At Hearing, State Department Official Confirms Portman’s Safeguarding American Innovation Act Will Help Federal Efforts to Stop China’s Theft of American Research & Intellectual Property

September 17, 2020 | Press Releases

WASHINGTON, DC – Today, at a Senate Foreign Relations Committee hearing, the State Department’s David R. Stilwell, Assistant Secretary for East Asian and Pacific Affairs, confirmed to U.S. Senator Rob Portman that his Safeguarding American Innovation Act will help federal efforts to stop China’s theft of U.S. taxpayer-funded research and intellectual property. Portman’s bipartisan legislation will help stop foreign governments, particularly China, from stealing American taxpayer-funded research and intellectual property developed at U.S. colleges, universities, and research institutions. It was passed by the Homeland Security and Governmental Affairs Committee earlier this year.

Recently, both FBI Director Wray and Attorney General Barr, have spoken about the threat to American taxpayer-funded research and intellectual property from foreign governments, particularly China, which would be addressed by this legislation. In fact, FBI Director Wray announced that the FBI is opening a new China-related investigation every 10 hours with around 2,500 open counterintelligence investigations across the country. In addition, the National Institutes of Health (NIH) has reported that 54 scientists have resigned or been fired as a result of a NIH investigation into American taxpayer-funded grant recipients’ failure to disclose financial ties to foreign governments, particularly China. In fact, according to the NIH investigation, more than 90 percent of the scientists had undisclosed ties to China. Committee passage of this legislation means Congress is one step closer to safeguarding American innovation and Portman is urging the Senate to take the next step and vote on this important legislation soon.

Excerpts of the hearing can be found below and a video can be found here.

Portman: “Well first of all, I really appreciate you having the hearing. I have enjoyed listening to our witnesses and hearing [Senator Risch] and Senator Menendez’s opening comments. I have a question for each of the witnesses just quickly, if we could, at the start. We have so many challenges with China and as former U.S. Trade Representative, we haven’t even gotten into some of the detailed trade challenges that we’ve had, but competitiveness and we’ve talked about the human rights challenges, we’ve talked about the challenge to our technology and our innovation, which I want to talk about in a moment. But to each of the witnesses, just very, very quickly, how would you describe our relationship with China and, specifically, would you consider China to be an adversary, a global competitor, an enemy? How would you describe China today in relation to its relationship to the United States?”

The Honorable David R. Stilwell, Assistant Secretary for East Asian and Pacific Affairs: “Senator, thank you for that question. I can answer that fairly quickly. Our official policy is China is a strategic competitor. I will note that in internal conversations in the PRC, they refer to the United States as the enemy. They’ve been doing that since 1950. In 2012, in a headline in the People’s Daily, when one of their Communist Party members ended up in the Chengdu Consulate, the headline was ‘The Comrade Wang Lijun Has Defected to the Enemy’, unashamedly noting that. So if you look at the difference in approaches and attitude towards each other, I think you can see that the approach from the Trump administration was long-overdue. Yet we are not using the word enemy, we are simply competing, and in simply competing, we’re having great effect in normalizing Chinese behavior in the United States and its adverse behavior in the United States and elsewhere in the world, and the number of folks who are coming in support, verbally and strongly, from these two regions and all others, is growing considerably as people recognize that the economic threats - you don’t have to bow to those, you can stand up for your sovereignty. Thank you.”

Portman: “Right, anyone else with a different description other than this strategic competitor?”

The Honorable Philip T. Reeker, Senior Bureau Official, Bureau of European and Eurasian Affairs: “Senator, it’s Phil Reeker from the European Bureau.  I would echo the term ‘strategic competitor’ as we describe it, certainly in the national security strategy, but to point out that in Europe we see this as the PRC trying to establish their own strategic foothold there and indeed promote an authoritarian model of governance and state-controlled economy and challenge U.S. national security by weakening our political and economic and military ties. Indeed over the last, say 12 years, the PRC gained increasing influence over European markets and supply chains, something the Europeans, particularly since COVID, have been focusing on in terms of resilience and working with us on that. The 2008 financial crisis really exposed that, where the PRC with lots of cash came in and targeted investment strategies, strategic industries, and critical infrastructure, including ports and other things. We’ve seen a real sea change particularly in the last three years, this awakening that Secretary Pompeo has talked about due to our own realization of China’s long-term strategy, sharing that with our European partners and allies, including at NATO where we’ve officially put into NATO’s doctrine going forward to look at the challenges -- and opportunities -- of the PRC as a strategic competitor. And you’ve seen the Europeans, of course, adopt investment screening mechanisms at the national level. The EU itself adopting, for instance, a cyber-sanctions thing. They had their first designation of a Chinese entity under their cyber sanction regulations.”

Portman: “Thank you, thanks for that. Let me get to another question and first of all I appreciate the hard work that you’re doing in Europe and I think people have begun to wake up to the challenge. And having been in Europe pre-COVID to talk about some of these challenges, they do need to wake up and they can, you mentioned the CFIUS type screenings in Europe finally catching up. You know, they’re looking to us to provide some information there to understand better how they can screen investments. You know, so many of the challenges we face, we talked about this morning, the answer is let’s work with the others and require China to do certain things and impose on China some additional level the playing field fairness and so on. And I don’t disagree with that and I mentioned trade earlier, that’s an example of where sometimes they have done things, either by subsidizing or by selling below cost, that are just wrong and violate the international norms.

“But it seems to me that a lot of our more productive approach to China would be getting our own house in order. Competitiveness would be the most obvious example of that, but there’s another one that I’ve worked on a lot with some colleagues on the committee, including the bipartisan leadership of this committee and that is how do you safeguard American intellectual property, American innovation, American taxpayer-paid research? And we have legislation called the Safeguarding American Innovation Act. It comes out of a year-long investigation into this issue, and was able to expose that really for two decades China has been systematically targeting American researchers, usually, again US taxpayer-paid research, and systematically taking that research back to China. Since we came out with our report and since we had a shocking hearing on this topic about what has happened, the FBI, the Department of Justice, U.S. Attorneys have stepped up and there have been several very public arrests of Chinese researchers, particularly with their Thousand Talents Program, who have again taken U.S.-paid research and taken it to China to help fuel the Chinese economy, really over the last two decades, and also the Chinese military, because some of this research is actually military research. So that legislation we’re trying to get passed on the floor now. We have19 bipartisan co-sponsors, including Chairman Risch.

“It is not only the result of a yearlong investigation and a hearing, it’s also been reported out of the Homeland Security and Governmental Affairs Committee. And I will tell you we’re now told that the FBI is opening a new China-related investigation every 10 hours, with about 2,500 open counterintelligence investigations across the country -- that’s public information. And so we know more in classified settings, we can’t talk about it today, but that point Is, our American research, our innovation has been going out the door to, particularly to China, other countries as well, but China is with its talents programs, the main perpetrator. And my point is we have five things in this legislation we have to do internally to tighten up. This is not about telling China what they have to do. Frankly, it’s about telling our universities, and our research institutions, and our federal agencies like NIH, the National Science Foundation, the Department of Energy, and others they have to tighten up. It’s tightening up our visa requirements when we know people are coming here to steal technology. We need a way to help the State Department be able to screen those folks. So I wonder if any of you have any comments on Safeguarding American Innovation Act and the need for us to get our own house in order here to be able to protect taxpayer-paid research and to be therefore more competitive in an increasingly difficult climate with China?

Mr. Stilwell: “Senator, I’ll say very briefly, you saw the closure of the Houston consulate. This is just the tip of the iceberg of all things that we’ve been doing that align very nicely with what you’re discussing.”