Espionage, overseas pfizer and conducts National Security reviews. Selected about two years ago, almost two years ago to lead the Chinese Initiative at chineseto counter the persistent and aggressive economic espionage. Thats a lot of what we will talk about today. Prior to his service as the assistant attorney general, john was the Vice President and assistant attorney general counsel at boeing. You are the first generation, right . Is relatively new and you were there starting in 2006. So, a long career. Distinguished, and thank you for doing this. What we are going to do today is , john will talk for a few minutes. We will have a conversation, then we will turn to the audience. Get your questions ready. We will screen them, but we will be happy to entertain anything you want to ask. Me andks for having proposing that we do this. The National Security division has done a number of events, including our 10 Year Anniversary event in 2016. More recently, on this topic, earlier this year we were kind of looking at the one year mark on this topic. But this is a topic that continues to develop over time. Thank you for having me. Just for a little background on what the China Initiative is here at the department, it really was in organic an outreach that the prior attorney general and i were receiving on a daily, every other day basis. We were seeing in those briefings how much theft of intellectual property was emanating from the Chinese Government. We began talking about what we can do to step up our efforts to combat this. Obviously this false squarely in nscs portfolio. And they have been working on the issue. The question was, what more can we do . We came up with the China Initiative, which was to focus on theft of intellectual property. Property by the Chinese Government. Mainly on the south side. 80 of our economic espionage that the department brings. That means theft of intellectual property on behalf of the government itself, for the benefit of the government involved china, the Chinese Government. Trade cases involved china. So the trade secret denominator is bigger. That includes any theft of intellectual property by anyone, anywhere, not necessarily government oriented or for the benefit of the government. That is the kind of thing we were looking at. Together we put this together for a couple of purposes. We were focused on this issue and prioritizing it. A lot of it was a message to the United States attorney. The bulk of the investigations. These cases are difficult. They are not cases where you will have high numbers every year. We want the u. S. Attorneys to understand. He was going to understand that you had one economic case in a year, that is a good year in a given district. Two is fantastic, zero is not a shocker. These are not going to be cases where you have 30, 50, 100, 150 cases a year. To docond thing we wanted was empower the u. S. Attorneys around the country to develop relationships with the private sector and with academic and research institutions. Those of us that live in this space, what becomes difficult is when you go out and talk about it. You can get paralyzed because you think i learned all this in a classified environment. Academic institutions of that them to theer materials and training is we did. We need the private sector in this, working with us to help us. The third goal is to look at other tools. Looks at foreign acquisitions here in the u. S. , mainly of technology but increasingly of data, we can talk a little bit about that. We will make sure that we were adequately focused on the National Security risks. Off two autumns ago. We were building on a series of cases that began in about 2014 of thee first indictment Peoples LiberationArmy Officers for cyber intrusion. It was for a variety of companies and institutions. Moment. A seminal i always like to start there. You start to realize that many are Traditional Law enforcement action. Ones with significant Foreign Policy ramifications. Back in the obama administration, getting the entire inner agency on board with the idea that the Justice Department would charge a number of their it was a big lift. But we went ahead. That is a precedent we have been able to build on. We have a cyber indictment. That one involving state security of chinese intelligence. We were building on that. What we were trying to combat is what i have called a replicate and replace approach to Economic Development that we were saying from certain people in the republic of china. That is stealing American Intellectual property, replicating that product and the u. S. Company. We saw this being done there were individuals at academic areitutions in the u. S. Who bringing the technology to china. Even within that, there were a couple of different things. One set that i think was the state directed cases. Ant we saw since 2014 was expansion of response abilities within the Chinese Government from your people Liberation Army hacking. To the use of the chinese intelligence services, taking electrical property. As a consequence of that shift, who was working on this issue on the chinese side, you have a shift in tactics. When you bring in the intelligence services, what they are really good at is developing relationships to get information. That is the trade since the beginning of civilization. We are seeing them develop relationships with individuals and companies here. In order to coopt them and give them the information there. That is what we have done for a long time. That means a lot of our cases are not just the cyber intrusion cases. They are these insider cases. Thexample of that would be mss officer that we extradited from belgium two years ago who u. S. Oopted an individual Aerospace Company in order to steal commercial jet Engine Technology and bring it to china. Are peoplecategory who have been induced by chinese to take intellectual property from their employer. Whether it is a company or chinasity, take that to one way or another by entering into the thousand talents contracts. You can get paid for either doing work there or transferring the intellectual property. This is a program that at one level is totally fine. This is about recruiting the best team in town from around the world and bringing it to china. Something a lot of companies do. A lot of organizations do it when they go for the best people. It has an underbelly. The underbelly is that when you apply for this program, it is a very formal process. You have to show that youre going to bring intellectual property there. Cases weok at the broadcom a lot lot or academic cases. A hallmark of the ones we charged is that they are hiding their affiliation. This was not working at one company and then having a weekend job or Something Like that. These were individuals they were hiding from the u. S. Government. They were getting grant money to do the real do the same research. If you look at our cases, they are all found in fraud, tax fraud, grant fraud, things like that. We didnt really have that piece of mind that develops. I was is talking to somebody on the board of big tech universities. What is the reaction to the universities . I know this is a little off topic. Click here is the thing, when i go to a company, i say the most important thing is that you protect the intellectual property they differentiate you from yourntiates you competitors. People are like that is what im supposed to be doing. If you go to university with a very different environment, that is one that begins that the chinese are taking advantage of. Of beingark successful, publishing your findings, not keeping your secret to monetize. You go there and you start to talk about theft of intellectual property. It sounds very different. T we have been emphasizing here is the risk that you are facing, here is what is happening. We can talk about the recent actions involving the pla researchers in this context. What we are saying is we expect you to have a clear conflict of interest and conflict of commitment policies so that your disclosures to the federal government are accurate. Thatf youre comfortable your professor has this relationship with china and it has all been disclosed to you, we are not going to tell you not to do it unless the information was classified. We are not going to tell them what to protect but we will push. He value of transparency case, look at the Harvard Harvard probably got the most notice. These are all allegations, using that name as part of this collaboration with the chinese university. Openly, at least with respect to the university, the university could decide what is inbound and what is not inbound. It is a different reaction but we have been working hard with the university. Ouras hampered us in ability to continue the outreach but we are doing what we can. It has been a busy couple of months. People will be disappointed if we dont talk about tiktok. Houston has long been on a radar screen of the fbi. This includes recruitment into the talent program, spotting and assessing. Then, on the foreign influence , we can at least talk about this. I hope we will be able to talk more about this. That is why houston was not chosen at random. They were actually at the forefront. The closure of the houston consulate and the simultaneous actions taken with respect to the pla people who were here but not disclosing their affiliation, there were not disclosing their affiliation. These were all attempts at disruption of what we had been tracking for quite some time, the activity here in this country. Seen publicly in , ims of those disruptions think more than 50 interviews. This is what we were trying to disrupt with the bureau together. We recognize that we are not going to be able to prosecute our way through these issues. Years of people being sent here. Take his action to disrupt that level of activity. That is the best way to understand what was happening on the pla side. What you said in a good alienate billions of 15yearolds but do you want to talk a lot bit about tiktok . It alienated me from my daughter as well. What are the National Security concerns with tiktok . It was an interesting case. Let me step back and say one of the things that exploded on the as recently as the equifax. We have seen that cyber intrusion side. See targeted acquisitions. This is traditionally thought of as protecting technologies. The fact that more and more Smart Technologies exist. Those Smart Technologies are gathering data continually on the way youre living your life. What is interesting about tiktok is you have one of the first instances in which individuals providingg up for and the app with their sensitive personal data. There is information you can give. Some people tell the truth, some dont. That thee is the data app collects about you while it is on your phone. Apps, thatof other app is collecting geolocation data. It is connecting your contact list. It is following your use of the phone. It can be used and abused by the state. This is a sensitive personal database. The second is what we saw, a lot of allegations when it comes to censorship. Hong kong, protest, tibet, taiwan. The content being censored. What is interesting about tiktok instances of americans voluntarily signing up. Obviously there is more for that process to play up but we will see how it goes. You have huawei, China Telecom and the u. S. , you have tiktok and . 10. What is the goal for the administration . They are very focused on telecommunications as you point out. There is a real appreciation, especially as we move to 5g technologies. Anyone who things are better for a little while realizes so much of your life is running over telecommunication right now. Never more so than during covid. Your professional life, banking life, personal life, your social life, on and on. More and more things are going to be connected through 5g. Your oven is connected to your phone if you wanted to be your refrigerator. All of these things can be used to paint a very interesting picture of your life. The networks over which all the data is running is really paramount to National Security in the century. Licenses, theions is a desirei it to ensure that we have trusted vendors from trusted countries and countries that share our political values. They are running these Telecommunications Networks over which our lives are already running. This brings up the issue of cooperation with other countries. We are not the only ones to experience chinese espionage. The canadians have people taken hostage. How do you assess cooperation . What is the effort to cooperate with allies in these cases . There has been a tremendous to cooperate with these other countries. There. Out from it has been a difficult road. Changed hist position on the use of huawei and 5g networks. That is the result of a lot of discussions and then trying to illustrate the risk. Against thing we are up in these discussions is not a failure to appreciate with the about thet is a worry Economic Impact that angering a country like china can have. China remains a tremendous market for a number of these countries, investment opportunities, Foreign Direct Investment into them, investment by their companies. We have seen numerous reports of this. They are held over the heads of these countries as they are in thiscision chinas behavior during the coronavirus has actually helped move some people into our camp, especially in europe by illustrating some of the risks. Footnote, we have a separate project with my colleague interviewing scandinavian countries. One thing that surprised me about chinese investment, how many of them brought up hong kong. Something that created unhappiness. For our chinese viewers, no offense. I think youre right. Has been through the biggest issues. Especially in my discussions with the europeans, those are lifessues that brought to some of the risks we were talking about. It also solidify the importance we have a lot of disagreements with europeans. At the end of the day, we do share the same political values. When having helpful these discussions. Kong withned in hong the breaking of the promises, what is happening has really helped us. I want to come back to the economic issues. Since you brought it up, one of the things i admired in the indicative in the executive orders, it looks like it was skillfully written. Apps are a new problem, you have a Foreign Service located outside the u. S. , made by another country. What were you guys thinking when you wrote the app language . The europeans share that problem. What are you thinking in terms of the territorial sovereignty . What is the story on that . The problem that tiktok illustrates best. That is that you have they are available on your app store. You have users that are choosing to download those. Once you do that, you have no idea where any of that data is going. Mostf us, here is the ubiquitous. Apps that we use, we dont really appreciate everything our phone is collecting on us in our lives. We tolerate that risk if we think the worst thing that is going to happen is that im going to get strange solicitations for something that i did not realize anyone ever knew i was interested in. I was talking while siri was on and siri picked that up. Watched an app for the very thing i was talking to my wife about. We tolerate that because it provides us with benefits. Once you start looking at that from a National Security perspective and thinking about that they are collecting on you, it is a very different matter with very different values and without the same rule of law and separation of powers that we have. One of the chinese doing with this data . That is the other question that often comes up. What are the chinese doing with this data . That is the question that comes out. It is to perfect the artificial tools algorithm. One of them is that. The second is more from a counterintelligence perspective. Be of that data will not something theyre interested in from a counterintelligence perspective. Once they are interested in if they can mind those existing data sources to find persons Financial Life is like, what their health life is like, what their married life is like, if you are a married person and you have a dating app on your phone, that is a little strange. They can use all that to paint a very effective picture of you and to think about where your vulnerabilities might be or even how best to approach you, how to approach you for that purpose. That is what we think they are information and then geolocation is very important for targeting someone if that is what youre doing. I dont mean targeting by killing, targeting by following around. Moveone does not throughout the workday. Of in a secure facility. Your phone probably moves during the workday. It is in your pocket. Say i have one job but in fact you see my phone having it away that i have another job, that tells you a lot about me too. That theher Company Executive orders went after his . 10 and we chat. Wechat. Nt and if they were anywhere else, they would be giving American Companies a real run for their money. A very popular app, not a lot of users in the u. S. But it did not seem to go after the game side of tencent. I dont want to ruin their business. Most ofwhere they make their money in the u. S. They have some really good games. You are alienating even more teenagers. Exactly. There was not an oversight in the graphing of that. This is a communication app fundamentally. It does collect a lot of the same information about the users that we were talking about before. There is that piece of it. In addition, we chat is used in the u. S. As a method by the communicatety to with chinese individuals in the u. S. The students were visiting from china. Chatwill be in a group with the other students at the university. Chathinese will use the we to message what they want to the Chinese Students. Greatate department has messaging. Here is the goal of the Chinese Government. Send a Chinese Student here to reap all the benefits of the u. S. Technical education. Do not allow them to get polluted by ideas like liberal democracy. How do you do that . You need to control the space electronically. Foreign to encourage exchange students. They like to hang out with people that speak the same language and have the same coastal references as them. You look at u. S. Students in rome. You go are you really learning italian . Encourage that by creating these bubbles around the Chinese Students. America is very violent. Look what is happening. Of the this picture Global Engagement center. Look at this picture of this chinese guy who was beaten by the police. I have no idea if that picture is true or not but a message about how dangerous america is, dont go out there, dont get nervous. We chat has a foreign influence. In this case, it is less foreign influence and a more controlling aspect to it. Risk a slightly different profile. Still one that has been on our radar screen because of the Chinese Government used of it use of it in the u. S. We have questions, i will just go down the list. Recent indictments have highlighted the efforts to steal vaccines and antiviral activities. What is the situation going on there . How much is china focused on stealing vaccine data . We know that from our prior cases that the chinese have long been interested in Biomedical Research. We stopped someone in boston who had biomedical material on themselves as they were trying to go back to china. We have seen it in other cases that we have indicted. That gives you a sense of where the focuses. In that context it would be surprising if they were not trying to steal the most valuable Biomedical Research that is going on right now. The valuable from a financial point of view and invaluable from a geopolitical point of view to be the first maybe the russians have them beat now vaccineop a coronavirus or treatment. What you saw charged in that one of attempted one intrusions that we have seen around the country. Obviously we have not charged ahose for a bardi variety of reasons. It is part of a greater effort to try to collect whatever research there is to get ahead of it. People ask how we avoid the appearance of racism and then among Chinese Students and researchers, there is a concern that this might lead to a red and racial profiling. I think red scare is a legitimate one. Racial profiling, what are you thinking on that . How do we avoid that impression . This is something we are very focused on. Flaggedsomething we had since the beginning. You see that many do involve individual chinese descent. It is not a chineseamerican person. To the extent that they do, is it is because we have seen that the Chinese Government itself focuses on when they are trying they focus on individuals, chinese ethnicity. The more recent immigration the better. Focus could be coercive. If you have families back in china that you feel are at risk or planning on going back to china and want to make sure they have a job, you will be more willing to help in a Chinese Government. Say about the businesses that we talk to, the agents that we work with and schools, you need to focus on behaviors. Ethnicity is not a risk factor. Dont focus on ethnicity. You are going to catch people who are misbehaving regardless of motivation. It is stealing it and you want to send it to the chinese. People also find a guy that is unhappy with the company. You will find a guy that wants to sell to another u. S. Competitor. Once to go out on his own and set up a competing enterprise. It is really to your benefit not riskcus on this security as a chinese intellectual property. Peopleu will find regardless of motivations. We are very sensitive to this. We like to talk about in terms of what the Chinese Communist party is doing. What the prc government is doing. Concertedis a topdown authoritarian plan here. It is not about people of a certain ethnic city doing this kind of activity on their own. Unrelated question that i got from a couple of people that they are concerned that screening Chinese Students and chinese researchers when they leave the u. S. They are concerned that will become a new norm. What is the attitude on that . What we are trying to do is write with a five pointed pencil as opposed to a big magic marker. Means people may get screened on the way out but that is not going to be everybody. That may depend on what institution theyre coming from in china if we have reason to believe that that institution could be involved in lateral property theft in the past. What fields they were studying here. The undergraduate studying mesopotamian architecture is probably not going to get screened at the airport. Here as ae who is visiting researcher who is a professor in an advanced field ,nd comes from the university we know people who have come and gone from that the past, they may get screened. There has been some significant streaming screening at the airport as people leave but it is more targeted than it may 1 appear. Connectiontrategic between the soft power and cultural propaganda in the u. S. That we talked about with tiktok and we chat . Is there a connection between the two that you see . Are they two separate programs . At first blush, i would say they are separate. Datainly you can use the that makes targeting packages. You may want that to influence. For the most part i would say that these are two separate efforts but some overlap on the part of the government. I would have to think about that. We are getting a ton of questions. We will try to get through as many as we can. They are really good. Someone was actually listening to what they said. Chinas behavior during the coronavirus actually helped move some people into our camp. Especially in europe. Can you talk about specific behaviors that prompted this move . I think the somewhat hamhanded attempts to dole out , personal protective gear while requiring countries for the them publicly assistance they received from the wonderful country of china, you can do this subtly. Obviously, it really it comes off the wrong way. Conditioning your humanitarian assistance on deep expressions of gratitude. I think people dont appreciate that. They see through your stencil be charitable intentions. I think there has been continued necessarilyout not although it is open questions. How did the Chinese Government pond in terms of this soup their suppression of knowledge thet the virus and even retaliatory acts they took against for the pressure they put on countries that are restrict flights. That was very offensive to the Chinese Government. I thought you might say i wish we all had done that sooner but while it was happening, the Chinese Government reacted to like it wass offensive to them and pushed means tough economic reverse their decision. Illustrated things to individuals and coming on top of what you mentioned. It was the back pack the background of hong kong. Maybe this isnt a country that we share the same values with. This was a country i was going to ask. How do you differentiate what the chinese are doing both in tradecraft and objectives . Russia. Ing to ask about how does chinese espionage compare . We definitely see russian attempts to steal military technology and controlled technology. We dont see the same effort to forl commercial technology the purpose of developing russian competitors. Plan thatthat came from honestly, we dont see it in any other country. Russia tends to be more focused on the military controlled Technology Aspects of it. Maybe a related question is people have asked, it is reasonable. And china go into a more tense relationship, as we move down the path of decoupling, have you seen a more urgent set of chinese efforts or expanded chinese efforts . Has decoupling affected the level of chinese espionage . I dont think it affected the espionage i have seen so far. Clearly, the talk on both sides including on the chinese side is stronger, including people who tend to use diplomatic ways of speaking. There has been an increase in rhetoric but i dont see an increase in espionage. We have seen this espionage for many years. It has gotten more sophisticated, more well resourced of resourced over time. The trend of a lot of these programs take quite some time to development to develop. These are things that we are trying to undo but they have ashley been going on for quite some time. That, you said this in your remarks. Most apps collect this kind of data. What is to stop the chinese from turning around and purchasing it and hacking it and stealing it . This is in some ways a privacy question. Probably the biggest avenue that that gives them is data on the markets. There are data amalgamated. Google will collect data and sell it either for commercial purposes or their happy enough assell it to nationstates well. What is to stop them from stealing some other u. S. App data . It is just another avenue. We are talking about purchases of data. We are trying to combat the best of data. Is a third way to users who are voluntarily providing the data whether it is knowingly or unknowingly. We did get one question. We chat is so critical to business and social life in china. Isad that on my phone that on a drawer with the battery out, that is a different story. Is this a measure to decouple the u. S. And china . I did not read it that way. There is a lot for the Commerce Department to work on with the regulations. There is a lot that needs to be worked out there. I did not see it as a greater effort to decouple our two economies. Related to that, someone asks what sort of things you think the Commerce Department will ban or could been for tictac tiktok. There is perhaps some First Amendment issues. How do you see the ban playing out . An peoplehould b embarrassing themselves on that at. That would be the First Amendment concern. That is permitted. This is going to be equity picked a pretty quick process. The make sense. Can you give an example of tiktok collecting data for those purposes . Maybe i shouldnt be asking this. Is this what you think tiktok can do . Isyou have evidence that being done . It is what tiktok can do. It is not tiktok itself that we are worried about, it is Chinese Government and their access to tiktok under National Security laws that we worry about. I know when i go to the hill, i always said there are more fbi agent in california, are we expanding our efforts or our personnel . Weekly at the number of prosecutor that work generally on that counterintelligence out of the house. For many years, we ramped up the counterterrorism. Less growth on the countering nationstate. Years, thest few terrorism threat has receded somewhat. The nationstate has amped up. That is the big difference. N i was here from 2060 20062 thousand nine, it was a counterterrorism organization. Seeing how much it has grown on the National Security side, we have definitely increased resources. In the u. S. Attorneys office, it was about a redeployment of sources, an increase in resources. The bureau has increased resources on the nationstate side. There has been an increase. Director ray gave us some startling numbers. There has been an increase. More questions. I think you did almost all of them. I will start taking questions now. Focus on theas a chinese. Foreign students and academics of other nationalities who might be under less scrutiny. Classic intelligence technique. It is. It is harder to pull off. If that foreign student isnt does not have a family in china, is that much less likely that they are going to be willing to be cooperative. That doesnt mean it cant happen. It is that much harder. Here,of what we are doing these are not silver bullets. We are trying to make the job a lot harder. When we extradited that Intelligence Officer from china, what was the significance of that . They both felt safe there. Americans are being coopted, especially at the beginning, they felt nervous. If the chinese Intelligence Officers dont feel safe doing that kind of activity in europe, following that extradition from belgium, that is a broader disruption. That doesnt mean they cant do it but it makes the job that much harder. To what extent do you see people recruited by the program as supporting the Chinese Military . Mainly it has been commercial. But i have not gone through the cases. That is the first blush. It is easier to do on the is a lotl side, there more controls on the military technology and information. Ut i would not exclude as i think about it, most of our cases have been on the commercial side. What about countries . Small countries in the hightech industry . I have a funny story to tell you about the middle east after the call. See outside of the u. S. . Are we the primary target . Are they going after others . What of the chinese up to . We are probably the primary target. The is where the bulk of highend technology is. Certainly europe is also a target. You step back and you look at them. If you go through those areas of technology, you could figure out professorsries have or institutions that are at the cuttingedge of all these different technologies. Any number of europeans and European Countries near japan, south korea. It is not exclusive. It is a means of developing china in part by taking technology from outside china. Almost done. Just a couple more questions. That theany evidence data is being used to suppress ethnic and religious minorities . Yes. You have to be kidding me. It touches on things you Pay Attention to. Do you think the administration is balancing the needs of the semiconductors. This is with the need to close off the highend. Balance . E find a you said there are no safe sales to china. Where do you think we will go control . Ncing on that topic, i can say that that is the topic of discussion in the inner agency. I dont want to say where i think they are headed in the future. Wehas been an issue considered. About writing with a fine pencil, those are the kind of distinction that think we can make. But there are a lot of players with this. Two quick questions. One is if we can expect more indictments for chinese hacking this year. Any predictions on when . Beif i said it, it would not a prediction. That is true. This will be the final question. What are the next steps for the China Initiatives . How is momentum going . Expansion going . Steps for theext china counterespionage . Thatis has been something was born organically and developed organically from what we have seen. About the talk academic side of things. I think we will continue to work with the university. I think our work has been somewhat interrupted by coronavirus and our inability to ,o the same level of outreach as recently as the spring. What i have appreciated is i we are starting to shift from lets delay that tillage just do it. Lets do it perfectly now. The activity has ramped up. I appreciate getting into that both on the private sector but also the academic side. We continue with the cyber investigations. Big, newee any initiative but that is not really the way this has grown. It has just followed our Investigative Lead and let those leads take us from wherever we end up. That kept you kind of busy. Perhaps this is the major National Security program. Mina thought on that is think many my thought on that is think about the many bipartisan issues bipartisan issues that we are taking on right now. That is at the top of the list. That is how serious this issue is. Factss how much the underpin everything we have been saying and looking at. There is a real appreciation that the problem is real and it needs to be addressed, and there coalescing in the interagency process around the and theat i have seen first time i was in government. You for all of the attention you are paying and thanks for putting on this event. It is always great to talk about these issues. I appreciate your doing this despite all of the technical issues that go along with this. It is one of my favorite issues, and i appreciate you coming on. Thank john demers. You will have to take my word for it that people are applauding. Thanks a lot. Appreciate it. 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