Experts called for sustained U.S. investment in domestic R&D and use of trade tools to keep Beijing from infiltrating America’s most sensitive information and technology.
China’s strategy of acquiring cutting-edge technology and information poses an urgent threat to American innovation and infrastructure, witnesses warned the Senate Small Business & Entrepreneurship Committee in a July 23 hearing.
China has been using several tactics to steal American innovation and spy on our infrastructure and technological systems for years. These include both illicit methods, such as cyber espionage and reverse engineering, and licit ones, such as talent recruitment, investment and joint ventures, for tech acquisition.
Expert witness and Senior Fellow at the Foundation for Defense of Democracies Emily de La Bruyère outlined China’s strategy: China is leveraging these tactics to dominate global supply chains, control key data, and influence global markets. If successful, this strategy will leave the U.S. and its allies dependent on Chinese infrastructure, which will lead to China having the ability to control markets, militaries, and minds. The threat is imminent and severe.
Expert witnesses were called to testify for the committee about these methods of espionage and potential solutions for safeguarding against them. All witnesses concurred that the U.S. is far behind, and we need to act now.
“The United States is playing a losing game,” de La Bruyère said. Small business, especially those involved in research and tech development, she emphasized, are vulnerable. Unfortunately, these companies lack both the understanding and resources required to battle against Chinese adversaries. De La Bruyère’s foremost concern is the national security risk posed by firms linked to Chinese entities receiving federal funding.
The witnesses outlined many recommendations for defense against China’s espionage.
“The United States needs to change its game. First, the U.S. government needs to shift from protecting American technology to protecting the American market,” de La Bruyère said. She expressed the importance of implementing rigorous restrictions on Chinese commercial entities that are operating in the U.S. Another proposed solution was to force the private sector to make a choice between U.S. and Chinese markets: firms that engage with China will not be allowed to access federal resources.
Expert witness Dr. Sujai Shivakumar, senior fellow at the Center for Strategic and International Studies, highlighted the importance of sustained federal research and development funding in the fight against Chinese espionage: “U.S. innovation — and, by extension, our competitiveness and national security — depends on sustained, substantial support to our federal R&D agencies and research institutions and our ability to convert the results of this research into products that meet the needs of the American people.”
Committee Chair Joni Ernst (R-Iowa) reiterated Dr. Shivakumar’s concerns about R&D funding, and further expressed the need for improvement of any foreign ties’ due diligence program in federal funding. Ernst stated that “six out of 25 of the largest recipients of FDI rewards have clear links to China, and these firms have received $180 million from the Pentagon, after implementation of foreign ties due diligence program.” The implications of this are clear: our national security is at risk, and swift, decisive action is required.
Members of the committee also raised concerns about the United States’ trade relationship with China and how it affects U.S. innovation. Sen. Jon Husted (R-Ohio) emphasized the need for a coordinated approach, stating, “We need to work with our partners, Japan, South Korea, etc., that are experiencing the same problem as us, help Made in America work by reestablishing our manufacturing base in this country, and use tariffs against China as a tool to get this accomplished.”
Sen. Jeanne Shaheen (D-N.H.) and de La Bruyère emphasized the need to remove China’s status of permanent normal trade relations, emphasizing that continued preferential treatment allows China to abuse the U.S. economic system.
It is paramount for small businesses and national security that America remains at the forefront of innovation, and to do so, immediate action is required. The U.S. must strengthen safeguards and enforce strict regulations to protect our technology and infrastructure from Chinese exploitation and preserve our national security.