On Senate Floor, Portman Outlines Upcoming Bipartisan Legislation to Stop China’s Theft of U.S. Taxpayer-Funded Intellectual Property

May 13, 2020 | Press Releases

WASHINGTON, DC – Today, U.S. Senator Rob Portman (R-OH) urged his colleagues to support the new bipartisan legislation he will introduce soon to crack down on the theft of intellectual property at federally funded research institutions and universities in a speech on the Senate floor. Portman, as chair of the Permanent Subcommittee on Investigations, conducted an eight-month investigation last year that culminated in a stunning bipartisan report that documented how American taxpayers have been unwittingly funding the rise of China’s economy and military over the last two decades while federal agencies have done little to stop it. 

Portman discussed how China’s lack of transparency enabled the unchecked spread of COVID-19 and the legislation that Portman intends to introduce takes action in accordance with PSI’s recommendations to promote an open and transparent research enterprise in the United States to promote continued innovation and crack down on theft. 

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

“As we work to address these problems here at home, let’s not forget how we got here. And my colleague from Wyoming just talked about this, but there is a clear consensus now about one thing, which is that this all started in Wuhan, China, which is a huge city in China --  Hubei Province -- and that information about this horrible virus was concealed by the Chinese Communist Party. Systematically and very deliberately, they kept the rest of the world from knowing about it. By the way, they kept it from their own people, too, and to the point made earlier, this is not about the Chinese people. This is about the Chinese government, meaning the Chinese Communist Party deciding ‘h, gosh, we have got a problem here, let’s not tell anybody.’ Which goes against all the rules. If you’re a country and you have a virus that is spreading, your responsibility, particularly as a member of the World Health Organization, is to tell your own people but also tell the rest of the world so that you can contain that virus. They concealed it deliberately.  

“They must be held accountable for that. Think of the devastation that they have caused, not just in our country but around the world. The number of people who have died, the people whose lives have been turned upside down, the economies that have been destroyed by this. So this information, this critical information having been withheld from the Chinese people and from the world has had a devastating impact. At the start of this year in January, apparently the Chinese Communist Party said ‘don’t worry, there’s no human-to-human transmission of this virus.’ No human-to-human transmission of this virus. They knew otherwise. By the way, four million cases worldwide tell us they knew otherwise. Four million cases. All started in one place, in Wuhan, China. Now four million cases.  

“So this is something that is serious and we need to address it. We’re also told that the Chinese Communist Party allowed people to travel from Hubei province, from Wuhan City. Not to the parts of China, apparently, but to the rest of the world. If they had cut off travel to places like Italy and the UK and the United States, we would not be where we are now. Luckily, our administration acted quickly to shut off immigration from China, from those hot spots, and for American citizens and green card holders, they had to go into quarantine, that helped. That helped. But the virus was already here. 

“Very disturbing to me is that apparently some Chinese Communist Party disinformation went out claiming that America was at fault somehow. This was classic propaganda and disinformation. So it’s sort of adding insult to injury, right? Not only did they not do what they should have done to tell the world about this and to help us to be able to contain this virus -- and by the way, the World Health Organization was there to help them, we were there to help them, we offered to go in. They wouldn’t let the World Health Organization experts come in for well over a month after they knew. Some say it was a few months, because they probably knew at the end of last year -- they must have, given the number of cases that they had. But they also kept the experts out from the United States who could have been helpful.  

“The World Health Organization is an international body where you have membership and they have requirements where you’re required to report data, you’re required to have them come in when you have a virus like this that -- of course, we didn’t know it was a pandemic at the time -- but we had a virus here that was concerning. Instead, it appears the World Health Organization, instead of being an early warning system for the rest of us all around the world, which is what they should be -- you know, a virus starts, they are the ones that go in and deal with it -- instead of being an early warning system, in a sense, they were apologists for China. So that’s why some of us have called for an investigation of the World Health Organization. We have asked the United Nations to convene a special panel, some of us, to be able to look into this issue so it’s not just America, the rest of the world ought to be involved in this as well. All the members of the WHO ought to be concerned, and I believe they are, about the deference that they showed to China at a time when we needed them to be on the spot helping.  

“So we now find ourselves forced to rely on the source of the virus, China, for a lot of our PPE, personal protective equipment. Think of the masks and the gloves and the gowns that our frontline health care workers need and others who are now interfacing with customers and working together as co-workers. We have to rely on China for this. So in order to safely treat the COVID-19 patients that are sick because of this virus that originated in China, we have now got to rely on China for this safety equipment. That’s unfortunate, and that needs to change. We need to produce more of this here from more reliable sources. We are hearing reports about delays in shipments now. We are hearing about poor quality products. All this is combining to affect our ability to be able to respond.  

“The virus has brought pain and suffering to our shores and to countries all around the world, and again if they had followed the rules, if China had played by the rules -- again, not the Chinese people who were also kept in the dark but the Chinese Communist Party -- if they had followed the rules, we wouldn’t be in the situation we’re in. By the way, none of this is news when it comes to China’s behavior on the international stage. Getting China to play by the rules has been a constant theme of mine and others for a long time. 15 years ago, I was the U.S. Trade Representative, and I brought forward the first successful case against China in the World Trade Organization because they weren’t playing by the rules. I also wrote a report entitled Top to Bottom Review of U.S.-China Economic Relationship that made policy recommendations to improve the equity, durability, and balance of our trade relationship with China. It was my number one priority, was China. When I was there I established for the first time a USTR, U.S. Trade Representative prosecutor just for China. One of my recommendations was to put a negotiator in China from the U.S. Trade Rep’s office. It’s there now.  

“Here in the Senate as the Chair of the Senate Permanent Subcommittee on Investigations, I have now led three bipartisan investigations on China, including the Chinese Communist Party’s use of what’s called the Confucius Institutes at our high schools, sometimes grade schools, at our colleges and universities. We learned that more than a hundred U.S. universities had allowed the Chinese government to operate these centers, which often come with stipulations requiring them to comply with Chinese law, Chinese law, even when they’re operating in the United States. We know some of these Confucius Institutes have been used as platforms for economic espionage. By the way, since we published our report in February of 2019, a year ago, more than 20 Confucius Institutes in the United States have closed their doors. Why? Because people have looked into this and determined this is not just a cultural exchange. This has other aspects to it -- as an example, not being able to teach the real history of China as if things like Tiananmen Square did not exist. That’s not something we should allow to happen here in this country. That doesn’t comply with our standards here of honesty and intellectual standards that says you have to teach the actual history, not what the Chinese Communist Party says is the history. Our students shouldn’t be subject to that. These Confucius Institutes have also spent a lot of money in this country. So schools have taken money and they have not properly reported it. That’s what our report indicated. And as a result, the Department of Education is now cracking down on some of these schools to say you've got to, at a minimum, report the funding.  

“Our subcommittee is right now wrapping up its review of three Chinese government-owned telecom firms that the FCC, Federal Communications Commission, licensed to operate here 20 years ago. We share concerns with the Justice Department regarding these telecommunications companies complying with U.S. law enforcement requests and whether these entities pose a national security risk by being vulnerable to exploitation by the Chinese government and the Chinese Communist Party. Last year the FCC denied a license to China Mobile to operate in the United States for these same reasons. So that investigation is coming to a head. We’re going to have a report coming out soon. We’ll learn more about this. But again we’ve got to be sure we’re not naive, that we understand what’s going on when these Chinese telecommunications firms are here in this country.  

“The third Permanent Subcommittee investigation involves another instance where China has not been playing by the rules as it relates to stealing U.S. research and technology -- often paid for, by the way, by U.S. taxpayers. Before the coronavirus put so much of our country on hold, we were preparing to introduce legislation that is a result of our bipartisan report and our yearlong investigation. That report details how China has used what’s called talent recruitment programs, most notably what’s called the Thousand Talents Plan to steal U.S. taxpayer-funded research. It turns out this has been going on for a long time. For 20 years this has been going on. And it’s helped fuel the rise of both the Chinese military and the economy during those 20 years. You might ask how has this happened? Well, every year federal grant making agencies like the National Institute of Health, the Department of Energy’s National Labs, or the National Science Foundation give out taxpayer dollars for research. By the way, it’s about $150 billion a year. It’s a lot of money. These are important research projects. This is a good thing for our country. It leads to new breakthroughs in science and technology. It has helped make the United States the world leader in innovation. So your tax dollars coming to Washington, going to the Department of Energy, National Institutes of Health, National Science Foundation, out to researchers and colleges and universities and research institutes, $150 billion a year has led to a lot of breakthroughs.  

“The open and collaborative nature of the research done here in the United States is one of the reasons we attract some of the best and brightest scientists and researchers from all around the world to take part in this research. But what we have learned, and through our report we prove, is that this system is very vulnerable. It’s vulnerable to theft by other countries and that’s exactly what’s happened in the case of China. China has made it no secret that its goal is to surpass the United States as the world leader in scientific research. One way it’s been doing that is by using secret contracts here in the United States with researchers, again, funded by tax dollars, doing research, medical research, scientific research, military research. The Chinese government has actually been paying these people to provide information to the Chinese government to take this research paid for by U.S. tax dollars. It’s wrong. It needs to stop. And our legislation is intended to do just that.  

“A State Department witness had one of our Senate hearings on the report said, and I quote, ‘The Chinese Communist Party has declared the Chinese university system to be on the front line of military-civilian fusion efforts for technology acquisition.’ In other words, the Chinese Communist Party has decided this talent recruitment program is going to be well-funded. We’re going to pay American researchers to give us their stuff but also then connect them to the Chinese university system which the Chinese Communist Party is using as the way to get technology, to acquire technology. Again it’s not a new problem. This has been going on for two decades but we’ve done little in this country to stop it because we have this history of being so open and accessible with our research. The FBI came to our hearing and they acknowledged this at their hearing. They said, and I quote, this is from the Federal Bureau of Investigation, ‘It should have taken more rapid and comprehensive action in the past,' to respond to these Chinese talent recruitment programs. Yes, they should have. Yes, they should have. Fortunately the FBI and the Department of Justice have now taken a different approach. They began stepping up their efforts this year with several recent high-profile arrests and charges filed. But again more laws and practices need to change to stop U.S. taxpayer-funded research from being stolen in this way to benefit our number one global competitor.  

“That’s why we’re introducing this legislation. The legislation is called Safeguarding American Innovation Act to protect American research and strengthen our national security. The legislation makes five necessary reforms to address the flaws in our current research enterprise and to stop intellectual property theft and promote a more secure and transparent process consistent with the recommendations we lay out in our report. First, the report found numerous cases of U.S. funded researchers who failed to disclose foreign sources of compensation on their federal grant applications. This issue has been highlighted this year. You probably heard about it because you may remember earlier this year, there was the shocking arrest of Dr. Charles Lieber, the chair of Harvard University’s chemistry department who was being paid both by Harvard and the Thousand Talents Program, by the Chinese Communist Party.  

“According to the FBI, without Harvard’s knowledge -- he didn’t tell Harvard -- Dr. Leiber was being paid up to $50,000 a month in salary by the Chinese, $150,000 annually for living expenses, and more than $1.5 million to establish and run a shadow lab in China. Interestingly, the lab was in Wuhan, China. None of this was disclosed on his federal grant application where he got U.S. taxpayer money. If it had been disclosed, he wouldn’t have gotten the money. That’s just wrong. The criminal complaint is based on his not telling the truth to the federal investigators, even though he was essentially defrauding Harvard and defrauding the U.S. government funding sources. But that’s not a crime. Failing to disclose compensation from a foreign government is not currently a crime. We make it a crime. That’s part of our legislation. The bill gives the Justice Department the ability to hold federal grant recipients accountable for hiding their financial ties to foreign governments by failing to disclose it on federal grant applications. Transparency and honesty on grant applications is critical to the integrity of the U.S. research enterprise and to stopping this theft. So that’s in our legislation.  

“Number two, despite more than $150 billion in taxpayer funding going to these federal research agencies every year, there is no unified tracking process to determine where these funds go. The National Science Foundation, for instance, doesn’t have anyone that handles grant oversight. Again, we’ve been too lax. That’s why the bill requires the federal Office of Management and Budget, OMB, to streamline and coordinate grant making between the agencies to ensure that the billions of dollars of taxpayer dollars going toward research every year can be accounted for every step of the way. Having this information is also going to save time and money for our research institutions and our universities. They’ll now know where the funding is, where it’s going, how it’s being used.  

“Third, the State Department is on the front lines here in vetting visa applications for visiting scholars and visiting students. But it is not permitted to deny a visit to individuals coming from overseas who are intent on stealing U.S. research. That’s just wrong. Our research enterprise in this country must remain open. We agree with that. We want to attract people from around the world, of course, but we’ve got to have common sense safeguards to prevent bad actors from taking advantage of our openness. So the legislation does that. It authorizes the State Department to deny visas so foreign researchers seeking to access sensitive U.S. research when it’s determined that doing so would pose a threat to our economic or to our national security. The State Department, by the way, wants this authority. The career officers who came and testified before us said, 'we would like to have this authority because we know we’re letting people in who are coming for one reason and one reason only and that’s to take U.S. research.' 

“Fourth, our report detailed a systemic lack of knowledge at the U.S. research institutions about the threat posed by the Thousand Talents Plan and other forms of epidemic espionage. For example, we found the Thousand Talents Program had recruited a member who downloaded more than 30,000 files from a Department of Energy National Lab. These are our top national labs in the country, highly secretive. 30,000 files were downloaded, without authorization, of course, and took those files. That researcher took those files with him back to China. Our bill requires that research institutions have safeguards in place to prohibit unauthorized access to sensitive research. They’ve got to tighten it up.  

“Finally, we found that nearly 70 percent, 70 percent of U.S. universities consistently failed to report substantial foreign gifts as required by current law. Our bill ensures transparency by requiring universities now to report any foreign gift of $50,000 or more and empowering the Department of Education to fine universities. These are new fines for those that repeatedly fail to disclose these gifts. Now, there’s some in the university community that don’t love our legislation. I would just ask them, given what’s happened, given what we know is happening in terms of the theft of U.S. research, are you really going to stand in the way of legislation that just says you have to report when you receive more than $50,000 from a foreign government? Is that too much to ask? I don’t think so. Right now they’re supposed to report. It’s a higher level. And 70 percent of them have failed to do so. So it’s not too much to ask. And I would hope that the university community will be supportive. Many are, but some apparently are saying they’re going to try to block this legislation. Don’t do that. That would be wrong.  

“The failure to stop the coronavirus early on has highlighted how China does not play by the rules. Whether it’s the World Health Organization rules, whether it’s the trade rules we talked about earlier and now with regard to this issue that we’re dealing with in terms of taking U.S. research back to China to fuel China’s military, China’s economy. When this pandemic passes and our universities and research institutions reopen their doors, I have no doubt that we will once again continue to attract the best and the brightest. Why? Because our research enterprise is the best. We’re innovators and we provide funding for it and we have such great opportunities here in this country to do research. People like to come here. But we cannot sit idly by as our top global competitor steals that research. Safeguarding American Innovation Act is an important step towards protecting it for the safety and security of every American.  

“Now more than ever, we’ve got to adapt to the fact that China is not going to play by the same set the rules as the rest of the world. It’s been 15 years since we put out that USTR report stating that our relationship with China lacks ‘equity, durability and sustainability.’ Equity, durability and sustainability. Right now our number one priority is solving the coronavirus crisis. We’ve got to do that, no question, that ought to be our focus. But in the context of this crisis we have need to reevaluate how we do business with China. We’ve got to look at this with fresh eyes. My hope is that this legislation we talked about this evening will help to allow us to reset the way we conduct our research so we can continue to reward those who come to our shores to discover new breakthroughs in science and technology while keeping China and other nation-state competitors from stealing that research for its own purposes. We can achieve that balance, and we must.”