On Senate Floor, Portman Highlights National Security Threats Posed By China & Upcoming Bipartisan Safeguarding American Innovation Act

Portman Also Discusses Bipartisan PSI Report Revealing How Chinese Government-Owned Telecoms Operated in the U.S. for 20 years with Little-to-No Oversight from the Federal Government

June 17, 2020 | Press Releases

WASHINGTON, DC – Today, U.S. Senator Rob Portman, as chair of the Permanent Subcommittee on Investigations (PSI), highlighted various PSI investigations that he has led that have shown China’s pervasive national security threats. Portman also discussed his upcoming bipartisan Safeguarding American Innovation Act, legislation that will crack down on the theft of intellectual property at federally funded research institutions and universities by China and America’s global competitors. Portman led a year-long investigation into this issue culminating in a bipartisan report and hearing that detailed how American taxpayers have been unwittingly funding the rise of China’s military and economy over the last two decades while federal agencies have done little to stop it. Starting in the late 1990s through its “talent recruitment programs”, China began recruiting U.S.-based scientists and researchers to transfer U.S. taxpayer-funded IP to China for their own economic and military gain. This legislation is the product of that investigation and will ensure that the federal government is taking decisive action to safeguard American innovation. 

This legislation also addresses the findings of PSI’s February 2019 reportwhich highlighted the Department of Education’s lack of enforcement of foreign gift reporting at U.S. colleges and universities, which the department admitted was “historically lax.” This bill gives the department increased authority to enforce foreign gift reporting rules and lowers the reporting threshold to increase transparency and prevent foreign interference on U.S. campuses. 

In addition, Portman discussed PSI’s bipartisan investigation and report detailing how the federal government provided little-to-no oversight of Chinese state-owned telecommunications carriers operating in the United States for nearly twenty years. As demonstrated in recent PSI investigations, China routinely exploits the American education and scientific research sectors to further its national interest and engages in cyber-attacks against U.S. companies, like Equifax and Marriott. This PSI investigation revealed how the telecommunications industry has been similarly targeted. The Subcommittee’s year-long investigation found that the FCC and “Team Telecom”— an informal group comprised of officials from the Departments of Justice, Homeland Security, and Defense — have failed to monitor three Chinese government-owned carriers -- China Telecom Americas, China Unicom Americas, and ComNet USA -- that have been operating in the United States since the early 2000s. The Subcommittee also found that Team Telecom had no oversight of or interaction with China Unicom Americas since the FCC authorized it to provide international telecom services in 2002. 

A transcript of his remarks can be found below and a video can be found here: 

“I’m here on the floor this evening to talk about China and to talk about how we can have a better relationship with China, one that’s fair and equitable. I’m going to talk specifically about some of the investigations and reports that we have worked on here in the United States Congress over the past couple of years. I’m going to be talking about four specific reports that came out of what’s called the Permanent Subcommittee on Investigations. I chair that Subcommittee. It’s under the Homeland Security & Governmental Affairs Committee, and it’s a committee that takes these investigations seriously. We do a fair, objective, thorough job. All of our investigations are bipartisan.And I’m going to talk a little about why these investigations that we have done have led me to the conclusion that we need to do much more here in this country to be able to respond to China and to be able to have the kind of fair and equitable relationship that we should all desire.  

“A lot of China critics talk about the fact that China needs to do things differently, and I don’t disagree with most of that. But the reality is there’s much we can do right here in this country to create a situation where we do not have the issues that I’ll talk about tonight, some of the unfair activities that have occurred here in this country. Frankly, I think we’ve been naive and not properly prepared. And I’ll talk about some legislation that we are proposing tomorrow morning which focuses on how to make America more effective at pushing back against a specific threat to our research and our intellectual property. Our goal is not to have China as an enemy. Our goal is to have China actually as a strategic partner, where there is a fair and equitable and sustainable relationship. But it’s going to require some changes, and again, I’m going to focus tonight on some changes we need to make right here, changes within our control. Our investigations have been thorough and fact-driven. And our reports have been objective, bipartisan, and eye-opening. And I encourage you to go on the PSI website, https://www.hsgac.senate.gov/subcommittees/investigations and check it out.  

“Our first report was in February of 2019. It detailed a lack of transparency and reciprocity, among other concerns, with the Confucius Institutes that China here operates in this country. These Confucius Institutes are at our colleges and universities. Some people are aware of that and some may not be aware they’re also at our elementary schools, middle schools and high schools. Our reports showed how these Confucius Institutes have been a tool to stifle academic freedom where they are located, toeing the Chinese Communist Party line on sensitive issues like Tibet or Taiwan or the Uighurs or Tiananmen Square. And, by the way, when I talk about China tonight, I hope people realize I’m not talking about the Chinese people. I’m talking about the Chinese government and, therefore, I’m talking about the Chinese Communist Party. And as an example with regard to the Confucius Institutes which are spread around this country, ultimately they report to a branch of the Chinese government that is involved with spreading propaganda, positive propaganda about China, ultimately controlled by who? The Chinese Communist Party. So I hope the comments I make tonight will not be viewed as comments that are regarding the Chinese people as much as a small group in China, the Chinese Communist Party that, with regard to the Confucius Institutes and other approaches they have taken to the United States, have led to these issues.  

“By the way, thanks to our report and the broader scrutiny that followed about the lack of academic freedom and the fact that history is taught a certain way in the Confucius Institutes -- also by the way, we pointed out that the Chinese language is taught, and that’s a good thing to have this intercultural dialogue and the opportunity for people to learn more about China -- but it needs to be, again, an understanding and a history of China that is fair and honest and that does include discussions of what happened in Tiananmen Square or what’s happening today with regard to the Uighurs, a minority group in China that’s being oppressed. In the year that followed our scrutiny, so really in the last year and a few months, 23 of the roughly 100 Confucius Institutes on college campuses in America have closed and others have made some positive changes as to how they operate. So I believe our report made a significant difference in terms of how we relate to the Confucius Institutes.  

“I said earlier that one of my concerns about the Confucius Institutes is the lack of reciprocity. When our State Department has attempted to set up something comparable on Chinese university campuses, they’re unable to do so. In fact, whereas the Confucius Institute employees and members of the Chinese government are able to come on our college campuses, we are told that U.S. government officials, and for that matter, private citizens cannot go on Chinese campuses without a minder, somebody to be there to monitor what they’re doing, and that sometimes they’re not permitted to go at all. So that goes to the lack of reciprocity. But my goal really is again to talk tonight about what we can do here, and I would urge those tonight who are watching, who are connected with the colleges and universities that still have a Confucius Institute, or a high school or middle school or elementary school, check it out, check out our report where we have many instances of where the students, American students, who are learning there are not getting the full story. That may not be true in the case of all Confucius Institutes, but I would recommend that you do the research yourself.  

“Then in March of 2019, after the Confucius Institute report, we reported into the Equifax data breach here in America. We showed how China has targeted private U.S. companies and stolen the information of millions of Americans. In the Equifax data breach of 2017 which we studied, which is one of the largest in history, the personal information of 147 million Americans was stolen by IP addresses originating in China. So we should just be aware of that, and we should take precautions here and protections and encryptions and security measures here to avoid it. Again, this is about us doing more here in this country to be prepared for the reality of the 21st century.  

“Then in November of last year, we released another eye-opening report, this one detailing the rampant theft of U.S. taxpayer-funded research and intellectual property by China by way of their so-called talent recruitment programs, meaning they systematically find promising researchers doing work on research that China is interested in, and they recruit them. These programs have not been subtle. The Thousand Talents Plan is the most understood of these programs, although there are a couple hundred others. But we showed in studying the Thousand Talents Plan how this problem has been ongoing for two decades in this country, and much of what through this program China has taken from our labs and taken to China has gone directly toward fueling the rise of the Chinese economy and the Chinese military. Again, this is about China but it’s really about us.  

“How have we let this happen? Specifically, we found that the Chinese government has targeted this promising U.S.-based research and researchers. Often this research is funded by U.S. taxpayers. We spend as taxpayers $150 billion a year on research to places like the National Institutes of Health or the National Science Foundation or the Department of Energy for basic science research. It’s been a good investment because we have discovered through some of these investments cures to cancer and particular kinds of cancer and technologies that have helped our military. But it’s not good if the U.S. taxpayer is paying for this research and then China is taking it. China has not just taken some of this research funded by U.S. taxpayers, but they have paid these grant recipients to take their research over to China at Chinese universities, again, universities affiliated with the Chinese Communist Party. This is not about the people of China. This is about the Chinese Communist Party. They have been very clever. They want to make sure that China is a stronger competitor against us and so they take the research delivered from the United States to a lab in China where they try to replicate the research, provide the money to these researchers.  

“Just last week we released a fourth PSI report that shows that this problem of China not playing by the rules extends to the telecommunications space as well. Let me explain that situation, and then I’ll go back to the Thousand Talents Program. You may remember that in May of last year the FCC prohibited a company called China Mobile, and their U.S. subsidiary from providing telecom services from the United States on the grounds that doing so was jeopardizing our national security, the first time such a ruling had been issued. The fact that this was only the first time that a foreign telecommunications company had been denied approval to operate in the U.S. on national security grounds prompted us to investigate other Chinese state-owned carriers that were already authorized to operate in the United States, and we asked an important question -- why was China Mobile USA any different than these other three Chinese companies? We discovered in our report, which, again, we issued just a month ago, that it wasn’t different.  

“We conducted a year-long investigation into the government processes for reviewing, approving, and monitoring Chinese state-owned telecommunications firms operating here in the United States, and we found once again over the years that the federal government had been lax when it comes to securing our telecommunications networks against risks posed by Chinese state-owned carriers. Again, it’s what we can do here in this country that we haven’t done. In fact, three Chinese state-owned carriers have been operating in the U.S. for nearly 20 years, but it’s only been in recent years that the FCC, Department of Justice, and Department of Homeland Security have focused on the potential risks these firms bring when they operate in the United States. What we didn’t know 20 years ago, we do know today. And we should use that information to protect ourselves.  

“We now know that the Chinese government views telecommunications as a strategic industry and has expended significant resources to create and promote new business opportunities for its state-owned carriers. We also learned in our investigation and said in our report that Chinese state-owned telecommunications carriers are, ‘Subject to exploitation, influence, and control by the Chinese government and can be used in the Chinese government’s cyber and economic espionage efforts aimed at the United States.’ This isn’t a surprise. We have seen this time and time again, that the Chinese government targets the United States through cyber and economic espionage activities and enlists its state-owned entities in these efforts. The Chinese telecommunications firms have been part of our U.S. telecommunications industry as a result. And of course, that’s critical to our everyday life. Its services from cellular networks to broadband internet connections, helps break down barriers between people, nations, and continents. That’s good. It’s helped our economy and the economies of many other countries grow immensely -- we all benefit when telecommunications are global. It makes sense then that our federal government has tasked the FCC with ensuring that foreign telecommunications companies can establish a foothold in the United States, but only if it’s done in a fair and a safe manner. Again, what we’ve learned is that the FCC and other federal agencies have been slow to respond to the national security threats these telecom companies can pose in terms of cybersecurity and economic espionage.  

“As we detail in our report, the FCC, which lacks the national security and law enforcement expertise required to assess these risks, has turned to other executive branch agencies to assess them. Specifically, the Department of Justice, the Department of Homeland Security, and the Department of Defense, a group commonly known as the Team Telecom. But Team Telecom was an informal arrangement and has lacked formal authority to operate, making it overall an ineffective solution to assessing these risks. The informality has resulted in protracted review periods and a process FCC commissioners have described as broken and an inextricable black hole that provided, ‘No clarity for the future.’ For example, Team Telecom’s review of China Mobile USA's application lasted for seven years. This points to a troubling trend we have found in all of these reports -- how, frankly, our government and our institutions over a space of time, the last couple of decades, have permitted China to take advantage of lax U.S. oversight, be it on our college campuses, our research labs, or in cyberspace.  

“At our PSI hearing on the Thousand Talents report, the FBI witness before us acknowledged as much, saying, and I quote, ‘With our present-day knowledge of the threat from Chinese talent plans, we wish we had taken more rapid and comprehensive action in the past, and the time to make up for that is now.’ That’s our own Federal Bureau of Investigation. Again, we wish we had taken more rapid and comprehensive action in the past. They don’t say that often, but it’s true, and I commend them for saying it and the hearing, and for starting to make up for it now, because they have made a number of arrests just in the past few months with regard to the talents program. It’s my hope that the PSI has opened the eyes of the government to the systemic problems. And I think that’s what we have seen in the Trump Administration is they have taken a firmer stance to the Chinese government in every one of the four areas I have talked about.  

“As PSI was nearing the end of its telecoms investigation, for example, the responsible federal agencies announced that they would review whether these Chinese state-owned carriers we were studying should continue to operate in the U.S., given the national security threats. The Trump Administration also recently issued an executive order to establish Team Telecom as a formal committee, which is a good idea, as well as addressing many of the issues the Subcommittee report identified in Team Telecom’s processes. Again, these are good steps, and I’m pleased to say that they were prompted by the thorough and again objective, nonpartisan inquiry that we made through PSI. These four investigations combined show us that China, frankly -- and again, the Chinese government and the Chinese Communist Party, not the people of China -- is not going to play by the rules unless we require it. Until we start to clean up our own house and take a firmer stance on foreign influence here in this country, we’re not going to see much improvement.  

“Rather than pointing the finger at China, we ought to be looking at our own government and our own institutions and doing a better job here. Along those lines, I found it interesting that just last week, 54 NIH-funded researchers nationwide have resigned or been fired because they had been found to be hiding their ties to foreign research institutions as part of an NIH investigation into this problem. So, again, after our PSI investigation, talking about how the Thousand Talents Program and other programs work, there are now 54 people just last week who have been fired or have resigned. Of the cases NIH has studied, 70 percent of the researchers failed to disclose foreign grant funding while more than half failed to disclose participation in foreign talent programs like Thousand Talents. By the way, the FBI just recently warned universities across the country that China may be attempting to steal our research on the coronavirus. Therapies, antiviral therapies, vaccines, other research. So this problem is ongoing. I think in a fair and straightforward manner, we have got to insist that there be a level playing field. We’ve got to insist that there be fairness and accountability. Again, in an objective manner and a straightforward manner. 

“At the same time, our law enforcement officials and other federal entities that are working to hold China accountable are limited in the actions they can take. That’s part of cleaning up our own house. We need to make some changes around here, including in our laws, which has to come through this body. In the case of the Thousand Talents Plan, we have seen the first-ever arrest related to Thousand Talents recently. They followed our investigation, our report, and our hearings. We even saw it in my home state of Ohio. All of the arrests in connection with the Thousand Talents plan, by the way, have been related to peripheral financial crimes like wire fraud and tax evasion, not the core issue of the conflict of commitment, the taking of American taxpayer-paid research. Why? Because amazingly, it’s not currently a crime to fail to disclose foreign funding of the same research on federal grant applications. In other words, if you are doing research and paid by the taxpayer of the United States to do the research and also being paid by China to do the same research and to have that research go to China, you don’t have to disclose that under law. So these arrests that have been made haven’t been about that core issue. They have been about other things like tax evasion or wire fraud. Kind of like they went after the gangsters in the old days on tax evasion because they couldn’t get them on a RICO statute. We need to change the laws so that we can give our law enforcement community the tools they need to be able to do the job that all of us expect is being done. 

“It’s incumbent upon Congress to work in a bipartisan manner to pass those laws to put a stop to this behavior. This shouldn’t be a partisan issue, and it isn’t. It’s about defending the interests of the United States, and that’s something we should all agree on. The good news is we’re starting to do just that. Tomorrow, we plan to introduce bipartisan legislation called the Safeguarding American Innovation Act based on recommendations from our Thousand Talents report from late last year to protect U.S. taxpayer-funded research. First and foremost, our bill is going to help the Department of Justice go after Thousand Talents participants by holding them accountable for failing to disclose their foreign ties on federal grant applications. Again, it’s a tool that they desperately need. Our bill goes directly to the root of the problem and makes it punishable by law to knowingly fail to disclose foreign funding on federal grant applications. This isn’t about more arrests. We should all agree that transparency and honesty on grant applications are critical to the integrity of U.S. research and the U.S. research enterprise. These provisions will help promote those principles as well. Our bill also makes other important changes from our report. It requires the Office of Management and Budget, OMB, to streamline and coordinate grant-making between the federal agencies so there is more continuity and accountability and coordination when it comes to tracking the billions of dollars of taxpayer-funded grant money that’s being distributed. This kind of transparency is long overdue.  

“We have worked closely with the National Science Foundation, with the National Institutes of Health, with the Department of Energy, and others on this legislation, and they agree this is very important. Our legislation also allows the State Department to deny visas to foreign researchers who they know are seeking to steal research and intellectual property by exploiting exemptions in our current export control laws. This may surprise you, but the State Department can’t do that now. Career foreign service officers, employees at the State Department, have asked us to please provide them this authority. They testified before our hearing, asking us to help them to be able to do what they know needs to be done. Our bill also requires research institutions and universities to provide the State Department basic information about sensitive technologies that a foreign researcher would have access to. Providing this information as part of the visa process should help streamline the process for the State Department and for these research institutions. This allows for college campuses to rely on the State Department to do some of the vetting for these applicants and to help keep bad actors off the campus. This is why many research institutions and universities will be endorsing our legislation tomorrow because we’ve worked with them on this issue and others, including new transparency standards for universities.  

“They are now going to be required to report any foreign gift of $50,000 or more, which is a lower level from the current threshold of $250,000, but it’s also going to empower the Department of Education to work with these universities and research institutions to ensure that this can be complied with in a way that doesn’t create undue red tape and expenditures. It also allows DOE to fine universities that repeatedly fail to disclose these gifts. We can use this as a model going forward of how we learn the lessons from these, again, objective, straightforward PSI reports to get to the root causes of these cases. We’ve gotten widespread support across my home state of Ohio, from research leaders, hospitals, colleges, and universities and other stakeholders who want to see us continue to have an open and transparent research system and to have the United States be the center in the globe for innovation and research. But to ensure that can continue to happen, they want to be sure that we’re holding China accountable.  

“We are now at work on this legislation to codify into law some of the steps taken by the Trump Administration in response to our new telecommunications PSI report as well. This legislation we will introduce tomorrow will be led by myself and Senator Tom Carper, my colleague from the other side of the aisle from Delaware who was also my partner on this report with regard to the Thousand Talents Program and the hearing. We also have five other Democrats who will be joining us tomorrow, all of whom have an interest and understanding of this complicated issue. We’ll also have about an equal number of Republicans joining us. Probably six to eight Republicans. So again, this is going to be a bipartisan effort, I would say even a nonpartisan effort, to ensure that in a smart, sensible, practical way we can respond to the threat that we’re facing. In this case, from China taking our intellectual property, our innovations, our ideas, and taking them to China and using them in China, sometimes against the United States. 

“In addition to the four examples we discussed tonight, the Subcommittee will continue its work to shine a light on other examples where China and other countries aren’t living by the rules, so we can ensure that with regard to China and regard to other foreign governments, we can create a more durable and a more equitable and a more sustainable relationship between our countries. Again, we don’t want to be enemies with China. What we do want is to have a relationship of mutual respect. And we have the right to ask them that they treat us with the same respect that we treat them. At the end of the day, that’s what’s going to be best for the Chinese people, best for the American people, and best for all of us moving forward.”