Washington D.C. – Congressman Michael McCaul (R-TX), Lead Republican on the House Foreign Affairs Committee, today gave remarks on the Chinese Communist Party’s (CCP) global malign influence campaign at the American Enterprise Institute (AEI). During the speech, he announced his new initiative to help counter their deception around the globe. This initiative’s goals are to educate the American public and others about the threat posed by China’s ongoing campaign to challenge American interests in key domains and to help foster an enduring, comprehensive strategy with our allies and partners to better compete with China globally. Following his remarks, McCaul participated in a fireside chat with AEI’s Dan Blumenthal. Remarks as delivered and highlights from the fireside chat are below.  

Click to Watch the Remarks and Fireside Chat 

-Remarks as Delivered-

“I would like AEI for inviting me once again, it’s a great institution. You’ve really been a leading voice on China, and a go-to resource for policy makers like myself.  Let me first say that my heart goes out to all those battling the Coronavirus, in China and around the world. We hope that it can be contained, and a vaccine found in the near future, and it not spread any more into the United States. I want to engage in a serious conversation about our overall relationship with China, and our understanding of the People’s Republic of China and Chairman Xi’s Chinese Communist Party. And our policy must be guided by the facts.

“I want to start with, anecdotally, a case I worked on in 1996, when I was a young federal prosecutor at the Department of Justice Public Integrity Section. There were reports coming in that China was trying to influence our election. So, the idea of a foreign power trying to influence our election is not anything new, and in this case, it was the PRC. And I had the case – Johnny Chung. We prosecuted him. He pled guilty and then he started cooperating with us in what was probably the most fascinating prosecution that a young guy at that time could have, because Johnny Chung then led us to the director of Chinese intelligence. And Chung really walked into an intelligence apparatus. He met with Liu Chaoying, who was the executive vice president of China Aerospace and her father was the most powerful general in China at that time. There is no distinguishing between private sector and military intelligence. So, they brought him in, and in a room with an antenna, Ji Shengde, The Chinese Director in Intelligence, said, “we like your president, we want to see him reelected, and we want to give him money.” And they gave him about $360,000, we had a bank deposit slip from Liu Chaoying, China Aerospace, into his Hong Kong bank account. And then Johnny, in his usually comical way, paid off his mortgage and the rest of it went to the Clinton campaign. But it was interesting in the sense that, at a young age–this is decades ago now–but I got a taste of the tech transfer, satellite technology. Why were they so interested in–Clinton had gone pro-Taiwan, anti-China to then pro-China. And the idea that they could cultivate him to do the tech transfers, dual use technologies, like satellites, to maybe help our economy, but strengthen the Chinese. They liked that policy, and they liked it so much that they wanted to see him get reelected. I thought it was very fascinating, we had a lot of wiretaps up in China, a lot of strange things that happened. The strangest thing was that my FBI agent, foreign counterintelligence – when the wall was up back then, we shared a lot with him but he couldn’t share anything with us – a year after that case was over, he was indicted for espionage. He was sleeping with a Chinese spy. That’s called the honeypot. And everything that I was giving him, he was turning over to the Chinese spy that he actually took to FBI Christmas parties, believe it or not. And all that information was sensitive information from Title Three wiretaps that went straight to PRC, to the Chinese. So that was my first taste of China, and, you know, that’s been more than 20 years ago, but this story really could easily be a headline today. And the threat from Chairman Xi’s Chinese Communist Party largely remains the same. But it’s now more aggressive, it’s more expansive, more sophisticated, and better resourced.”

“The threat is really multi-dimensional — impacting the schools our children attend, the technology we rely on, and the potential wars we need to plan for.  The CCP is a strategic adversary and our top competitor.  Let me be clear, our challenge is with the CCP and not the Chinese people or their rich culture. Immigrants of Chinese descent are deeply intertwined into the fabric of our society. Their entrepreneurship, work ethic, family values, and commitment to the American Dream have enriched communities across our country. But it’s the Chinese Communist Party that’s been using a slow, deceptive campaign for decades to achieve superpower status by eroding the foundations of democratic societies around the world and American global leadership.  

 “Chairman Xi is accelerating this campaign. Not the reformer many imagined in the beginning, Xi is a hardened Communist. He is a believer of what former Chairman Mao said: “All political power grows out of the barrel of a gun.” The United States initially worked with the PRC. President Nixon and Henry Kissinger’s trips to China led them to believe that we could possibly stave off a shared threat from the Soviet Union by driving a wedge between Communist powers. Just as we helped other Asian countries rebuild their economies, the United States believed a prosperous, stable PRC was in our global interest. In his 1972 victory speech, President Nixon cast his opening with China as part of “the greatest generation of true peace…that man has ever known.” We miscalculated. We really miscalculated this one, on all levels. As Dr. Pillsbury, author of The 100 Year Marathon, stated, it was “the most systematic, significant, and dangerous intelligence failure in American history.”

“China promotes a false narrative that the United States seeks to stop China’s rise when in truth, they have rejected decades of engagement and repeatedly chosen to pursue malign, deceptive, zero-sum policies. Empty promise after empty promise. I commend the Trump Administration for distinguishing itself with a new policy, a competitive policy, and clear-eyed policy approach towards China. Under this administration, the United States will begin to impose consequences for China’s malign actions. But how did we get here? For decades, the United States’ policy of leniency toward the PRC has been based on false assumptions. The CCP claims the PRC is open and free. Yet, it rounds up and oppresses ethnic and religious minorities, including Christians, Uighurs, and Tibetans; and censors free speech and religious texts. Just last week, I helped pass legislation in the House supporting the people of Tibet against the CCP’s attempts to dismantle Tibetan Buddhism and the Dalai Lama. They want to replace the Dalai Lama with one of their own, and we cannot let that happen.

“The CCP claims the PRC is a market economy. Yet, it spends tens of billions of dollars to subsidize its own industries; it steals hundreds of millions of dollars’ worth of American intellectual property every year; and as Secretary Pompeo has explained, under Chinese law private sector companies must share technology with their military. China does not have a private sector as we know it in this country. These Chinese Companies are arms of the State at best, and tools of the military at worst.  The CCP claims its foreign policy respects sovereignty and international rules. Yet, it disregards its WTO commitments and it has the world’s second largest GDP but still claims to be a “developing nation” status in order to deceive the international system and get World Bank loans. Imagine – China’s the number two economic empire in the world, yet they’re defined as a developing nation that qualifies for World Bank loans. Does a country with an expansive space program really need loans from the World Bank? Additionally, they use debt-trap, Belt and Road Initiative, diplomacy to take strategic land and resources from nations through their predatory Belt and Road Initiative.

 “The CCP claims it believes in rule of law. Yet, FBI Director Christopher Wray told Congress that “there is no country that poses a more severe counterintelligence threat to this country right now than China” In fact, the FBI has more than 1,000 open intellectual property theft investigations—and almost all lead back to China, according to the FBI Director.  And former General Alexander, the former NSA director, calls this the “greatest transfer of wealth in human history.”We do not need to look further than last week to see the pervasive reach of their 1000 Talents Program, which I warned about for years.

“Harvard’s lead chemist was arrested for lying to the Pentagon about taking millions of Communist research funds, a Chinese national was stopped at an airport with 21 vials of biological research in his socks; a PLA officer committed visa fraud in an effort to discover military research projects. Texas A&M University, in my home state, discovered more than 100 faculty members were involved with a Chinese talent-recruitment program, even though only five had disclosed participation. These are just in the recent weeks. In the last year, a massive espionage campaign to steal advanced biomedical research was exposed at Houston MD Anderson’s Cancer Center- a prominent research facility near my District. Multiple scientists were caught sending research back to China or plotting to do so. In an E-mail back to China, one scientist wrote, “I should be able to bring the whole set of primers to you, if I can figure out how to get a dozen tubes of frozen DNA onto an airplane.” Remember at MD Anderson, Dr. Allison discovered immunotherapy, which is going to be the breakthrough in the way we treat cancer, to use your own T-cells, your own immune system, to attack the cancer rather than chemo, killing the cancer before it kills you.

“But, simply put, we’ve let them get away with this, really, we’ve given it to them. Really for way too long, and as a nation, we’ve been asleep at the wheel. I think only until recently, and I think Dan, with your book, are we waking up to what has happened. And they have used our complacency to their advantage. I think it is time for America to wake up to this threat, and really start to compete. We can say China is a bad actor, but we have to compete, and if we don’t compete, we’re going to lose.

“In no other area is this competition more consequential than in cutting-edge technologies like quantum computing, which is a digital space race. Just like a race to the moon, quantum will be a space race in the digital space. Artificial intelligence, cyber, and 5G is vitally important. When you look at the global map, you look where they are, in terms of Belt and Road and 5G, it’s approaching nearly half of the world, and we’re now just waking up to that fact. Chairman Xi has publicly stated that he views “high end technology”—like 5G—as a “national weapon.” When CCP companies plant down 5G networks they own the digital space and everything stored on it — from personal data to sensitive government and business information. China’s own National Intelligence Law states that “Any organization or citizen shall support, assist, and cooperate with the state intelligence work.”

“And they are deploying their state-owned 5G worldwide. I just sent a team to South America to examine Chinese influence in the region, particularly in telecom. Sadly, I was not surprised by their findings. China is buying key companies and infrastructure and winning the race to deploy Huawei’s 5G and undersea cables. Their influence and access to data are also growing in other key regions like Africa where their Ambassadors tell me America and our businesses are “just not there.” We need to be there to compete. It’s amazing to me, the Panama Canal, Teddy Roosevelt built it, Carter gave it back, now both ends of it now have ports controlled by the Chinese. One large American company with substantial presence in Africa told me that African leaders have said to the company, “please do not leave us in the hands of the Chinese.” They simply have no alternative in these developing nations. And I would be remiss if I didn’t say how disappointed I am with the UK’s decision, one of our Five Eyes partners, to let Huawei into their networks. And we introduced a resolution, with myself and Liz Cheney, condemning this.

 “The goal of the CCP’s deception is national rejuvenation. This is China’s “aspiration to replace the United States as the economic, military, and political leader of the world by the year 2049” which is the one hundredth anniversary of the founding of the PRC.  The CCP is well on their way by: dominating manufacturing supply chains for critical sectors; achieving supremacy in core technologies; remaking trade routes to put China at the center of the global economy; and building up dominance in space, cyber, sea, and on the land. I’m sure many of you watched them showcase their military might late last year by parading thousands of troops, and I think the biggest surprise was to see their nuclear and hypersonic weapons through Tiananmen Square – some of these weapons we didn’t know they actually had. Hypersonics are these exotic weapons that travel forty times the speed of sound, and they’re so fast that we simply can’t stop them. The message was clear: Chairman Xi will no longer “hide his strength and bide his time” like previous Party leaders.

“They are competing at every level – and competing to win. If the CCP succeeds, there will be grave consequences for America and the world. More jobs, innovation, and wealth will move to China. The PRC will be able to push the United States military out of the Indo-Pacific and the PRC’s Orwellian model of digital governance would spread globally. So, we need to take action: the President, Congress, business, civil society, and others. When the CCP threatens our interests or values, we must impose consequences.

 “When the CCP steals 25 million security clearances, including mine– I remember getting that notice in the mail, that the Chinese have my…I filled out a paper that was digitized by the FBI, then China went through OPM and stole everything. And what were the consequences of that? Absolutely nothing. When I asked Secretary Johnson of Homeland Security: “What is our response to this?” We had a meeting with the Chinese. This is what has to change, you know it’s like my kids, I have five kids, and if there’s no consequences to bad behavior, guess what? Bad behavior continues. We have to have consequences to this.

 “The CCP is all-powerful in China but continues to allow the export of fentanyl to poison our children. What a foreign policy when you think of that one, they poison over 100 Americans a day die because of fentanyl. The Chinese, they’re poisoning America, and they’re making money off it. Xi committed to stopping this, but we still see it coming in.

 “We need to take stronger and more resolute with our actions with our allies against those responsible for these concentration camps, as the DOD calls them, in western China and the suppression of pro-democracy protests in Hong Kong. We need to hold Chinese companies to the same corporate transparency requirements as our own companies, and better communicate to our universities, as I’ve tried to do, and businesses about the dangers of working with and becoming reliant on Chinese funds and markets.

 “So, what have we done and what more do we need to do? First of all, I think this administration and Congress have started to take China head-on, for the first time. The Administration has correctly labeled China as a strategic competitor, and they are. They are not a developing nation anymore. They are adapting to the PLA’s growing capabilities in new domains including space, outer space. I was proud to be at Andrews Air Force Base when the National Defense Authorization Bill was signed by the President, creating a new branch of service: the Space Force. This is not by accident, it’s by design, because we have to compete with China and Russia in space. There was a kind of interesting joke, what are we going to call the cadets at the Space Force? They’ll be the space cadets.

 “We have sanctioned Chinese companies that are perpetrating human rights abuses throughout China; and launched the Department of Justice “China Initiative” that has convicted American and Chinese nationals for espionage and other criminal behavior. Things I tried to do back in my day as a young prosecutor, we finally have a DOJ that is taking espionage from China seriously. And Congress has passed two bipartisan bills — both now law — that impose consequences on the CCP for its suppression in Hong Kong – Hong Kong Democracy and Freedom Act, which was very bipartisan, on both sides of the aisle, supporting freedom and democracy, and the people of Hong Kong, against the oppression of China. We also appropriated more than $300 million to counter Chinese influence around the world and funding technologies that support internet freedom. Remember in China, just like Iran, the internet was not built – like here, it was built, not in security in mind, but as an open academic exercise, and the power of academics is an open, free flowing of information society, but it’s also the greatest vulnerability–and China created their internet, just like Iran did, with security in mind, so they can turn off and on the internet with a switch. We see it in Iran, turning off the internet and killing people, we see China controlling their internet as well.

“We are also putting commercial diplomacy at the forefront of our foreign policy to help confront China around the world through bills, like my Championing American Business Through Diplomacy Act – you know, the original mission of the Foreign Service was to advance American interests, American business interests. It’s in their charter and yet many diplomats seem to forget that is a fundamental mission of the State Department, to fund our business interests abroad. And the BUILD Act, and the Development Corporation, which is kind of like OPEC on steroids is going to be fundamental in how we’re going to compete against this Chinese influence in Africa and in Latin America. They are only a start, and we are going to do much more.

 “We are also working on a Phase 2 deal with China to address the structural concerns in our trade relationship—namely subsidies and industrial policy that make it impossible to compete with China’s ‘national champions’ like Huawei. We need to work more strongly with our allies to put effective controls on critical technologies that empower China’s Military-Civil Fusion initiative. We must find a way with our partners to come together on privacy, AI, and exports controls to counter a Chinese-led techno-authoritarian bloc.  And, most importantly, we need to invest in ourselves.

 “We need a whole-of-society dialogue on ways to break our businesses’ reliance on the Chinese market. We need to continue our lead in Research & Development and address the costs of restricting commercial activity that undermines U.S. security. The American people need to understand the privacy related dangers from seemingly harmless apps that they download – like Tik Tok – and companies they are working with or investing in. Americans and others need to understand the true costs – social and beyond – of doing business with China. This will be a process, but Americans are beginning to wake up, I think, to this reality. So, today, average Americans have the touchstones of Hong Kongers fighting for democracy, concentration camps repressing minorities in western China, and the NBA choosing profit over values. 

 “Prosecuting the Johnny Chung case, going back to the beginning, I really saw first-hand how the CCP operates, and how they try to undermine and exploit our democracy. Thankfully, we brought that single case to justice. Now I hope we can address this decades long issue in a new and more comprehensive manner.  And education – raising awareness – is the first step.

“That is why I am proud to be launching a campaign in the Congress to bring Americans together to counter China’s deception and global malign activities, and to help educate the American people on the serious challenges before us. And the costs of inaction. So, my goal is to help elevate the national discourse with a continuing dialogue, and I want to thank AEI for this opportunity.” 

–Fireside Chat Highlights-

On China’s predatory practices worldwide: “I want to remind you I’m not talking about the Chinese people I’m talking about the Chinese Communist Party. We need to understand how they operate. It is one and the same: military, intelligence, and private sector. Our companies need to be aware when they go in that they’re going to have Chinese cells operating within. The African nations know they’re getting exploited, they bring in their own workers they don’t hire the countries host workers and they debt trap and leverage them where they can wholesale take over these counties. The ports are really important. We look at the ports that China is in right now: they took over Sri Lanka, Djibouti, which is right next to our military base, and the Panama Canal. I worry that we just have to be more competitive. I think that’s where we can invest with our private sector to go into these areas where they’re taking over wholesale and try and compete against the Chinese and let these countries know that  the Chinese are not acting in their best interests.” 

On a constructive way forward with China: “Well I think when we have not just free trade, but fair trade. I think we hit that watershed moment; we’re getting closer. We are intertwined rather you like it or not, it’s a global economy. I worry, all the economic indicators are so positive right now with the tax cuts, with the USMCA signing, I was there and that’s going to help the workers, and the China deal. I worry about this coronavirus and the impact it could have with the Chinese economy because it is not in our best interest to see their economy fail. We want them to move toward a different system that’s not the Chinese Communist Party, that’s not state subsidized. That’s a very difficult challenge.”

On the Trump Administration’s approach to China: “I think China has proved themselves not to be trustworthy from the last two decades. So we need a new approach, and I think this is the first administration I have seen actually stand up to the Chinese. And out of it, we got this trade deal. The first phase is the trade imbalance, it’s 200 billion and the IP and tech transfer piece is in there, and my question is going to be enforcement.” 

On 5G and Huawei: “I’ve had a lot of conversations at the classified level about how can we jump start our 5G. When you look at  China– they planted down 4G, they’re converting to 5G – it’s approaching 50% of the world now. And now one of our Five Eye countries is looking at opening a backdoor to China. In the UK we’re seeing that and I hope they’ll change their decision.”

###