Who truly needs to introduction. As you know hes vice chairman of the Senate Select committee on intelligence. Im going to be presiding over this discussion. The meeting is the annual kenneth a. Moscow lecture on Homeland Security and counterterrorism. This is an annual lectureship that honors the memory of kenneth a. Moscow who was a long time member of the council with a distinguished career in the Intelligence Community. Further details on his life and his many professional accomplishments can be found in the booklet that you have at your seat. I do want to extend a special welcome to the members and guests of the moscow family who are here with us today seated at the center table. Welcome to you. So without further ado, ill just say i will invite senator warner, he will speak for about ten minutes and then ill have the opportunity to ask him questions for about 20 minutes and then at 1 00 we will open it up for questions from members. So without further ado, senator mark warner. Thank you for that int introduction. Looking forward to our discussion. Thats about ten minutes for senate time. About ten minutes, right . It is a look forward to our conversation. I also its a great honor to be here council on Foreign Relations with the moscow family and got a chance to meet the kids this is a great tribute to mr. Moscow and his service to the council and his service to our country. What i want to talk about today in this obviously deals with cyber, deals with Homeland Security, i want to take a slightly different vent though and talk about china. This is a subject of which, for, you know, probably 2008 Going Forward i guess for a long time i had what i would view as pretty traditional, conventional views about china from both that i think was shared by a lot of members in our policy committee, a lot of folks from the business community, as a former Venture Capitalist i looked as china as a rapidly modern sizing country with 1. 3 billion people with rising incomes and expectations and mostly saw opportunity. I think i saw what a lot of folks thought, that a rising china, a china that had been brought into the wto, a china that was part of the world order wub good for the overall world order sigh eye there would be places where we wub competitors, but mostly partners, typically the last three years or four years, and many, many classified briefings later i have fundamentally vifted my viewpoint. I believe that president xi, starting with major consolidation of power in 2015 and 2016 reasserted the communist partys dominance in china across all field of business, society, the military, and he has now using that consolidated power to bring about both state and civil society, actually propose a role and view of china that would dominate the world and that domination would lead to a diminishment of u. S. Power and influence. The Chinese Government uses all the traditional tools of the state to exert influence and expanded military presence and weve seen that, and im sure well talk about in the South China Seas, an aggressive deployment of espionage to steal secrets and we saw some of that decline after his meeting with president obama back in that 2015 time frame. Weve unfortunately seen a dramatic increase since that. But what weve also seen come out of china is more creative mechanisms that take advantage of the authoritarian model to force chinese companies, researchers and others to act on behalf of the communist party. All this has set the stage for the Chinese Government to aggressively display every lever of power to service the state and at the same time exploit the openness of our society to take advantage and to take economic advantage. I believe this is, in many ways, the challenge of our time. Let me also put a caveat here thats extraordinarily important, my challenge, and i believe our beef is with the communist party of china and the president xi regime, china is a great nation, and a great people. As we see right now, the pushback in china, forces of beijing, when we see the concerns raised by many chinese about the incarceration, imprisonment of at least a million if not 2 to 3 million leaders, concerns about the Chinese Government are felt all across the region. The rest of the presentation are questions we continue to reaffirm the concern i have is with the communist party and the government and i am deeply concerned that we dont allow this to turn into, in our country, a diminishment of the contributions made by Chinese Americans and chinese nationals and others. We do not need in any form. We repeat the chen case that took place in the early 80s in detroit. With that caveat id like to think about, again, where we go from here. First again with the focus on technology. Weve lived in a world and many of us in this room have lived in a world that still can remember sputnik, the last moment when americas technological supremacy was really questioned and sputnik jolted america into action, president kennedy charged us to put a man on the moon and we changed our academic institutions and we changed our research areas, changed our military Industrial Complex and we were successful in that contest over space and i would argue since that moment in time virtually every technological advancement, computing, whether it was in telecommunications, my field in wireless, around the internet, social media, all of these innovations have either been american or western led. Even if they werent american we ended up setting the standards. And by setting the standards, by having the Worlds Largest economic power that ability for us to set the standards while the rest of the world sometimes would complain about us setting the standards by us setting the standards that meant the rest of the world had a default position. We were the largest economy so we had a single governance rule around this technology. I dont think in many ways we as a nation have fully appreciated all of the economic, political and candidly social benefits our country enjoyed by being the Technology Center and the standards setter. In many ways that is all up for grabs right now. I see this firsthand in the competition for 5g and for those of you who are not technology nerds in the room 5g is the equivalence of in the wireless Nex Generation of moving from radio to television, enormous opportunity and china is basically employing tactics we used to employ. Equipment vendors with 120 and more financing, they are flooding the zone with engineers in terms of standard setting bodies and in many ways what is happening with 5g could very well happen with Artificial Intelligence if america doesnt try to reassert its both investments in technology and its willingness to set the standards. I also believe that what were seeing as well is not only china make these moves but theyre can you believing that with an ability to actually manipulate and use western companies in ways that are frankly fairly confounding. Weve seen western companies in an effort to try to get access to the Chinese Market make sacrifices on intellectual property, make sacrifices on Business Practices that they would make to get into no other market in the world. And were seeing countries make that entrance into china two decades ago pop up next to their facilities, forcing of sharing of intellectual property. Obviously peoples republic of china is trying to use this new enhanced power as a way to build economic dominance, i believe not only in china but around the region weve also seen china in the Technology Field to do something that quite honestly i dont think most of us in the west thought was possible, to use and eregulate the internet. Bill clinton in the late 90s saying any government that would try to regulate the internet would be like nailing jello to the wall. Using the powers of internet and facial recognition, collaboration between Chinese Tech Companies and government to build a surveillance state that would make george or well blanch. We are still trying to grapple with that. What we have right now is a Chinese Government basically trying to now take their successes and exploit and basically offer them the other regimes around the world. A threepart plan, one, they offer an authoritarian form of government to oppressive regimes, and a belt and Road Initiative that offers economic financing for countries who are open and three increasingly they are offering this technology driven, repressive state model to actually regimes like in pakistan, ethiopia, venezuela and elsewhere. And quite honestly, one of the things that is of great concern to me as we go through this recognition of what chinas been able to do, it bothers me a great deal when we sometimes see American Technology companies who have no problem working with china on development of their social Credit System or surveillance state tactics in some of those same companies than having challenges working with establishment. Thats something we need to examine and frankly have some honest, heart to heart conversations with some of those companies. So where do we go from here . Three areas that i would leave you with before we get into our conversation. First, we need to sound the alarm and over the last year, because ive had so many of these briefs and the evidence has become so overwhelming, ive gone to the Intelligence Community and said, you know, simply terrifying or scaring, you know, members of the Intelligence Committee to give us this information in classified briefings, you are not we are not doing our job if we dont find ways to declassify more of this information and get it out to american business, american policymakers, american academia. So ive started a series of road shows. Weve done now 11 of them where i always take a republican senator partner, usually senator rubio or senator burr and along with either the director or Deputy Director of national intelligence, senior levels from dhs, fbi, and our Counterintelligence Center and bring in groups of business leaders, Venture Capitalists, academics to really kind of share in a one day classified readin some of the challenges that china presents and some of the tactics they use to try to advance their governments interests. We need to set warnings in a better way. We need a shortterm strategy. Here i think we need a lot of work and frankly i have seen very little articulate development from the administration on that shortterm strategy. I would acknowledge that the Trump Administration has done the right thing, visavis china in saying the status quo is not working. But if the status quo is not working hes got to offer an alternative. I would argue the challenges of an emerging china have not been only counter to the United States but all of the west, the countries that first raised the challenges around china before they were fully recognized in this country were japan, korea and australia. There was a moment in time where we could have built a grand National Coalition and gone to china, china, youre a great nation, one of the most powerful countries in the 21st century but youve got to play by the rules. And instead of building that grand coalition, the administration has called canada a National Security threat, not the kind of plan that we ought to have. So the third thing i think we need is the need to make sure that as particularly as the administration moves forward that we dont confuse trade issues with National Security issues. The president , i think, has launched this trade war without Building National alliances needed, without articulating clearly what his goals are. But what particularly concerns me is recent comments where hes indicated that the administrations appropriate actions, i would argue, around huawei might be a trading ship in our trade dispute with china. That would be a disaster. Were finally starting to make progress with allies in terms of raising the very legitimate concerns about huawei and other chinese provide ers in the 5g area. If that were to be traded away as a trading ship the ability for our Intelligence Community, the ability for our Technology Community to have any credibility on a Going Forward basis would be extraordinarily diminished. We have to be concerned about that. To the areas on legislative front, shortterm, that i think we need to continue to explore, one, ive been a strong supporter of the reform called firma. We may need to take a broader look there because there are certain tactics that the chinese entities are now using in erm thes of Venture Capital investment, noncontrol sectors that disproportionately are falling into areas of great technological advancement. That needs to be reexamined and ive also recently put forward legislation around both aml and Beneficial Ownership, Beneficial Ownership legislation would be geared around true ownership companies. This has an opportunity beyond frankly the china threat but it does involve a tactic that china constantly uses, the use of shell companies. Finally in terms of everall strategy, a lot of work needs to be done. We havent articulated the steps we need to take and finally we need the longterm strategy and that goes back to what kind of investment were prepared to make in this country in research and development. I often like to point out that america has a Defense Budget last year at 716 billion. Chinas Defense Budget is roughly 250 billion. That 500 billion delta, china is investing in 5g, Artificial Intelligence, quantum computing in a host of other areas where, again, under president xis vision china will not only lead but will dominate. I worry at times our Defense Budget, we may be buying the worlds best 21st century intelligence when most of conflict will be in the cybersecuri cybersecurity do main, and increasingly in space and those are areas where we are not doing as much as we need to do. We need to make those research investments. Weve seen, if you go back from the historical basis at the end of world war ii, the United States accounted for 69 of annual global r d, were now down to 29 . Chinas on a dramatic upward trend, china will pass the United States in all expectations by 2020 in the number of patents issued and, again, in a world where this is all worked on on a collaborative basis i think we can get this right, in a world where the Chinese Government under president xi is looking for economic and strategic dominance, that ought to be a concern for us and what i hope we can go through in our discussion here, judy, is how we get this right, how we set policies on a Going Forward basis. We do not want the default into the old bipolar world we lived in post world war ii. We do not want to have these concerns about the Chinese Government actions, again wipe off on the greatness of the chinese nation, the chineseamericans but we do need to come to an understanding that the kind of best notion Business Case of five or six years ago is not coming to pass and how we get our act together on a Going Forward basis i again will argue will be the question of our time so with that judy let me bring you forward and lets go forward into our conversation, thank you. Thank you, senator warner. Thank you. You went over just a few minutes so im going to go over into the members time just a few minutes. What is the main worry that you have about china . I mean, what is the worst Case Scenario . Do you think i hear you saying you dont think chinas going to come across the ocean with weapons, but what are you worried about . I would say there are two things i worry the most about. One is, you know, theres been no economic Success Story greater than chinas in the last 25 to 30 years. And if we go back to a pre89 world where the america and the west versus america the west versus soviet, i think, it falls into a pure etiologic conflict with china but for china is on the move, on the go and they are offering a case and to a lot of people it looks really good. If you could somehow obtain chinas growth rates and saying here dont look to democracy, look at our authoritarian form of government, that gives you the kind of control you need to move the country forward. Second, they are completely not with the same tools that really in the past were economic incentives and then third, im very troubled with what china has been able to do in terms of its creation of a surveillance state which i think would make george in 1984 pale in comparison when china is literally creating this social Credit System, on a financial credit basis and on a soci