion of this jackson science vault that was authorized the next ten years and finally congress should rally edelstein a local Organization Government to tariffs to achieve the number one score the work worlds banks Business Records which includes measure of infrastructure roll of law, and tax regulatory burdens. In a business environment, or science funding installer math education as we used to say in the report, infantry tactics some of those three are simple but ivc also powerful in our Education System can ensure that every american child is good in math, and science industrial complex, and invest in them to invent and inspire government makes it easy to bring those invention to market that we do not need to steer chinas hold on the Economic Future and we can build it ourselves. And dr. Schmidt, auto invite you perhaps in a written response if that would be okay with you, to comment in particular national r b intensity what the United States government can do the bio economy in particular by making biological machine readable and what types of datasets are in demand by the private sector now and with might be an unblocked to the public in funding. Economic oppression, the cps is determined to dominate critical supply chains through massive strirl subsidies, forced Technology Transfers and intellectual property theft. United states trade and economic policies must align with our strategic accords to strengthen chain and reduce dependence on the ccp while advancing standards in serve our interest. One important area in this regard is American Leadership on digital trade. And in the play book on Digital Trade Centers around censorship forced data localization and control of cross border data flaws, it fixed to export these practices to other countries around the world because control of Digital Economy serves its malign influence. At ustr negotiate the first ever trade chapter in the United States, canada, mexico, as well as u. S. Japan, digital trade agreement both agreements that are high stand for digital trade base on american standards. Presently, theres to be a lack of u. S. Leadership on digital trade do you agree how with the United States push back on the uccp in indo pacific regions specifically as it relates to localization and data flows while american leaders and digital trade help our american Small Businesses expand into new markets. Well, thank you for the comment and and for the question. I think what we did in in u. S. Mca and in the japan agreement were were very important and i i think these Technology Issues are particularly significant. My own sense is that respect to countries like china youre never going to get any kind of an agreement on on banning data localization theres just, it is just all to me at least a lost cause and i think the same thing is probably true in europe i think it willing mandate a localization, i mean, i i think continuing those kind of negotiations where it makes sense we should do it. But as a general matter, overall principle of banning requirements for data localization is one that were just fundamentally not going to win because its in the hands of those countries right and, in the final so we have a valid principle. And we certainly did it with respect to canada and mexico did it with respect to japan i would suggest maybe three countries are different than some of the other countries were dealing with. But but i do think theres a lot that can be done in the area of digital trade i think congress has to be careful to make sure that it maintains its ability to regulate technology in the future. That we dont do something in these agreements that that would prevent you from from doing something that you thought necessary down the road. And i think theres some work being done on digital trade. Thank you. And second question doctor schmitt could you speak a little more to the ccp playbook on digital trade and craft rule and standards to export their model of the state controlled Digital Economy and how important it is for the United States to be writing the digital rules of the road when the ccp is rying to pass us by dominate 21sting city technologies like our intelligence. I think what happened with huawei is destructive so a purchasing things from china for example well pick an african country. And products are cheaper than they globally the other global competitors anyway. So you have an african country that is not particularly wealthy and ultimately make choice for reasons and they get a whole set of firewalls and censorship capabilities and services above it which are not representative of western or american values. Some of the countries use it some of them dont but more importantly, it also serves as a signal Intelligence Network for the chinese. The Chinese Government is very obsessed with chinese foreign, Chinese National foreign countries. So theres lots of evidence for surveillance through techniques and lots of aspects of that in general so theres a good example where the fact there was not a globally competitive relatively inexpensive and well finance choice cause a country they didnt want to buy it and didnt buy all of that other stuff by they got the as part of the package thats the threat. So you can imagine going back to what the ambassador said about about how trade works. Imagine that as more and more of the stuff from china gets embedded in all of the other countries it comes with all of these additions. And these additions are things that we would never allow. Thank you my time is up i yield back. Mr. Torres. Thawnch mr. Chair. America competitive advantage over the rest of the world can be summed new three is first investment. America single capacity u. S. Alone accounts for half of the worlds capital. Second is immigration. America singular ability toe attract people and talent across the road to draw both entrepreneurial and our essential work force. And the third is innovation america is a nation of investor and immigrants who drive innovation. As a country, we are in danger of scwangdering our advantages that the ccp could never dream of rivalling if we here in congress build a political or necessary for unleashing power of investment immigration, and innovation to the fullest productive potential. In the end our greatest enemy is not the ccp. Our greatest enemy is ourselves. It is the deepening dysfunction and maddening myopia of politics that prevents america from becoming best version of itself america at its best can outcompete any adversary anywhere including the ccp simply put the 21st century is always to lose. Doctor schmitt your team at cp points out Francis Bacon one of the fathers of science identified three revolutionary technologies in his time pointing gunpowder and the compass in the spirit of Francis Bacon doctor schmitt tell us what are the three most revolutionary technologies of our time which country is leading in the three fields the United States or china. And how do we win in those three fields and please do not include soybeans from south dakota in your answer so [laughter] well im a big soybean fan i approve that message. [laughter] so there are many candidates for your answer. But i think as simple is quantum a. I. And biology. Quantum because it is a whole new world of computation and communications and scale. Its just geng to be powerful. I would score us as somewhat ahead but not very far ahead we might be even. And ass an example of what china does done had had two entang when would they arrived on land 2,000 mile which is is extraordinary achievement u. S. Has not done that yet thats a concern. And a. I. Every reason to think they have more people working on a. I. They understand its Strategic Initiative sanctions that were put in place have helped us but i think thats a temporary advantage. And then synthetic buying you should understand the Synthetic Biology ultimately means that america will grow many of the things that we manufacture today. Growing sthem, obviously, more Energy Efficient it is more climate friendly. But it is an interesting thing especially in the midwest after more rural states so here you have a technology which can revolutionize the job job loss and migration of the cities by creating this enormously interesting set of industries in each of the states of our heartland that is both a politically good thing for america but it is a good economic choice. We need to win all three of those. Those winning Synthetic Biology . Were slightly ahead. In quantum slightly ahead in a. I. Slightly ahead in sin syntc biology. Slightly if i may were talking about a year or two not very long. Or somewhat a few months with respect to a. I. Depending who you ask. Export controls that prevent the transfer of the most semiconductors to the ccp in response to those export controls design new shifts specifically for china hh1 00 is it advance to enable china to be getty with the United States and a. Iment . Hhi is not shipping yet but conventional wisdom but need three of them for each 1,000. China will need 3 chips to win. And thats a fairly significant delay because these chips are hard to just install hard to program and so forth it is all very difficult stuff. China has some other disadvantages than a. I. One of the things that people dont understand is innovation is a repetitive game and not as much and taiwan and chips theyve learned to scale it and third disadvantage people dont appreciate with china is that were training on english language theres not as much chinese for them to learn from so those are few years of advantages and that i think the current policy which allows hh hundred Network Speed gap that is slower is probably an acceptable compromise. Time expired. Ms. Hanson. Thank you mr. Chairman and to our Ranking Member i appreciate you hosting this hearing tonight. Not only do we have soybeans in iowa but we have a Quantum Program at the university of iowa but we have a lot of beans and quantum but thank you so much for joining us tonight to our witnesses youre help us get at the core mission of our committee which is really how do we counter economic aggression from the ccp and weve heard a lot about the promises that cheen has made over the years. The ccp has warmed its way into International Trade greems but common theme is really this is an adversary that cant be trusted and it is clear that ccp quick cares really about the ccp. And our first hearing we learned about the threat to our country and how they operate counter to our american values. And our second they learn we learn a lot about how they dont care about their own people and are exploiting slave labor and now were learning they dont keep the promises that they make or the promises that they break. So let me ask you all tonight and were going to go rapid fire since i know were short on time but about commitments that we have heard from ccp and ill address and if youll answer but did china live up to their end of the phase one trade agreement particularly when it comes to imports of u. S. Goods . No. Are we all in agreement here . Thats thats resound no. Okay what about commitments on stopping rampant theft of American Innovation has ccp lived up to those agreements . So i would say no but they have made an effort in certain areas but overall you would say no. It has been reduced. The joke in the industry was that they already had stolen everything there was nothing left to steal. Sorry to make a joke about that. But it is a sad joke. But his reduced but still a problem. And you agree. You agree with no. What about trade agreements with u. S. And our allies has ccp historically lived up to those agreements yes or no . So when you say trade agreements youre talking about wto and i would just say no, and i drop a footnote down that says usgr has 190 page report every year about various reaches when we saw in opening video, obviously, the narrative that was surrounding their addition to the wto more than 20 years ago now weve seen reality of that. Can you provide some examples of maybe some of thes other broken commitments from the ccp when it comes to trade i. P. As i say theres 190 page document on it. And theres numerous cases that over the years in various administrations particularly the last three where we brought wto cases against them. There are access to various Agricultural Products. There are agricultural subsidies theres financial services. Theres the implementation of their trade laws. I mean, theres and keep in mind that a lot of what we complain about is bad that theyre doing has nothing to do with trade agreements right this is banking system, labor system thats why im for overall tariffs youre not going to win by saying you stop this and they do something else. But for sure they havent capped their commitments but the problem is far bigger than commitments they made. Its they have a system that needs to be that we need to take a step to to balance the system all of it. Rienchts. So when you look at the the i guess the most favored nation status for example. Things like that that weve given them we cant trust a word ccp says when it is making promises to us so why should we continue to give them sweet heart deals like mfn that gives them upper hand and weve given them ways to get into our trade agreements and supersede us and cheat so why should we continue to enable them to have that status i think i would be looking at from a policy perspective. So i mean, should we take back permanent normal trade relations absolutely i was against what we did it it was obvious it was a mistake, of course, we should take it back but you have to do more than that you have to also change column to tariffs because they go from fn and those are higher tariffs but some of those you have to change because theyre you know like theres not a high enough tariff on automobiles you have a modification on that. But ive been around congress a long time and theres no one would elect me to anything so i dont have to worry about that part. But ive been here as a staffer and i like members that i talk to i would think you have a vast majority of the members of of this current house that would vote to take back mfn and give higher tariffs to china i cant imagine a handful of people for whom who say and people they can have that. But i completely agree with you. I know my time is up so mr. Chair i look forward to continuing this discussion when we have more time. Expired ms. Brown. I want to begin by expressing my sincere appreciation to the witnesses for their testimony and then taking time to share their expertise. Now on this committee weve explored a number of topics related to u. S. Economic posturing from the ccps role in the genocide of weaker people to the United States relationship with taiwan and our Global Supply chain. While weve spoken in depght about large of u. S. Koarptions i would leak to circle back to what rep stevens talked about roles of small and medium businesses within supply networks so mr. Robinson how are Small Businesses uniquely equipped to address economic competitiveness specifically how can these businesses provide solutions so the diversify and harden the u. S. Supply chain . Its really outside of my outside of my wheel house. To be honest with you ive just been concentrating on the Financial Sector to have a good solid answer for that im afraid. Thawnch. Anybody else like to well i would just and ill be quick because im taking up so theres kind of what you talk about Small Business theres manufacturers, you would think and then theres a Small Businesses and importer right Small Business importser is in a different position. But if you look at who was hurt most by the hallowing out of americans interest and in these its the small manufacturers its these towns where they have one company and that we all know them you have them in your district and one company and that company or bunch of them basically lost out because we have we have a trade policy in apartment of it was nafta. But the biggest part of it was china, and those were the people that suffered the most nerp ones who were incapable of making some kind of adjustment what can they do so those small manufacturers are ones we should be focusing on and theres a lot of innovation in the like that comes out of those people. And many cases theyre heart of their communities. Thats right dr. Schmitt what approach can congress boost manufacturing other than imposing tariffs on imported goods . I already mentioned the notion of smart manufacturing. And theres a lot of evidence that onshoring and reshoring works when youre building more sophisticated higher, higher value added products. Because having the manufacturing closer to the r d center is a net benefit with faster. So other and over again i think the strongest part of our story is that we have integrated software and hardware designs and we have a factory close together and theyre very flexible. Think of this as cnc machines gone crazy. All right all of a sudden you have 3d precincting very, very sophisticated manufacturing. I said a fair amount of time visiting plants that do this in america and theyre making good money. All right one way to think about manufacturing question you ask is to reimagine manufacturing as the high value added part. Im not going worry about commodity part but im extremely interested in having that stuff because it is sophisticated built here salaries are higher Gross Margins are higher it is american branded and its a direct benefit from our capability of innovating in each keargt. Thank you so much as ive expressed my work as Ranking Member on general farm commodity and Sub Committee it is critical to support our nation farmers especially the soybeans. I have also emphasized people that are hungry in schools at work and elsewhere, by the strategic disadvantage in this regard cuts to our nation Food Security programs could negatively affect our current and future federal work force. And ambassador lighthizer describe correlation between productivity and satisfaction of fundamental needs. Im talking about satisfaction [inaudible conversations] microphone. I just turned it off. Clearly i would say my focus all along was on working people right if youre not taking care of the fundamental needs theyre not productive. Youre more of an expert on this, on the nutrition all of that side of it than i am but to me if youre not taking care of the fundamental needs youre not feeding, educating them or making them learn about law and order and how society is structured how families operate then youre losing the most important part of our productivity it was one of the pieces we were talking about right. People yeah. [laughter] one of the people. So i completely agree with that notion. Thank you my time expired thank you mr. Chairman. Thank you mr. Chairman. Mr. Johnson to answer your question what do we do with beans is america will produce more gas. [laughter] now, more serious note. Ambassador lighthizer throughout history, communist and socialist regime such as ussr cuba, venezuela, romania, and vietnam, one time or another what they have done eventually is theyve nationalized industries. And so with the United States being so heavily invested in companies being so heavily invested in china and producing so much in china, what do you think is a livelihood that eventually american corporations and industry will be nationalizing in communist china. So this is u. S. Businesses operating in so what they have tended to do ill give you a good example so you have the ball chorption everyone knows about. And they make more beverage than anyone else and if youre back to 2015 they made the most in the United States and most in china. And they have a fisher partner, and over period of time the started their companies and pretty soon all of the markets here goes to them and now they sell zero and they pull out. So its kind of unnecessary to nationalize it. What you basically do is create a competitor direct all of the customers away from the u. S. Company. What i say is if youre a u. S. Company, youre going make as much money as they want you to make for as long as they want you to make it. And you have all of these people who sort of think its different than that all of these businesses it is kind of thinking to me is like the movie the sting. You know like the big con they make few big hits and then produce bang they go in there and theyre out, and theres just one example after another les. We have some that really invested in a lot of them like a Fruit Company no it is not a Fruit Company but produces computers. It has a fruit on the front. Okay. Which produces 90 of their things ieg phones et cetera over in china. Superinvested. I tend to think that if we somehow get into a conflict with taiwan and is theyre going to nationalize American Companies. Would you agree to that . You may be right. I mean that particular company is in kind of a unique circumstance for a lot of reasons. What would you advise these companies to do . Look at theres you know, what is a company do. Theyre they bought the big con theyre in and a lot of them have not realized theyre in a con yet. You see companies you know ill give an example ford which made enormous investments aen they havent made money for years you see autocompanies making a lot of money and now starting to make less money because the Chinese Companies are taking over the market to me. But in the things that i know about i would say be very, very skeptical dont think youre smarter than a rigged game because everybody thinks they are but nobody really is. Is there something we should do here in congress to try to protect american investors especially those who were in pension firms and neutral funds et cetera that are invested heavily in china to try to start to protect their investment in the future . Knowing or thinking that thats maybe an eventuality . I think so yes. For example, we talked a little earlier about the fact that theyre now communist parties. So being forcibly inserted into the Senior Management structure. Of every chinese company, but increasingly were starting to hear noises. That thats also going to be the case with u. S. Corporate operations in china itself and it seems to me thats not on. But you look at jp ones to wap are jpmorgan chase. Black rock, others that are going in to china trying to have that holy grail of penetrating that market and selling services they do here which is restricted to date lack of reciprocity in every category in the Financial Sector i can tell you right now. But it seems to ming legislatively that faction can be taken there. For example, i would say that there could be a bill that would indicate that its simply not going to be the case. That u. S. Operations in china will have a communist party sell successfully implemented in their Senior Management structure. If thats the case then its just over. Period. And stop fooling around about this. Because again there comes a point where the relationship is deteriorated so such an intengts and we are seeing the true colors of our foremost adversary so vividly that its time to take a stand on these kinds of things. Thank you my time is up i yield back. Mr. Banks. Ambassador youve covered there but i want to ask simply should congress revote china status . Absolutely and take the second tsa step of reforming the column two because theres some anomalies. What would that do to manufacture american jobs . First you have to figure out a way phases or you have to think about the about the actual process. You do but in i opinion it would it would be one of the greatest things you could possibly do for American Manufacturing all Small Companies are in a different circumstance and also if you did it it would help our relationship with a lot of those countries over there that youre worried about that you want to make friends with it would have that that effect and it would also by the way, generate a fair amount of money thats money that you can use on your science programs and all of the stuff that doctor schmitt what is talked about so for me it is like i dont know how anyone the only way you can decide not to do it is if you dont think theyre a threat and anyone when i tiewk talk to someone who doesnt believe theyre such a serious threat im always like oh you must have some investments over there. I get it. [laughter] what prevented us from repealing it during the Trump Administration . Well let me say first, you know, these things are sort of all an evolution, right. Where we all are right now is not where we were six or seven years ago and thats in every case. Right . So should we have done it in that administration . My guess is we begin the process of decoupling as radically as you could have done it as systems would tolerate but were past that and now six years into it and democrats buying on to same Democratic Administration buying on to same policy as republican administration. Now we should take the next step. I totally agree. A country where everything is controlled. Can i prove it . Know but does anywhere sit here and think . Here is the basic pitch it is that america is gone. We should win because they say i put the quotation that our days are gone it is over. These are always trying to prove it and then circling japan not just taiwan they are trying to demonstrate to the rest of the world that we are on the decline. You agree it is intentional . I cannot prove anything that some of there are tens of billions of dollars seeping out of their system in the communist party doesnt know about it that strikes me as unimaginable. So with the Trump Administration conversations because it is so much worse today. The president certainly raised it a lot. Maybe nobody really knows about it but there is a process. It is something that you did as part of the strategy. But it was a group other than me on the ground worrying about it. We have 25 seconds left. They are guilty as charged. Lets start there. Talk about the big Chemical Companies these were not banditos as was stated. Even in china because i can tell you in the portfolios of the American People not only are we victims to these astronomic numbers that we may be paying for because it is exactly this kind of thing not only publicly traded but the second step the members of congress should be taking routinely is one to be publicly traded and who was holding their securities . What index funds what Asset Managers or mutual funds because that is where the insult to injury hit so hard that we pick up the tab. It is passed the chairmans bedtime i yield back. I thank you frame to the problem very persuasively awesome in the testimony it bears repeating Capital Market sanctions are beijings single greatest nonmilitary fear. The ccp knows it is predominantly about the money. Access to trillions of dollars of American Funds under management. We talked about our bill and discussed legislation the Chinese Military surveillance sanctions act that has full sanctions on specific Companies One for specific Us Government lists dod 1260 h military companies treasuries , cs am i see commerce entity military enduser list. These are all companies that have ties to Chinese Military and surveillance state. In your review does this approach provide the American Private sector who have dealings with china with sufficient clarity, precision and certainty about which chinese businesses they may do business with and they may not do business with and specifically, the american index aggregators and Asset Managers mutual fund and etf. Thank you for the question. Wall street publicly that if it is not illegal they will do it. Human rights abuses are somebody elses problem. National security concerns again, somebody elses job. Our job is returns and the very focused narrow mindset. Okay. Then lets give them clarity on the law. And your proposed bill does so in the sense that after all they are looking for predictability and the guidance they will we not follow or do things that we would consider sensible from their Corporate Reputation and brand point of view imagine Asset Managers that are household names willing to absorb the risk to be called haters and abettors of genocide. Fall sdn sanctions no resting on sanctions no equity, no debt, no private equity, red light on those companies very precise identify them greenlight on them has the clarity us investors need. I believe it is and after all these are us sanctioned entities. Start their. Talk about low hanging fruit how we go about trying to lower radically the american risk exposure particularly to the bad actors in chinas corporate world. This is a very good place to start. It requires the to harmonize the list to crossreference and coordinate. And to have 1260 companies not so long ago on the Commerce Department entity list and they are prohibited are supposed to be prohibited from the american equivalent technology because of the egregious National Security and human rights abuses do you know how many of those are also on the list meaning a fancy way to say treasury list that impedes them from raising money from unwitting american Retail Investors . Sixteen does that sound serious to you . Sixteen . Out of this kind of number . We will speak to the multilateral effect of the sanctions. In other words when the chinese entities are sanctions what does that send to the non investors quick. Clearly the kind of signal others can read and understand on us Capital Markets are roughly the size of the rest of the world combined there is no going elsewhere if you are china by the way to so utterly dominate the phony financial domain its not even funny you talk about 50 my number 60 percent of the worlds investable capital the worlds reserve currency and so forth this is a major competitive advantage so the signal that it sends to answer your question is one of fear and concern. Guess what . It is fear that communicates are allies more than cajoling and persuasion. A few logistical notes. As soon as we have the topics for june and july we will let you know we are waiting on a response from the administration for some request the hearings may not all be at night not as immediate i know michelle has strong views on that it is remarkable you all dont agree on everything but then to have the added benefit to have people stay here and not competing with time for thousand of their hearings those coming on the uk trip tomorrow remember we have to get to the airport quickly. Cannonball run is in effect we will have a First Business meeting which is the first test of a policy endorsement process. And if we can figure it out then we move on to the hard stuff and that is what we talk about here tonight. We are very fortunate to have amazing testimony from three expert witnesses to think through the complexities of the economic competition with the Chinese Communist party and how we defend ourselves from ccp aggression. Your written testimony is fantastic in addition to what we have heard directly we will pour over in the weeks and months to come take you up on your offer to be a sounding board and follow up as we test various ideas and we hope to arrive at a framework for whatever we call it strong smart and bipartisan thank you all for your time and expertise and i remind members questions for the record are do one week from today on may 2. Your staff will receive submission instructions shortly. The Committee Hearing is adjourned. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] we dont have that escalation strategy ready to go but we need to get within the other agency but his ukraine we need a control structure for our own forces in the indo pacific so that is the realm of ideas. And then you know how important that is. So they did without loss start and its in the later stages but then we lost that muscle memory. And then to get into a genetic confrontation. And thats what they been doing against us for decades. And we didnt want to kill the golden goose of china so now we have to wake up to the fact and then there is a level Playing Field and then to be tens of millions or hundreds of millions of americans on the success of the totalitarian. I want to make a theoretical point. That sanctions have as much of a deterrent effect. Particularly i think they can enhance a deterrence strategy built primarily on conventional power but they cannot act as a substitute when it comes to ccp. I Capital Market sanctions for the chinese in my humble opinion it really is about the money. And have heard about that at all. With the chinese moving from the portfolios of average americans into the coffers of the ccp. Is that something you are exploring and when that talk persuasively of the loophole and then like adidas and nike could be exploiting that loophole that is the letter we recently sent to the companies we have a variety of tools at our disposal and also have that as a coherent approach to the Chinese Communists on Chinese Communist party. I could constantly be flanked. So talk about Community Assistance but what about the potential drawdown considering what you want that to entail . He mentioned that to be essential for taiwan selfdefense and otoole we can use in less than a year that doesnt need to be a new package of assistance from congress or appropriation so he definitely mentioned it and that message was well received by her members whether just delivering whether it is the sms package or the drawdown essentially to get there in the near future because its too late in my opinion we cant take the risk president xi will wait until then so we need the president and secretary of defense and secretary of state to wake up every day saying why have we not develop on dennis multiple cases and any other thing im in favor of the saudis pay for the upgrade and for political reasons and to work something out with the saudis it be much easier and with chaos in that relationship in the last couple of years. I was there in february and had a great time and it is consistent with the relations act and highlevel changes and then the more profound respect for the military problem and i learned a lot is it possible for the other members you always take me up on the offers and remarkable they all showed up but then you do politician piece in the back if you want it. [laughter] we dont do that. I cant say at what point it will be right now. Sorry. So we will be discussing about the general principles. I like the anti coercion framework ambassador manual put out that make sense to me and i can get allied countries ally and around that with that concept there needs to be something put meat on the bones of that framework and to talk about discussing ai in a common framework with the guardrails or ethics we went to make sure the free world is aligned with Critical Technology. The trade and economics on the agenda have an honest discussion like the indo Pacific Economic framework we heard in the region that leaves a lot to be desired that sent the wrong signal and in taiwan with that double taxation agreement and some negotiation on freetrade and to enter Economic Engagement as well. Any other questions . You all get extra credit for staying late. Coming all the way from wisconsin. Who are you with now . Did you change . Covering the policy lobby in the National Security. Increasingly important. Ever in the history of congress. [inaudible conversations]