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tv   Judiciary FBI and Homeland Officials Testify on Chinese Espionage  CSPAN  December 12, 2018 10:03am-12:23pm EST

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we welcome everybody to this hearing, but particularly those people that are testifying because it takes a lot of work to prepare for this. it even takes a lot of work for our staff to prepare for it. i know for those that are both government and non-government have to work hard as well. we've heard a constant drumbeat over the past two years about the national security threats posed by russia, attempts to sow discord and partisan disciplines through social media and attempts to interfere with our elections through cyber intrusions are real threats. they should not be underestimated. i've held seven hearings on election meddling, but the media has distracted attention from an
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arguably greater, more existential threat, and that happens to be china's effort to overtake the united states as a world preeminent super power in all phases of society and economy. china has made no bones about doing this through any and all means, whether it be president xi's stated goal of becoming quote/unquote the world's biggest super power by 2015 or the program made in china 2025, and that's an initiative that calls for a ten-year overhaul of china's manufacturing and high-tech industries, the prc's plan for superiority, including even economic dominance. the united states remains the most creative, innovative
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society on earth, although china has made significant strides in various sectors like technology, telecom, advanced robotics, artificial intelligence and scientific research. one tool of economic advancements continues to be very pervasive. that economic -- that's economic and other forms of espionage. in simple terms then, it's called cheating, and it's only getting worse. in the past nine months alone, the department of justice has investigated, charged and convicted at least 16 individuals and four corporate entities in eight separate cases involving theft of trade secrets. over the past five years, six more individuals have been investigated, charged and convicted by the department of justice for stealing research from american universities. one case involves a chinese
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intelligence officer who was a deputy division director from china's main spy agency. he's the first chinese intelligence officer to be brought to the united states and tried in open court. a slew of other chinese intelligence officials and actors were charged in a multiyear plan to steal sensitive commercial aviation data. then there is the massive plot by a chinese government-owned company to steal u.s. semiconductor technology. these cases in particular highlight the threat of chinese state-controlled economic espionage. just last week, we saw the arrest of the chief financial officer of huawei, the largest telecommunication company in china in a financial firm owned
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by china's ministry of finance, reportedly used various shell companies to conceal efforts to get sensitive satellite technology from boeing. that technology, of course, has potential military applications. although those two cases did not strictly involve espionage, they point to a broader issue, that being cold, disinterest to american sanctions enforcement and a callous indifference for broader adherens to the rule of law. when it comes to espionage, fbi director wray has said, quote, there's no country that's even close, end of quote, to the people's republic of china. generale keith alexander called china's estimated gains from
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economic espionage of up to $600 billion. quote, the greatest transfer of wealth in history, end of quote. china is believed to be responsible for 50 itto 80% of e cross-border intellectual property thefts worldwide. over 90% of cyber enabled economic espionage in the united states reports issued this year by the white house office of trade and manufacturing, the u.s. trade representative, and by odni, all report detailed findings on china's role as a prime cyber attacker and thief of american intellectual property and technology. the national institutes of health announced in august of this year that it has discovered nih grants are going to
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researchers who are not disclosing their contributions from foreign governments. chinese talent programs seek to recruit american researchers to bring technology advancement back to china. confucius institutes found at many of our nation's top universities and directly funded by chinese government stifle intellectual freedom and quiet all those who would criticize china with revisionist history. in response to the growing number of cases, the department of justice recently announced an initiative to combat chinese economic espionage. i look forward to hearing more about the initiative and any legislative proposals needed to address these. we often get distracted by the shiny objects in front of us. i fear that china is all too
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happy to have our attention deflected away from the threat that they pose to our economy, our innovation, our business, and our very standing in the world. nobody is in favor of billions in american intellectual property being stolen. nobody supports researchers violating the terms of their government grants in favor of foreign government. we all should condemn cyber attacks on government and private sector information and systems. the question is, how can we counter these activities? i hope we can come to an answer. senator feinstein. >> thanks very much. mr. chairman, as i listen to your statement, i thought back, i believe i was the first american mayor to go to china, to forge a relationship for my city, san francisco, with
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shanghai, which became one of the most active sister city relationships in the world and i think eased the transition for china. we sent scholars and technical people. it was a relationship that i have always been extraordinarily proud of. the first president of china -- the president of china and i were mayors together and forged this relationship. now we see things going awry. it is very hard for me. i've been very proud of china's economic and technological development, which has been much faster than we thought in the mid-1970s it ever could be, and its continued economic and
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technological development presents many opportunities and challenges for the global community and particularly for us. ensuring that our two nations can continue to enjoy productive relations is really going to require a mutual commitment to basic international norms, particularly regarding the use and protection -- excuse me, i have a cold -- and protection of intellectual property rights. transfer and theft of american intellectual property by the chinese government is today the most pressing economic and national security challenge facing our country and i believe china as well. in 2017 a counterintelligence analyst testifying before the united states/china economic
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security review commission described chinese espionage efforts as, quote, persistent, intense, patiently executed and include the simultaneous execution of such a large and diverse set of legal and illegal methods, individuals and organizations, there's little chance the targeted u.s. competitor can effectively defend or compete in the future without significant support of the united states government. end quote. that's the u.s./china economic security review commission from january 26, 2017. the communist party of china's use of illegal tools like cyber theft to acquire american intellectual property is now well documented. in 2013, the commission on the
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theft of intellectual property conducted by the national bureau of asia research cited a report that found state affiliated actors were responsible for 19% of successful data breaches. of those cases, deemed to be motivated by espionage, the people's republic of china was determined responsible for 96%. moreover, the commission estimated that the chinese government's cyber theft activities cost the united states an fully $300 billion in intellectual property, $100 billion in lost sales, and 2.1 million lost jobs. that is a record. while cyber espionage and theft remains a lucrative practice for the chinese government, today's
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hearing will examine other more non-traditional forms of espionage. while many of these efforts occur in plain sight, they are equally troubling in the context of china's overall economic and military objectives. for me, they do enormous damage between a relationship that i had hoped way back in the 1970s was really going to change that big pacific ocean into a small river of services and goods and interchanges. i hate to see it all beginning to examine apart. recent studies by the white house office of trade and manufacturing policy and the defense innovation unit in california have attempted to catalog these non-traditional espionage tactics, from placing chinese scientist, including
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those associated with the chinese military at top u.s. universities, research institutions, and national laboratories, to acquiring small promising u.s. technology companies, to luring top u.s. academics with lucrative contracts to institutions located in china, to forced joint ventures and dubious inspections requiring u.s. firms to turn over source codes and other confidential information if they want to access chinese markets and patents, the chinese government has deliberately and purposefully created a system of maximum information extraction at nearly every level in every sector of the united states economy.
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that is so hard for me to see and watch and develop with all the hopes i had between china and this country. a recent report by the department of defense's defense innovation unit, even includes examples of the combination of overt and covert means of espionage by the chinese government. in one case chinese government cyber attackers ma lip lated a company's -- manipulated a company's sales figures to manipulate a view of itself making it more likely to accept a purchase offer from a chinese company. perhaps the most concerning aspect of the chinese government's non-traditional espionage efforts is its scale. according to the defense innovation unit, in 2015, chinese investigators participated in 271 early stage
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investments in u.s. tech firms with a total value of 11.5 billion, which was 16% of all technology deals that year. near the end of 2017, chinese investigato investors participated in 69 deals worth 1.2 billion in u.s.-based, artificial intelligence technologies alone. in 2016, 328,000 chinese foreign nationals studied at u.s. colleges and universities and chinese foreign nationals comprised 25% of all u.s. graduate students in s.t.e.m. fields. now i very much welcome chinese -- china's economic development that would improve the lives of the chinese people and the american people as well,
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but the united states simply cannot tolerate theft of american intellectual property as a means to achieve these objectives, so i very much look forward to hearing from these witnesses and i hope you will be really up front and honest -- you'll be honest anyway, but up front with some of these problems and particularly with solutions. thank you very much, mr. chairman. >> before i give senator corner an appointed personal privilege, at 11:00 we're going to keep the meeting going, senator kennedy is going to preside so that i can be on the -- in the senate when senator hatch gives his farewell speech to the senate. senator. >> thank you, mr. chairman. i agree with every word you and
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the ranking member senator feinstein have said and other than the threat of a rogue nuclear power, i can't think of a more urgent threat to the u.s. economy and to u.s. national security than the subject we're talking about here today. the chairman of the joint chiefs of staff, general dunford said by 2025, china will pose the greatest threat to u.s. national security of any nation, and we're already seeing, of course, belligerent behavior in the south china sea threatening the lanes of commerce there and the rec kwigsioning and effect of the islands in the south pacific and turning them into military outposts. they are on a -- on the march. china is an economic juggernaut with no respect for the rule of law. its coercive, state-driven industrial policies distort and undermine the free market. it is engaged in an aggressive military modernization and it
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intends to dominate not only its own region, but potentially beyond. china's not just exploiting the freedom and openness of our society and our markets and our institutions, it's eroding our national security advantage before our very eyes. what might this mean for our national security? we would potentially have an adversary that can dominate the cyber realm, defeat our weapons systems, and control the skies as well or better than we can. just imagine a chinese military that's stronger, faster, and more lethal, such that china could unilaterally dictate which ships can transit through critical sea lanes in the endo pacific region as i alluded to or imagine if china could invade the democratic neighbor taiwan with impunity. the implications for the united states would be profound, both security wise and economically. that's why -- this is what the
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future holds unless we wake up and we act. it's time to tackle the underlying problems head on while there is time. china uses any means available to close the technology gap with the united states and leapfrog ahead of us, stealing our intellectual property and using that to develop products, many with national security applications in china itself. i was pleased to see that you included the intelligence community's so-called wheel of doom in your written statement and i would like to show this to find a way so that it's not right behind my head. this so-called wheel of doom reflects all the multifaceted way that china is attempting to impose its will not only on the united states but the world. as wecht see in the security services, the legal and
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regulatory environment, non-traditional collectors. i think we've heard you talk about the paradigm of spy is versus spy no longer applying before and i hope you will expand on that and explain that. all of these represent opportunities for china to do espionage on u.s. businesses and on the united states government as the chairman was alluding earlier. i hope we have a chance for you to describe in more detail what this encapsulates. of course one of the tools that china uses is investment in the united states, which has been weaponized to vacuum up u.s. industrial capabilities and emerging technologies. that's why it was so important when senator feinstein, i appreciate her working with me on the reform, the committee on foreign investment in the united states, we've now reformed that process so we can be on the lookout for efforts by china to
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make foreign investments in the united states with a way to gain not only access to the intellectual property but the know how they need to erode our national security advantage or threaten our economy. mr. chairman, this, as i think i said earlier, one of the mosts urgent issues facing our country today and i certainly appreciate you and the ranking member conducting the hearing and look forward to questioning our witnesses. i had the chance to hear from mr. krebs and mr. prestap in austin with senator warner and senator burr. they hosted a briefing for the business community and as you know we have a growing technology community in austin and i think many of them were shocked at what they heard and threat that threatens our economy and our national security as well. thank you for being here and thank you, mr. chairman. >> john demmers is the assistant attorney general for national
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security division, doj. he was previously vice president and assistant general counsel of the boeing company as well as senior counsel to the assistant attorney general and then deputy assistant attorney general for the office of policy in the national security business division. christopher krebs is the first director of the department of homeland security, cyber security infrastructure security agency. i congratulate you, sir, on being the first in this role. his previous roles included serving as assistant secretary for infrastructure protection and a senior counsel to the secretary of department of homeland security and as a member of microsoft's u.s. government affairs team and their director of cyber security policy. bill prestap is the assistant director of counterintelligence
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division of the federal bureau of investigation. he has served in the fbi for 20 years in a number of roles, including deputy assistant director of intelligence operation branch and the director of intelligence and a special agent in charge of counterintelligence division in the new york field office. we'll start with my left to right. mr. demmers, please proceed. you've been patient while we've given long statements so thank you. >> thank you. good morning, chairman grassley, ranking member feinstein, and distinguished members of this committee. thank you for the opportunity to testify on behalf of the justice department's efforts to combat chinese economic aggression, including through our new china initiative. the challenges we face and our response are exemplified by the case of micron, a boise, idaho company. micron controls about 20 to 25% of the $50 billion market for
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basic kind of computer memory known as dynamic random access memory or dram for short. it's a component of a wide range of computer electronics. until recently the chinese could not make dram. they had to buy it from companies like micron. in 2016 the chinese authorities set out to change that. first, at the highest levels, the chinese government publicly identified the development of integrated circuit technology which includes dram as a national economic priority. then it invested more than $5 billion to start up a company for the sole purpose of designing, developing and manufacturing integrated circuit chips, specifically dram. that same year, having never made a single computer chip, this company announced a partnership to manufacture dram with a taiwan semiconductor
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foundry known as umc. there was only one problem according to our indictment that we unsealed last night -- last month. neither company had ever made advanced dram so how could they possibly manufacture it together less than a year after they had been founded? according to the indictment, by luring micron employees to steal trade secrets from micron and bringing them to umc who would then transfer the technology to the chinese state-owned enterprise pursuant to the cooperation agreement. we have responded with a full force of our law. we have charged three former micron employees and two companies with economic espionage. stealing trade secrets for the benefit of a foreign government. we've brought a civil suit, the first of its kind, seeking an injunction to prevent them from ever exporting dram to the united states where it would compete directly with micron and we worked with the commerce department to add them to its
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entity list, making it functionally impossible for the company to buy the materials it needs to make dram based on the technology it is accused of stealing. in these ways, we have deprived the thief of the benefit of its theft, mitigated the damage to pie con and discouraged future theftsz. the micron case is one example of china's malign behavior. china is driven by a desire to be at the forefront of ten critical technologies laid out in its made in china 2025 plan. no one begrudges a nation of ideas and from them develops the best technology, but we cannot tolerate a nation that steals the fruits of our brain power. that is just what china is doing to achieve its development goals. china has turned the trade craft of its intelligence services against american companies, taking trade secrets and other sensitive commercial information through computer intrusions and
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by coopting company insiders, from underwater drones and autonomous vehicles to critical chemical compounds and corn seeds, china has targeted advanced technology across sectors that align with china's publicly announced strategic goals. the playbook is simple, rob, replicate and replace. rob the american company of its intellectual property, replicate that technology, and replace the american company in the chinese market and one day in the global market. it's no wonder from 2011 to 2018 more than 90% of the department's cases alleging economic espionage on behalf of a state involved china. our china initiative prioritizes the justice department's response to these challenges. through it we will work to ensure we are devoting the right resources to these investigations and we must adapt our strategy to reach
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nontraditional collectors, researchers, labs, university, who may have undisclosed ties to china and better confront china's covert efforts to influence the american public and policymakers contrary to u.s. law. beyond law enforcement, we will work to mitigate threats from foreign investment and through supply chain compromises, working with the treasury department to implement and other partners to better secure our telecommunications networks as we transition to 5g technology. we will raise awareness of the threats across the private sector and academic communities, encouraging them to address them, including by cooperating with law enforcement. because this is not a challenge that the executive branch can handle on its own, we must work together with you and the congress including to identify legislative reforms that may be appropriate. for this reason, i am grateful for the opportunity to discuss these important issues and for your work to counter this national security threat. i'm happy after my colleagues
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have gone to take any questions. >> chairman grassley, ranking member feinstein and members of the committee, thank you for the opportunity to testify before you today regarding the economic and national security threats posed by china. i'm honored to appear before you as the director of the cyber security and infrastructure security agency within the department of homeland security. i would like to first thank congress for establishing the cyber and infrastructure security agency allowing us to change our name and providing us with a brand that more accurately reflects our mission, that we are the nation's risk manager. we work with government and industrial to understand and manage risks, digital or physical, facing our nation's critical infrastructure. as my colleagues have and will so clearly lay out, cyber security threats are increasingly one of the most strategic -- significant strategic risks for the united states threatening our national security, and public health and safety. our economy is built on a common fabric of cross-cutting
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systemspp to our adversaries including china this is a vast web of targets. secure this broad common attack service necessitates a coordinated and whole of nation defense. our agency cisa serves as that zone across the federal government and industry seeking to break down silos and facilitate cooperation, particularly in the seams between agencies and sectors. at cisa our vision is to fully realize this national effort and empower a collective defense in cyber space. crucially, we serve as an information and operations integrator and provide a broad range of capabilities to assist private sector entities across all sectors of infrastructure. we serve as the central hub for cyber security threat detection, response and coordination, for both government and industry, bringing together the intelligence community, law enforcement, sector specific agencies, international partners and the private sector. it's important to highlight that
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our primary goal is to raise the baseline of security across the country in a threat manner. we don't have to wait for attribution to a specific actor to issue, guidance alerts and warnings. why? our job is to give network defenders every advantage at the greatest speed possible. for us, the possibility of a threat combined with the vulnerability is enough to act. when appropriate, these alerts may include public attribution to a nation's state sometimes after the fact. in the case of the threat posed by china, we work with our industry partners and government partners to understand general and discreet risks, share that understanding and help manage risk. as described in the u.s. trade representatives section 301 report issued earlier this year and updated last month, china uses a broad set of tools at home and abroad to facilitate the transfer of technology and intellectual property and other sensitive information and use cyber enabled theft to take what
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they want, supply chain manipulation to spy on what they want and work around to buy what they want. if they can't buy it they steal it. to counter these tactics we conduct classified and unclassified briefings on the tactics and techniques udsed by china affiliated actors like the ones senator cornyn mentioned. we use mitigation guidance including more targeted alerts informed by intelligence to enable network defenders to improve their security posture across networks and supply chains. we advise companies on the risks of doing business in a complex and unpreble environment that includes limited transparency and a lack of privacy. in a globally integrated world what happens over there can impact operations over here. it's essential for companies that choose to enter that market to go in with eyes wide open and strategies to protect their broader operations in the nation as a whole. on supply chain, among other
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efforts, we've recently established an ict information and communications technology supply chain risk management task force bringing together the i.t. and communications sectors with government to consolidate supply chain risk management best practices, identify gaps and develop solutions. in addition, like doj and fbi, cisa participates in interagency risk management efforts including team telecom. dhs represents 10 of the 16 critical infrastructure sectors that go through with cisa, my agency, managing the relationships with the majority of those sectors, including manufacturing, i.t., and communications. we assess risks posed by transactions and engage with our partners on the disposition of acquisitions. our goal, our vision is to enable that broader collective defense against cyber security threats where the government and industry understand the risks we face and are prepared to defend against them. i look forward to further
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outlining our efforts today and thank you and i look forward to your questions. >> chairman grassley, ranking member feinstein, and members of the committee, thank you for the opportunity to appear before you today. the united states is the world's sole super power and single largest economy, but our prosperity and place in the world are at risk because the chinese government and its proxies are aggressively exploiting our nation's economy, technology, and information. i believe this is the most severe counterintelligence threat facing our country today. it's impossible to overstate the differences between the american and chinese systems. china is an authoritarian one-party state where the chinese communist party reigns
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supreme. at the party's direction, the chinese government dominates every facet of chinese life, through actions such as censorship, economic planning and leveraging intrusive technologies. any semblance of free enterprise, free speech, or religious freedom exists merely at the whim of the party. it is, therefore, alarming that the chinese government's economic aggression, including its relentless theft of u.s. assets is positioning china to s subplant us as the world's super power. since world war ii the united states and our allies have created an international order that has led to greater peace, prosperity and human rights than at any other time in human history. the chinese government has been exploiting this order while
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simultaneously trying to challenge and replace it. the resulting double standards are everywhere. china tries to dominate internet governance to benefit chinese telecom companies, yet china censors its own internet and eliminates data privacy. a chinese police officer becomes president of interpol, yet that official later disappears into china's opaque criminal system, accused of vague crimes and never seen again. china ratifies the u.n. convention on the law of the sea, yet builds artificial islands in disputed waters. china claims to champion the developing world, yet china's loans create debt traps and undermine sovereignty. the chinese government pursues its goals by any means necessary, some are clearly illegal like economic espionage and computer intrusions. even those that appear legal
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often rely on deception, such as front companies or digital back doors. some are lawful but not reciprocal, exploiting the openness of free nations. that's why investigations and judicial actions are critical, but we need an even broader response to this threat. we must continue to inform businesses about supply chain risks and insider threats, inform academia about talent recruitment programs and theft of research, inform the chinese community about coercive repatriations, inform police and public officials about threat indicators, and inform the public about data risks and maligned foreign influence. as the united states pursues a society response to this threat, we must address the vulnerabilities within our system while preserving our values in the open, free and
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fair principles that have made us thrive. what hangs in the balance is not just the future of the united states, but the future of the world. thank you. >> thank you all very much for keeping within the time limit. we'll have five rounds of questions. i'm going to start with something that mr. demmers already addressed, but maybe you could be a little more definitive. on november 1st, 2018, doj announced the creation of a special initiative to counter the threat of chinese espionage activity and, of course, you're the leader on that, which calls for recommendation -- the initiative calls for recommending policies proposals to congress if necessary. how will the department's china initiative improve the department's ability to respond
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to these nontraditional chinese threats? >> thank you, senator. we are under way. this was an initiative announced by the former attorney general, but it continues at full speed. it -- our focus is this -- first, whenever the attorney general gets up and says this is a priority of the department, the department responds. the assistant u.s. attorneys in the field, the fbi investigators in the field, they hear that and they realize these cases need to be prioritized. now why that's important is that these cases are difficult, they are -- they take a long time, they involve sometimes sensitive intelligence sources and methods, and sometimes folks are discouraged from bringing them because they think they may not lead to prosecution. when the attorney general gets up and says this is a priority, i understand the difficulty of these cases, folks respond. so one thing that we're going to do, we're going to try to encourage and enable folks in a
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number of ways to do that, including by having training sessions with prosecutors to understand better how to bring these cases. we have prosecutors that are very experienced in these areas, but this is a problem that touches u.s. attorneys offices across the country in every state, so we've got to make sure we have the right expertise across the board. we're also going to arm the u.s. attorneys to work with the fbi that already does so much private sector outreach, arm them to go out to the universities in their districts, arm them to go out to the businesses in their districts to make sure those folks in the private sector, in the non-profit sector r aware of the threats they face and to develop the relationships that encourage them to work with us when something happens. the successful cases that we have had have been as a result of companies cooperating with us. that's a critical element of our investigations when the company is targeted. we have to develop those relationships as well and we'll
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be doing that. we'll also be looking at strategies to see how we can better address the nontraditional collection activities that we've talked about. researchers at universities, students who are here to study, most of whom are here for legitimate purposes and only doing legitimate activities, but some of whom are here to harvest our technology and send it back to china. the trick is that not all of these things are illegal and i think of it a lot like we need to look at activity that's legal but presents a national security threat. that's one area where we may need help and to work with all of you. i highlight in my testimony a couple of areas that may require legislation to address, including theft of u.s. intellectual property outside the u.s. by nonamericans. these are the things that we are hoping to accomplish and this is
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what we have begun to work on since november 1st. >> also for your answer, incidents of chinese economic espionage appear to be increasing just over the past nine months. we've seen a huge uptick in the number of cases brought by doj or maybe under investigation. what in your view accounts for the drain and does the increase in criminal cases mean that the chinese are intensifying efforts to steal from american companies more so than what we've known over a long period of time? >> i think, senator, that their activity has been steadily decreasing. the cases we've brought -- i'm sorry, increasing. the cases we've brought in the last nine months are results of investigations that have been taking place over a number of years, so they don't reflect just the last nine months worth of activity.
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i think what they reflect is starting several years ago, a real focus on the part of the department, on the part of the fbi, to investigate these cases and to bring these prosecution. the moment i think being back in 2014 where for the first time the department charged chinese -- in that case military officers with commercial espionage and from that, i think the fbi and the ausas realize these are cases that the department is going to be willing to bring and they started to do those investigations. we've been able to bring a number of cases because the activity is tremendous and the grounds for those cases very r fertile. >> for my last question, i have a long lead in to this question, but i think you know what i'm getting at by asking you, mr. prestap, how does the fbi work with the nih and the universities to identify and
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prevent the conducts that we know and i've described in my opening comments and if you found that china is a serious threat to the integrity of this company's publicly funded research? >> so, sir, getting back just a minute ago to a question about the attorney general and department of justice standing up their china initiative, because i think that's relevant here, it comes down to raising awareness of the threat. of late, i pay attention to both global and american surveys of the greatest threats facing our country and again and again, it's called the top ten list, china's always near the bottom. yet meaning the average american, the average global citizen, when they think of the greatest threats facing them and their countries they put china toward the bottom. in my opinion china needs to be near if not at the top of that list. whether it's working with the
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national institute of health or american universities, with the fbi, doj, dhs, and others in the u.s. government are doing, we are trying to make them aware of the gravity of this threat, the capabilities of the adversary and the methodologies by which the adversary advances their aims. make no doubt that china is absolutely after the sensitive research in regards to those organizations. >> are you kind of inferring -- don't go into depth on this because i'm taking too much time, are you kind of inferring in your question that our government agencies or the universities involved are not -- they're not aware of what the chinese are trying do? >> sir, in my experience and i'm sorry if it was confusing at all, what i'm trying to convey is -- i had the opportunity recently to visit three u.s. states and speak with business leaders in each of those states. on one hand i was amazed an some
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of those business leaders' understanding of the way the threat is working today. on the other hand and with different business leaders, i was amazed at the lack of understanding, again, of the gravity, capabilities and methodologies of china. what i'm trying to convey is there is still work to be done by the u.s. government in messaging to the american people the gravity of the threat we're facing. >> okay. senator feinstein. >> thank you, mr. chairman. in november of 2017, mr. krebs, you sent a letter to senator widen acknowledging that dhs was aware of portable international mobile subscriber identity catchers, also called stingrays which are machines that mimic cell phone powers to capture cellular signals being deployed in the national capitol region
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by unknown individuals. could you confirm that these imsi machines or cell phone signal interception machines have been found in our nation's capitol? >> yes, ma'am, we did detect anonymous activity in the capitol region and we couldn't attribute to a specific imsi or string ray and we shared that information with the carriers and in many cases they were able to deconflict or determine it is not necessarily nefarious anonymous activity and we partnered with a range of law enforcement partners, federal and state and local to share what we found. at that point our role in the -- in the pilot has exhausted itself. our job is to eliminate, identify and share our findings with those that can take action. >> is there any information as
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to where those devices came from? >> ma'am, no, we were not able to isolate or capture a specific device and do any sort of forensics on that -- that is not within. >> what did you know. >> we identified activity that appears anomalous. >> what does that mean -- >> and i'm happy to follow up and provide a more detailed briefing on this issue. but it forced downgrades from lte or 3-g down to 4-g, so across the different bands. >> and what does that do? >> in some cases that activity could push a phone or a signal into a dedicated antenna. so it could potentially -- for both legal in some cases for legal purposes capture a signal. >> so in other words it is a way
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of sort of wiretapping. >> again, there are both lawful purposes for these devices and they are -- i would defer to law enforcement on that matter. there are lawful purposes and as well as potentially unlawful. and again, our ability through the pilot was not able to determine or attribute the activity we observed to a lawful or unlawful, we just observed agnostic threat actor -- or actor agnostic activity. >> well, mr. priestap, do you know where the lawful ones are as opposed to the unlawful ones? >> sometimes we know where the lawful ones are and sometimes we don't. but i think it is important to note that when it comes to china's activities, there are times they will abide by our law and there are times they will bend the law or operate in gray areas and there are times they
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will break the law. the bottom line is they will do anything they can to achieve their aims. >> last year, i introduced legislation with senator cornyn, shaheen and young to modernize the foreign agents registration act known as fara. the bill would proside the department of justice with additional tools to investigate individuals acting as agents of a foreign power that failed to disclose their activity to the doj. chairman grassley has also introduced legislation to update and improve fara. those bills are pending in the senate foreign relations committee. mr. demers, mr. priestap, would improved authority under fara particularly additional civil investigative authorities be helpful in addressing some of the informal networks that the chinese government uses for these types of nontraditional
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espionage efforts? >> thank you, senator. >> thank you. >> so the increasing foreign enforcement has been a priority of the department and a priority of mine since i've been there. i think we've seen registrations under fara go up marketedly in the last year or two. i think when these -- the year numbers for 2018 come out you'll see a continued increase in those. and as well as indictments under fara for failing to register as -- as an agent of a foreign principal. we continue to do our investigations using letters of inquiry unless they are criminal investigations in which case we can use grand jury subpoenas. and continue to assess the degree to which it would be helpful to have civil subpoena authority. i do think that folks who get
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letters of -- of inquiry are just more responsive to subpoenas and provide fuller responses to subpoenas than letters of inquiry and i've seen that in some of the cases that we have done. so i know we've worked together with you and your staff on those bills as well as mr. grassley and i would propose that we continue to do that in the new year. >> thank you. i'd like to. thank you, mr. chairman. >> actually, senator kennedy would be next but he's going to come and chair for me so i think i'll call on senator -- i'm sorry, you haven't asked questions. >> i out-rank him. it is confusing. but i'll confer to the senior senator from texas. >> i forgot. >> thank you. that's quite all right. mr. demers, in your written remarks you refer to the made in china 2025 and we have another chart here if i could get -- if i could get vanna white to show
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it. [ laughter ] >> but this is -- this is -- in your testimony you say made in china 2025 is as much a road map to theft as it is guidance to innovate. can you explain what you mean by that? why would china tell us this is their game plan? >> well, i think what they're telling us overtly is this is their game plan in terms of where they want to lead the world in technology. and where they -- specifically where they want to have domestic capabilities in terms of the ten rather broad technology areas that they believe will be the future of technology around the world. what they're not telling us openly, in fact what they deny ritually openly, is that they're also using illegal means to advance their development goals in those technologies. and so what i always say and i said it today is we, of course, don't begrudge them the efforts
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to develop technology and they could be of great benefit to the world and of course to china. but you cannot use theft as a means to develop yourselves technologically and that is what they are doing in a number of areas. if you look at the cases that we've charged in the last year or so, you could map so many of them into those ten slots that you have up there on the board. >> so with it be fair to say this is sort of a shopping list that the chinese use to go out and steal intellectual properties in this area to leap frog us. in other words they don't have to go in and develop a fifth generation fighter aircraft if they can steal the plans for that and then make it in china, correct. >> right. it is more than a shopping list. it's guidance to the rest of the government and the rest of their companies and to their people that this is what we want to be the best in class at and therefore you should organize your activities, whether they
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are legal or illegal, to achieve that. and that's the micron case we talked about. first you have a high level goal that is set and then you have direction and funding to achieve that goal in that case through illegal activity. and that is what we see in a number of these cases that we've charged recently. aerospace is up there. a number of the cases that we've done recently are about commercial jet engin fan blades ant the use of composites in aerospace. >> i know my conversations with ambassador bolton just this week we talked about ways to work together to deter intellectual property theft. i know part of that has to do with them stealing plans and then making counterfeit products that they then try to import into the united states. but we also think there is an important role for congress to play working with the administration to try to deter that on the front-end before
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they steal it and then try to sell it back to us. mr. priestap, i alluded to some remarks that you made and maybe you could expand on those, you alluded to some of these this morning on how the espionage that's being conducted by china is not a spy versus spy paradigm but an all of government exercise. could you expand on that and also in your answer explain why state owned enterprises in china and other companies that look to be a free-standing entity really are not and they have essentially the communist leadership in their boardroom directing them what to do and also getting access to the information that they acquire. >> and so in my opening statement i mentioned that i believe that china was the most severe counterintelligence threat facing the country today.
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and when i talk with outside groups periodically and i ask them about the counterintelligence threat and what it means to them, i'll hear things like, well it is about countering the activities of hostile foreign intelligence services. it is about spies versus spies and it is about our spies trying to protect america state secrets. well what has happened over the last couple of decades is that china and other certain nations have realized that they can't just rely on their spies to accomplish their aims. and what are their aims? to gain strategic advantage over the u.s. in whatever ways they can. military, technology, and even academically. if they went rely on spies, what are they doing? they're relying on people from all walks of life to carry out their aims. so last thing i would want to do, would intend to do, is to
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demonize a people. i'm not trying in any way to demonize the chinese people but also as i said in my opening statement, the communist party reigns supreme and they have a great ability to lean on people, some who are willing, who are not willing, in their society, to again carry out their aims. so whether they be research or scientists, students, businessmen, otherwise tourists, the chinese intelligence services don't hesitate to ask those people to carry out their aims. they just don't -- they just don't rely on spies. in regards to state-owned enterprises, or really any chinese businesses, what we have to understand again is the idea that the communist party reigns supreme. it means those businesses ultimately are beholden to the chinese government. and so what happens when the chinese government asks those businesses to engage in activity
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contrary to u.s. interests. those businesses have a choice. if they want to continue to do business, they basically follow the order of the chinese government. if they decide not to follow those orders, they're at the risk of being shut down. and so our idea of a free market economy is not what chinese's system is. it is very, very different and i think we need to understand that. >> thank you. thank you, mr. chairman. >> you bet. senator klobuchar. >> thank you very much. i want to thank you all for being here. in may i led 18 senators urging john bolton to reconsider his decision to eliminate the role of cybersecurity at the national security council. i'm concerned we're going to lose important expertise in our cybersecurity workforce while the chinese by all accounts, especially what you saw the news
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this week about marriott, the chinese seem to be doing the opposite. given the chinese government's commitment to cyber programs and investment, how can our government keep pace? do you believe additional cybersecurity leadership is needed and that the nsc should have a dedicated cybersecurity expert? i guess i'll refer that to you mr. krebs. >> yes, ma'am, thank you for the question. so i think it is important to look back over history and the creation of the cybersecurity role established in the early days of president obama's tenure in part because of the relative immaturity or lack of capability across the federal government in terms of a cybersecurity capacity. the department of homeland security under the prior national program director and my old organization was just emerging out of the comprehensive national -- >> i have so many more questions so maybe just -- >> i would not mistake the lack
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of a coordinator for lack of coordination. i think we find sufficient operational capability. >> okay. very good. and yesterday we saw the reports in the press that it was chinese hackers that stole roughly data -- data on 500 million guests from the marriott hotel chain. this is most recent example as we've discussed in the hearing you've seen more. what outreach and coordination is being done with companies and what limitations exist on your ability to share information on the threats both with other government agencies and with businesses? anyone can take it. >> well, i'll start with the idea, and again it is one of the reasons i'm so pleased that the hearing is being held today. we need greater awareness, again, of the gravity of the threat and the methodology and capabilities of our adversary in this regard. i want you to know from all
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three of our organizations, and i've sat on panels with these gentlemen, we are doing everything we can to convey the message to as many -- i call them thought leaders, business leaders, academic and u.s. government leaders on this topic as is absolutely possible. are we limited at times with the variety -- or because of the classification with some of the information we can provide? yes. but please rest assured that we're leaning forward, we the fbi and my partners in government, we are leaning forward in my opinion and sharing more information from a counterintelligence end than i've ever seen us do before. it is not perfect but we're going in the right direction. >> okay, thanks. mr. demers, do you think we have enough resources both with the justice department including adequate enforcement of the foreign agents registration act? >> thank you, senator, so i think that -- >> microphone. >> that is a question i've been
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asking myself. and to the extent that we need more resources, i think that they are kind of this in counterintelligence area, implementation of firma and i know congress has given the treasury department additional resources to implement the new statute. so that is an area we're looking at and at the appropriate time we may be coming forward with a request. >> okay. that will be helpful. just one last question. can you provide clarity about any specific campaigns by chinese or chinese affiliated entities to influence our election. as you know, a lot of us at this table including senator harris has been working on the secure elections act and the ads act that senator warner and former senator mccain and i have started. so can you talk about that? what have you seen from china? >> sure. i think the nature of interference on the policy side is different from china than what we see from russia.
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now, i don't want to get ahead -- there is a process that we're undergoing right now under the recently issued executive order to assess and then lay out in a report what we saw in the last elections with respect to election interference, if any. i don't want to get ahead of that process. they'll be a report in the not too distant future. but we are worried more generally about chinese political influence and how can we use fara and how can we use section 951 of the criminal code to make sure that any efforts at influence are transparent. >> okay. very good. thank you. i hope we'll get your help in trying to get the bills passed, because it is not just one country. >> thank you. >> thank you, senator. i think i'm next. thanks to all of you for being here today. i want to look at this from 30,000 fight. one can debate the date of the
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rise of china, but one simple thing is when china was admitted to the wto in 2001, i believe they were admitted on december 11th, on december 12th, 2001, china started its economic expansion and it also started to cheat. and we were told, as it became more and more apparent that our friends in china, or at least the political leadership, were not playing by the rules. but be patient. eventually china will develop a market economy, they will come to value property rights, as people lift out of poverty into the middle class. they will -- they will embrace liberal -- not liberal versus
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conservative, but liberal in the classic sense, values. and we were naive. i'm happy people have been lifted out of poverty into the middle class in china. i think they've made the world richer. i don't want to hurt china. but i don't want china to hurt us either. now, from -- what are we going to do about this? we were naive and tolerated it for a long time. how are you going to put this jeanne back in the bottle, gentlemen? >> well, i think what we're trying to do and i think along the lines that you suggest is certainly from the justice department perspective is go after the malign activity. obviously we don't want to do anything and that is going to interfere with their legitimate economic development and the betterment of the lives of the chinese people. but we have to address the
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malign economic aggression that we've been seeing and we continue to see. and i think what you're seeing in the china initiative in this hearing and in the work that we've been doing is the culmination of many years of people running out of patience and realizing that this problem is not going to fix itself. so each of us, i think, using our own authority and of course other government partners as well, treasury and commerce and et cetera, need to take coordinated efforts to -- to confront these behaviors. >> i'm sorry to interrupt. >> no, please. >> i agree, at some point patience ceases to be a virtue. but let's talk about something specific. what is the confucious institute? go at go ahead. >> it is an institute for language and cultural exchange and the chinese government funds them and i understand there are
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around 150 of our university campuses here in the u.s. >> the chinese government comes to american universities and gives them gon-- gobs of money, right to open a confucious institute. >> they fund the institute, yes. >> in louisiana i think we have or had one at tulane and one at xavier. have those confucious institutes but used as communist arms of the party? >> i guess i would put it this way, the confucious institute in my mind are not strictly a cultural institute. the confucious institute are a chinese government funded cultural institute. that means they're ultimately beholden to the chinese government. and there have been instances around the world in which those
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institutes have, say, quashed free speech, in particular in regards to issues involving tenet -- >> in other words if you talk about what we don't want you to talk about, we're going to take away the money and the universities say, okay, we would rather have the money than free speech? >> again, there have been instances where those institutes appear to have quashed free speech, yes. >> do we have students from china who come here and are sent to steal our intellectual property? >> sir, i don't know that the you the students- >> well the fbi director said we do. >> let me be clear. i don't know if the students decide this come to the u.s. to steal the sensitive research. what i've seen is that the china government in particular in
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intelligence or security services will utilize and lean on those students in in effect say if you want your tuition paid, if you want to continue the opportunity that we're affording you to continue your education at a higher education institution in the u.s., well then you better not come home empty handed. >> senator sasse. i'm sorry. i have to take it back. >> it is only the third time today. go ahead. >> i'm sorry. senator harris. >> i don't want to take any more time. go ahead. >> thank you. i appreciate it. so my question is for you, mr. demers. to be clear, think we're clear, foreign entities are stealing american property essentially that is what we're talking about. our trade secrets, our inventions, our intellectual property and our ideas. and there may be the intention but certainly the effect is to harm our economy and weaken our
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national security. and i have three examples. in july of 2018 a chinese national was arrested for allegedly stealing proprietary information about apple self-driving car and sharing it with the china-based competitor. and in october of 2018 a chinese spy was arrested for allegedly attempting to steal trade secrets from ge aviation cl is a jet engine supplier for military eric and in november of 2018 the doj accused china of stealing technology from micron technology, a producer of computer memory chips found in, quote, just about every gadget. so this is obviously just a snapshot but the type of theft is rampant as you know. some estimates suggest it costs the united states economy $225 billion a year. so one tool to combat these malicious acts is the economic espionage act of 1996 which i know you're familiar with which increases penalties for trade theft. the e.u. as it is known is known as a critical deter ents
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mechanism and you have noted that the threat of prosecution has raised the stakes for foreign intelligence officers. so my question is, would you agree that if we are able to extend the statute of limitations for civil actions that we would further enhance the deterrent effect of the eea. >> for criminal actions? >> yes. >> i think that might be useful. i would have to take that back and think it through. but the reason i say that is these cases are complicated and they take a very long time. so a number of the cases that we've charged just recently are about conduct that occurred five, six, seven years ago. and it can take that long -- attribution is difficult in the cyber context -- >> so extending the statute of limitations. >> that could be a useful tool for us. >> and i appreciate your feedback on that because i would like to help in that regard. and would you agree if we were able to increase the punitive damages available to victims that that would similarly enhance the deterrent effect of
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the -- >> that may. that is not an issue that i've looked at very carefully -- >> let's follow up on that. >> yep. >> and then also looking at expanding the extra territorial scope of the e.a. to increase the deterrent effect and i assume you haven't looked or thought about that either. >> that is something i mentioned in my testimony, we were lucky in the micron case that some of the conduct occurred here so we could reach it jurisdictionally but you could easily imagine a situation where that u.s. company and technology is outside of the u.s., there are no u.s. defendants and we couldn't charge it. so i think that is clearly something we need to address. >> great. so i'm introducing a bill that would increase the available punitive damages to three times the damages -- the travel damages essentially. we would expend the statute of limitations from three to five year and expand the scope of the ea in such it would apply to
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offenses that have substantial economic effects. so let's follow up on that. but i would love to get the doj to weigh in on that and hopefully it would be helpful for your prosecution. >> i look forward to it. >> thank you. mr. krebs, good to see you again. there is a may report that you issued with the omb that found, quote, a significant number of agencies are unable to dedicate the personnel and resources to defending themselves from malicious cyber activity. would you agree that the federal government still does not have all of the cybersecurity experts we need to defend its systems? >> yes, ma'am. and that is been reflected in recent statements as well. >> and how significant is this talent shortage and what are any barriers that you have experienced to be able to hire the kind of talent that you need and what can we do to address that? >> so i'll get back to you on the specifics of the numbers and gaps that we have. i think we have to provide more opportunity. there is a pay gap between private sector and government. what i think we need to think
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through is what is the creative strategy that doesn't only focus on getting people into jobs, but how can we reskill and up-skill existing personnel and make more creative use of search capacity forces, alumni networks for instance. but also contractors. and then also consolidate services so rather than compete across federal agencies for the same talent, consolidate and move into a securities of service model. >> so could you follow up with us in terms of how that plan is coming along and what we can do to support that. and then my final question is again as it relates to that report, you found that 71 of 96 federal agencies, quote, have cybersecurity programs that are either at risk or high risk. and you made several recommendations to address those risks. so my question is have the federal agencies that you've mentioned fully embraced and implemented your recommendations and what is the timeline forgetting that done?
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>> again, happy to follow up with a more detailed briefing on where we are on that report. what we have found -- a significant amount of interest across the federal cio's which have their own challenge of staying in roles and having persistence in those roles. i can't think of a single agency that has not embraced what needs to be done. >> so if you could follow up with us on a timeline and goals and also hopefully deadlines for when we expect those agencies to comply with your recommendations. >> yes, ma'am. >> thank you. >> senator sasse. >> thanks for being here and incredibly important topic and i appreciate you for scheduling that hearing. mr. priestap, you've made a number of startling comments in your opening statement. how does the chinese government think about its dais parra or
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those working in silicon valley? >> in my opinion, they think of them as being beholden to them. they think of them as -- just simply an extension of their power, of their nation. >> and what is the range of understanding that chinese nationals who are studying, getting ph.d in the u.s. or working in tech companies in the u.s., what is the differentiation of understanding they have about how they are viewed as assets of the government? >> you mean those individuals? based on fbi interaction with some of those individuals, it really is case-by-case basis. some i think are not knowledgeable in the least and are completely unwitting of doing anything in furtherance of their government aims and others either through direct or other softly applied pressure
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understand that they have obligations to meet. but it really runs a gamut is what i'm trying to say. >> is there clarity in the way we, the u.s., rell ate to those who come into our country about the laws and what is and isn't appropriate forms of state craft and spy craft. >> i think that is a great question and in my experience there doesn't seem to be consistency and frankly it is something that i think we could do a much better job of. especially in regards to universities and other research institutions, standards of research, what is acceptable behavior and what is not. is that spelled out for all of the people studying and conducting the research so that people know from day one what is right and what is wrong and that there will be consequences if they cross that line. >> and when you say -- and director krebs, you and i have a number of good briefings separate from this and i
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appreciate your work and also agree with the congratulations on your new role. but when we say that there is coordination but there is not a coordinator, who would be responsible for what director priestap just said? who is the u.s. government is responsible for thinking through this issue of strategic communications with chinese nationals who come to the u.s., many of them not intending to break laws but ultimately having pressure on them to break our laws or be involved in corporate and technology espionage and who in the u.s. government is rell ating with the tech companies about the hiring they are doing and communicating with the universities about the often nefarious effects of the confucious institute. where does that responsibility reside in the u.s. government. >> i see those as counterintelligence and law enforcement role and responsibility that there is a substantial amount of coordination that happened through the national security council led in part by the drerktor of fbi and the director of national intelligence. now my job is principally
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cybersecurity and risk management is to carry the message they develop and push it out through the public/private partnerships whether it industry or academia. >> thanks. director. >> senator, if i may, because i think that just an absolutely critical question in what i'm seeing not just across government, but across business, across academia, what have you, again there are pockets of great understanding of the threat we're facing and effective responses but in my opinion we've got to knit that together better. our government somehow -- obviously we have three separate branches intentionally, but if we're facing a whole of government and some call it a whole of society, not meaning every person in the society is posing the threat but people from all walks of life, you can't effectively combat that threat with ad hoc responses.
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we need more people in government, more people in business, more people in academia pulling in the same direction to combat this threat effectively. >> going back to the point you made earlier about spy on spy, the chinese clearly understand that this is not merely a spy on spy initiative any more. and our system is the better system in the long-term. decentralization is the better system for human flourishing and for innovation. but it certainly puts greater communications burdens on us to be able to respond to all of the asymmetric disadvantages that we face. is there anything we can learn from the five i's partners about how they respond to these kind of strategic threats. >> i guess the only thing i would add, because obviously the fbi and my division coordinates closely with them. we need them. if we think we've got a threat today and people are trying to steal things today, what we have to understand is if they can't get it from the u.s., you go to the place where -- somewhere else you could get if. in other words you look for the
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soft underbelly. you need a coordinated response. we need as many allies in this fight as is possible. >> i'm at time so general demers, i'll just flag for you that i'll send you a letter following up on some of the important comments you made about the intention of the department to continue the china initiative from the chinese espionage act and to ask some questions about how many cases we're currently pursuing. so thanks for your work. >> senator blum enthrall. >> thank you, mr. thank you to this panel for being here and excellent work on a very critical topic. i'm sure everybody here has followed the arrest of meng wanzhou, the chief financial officer of hauwei. miss meng is accused of committing fraud as an effort to circumvent sanctions against iran. the president has suggested that
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he would intervene in her case. perhaps for the sake of helping him in a trade war, there are other means of ending the trade war and there are no doubt other impacts on whether we end it, but his suggestion that he would intervene to block action by the department of justice either in that extradition proceeding or in the underlying criminal action is extremely disturbing to me and i think it may be to others in the law enforcement community. the idea that the president would intervene in any criminal prosecution for political purposes seems somewhat troubling. so let me ask you whether you
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think that kind of statement sends a dangerous message to our law enforcement community? >> thank you, senator, for your question. i really can't comment on a pending criminal proceeding. obviously as you said, the extradition is ongoing. if she is extradited, our criminal case will continue. so i won't comment on that specifically. i will say that what i do and what we do at the justice department is law enforcement. we don't do trade. and so we follow the facts and we vindicate violations of u.s. law. that is what we're doing when we bring those cases and i think it is very important for other countries to understand that. we are not a tool of trade when we bring the cases. and that is when we -- what is what we do when we see them through to their conclusion. >> and frankly i think that is
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the danger of the president's statement, that it makes it look like law enforcement is a tool of either trade or other political or diplomatic ends of this country and that may be true in other countries, but not in this one. and you are professionals who are doing this work very professionally. it seems to me that the president does a disservice to the -- the work as well as the image of our nation in terms of law enforcement. any other members of the panel have any comment? >> sir, i would simply echo what john said in that -- i don't know if your a new england
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patriots football fan but i have a son who is and from what i understand, the new england patriots have this motto. it is very basic and it is do your job. and i want you to know from the fbi's end, we're going to continue to do our job. >> why are you not a patriots fan if your son is? [ laughter ] >> i have another question. and this is a supportive question. as you know, we often see press release and announcements of indictments against cyber criminals in china or other criminals who are beyond reach of u.s. law enforcement and miss meng would be too had she not transferred planes in vancouver.
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generally speaking, the doj knows that apprehending them may be unlikely. particularly if they are in china and russia, so my guess is a lot of people wonder why is the united states spending resources to do this investigation and prosecution if we have only a small likelihood of actually bringing them to justice. i say this is a supportive question because i firmly believe that we should be doing these prosecutions. but i think it would be helpful to know -- to hear you explain it to us and to the american people, why it's important to enforce the law, to do these prosecutions, to take the indictments to court, to undertake this work even though they may never be held accountable inside a courtroom. >> right. sure. >> gentlemen, we need to move on. i'm sorry. we have a break at -- a vote at
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12:15. >> okay. >> maybe you can -- you can work that -- your answers in in response to senator whitehouse's question who i will now call. >> thank you very much. >> i'm happy to take your answer in writing. >> i'm sorry, senator. i didn't mean to be rude but we have another panel and i think we need to be out of here by 12:20 or so. >> mr. demers, welcome back. thank you for your work. >> good to see you again. >> your testimony mentions three prosecutions of china nationals. how many total are under way in the department of justice right now? >> with respect to investigations, i really can't say, right. with respect to prosecutions, i believe it is the three in the testimony, plus the micron case which is also in the testimony,
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but separately. so i think we have those four pending right now. >> okay. to tell you the truth, one of them seems pretty minor. the extradition was great in the other one. but i go back to general alexander saying this is the largest illicit transfer of wealth in the history of human kind. which is a phrase i contend that he stole from me. but i love that he says it because i think it's true. and i remember chasing the obama administration around to try to get them to be more aggressive and ultimately i applauded the indictments that they brought against five chinese pla officers for fraud. it just strikes me that with all of this going on and with the threat levels as high as they are for this type of industrial espionage, three doesn't seem like a lot of cases. particularly when one of them barely counts.
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is there a problem with pursuing these cases? do you need additional investigative resources? the obama administration there was very often pushback to the department of justice by commerce and state and other players who didn't want to have their worlds disrupted and that had to be over-come to pursue the indictment of the p.l.a. officers. what is the environment in your world that explains only three and by my standards really only two cases. >> i think -- well, these cases are very difficult. so the cases -- they take a long time and they are resource intensive. so the cases now are based on investigations that have been going on for a number of years. they're also difficult sometimes because they may involve intelligence information that we ultimately may not be able to use in a criminal proceeding. and that is something we have to
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do in these kind of cases. is just balance all of those equities. >> understood. >> they are -- and what we're dealing with is covert intelligence activity that is aimed at private companies. so they're done by very sophisticated actors good at covering their tracks. on the cyber side, the hardest part, as it is in cyber generally, is attribution, trying to figure out through technical means and sometimes through other intelligence who did the test, who did the ex filtration. so it is something we look at, whether we need more resources dedicated to these efforts and i mention -- >> with time running down, let me try to drop in two more questions. one, i ask you to do in writing. there has been at various times at various levels in the department of justice an effort using the civil law to go into court and get permission to tear down bot nets. it began years ago with the case i want to say out of the u.s. attorney's office, maybe in
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oregon. microsoft actually opened it with the case of their own and then the department followed along. i know the fbi for a while took a keen interest in pursuing this. could you get me a written answer about the status and the structure in the department of justice of the operation that is designed on an ongoing basis to tear down bot nets but a bot net lurking out there, i think you will agree, is a threat to a chinese or any other actor to be able to use it to come in and do mischief in the united states. is that last fact correct? >> yeah. and we've done a couple of bot net takedowns this year. >> can you give me an update on how this works in the department -- >> -- in writing. >> how many people are tasked with it and where they are and so forth because this should be an enduring project. and you close your testimony by saying that we -- we must work together with you in congress. and i hope you see a bright -- a
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welcome flag here in department -- in this committee to work with us. i think senator graham and i and our entire committee have held hearings on this and asked people to come in and urge cooperation. when i looked at tom bossic who i thought was credible in the white house and i looked at joyce right behind him so also seemed equally credible and a saw a former senator dan coats at dni who knew his way around this and in the very early days mike flynn was involved in cyber activities and helped coordinate a naval conference on cyber so i saw things coxing together for a real opportunity to do some legislation with the administration on this. that has turned into as best i can tell a great big nothing. i think there is a big legislative opportunity here but there is no vehicle that i'm aware of right now for conversations between the trump administration and congress about what that legislation
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should look like. so i would encourage you to do that. i've had this conversation with attorney general sessions and director coates and your boss, mr. krebs, and at the moment it is like deafening silence out of the administration on having a comprehensive legislative package of some kind worked through. i think it is very doable. i think there is bipartisan willingness here. and we do have a problem which -- as general alexander used to say, i have to answer to 130 committees that have jurisdiction over this. so if there is not a cadda liezing force, it is really hard for us to get this going on our own. and it becomes virtually impossible if we talk to the administration, what we get back is we'll have to get back to you and then nobody does. so please do what you can to try to close that gap. there ought to be at least a working group of some kind
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between the executive and legislative branches to figure out what needs to be done, if, in fact, we must work together with congress is a priority for you. thanks. >> thank you, senator. the kata liezing senator cruz. >> thank you, mr. chairman. >> that's a complement. >> i'm not sure what that means but i'll take it. good morning, thank you, gentlemen, for being here. thank you for your service. i'm increasingly concerned that china is gaining access to american secrets. using nontraditional, all of nation approaches to conduct espionage against our allies. chinese company hauwei maneuvered into a dominant position providing communication infrastructure across the globe, including to major allies like canada. for each of the witnesses, can you assess the risks presented by such practices, especially as they relate to hauwei.
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>> so, thank you for the question. so when it comes to hauwei specifically, but chinese technology companies, we break things down in terms of hardware, gear, things like that and also information access. so the challenge is broader than hauwei and also included china telecom and unicom and who has access to the data and how do they access that data. i would say globally when you think about the exposure that china has, it's -- hauwei and like companies, it is fairly, fairly broad. there is an awakening, though, and i wouldn't take away from the fact that a company in a country has done a deal with hauwei as that country accepting the risk of working with hauwei. i think the risk tolerance needle is shifting here. section 889 in the national defense authorization act which deals with hauwei and others is a positive step forward in
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progress beyond the work we've already done. as we shift into 5g it is important that we communicate the risks associated with advancing technology. with our technology companies, as we've talked about, with our five partners, we do have an increasing common understanding of those risks. looking forward, but yes, there is -- there is work to be done here. >> the chinese government does not share our government's values and to me a great example of that is their cybersecurity laws they've enacted over the last few years which provides their government access to user data from any of their telecommunications or cyber companies when they want it, whatever they want and they can do whatever they want with that. they could exploit that data however they want. with china -- i'm sorry with hauwei -- let's call it growing
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position globally and other telecommunications, we have to understand that that then means the -- the data, the user data that those companies possess can be utilized by the chinese government, again in whatever manner possible. and to me that's extremely worrisome. i'll leave it at that. >> let me raise a related issue which i've spoken a number of times to leadership of a major research institution in texas that is facing ongoing challenges of chinese espionage and in particular chinese nationals being paid by the chinese government, working at that institution, working on sensitive research projects and they discover projects they are in the midst of working, companies out of china are filing u.s. patent applications and seeking to get u.s. intellectual property in the
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midst of the research. how wide spread is this problem, is this threat of industrial espionage, theft of intellectual property by chinese nationals working here in the united states and what are we doing about it and what should we be doing about it? >> sir, i can't quantify for you -- i wish i could -- the level of the threat. but what i can tell you is this, i'm waiting for the time that somebody reports to me, come news my office and says, we have concerns about some activity here relating to china and in which again they might be up to -- or might be engaged in for nefarious purposes. and they'll ask my permission it go take a look and we then go take a look. i'm waiting for the time to come
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back and say it wasn't there, we didn't find it. we looked and it didn't exist. every rock we turn over, every time we look for it, it is not only there, it is worse than we anticipated. >> and give us an order of magnitude? how wide spread are the complaints? are we talking handful, are we talking dozens or hundreds? what is the breadth of complaints and investigations you're seeing on these issues? >> just say extremely voluminous. >> hundreds? thousands? i want to get an order of magnitude in terms of how broad this challenge is. >> thousands. >> thousands. okay. thank you. >> senator feinstein has another quick question. thank you senator cruz. >> yesterday "the new york times," david sanger wrote an article, data breach is traced to chinese hackers as u.s. readies crack down on beijing. i gather they hacked into
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marriott starwood chain and it was discovered only in september revealed last month. it is not expected to be part of what are coming indictments. but two of the government officials said that there is added urgency to this crackdown because marriott is a top level provider for american government and military personnel. it's my understanding that this breach is really huge in terms of numbers and data. what can you tell us about that? >> so i -- my department, my agency doesn't do attribution. i look at events like marriott and it is in the early days of the investigation, i try to take away what the -- what the network defenders can do to make sure there is not another marriott. so i take a couple of things away. what is the data retention policy, what is the information they are holding, it is passport
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numbers, how are they holding it and securing it. >> can you give us that information on this data breach. >> i would have to follow up with the law enforcement community and i add that we also need to look at the risk with -- with mergers and acquisition and they brought in the starwood chain and they may have brought in risk with that. so what is the due diligence companies go through when they bring in. i'm trying to help network defenders to stop the next event. >> get us that information. i'd like to get a copy too. okay. i want to thank all three of you. you have very impressive backgrounds. and i've learned a lot listening to you today and i want to thank you for sharing your time with us. mr. priestap, did i read that you're retiring? >> yes. >> well, thank you for your service. if after you get bored, i hope you'll come back. i mean that. you just had an extraordinary
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career and the american people thank you. thank you, gentlemen. if our second panel could come forward, please. gentlemen, thank you for joining us today. with us today we have -- if i miss pronounce your name, i apologize in advance. mr. dean cheng, from the
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heritage foundation davis institute for national security and foreign policy. he's an expert in china military and foreign policy. welcome, mr. peter harrell is an add junk senior fellow in the economics and security program, an expert in economic state craft sanctions and energy. and dr. james mulvenon -- did i say that right? mulvenon. i apologize. the general manager of the special programs division at s.o.s. international. he is an expert on the chinese military and chinese cyber issues. gentlemen, welcome. mr. cheng, would you like to go first? >> sure. good morning. senator kennedy, ranking member feinstein, senators, my name is dean cheng i'm the senior research fellow at the heritage
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foundation. my comments this morning are my own. my comments this morning are intended to provide some context for better understanding than nontraditional chinese approach to espionage both in terms of information gathering and also influencing foreign audiences. chinese espionage is important to note is nontraditional not only in terms of method but also in terms of the targets. and this nontraditional aspect is rooted in the very different context based on china'sview of its own national security. this is rooted in several key points. the first is comprehensive national power, so-called wheel of doom displayed for the previous panel. the desire to catch up with the west to ensure there is no repeat of the so-called center of humiliation and the extensive research of the china communist party throughout chinese society. comprehensive national power as the china conceive it is basically how they measure themselves as set against other countries, be it brazil,
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bolivia, botswana and it includes diplomatic respect and culturalsecurity, but also scientific and technological capacity. and it is important to note that china is trying to build up all of these elements in order to catch up with the west, in order to avoid a situation where china finds himself strategically disadvantaged in the competition that they see themselves already in with the united states, but also with the west in general. to support their effort to build comprehensive national power and to catch up with the west, the chinese communist party has the ability to apply all the instruments of national power. the previous panel, for example, talked about the whole of government. i think that's part of it, but i think it's also useful to think of china as a whole society, where it's not just military
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entities and intelligence entities, but industrial, financial and corporate entities. state enterprises but also private companies which do exist in china. and even aspects of what we would consider to be civil society, academia, journalism, even tourist groups. because there is no real civil society in china insofar as there is nowhere that is not under the purview or operating under the shadow of the chinese communist party. when they give out nontraditional methods, the prc employs not just military or intelligence entities but information to influence others. for example, they employ financial entities. the recent case involving the company global ip, which was trying to acquire a boeing satellite, basically the chinese positioned themselves by assuming a non-majority position on the board for global ip in order to be able to review the contracts which in turn included
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technical data. it includes gathering information via academia students but also visiting professors. gathering information by rerouting the internet. china telecom has rerouted the border gateway protocol, entire lines of traffic into china for review, recording and presumably for access to the information. they do so selectively, not wholesale. the chinese also engage in nontraditional targets because they see their security as comprehensive. so, for example, we have multiple cases of the chinese going after plants. by plants i don't mean companies, i mean literally crops. because in 2016, they went after dupont and monsanto corn seeds. in 2015 they went after bioscience's rice -- >> what do you mean they went after? >> in multiple cases, sir,
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people were stopped at multiple airports. their luggage was examined and they had acquired seeds, seedl ing s and the plants themselves. we don't tend to think about food security, they do. finally just very quickly, the influence of operations. targets can be highlighted. we've heard about confu cio us institutes. it is a rare day when they all agree with each other, but on the idea of confucious institutes, there is a belief across the board that these institutes do not want freedom of expression and freedom of inquiry. we've seen them target academic
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publishers. cambridge university press at one point apparently was prepared to take down over 300 articles from china quarterly, the premier journal of the chinese study field under pressure from the chinese because they covered topics such as tiananmen square, xinjong and tibet. so when we think about the chinese engaging in nontraditional espionage, we do need to recognize that it covers both ethnics and targets. thank you for inviting me to testify today. as senator cornyn's earlier charts made clear, the ones he displayed a little while ago during the first panel, chinese economic espionage is only one element in a broader chinese strategy to promote china as a world leader in a range of technologies. china's approach includes purchasing innovative companies
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through overseas investments, acquire companies to transfer cutting edge technology to china, subsidizing domestic companies and financing training for top chinese students and researchers overseas. chairman grassley and ranking member feinstein, in your opening remarks you very fully addressed the scale and the challenge of chinese espionage, and i will not belabor the remarks you already made. i'll simply add that, unsurprisingly, much of china's economic espionage is directed at economic sectors identified in china's made in china 2025 industrial strategy. in recent years, chinese spies have targeted firms operating in sectors as diverse as cloud computing, misconductors, robotics energy and agriculture, as mr. cheng just mentioned, among others. it's important to remember that china does not only steal trade secrets and other sort of high-end crown jules of u.s.
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intellectual property, they also try to steal important commercial information such as pricing strategies by american companies so that they can help their own companies develop pricing strategies. a couple of years ago, the department of justice even indicted chinese spies for stealing strategy information from a u.s. labor union that was strongly opposing chinese trade practices. in terms of the u.s. government response to date, broadly speaking, i think it can be broken up into three parts: better defense, prosecuting spies and increasing costs to china. first, better defense. director krebs described many of the initiatives currently underway by the u.s. government to harden both u.s. government networks and also private sector networks, cyber networks and other kinds of networks by private institutions, universities and other entities to protect themselves from chinese espionage.
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over the past several months, there's also been an important focus on restricting the ability of chinese telecommunications companies to sell network infrastructure to u.s. telecommunications networks and to our allies. there's been some remarkable success there. the second major response today has been to prosecute spies, and assistant attorney general demmers described these initiatives in some detail. i think these are important efforts that should continue going forward. the third major line of response has been to increase costs to china over its espionage program and to take action against specific chinese companies profiting from stolen i.p. in 2015, the obama administration used political prosecutions and sanctions to convince china president xi to an agreement that china would not knowingly import cyber theft
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for political gain. that reduced chinese espionage in the united states, but as we've heard earlier today, over the past year or so, there has been a renewed significant increase in chinese economic espionage. the trump administration has expanded costly possession efforts. ip theft has been the primary rationale as part of the trade war. importantly, the trump administration has also begun to deploy targeted measures of chinese beneficiaries of ip theft including trade commissions on a semiconductor firm that stole technology from micron technologies. so what are a couple recommendations, very briefly, going forward? first, i think it's important to keep in mind that this is a whole of society defensive effort, not just a whole of government effort. institutions, including companies and universities, need to take their own steps to keep
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hardening their defenses. but for u.s. government leaders, i have a couple of specific recommendations. first, i think we should expand the use of sanctions and targeted parade control measures to punish chinese companies' benefit from economic espionage. second, i recommend congress look at ways to expand prohibitions on importing into the united states chinese products using stolen american ip. there are already authorities the international trade commission can use to do this, and they've done so in a number of cases, but we need to study expanding those authorities and resourcing those efforts. i also recommend congress look at ways to expand the economic espionage act to create better private rights of action for companies american victims of ip theft to sue the companies that attack them. i finally should recommend that congress look at an issue that both chairman grassley and ranking member feinstein, you have worked on, in some detail,
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which came up during the prior panel, which is expanding the foreign agent registration act to make sure it fully covers the kinds of unconventional activities that china engages in here in the united states. thank you again for the opportunity to testify. i look forward to your questions. >> thank you. doctor? >> senator kennedy, ranking member feinstein, thank you for inviting me here today. i'm a chinese l ing uist. i've spent the last 20 years supporting issues like chinese espionage. i've had a 20-year obsession with a company called huawei. that being said, it doesn't concern this work. the reason i'm here today, in 2013 i published a book called "chinese espionage" which
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included details of chinese collection activities. it had additional benefit subsequently of hurting beijing's feelings. our research documented enormous infrastructure of organizations both in china and in the united states, and a professional cadre dedicated to the structure from the united states to china. they required the requirements. it's the industrial level we talked about today made in 2025. i would also recognize the 2006 to 2020 s & t plan. coordinated by community groups and escalated by a wide amount of groups including the he espionage affairs group. they coordinate closely with tech transfer offices, companies
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like falone in falls church, virginia. they look at formal journals, patents, proceedings and diss dissertations. now they have the semi-famous talent programs and the participants in those programs travel from the united states at government expense, divulge knowledge and venues, and then make what is called the u.s.-based gd. the same is used for military bases. that technology is converted at 180 pioneering parks for 80 overseas scholars in china, 180 service centers and 276 model transfer organizations, and those are only the ones we found. the dynamics of the actual acquisition of the technology itself which the chinese described in that mid to
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long-range s & t plan to be, quote, diverse means, which is one of their many euphimisms for espionage and i.t. tech transfer. they say organizations on u.s. soil must, quote, serve the motherland. the recipients, quote, serve china while in place, end quote, and, quote, operate from two bases, in other words, the united states and china. these tech transfers again are euphemistically described as changes, but one will show up with his colleagues and spend hours debriefing him at one of these transfer centers. the scale of this activity continues to a maze maze me as deeper on it. but i would offer a number of policy recommendations. i'm a strong supporter of the doj china initiative.
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i'm proud to say that my organization had some small part in the creation of the wheel of doom. but that being said, we need to do more. i was a public supporter of senator feinstein of firma. i believe i was the only person that actually supported the bill. but i believe the inple mentation of it, however, will require the additional resourcing of the personnel. if we're going to expand the scope of the cases, i know from discussions with department officials they're concerned they won't have the resources to be able to handle the greater workload. i also support the strengthening of fera as a deterrent effect. one thing we discovered, on the public web sites of the chinese talent programs, it lists over 300 u.s. government researchers by names who have accepted thousand talents' money. i believe the researchers, in order to do that, at the very least ought to register under fera -- >> say that again. >> on the thousand talents
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website, it lists over 300 u.s. government researchers with their u.s. government agency affiliation as having accepted thousand talents' money. it is unclear to me whether those individuals ever received permission from their agency. i know there is a criminal statute, 18-c-209 saying they are not able to accept compensation for the same thing they receive as a government employee. their company affiliations have accepted money under the thousand talents program. again, no details about the specifics of what was exexchang, but the openness with which the chinese listed that material on those websites really goes to the fact that, one, china regards its languages its first larry of photography. my layer exists because so much exists in the public domain of the chinese, but also because of
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the scale and effort and brazenness of it. that being said, at the very least, individuals should have to register under fera and there are a variety of other policy suggestions i would be happy to offer in the q & a. thank you, senator. >> thank you, gentleman. senator feinstein. >> what additional policies would you recommend? we're very interested. i would like to go over it briefly, and i would very much appreciate a letter from each of you to your recommendations as to where you believe we should go with respect to legislation. >> yes, i'd like that, too. do you have more questions? >> no. that's it. >> one additional recommendation. almost a decade ago, the department of commerce put out a notice in the federal register that i thought was very sensible and at the time was shouted down by u.s. university presidents. and frankly i think the current
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environment would be much more amenable to it. what it said was that piercey national, who is a grad student in the hard sciences program in the united states operating in a lab, that if they were going to use a piece of equipment, an instrument, for instance, that would have required a deemed board license if that individual were to use it in the lab located in the prc, that the university's hard sciences department should also have to obtain a deemed d erkax port license. >> could you go over that again, pretend i'm a fifth grader? >> sure. under the u.s. export control laws, for instance, if a u.s. company was operating a lab in china and that lab was using a piece of equipment that would have used an export -- required an export license to be sold to a chinese company or transferred to a university, and a foreign individual was going to use that
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piece of equipment as an employee of that u.s. company, that company would have to apply for what's called a deemed export license. in other words, the technology itself wasn't being transferred to a foreign entity but it was being used by a foreign national within it is cthe confines of t company. my recommendation is that the same request needs to be made if a lab in a university is using the piece of equipment that would have required a deemed export license if it had been used in a lab abroad. there is a reciprocity that seems logical to me, but when it was proposed last time to the commerce department, it was shot down. >> can you send us that in writing, that explanation? >> yes, senator. >> that would be wonderful to have information on that. i just have a couple questions. this has been -- i hope we'll do this again. this will has been very informative. i want to go back to the
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confucious institutes. i don't want to curtail free speech. if somebody in society, including but not limited to a university, wants to advance an argument that the political and economic structure of china is best for the world, i don't happen to agree with it, but i think they should be allowed to ethicate. that's not what i'm talking about. what i'm trying to understand here is to what extent, if any, the confucious institutes are doing more than that, and in particular, to what extent the institutes are curtailing speech critical of china, and to what extent the universities are
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giving in because they want the money. >> sir, the confucious institutes themselves are not funding the entire university, they are funding a particular program there. >> of course. "they" meaning -- >> the confucious institutes. it is serving as a conduit for the chinese government. >> right. they pay for the institute. >> as a pass-through they provide money to the university, and the university finds free money moderately to be very addictive. as a result, they are prepared to curtail or pressure or discourage inviting tibetan speakers or allow inquiry into certain areas. but it is important to note that the confucious institute is only one method used as part of the a
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broader effort. >> i understand that, but i'm trying to focus on a specific example. >> in a sense, it is the university that pulls the trigger. it is the confucious institute, however, putting into the ear of the institute, that's a lot of the money we're giving you. do you really want to put that in jeopardy? >> do you know particular institutes where that's happened? >> i don't have it in front of me. >> you have it? you can get that to me? >> yes, sir. >> senator, there was a very bipartisan report about two weeks ago by the hoover institute out in california and the ageless society -- >> at stanford? >> -- at stanford that looked in great detail at a bunch of chinese operations, including the issue of the confucious institutes. i'll send you that, sir. >> would you be willing? >> yes, sir. one thing it found, at the very
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least, if confucious institutes are going to remain in the united states, there should be complete transparency of what they're doing, the operating structure they're operating under, and the university should have complete operational control over what the institute is. so if these became something that was purely a language training program with no other strings attached, it could remain. but you would need a lot more transparency than you tend to see today. >> senator, i was proud to be a member of the task force that produced the hoover institute report specifically on that issue. and i'm also proud that my alma mater, michigan, yesterday, kicked the confucious institute off the campus, which i think is the sixth or seventh confucious institute they kicked off -- >> why did they do that? >> because of the threat of express sieve freedom, sort of the litmus test of hiring of the
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institute. they don't hire people who have controversial, from beijing's perspectives, views on tibet, taiwan -- >> who makes the hiring decisions at the institute? is it the university? >> usually it's the institute director. one of the other reasons they've been controversial is because often when you interview faculty about the confucious institutes, and my organization has done extensive research on it, often the faculty can't figure out where it came from. it wasn't a transparent process by which it was set up, and people weren't offered the opportunity to object to it. but if you simply go back to the beginning of the confucious institutes, one of my colleagues who look at this very consistently, instead of being set up as a chinese claim by the industry of education, the honbon association, in fact, it was set up by the united front work department, which we've been reading as being at the heart of chinese influence
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operations. i think the united front work department is all we need to know about what their true intent is. but it's sort of a broader array of pressure that they're putting on universities, whether it's set up a satellite campus in china. what i'm looking at is are there university transfers that are occurring between the universities in the united states and the satellites in china that are excavating our reviews? and if you talk to the deans in these schools, these schools are financially addicted to full freight chinese tuition. so that leverage is a huge part of the pressure. as a return to the chinese side, i would say that all the companies that operate similar organizations in the united states, like the german guta institute which studies german language, the french have similar ones, none of them are
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affiliated with universities. they're all stand-alone institutes. my daughter benefited from an institute in terms of teachers and books. i have no problem with that, but i don't want them impinging on freedom in university campuses. >> senator feinstein, i would like to come back to a question you had posed about additional recommendations, and i will submit a letter with several. two additional recommendations, though, just to mention very briefly, first i'd like to echo one that dr. boldanon talked about, which is firma, one i think you implemented very closely. i think as the trump administration works on firma going forward, there are research issues and also regulatory issues about how to maximize the efficacy of firma going forward. and the second, as we look at chinese hacking of u.s. citizen
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personal data, we've talked about -- it came up on the first panel, things like hacking into marriott hotels, stealing the personal data of 500 million americans. i think we also need to think about the ability of the chinese to simply purchase a lot of american personal data. you may have seen a recent "new york times" study where the "new york times" actually purchased realtime location cell phone data of millions of americans and was able to identify specifically where many tens of thousands of americans moved throughout the day. t if the "new york times" can purchase it, i'm sure the chinese can. i think that's another area we need to be thinking about. >> mr. cheng? >> two other recommendations, and i hesitate only because this would burden the previous panel and their respect active agenci -- respective agencies. the first is where companies tend to use stolen ip, that
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would affect interstate commerce and exploitation of stolen goods. i'm not sure why a stolen stereo would be treated as a problem and stolen ip would not. that should allow the united states to think about prosecuting companies that exploit stolen ip. that would mean demonstrating that the ip was stolen. the other is research statutes. given all the discussion by this panel, previous panels and other hearings, it would seem fairly evident that there is, in fact, a legal definition of conspiracy, and let me note here i'm not trained as a lawyer and i probably should not use legal terms like that. but assuming it is a conspiracy, rico would also be applicable to any company that was involved in the use and exploitation of stolen material that was transferred across state lines. >> gentlemen, this has been fascinating.
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thank you for your time. we'll do this again. the record will be open for two weeks. we're going to go vote now. i hope you will -- i know you're all busy, but if you could get us that information in writing we asked for, i know i will, and i think i speak for senator feinstein, we will read it with interest. thank you again for your time. this meeting is adjourned.
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when the new congress takes office in january, it will have the youngest, most diverse freshman class in recent history. new congress, new leaders. watch it live on c-span starting january 3rd. our live coverage here on c-span3 will continue this afternoon as u.s. border patrol chief carl provost and two of arizona's police chiefs will be testifying about drug cartels and border security. the senate judiciary subcommittee hearing will get
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underway at 2:30 eastern on c-span3. you can also watch it on line at c-span.org or watch it on the c-span app. the supporters came to rally at madison garden and it showed nazis giving the salute next to george washington's picture. there was a very big fascist movement early in the '20s and '30s, that it was associated with america first. >> london literary professor sarah churchwell looks at the terms of "america first" and "the american dream" in other book "behold, america." sunday at 8:00 p.m. eastern on sunday's q

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