China’s Economic Espionage and Subnational Influence in the United States

Note: Generated Timestamps are accurate +/- a few seconds

Hearing Opening and Overview 0:20

The U.S. Congressional Select Committee convened to discuss the Chinese Communist Party’s (CCP) economic espionage and “malign influence” specifically targeting the subnational level (state and local governments, universities, and businesses) 0:35.

The Chairman emphasized that while the CCP professes a desire for “win-win” outcomes, it actively engages in a multifaceted campaign to undermine U.S. sovereignty 0:51. Key components of this campaign include:

• Economic and traditional espionage
• State-directed cyber intrusions
• Talent recruitment programs
• Information warfare and covert influence networks
• Legal and illegal lobbying
• Transnational repression targeting the Chinese diaspora

A specific case was cited regarding Eileen Wang, the former mayor of Arcadia, California, who pleaded guilty to acting as an illegal agent of the Chinese government 1:55

Opening Statements and the Threat Overview 0:20

The Select Committee convened to address the Chinese Communist Party’s (CCP) campaign of economic espionage and “malign influence” specifically targeting the subnational level (states, local municipalities, universities, and businesses) 0:35.

The Nature of the Threat:

• Acceleration: CCP activities have increased in scale, intensity, and sophistication over the last decade 0:51.
• Scope of Operations: The campaign includes:
  • Economic and traditional espionage.
  • State-directed cyber intrusions.
  • Talent recruitment programs.
  • Information warfare and covert influence networks.
  • Legal and illegal lobbying.
  • Transnational repression targeting the Chinese diaspora 1:21.

Case Study: Eileen Wang:

The Chairman cited the arrest of Eileen Wang, the Mayor of Arcadia, California, who pleaded guilty to acting as an illegal agent of the Chinese government 1:48. This serves as an “alarm bell” regarding how the CCP exploits open societies 2:14.

Overview of CCP Economic Espionage and Malign Influence 0:35

The hearing addresses the escalating scale, intensity, and sophistication of the Chinese Communist Party’s (CCP) campaign against the United States. The Chairman characterizes the CCP’s public promises of “win-win” outcomes and respect for sovereignty as false, noting an active campaign to undermine U.S. interests through several methods:

• Espionage & Cyber Warfare: Economic espionage, traditional espionage, and state-directed cyber intrusions 01:15.
• Influence & Recruitment: Talent recruitment programs, information warfare, and covert influence networks 01:21.
• Political & Legal Maneuvers: Legal and illegal lobbying, and transnational repression targeting the Chinese diaspora 01:30.
• Case Study: The arrest of Eileen Wang, former Mayor of Arcadia, California, for acting as an illegal agent of the Chinese government 01:48.

The “United Front” Strategy and Its Levers 02:28

“United Front” work is identified as a primary instrument for the CCP’s political influence. Unlike traditional foreign intelligence, this is a comprehensive operation that integrates into American communities, businesses, and institutions, often disguised as benign cultural, academic, or commercial engagement 02:43.

The strategy operates through three primary levers 03:02:

The United Front Strategy 2:28

The United Front is a primary instrument for the CCP’s political influence 2:30. Unlike traditional foreign intelligence, it is a comprehensive operation that integrates into American communities through seemingly benign academic, cultural, or commercial engagements 2:43.

The strategy utilizes three primary levers 3:02:

The Chairman warned that because these activities often occur far from Washington, D.C., they frequently lack federal oversight, creating a significant vulnerability 5:31.

The “United Front” Strategy 2:28

The “United Front” is a primary instrument for political influence used by the CCP. Unlike traditional foreign intelligence, it is a comprehensive operation that reaches deep into American communities, businesses, and institutions, often masquerading as benign cultural or academic engagement 2:43.

The Three Primary Levers of Influence 3:02:

Subnational Vulnerability and the “Security Gap” 04:58

The CCP targets “soft targets” at the subnational level because they often lack the oversight found at the federal level 05:15.

• Targeted Entities: State legislatures, municipal governments, school boards, public universities, local businesses, and community associations 05:00.
• The Oversight Gap: Because these engagements occur far from Washington, D.C., they often unfold with inconsistent safeguards and limited awareness of risk 05:31.
• Proposed Solution: A “whole-of-society” approach is required, necessitating better intelligence sharing between federal agencies and state/local partners 05:59.

Subnational Vulnerability and the “Gap” 4:58

The CCP treats state legislatures, school boards, public universities, and local businesses as “soft targets” 4:58.

• The Oversight Gap: Because these engagements occur far from Washington, D.C., they often proceed with limited federal oversight and inconsistent safeguards 5:31.
• Proposed Solution: A “whole-of-society” approach is required, necessitating improved intelligence sharing between federal agencies and local leaders (mayors, university administrators, etc.) 5:42.

Congressional Perspectives on Economic and Civil Rights 07:30

Economic Self-Reliance and Intellectual Property 07:41

The Ranking Member emphasizes the need to:

• Stop the theft of intellectual property (IP) from American manufacturers.
• Counteract coercive joint venture agreements used to force technology transfers.
• Prevent the offshoring of the American industrial base to China.
• Ensure a level playing field where the U.S. does not steal technology, and China is prevented from stealing ours 08:15.

Civil Rights and the Risk of Profiling 08:43

The Ranking Member warns against conflating the actions of the CCP with the Chinese-American community.

• Historical Context: References the 1882 Exclusion Act and the harm caused by the “China Initiative” 09:27.
• Economic Contribution: Highlights that 38% of top AI researchers in the U.S. are of Chinese origin and that 72% of STEM graduates come from outside the U.S. 10:00.
• Core Argument: National security measures must be evidence-based rather than ethnicity-based to avoid a “brain drain” and the harassment of innocent citizens 10:51.

Financial Oversight and Tax-Exempt Organizations 11:56

Chairman Jason Smith (Ways and Means Committee) discusses the investigation of U.S.-based tax-exempt organizations tied to the CCP.

• United Front Funding: Concerns that these organizations use their tax-exempt status to peddle propaganda and influence elections 13:08.
• The Singum Network: An investigation into a network of organizations (e.g., Breakthrough News, Trontinental, The People’s Forum) allegedly funded by wealthy American tech mogul Neville Roy Singum, who has close ties to the CCP 14:15.
• Weaponizing the Tax Code: The committee seeks to prevent foreign money from being used to fund domestic protests that disrupt critical infrastructure, such as data centers 16:09.

Economic Espionage and Industrial Theft 7:30

The Ranking Member addressed the undisputed reality of intellectual property (IP) theft by China, noting that American companies were often forced into coercive joint venture agreements to gain market access, effectively trading technology for entry 7:57.

Key economic concerns include:

• Offshoring of the industrial base to China 8:15
• The need for self-reliance in critical industries 8:31
• The necessity of a level playing field where American technology is not systematically stolen 8:15

Bipartisan Concerns: Economic Espionage and Civil Rights 07:30

Economic Integrity 07:41

The Ranking Member emphasized the need to combat:

• The theft of intellectual property (IP) from American manufacturers.
• Coercive joint venture agreements used to gain market access.
• The offshoring of the American industrial base to China 08:15.

The Civil Rights Imperative 08:43

A critical distinction must be maintained between the CCP government and Chinese Americans/students.

• Historical Context: References were made to the 1882 Exclusion Act and the harmful “China Initiative” 09:27.
• Economic Contribution: It was noted that 38% of top AI researchers in the U.S. are of Chinese origin, and 72% of STEM graduates come from outside the U.S. 10:00.
• Core Argument: Security policies must not conflate the legitimate threats of the CCP with the harassment of Chinese Americans 10:51.

Civil Rights and the Distinction Between State and People 8:43

A critical tension exists between combating foreign influence and protecting the civil rights of Chinese Americans 8:43.

The Ranking Member highlighted the historical context of discrimination, including the 1882 Exclusion Act and the recent “China Initiative” 9:27. The latter was discontinued after it was found to unfairly target Chinese American professors and scientists, creating a “brain drain” 9:43.

Key Statistics on Contributions:

• 38% of the top AI researchers in the U.S. are of Chinese origin 10:00.
• 72% of STEM graduates in the U.S. come from countries outside the United States 10:35.

The goal is to ensure that national security policies do not conflate the actions of the CCP with the identities of Chinese American citizens and residents 10:51.

Tax-Exempt Organizations and Foreign Influence 11:56

Chairman Jason Smith of the Ways and Means Committee discussed how the CCP exploits the U.S. tax code to fund influence operations 12:46.

• United Front Tax-Exempt Organizations: Investigations have uncovered U.S.-based nonprofits that receive funding from foreign nationals influenced by the CCP 13:40.
• The Singum Network: A specific network tied to tech mogul Neville Roy Singum, which operates out of Shanghai and has ties to Chinese propaganda efforts 14:15.
• Impact on Communities: These organizations have been accused of mobilizing protests that disrupt local institutions and public discourse 15:00.
• Technological Sabotage: Concerns were raised that foreign money is flowing into nonprofits protesting data centers, potentially to undermine U.S. leadership in Artificial Intelligence (AI) 16:09.

Oversight of Tax-Exempt Organizations 11:56

Chairman Jason Smith discussed the investigation into U.S.-based tax-exempt organizations tied to CCP influence.

• The Singum Network: Investigations uncovered a network of organizations (e.g., Breakthrough News, Trontinental, and The People’s Forum) funded by wealthy individuals with close ties to the CCP 14:15.
• Impact: These organizations are accused of spreading propaganda and mobilizing protests that disrupt American institutions 15:00.
• Weaponizing the Tax Code: There is a call to prevent the U.S. tax code from being used to fund rogue organizations that serve foreign interests 16:57.

Witness Testimony: Expert Analysis 18:09

David Shed: “The Great Heist” 18:23

Shed describes a systematic, state-directed campaign to acquire American industrial secrets.

• The Strategy: A “whole-of-society” approach that fuses military and civilian collection objectives 21:45.
• The Mandate: The Ministry of State Security (MSS) has expanded significantly to carry out large-scale larceny 22:00.
• Technological Leapfrogging: China uses venture capital, private equity, and academic partnerships to bypass legal acquisition of R&D 22:32.
• Economic Impact: The “Made in China 2025” initiative is estimated to facilitate a wealth and knowledge transfer of approximately $600 billion annually 24:35.

Michael Luchi: Subnational Security and Prepositioning 25:48

Luchi focuses on the physical and institutional threats at the state level.

• Physical Prepositioning: CCP-linked entities acquiring land near critical assets, such as military installations (e.g., Laughlin AFB in Texas or Grand Forks AFB in Nebraska) 27:07.
• University Infiltration: The concern that federal research grants are inadvertently funding the modernization of the Chinese military through university partnerships 28:22.
• State-Level Responses: Nebraska and Texas are leading in enacting bipartisan protections, including bans on CCP funds in lobbying and protections for genetic data 29:07.
• Pressure Campaigns: State lawmakers have faced threats and digital harassment when attempting to pass protective legislation 30:34.

John Yang: Protecting Civil Liberties 32:36

Yang advocates for a distinction between the CCP government and the people it rules.

• The Danger of Profiling: Warns that substituting ethnicity-based suspicion for evidence-based enforcement harms national security by driving away talent 33:23.
• Recommendations for Policy 36:23:
  1. Base policies on specific, articulable evidence of conduct, not ancestry.
  2. Avoid overcriminalizing administrative errors.
  3. Tailor restrictions to actual indicators of foreign government control.
  4. Build robust anti-bias and due process protections.
  5. Invest in language access and education.

Witness Testimony: Expert Perspectives 18:09

David Shed: “The Great Heist: China’s Epic Campaign to Steal America’s Secrets” 18:23

• Strategic Shift: Since 1984, China has pursued “managed capitalism” under socialist guardrails to enable rapid transformation 20:08.
• Whole-of-Society Espionage: Unlike traditional state-to-state spying, the CCP fuses military and civilian collection. The Ministry of State Security (MSS) targets corporations, professors, and researchers 21:45.
• The Cost: The “Made in China 2025” initiative is estimated to drive a wealth and knowledge transfer of approximately $600 billion annually 24:35.
• AI and “Distillation”: Shed highlighted how China uses “distillation attacks” (e.g., Alibaba targeting Anthropic) to simplify expensive AI models, allowing them to leapfrog Western R&D costs 38:18.

Michael Luchi: Subnational Security 25:48

• Physical Prepositioning: CCP-linked entities are acquiring land near critical assets, such as military bases (e.g., Laughlin AFB, Grand Forks AFB) and energy grids 26:53.
• University Infiltration: The penetration of universities via military-focused grants is described as a “national security crisis” 28:07.
• State-Level Responses: Nebraska and Texas are leading the way with bipartisan laws regarding foreign agent registration, research security, and protections against transnational oppression 28:51.

John Yang: Civil Rights and Precision Policy 32:36

• Avoiding Past Mistakes: Yang argued against substituting “ethnicity-based suspicion” for “evidence-based enforcement” 33:23.
• The Cost of Overreach: Broad policies lead to a “brain drain” and make the U.S. less attractive to global talent 35:53.
• Five Recommendations 36:23:
  1. Base policy on specific, articulable evidence of conduct, not ancestry.
  2. Avoid overcriminalizing administrative errors.
  3. Tailor restrictions to actual foreign government control.
  4. Build anti-bias training and due process protections.
  5. Invest in language access and education.

Witness Testimony: David Shed on “The Great Heist” 18:23

David Shed, former acting director of the Defense Intelligence Agency, detailed China’s systematic campaign to acquire American industrial secrets 19:27.

The Evolution of the Strategy

• 1984 Reset: Deng Xiaoping transitioned China toward “managed capitalism” under socialist guardrails 20:08.
• Post-2001 Acceleration: China’s entry into the WTO catalyzed a multifaceted effort to steal commercial and technological secrets 20:34.
• Whole-of-Society Approach: Unlike traditional espionage targeting government secrets, the CCP targets corporations, professors, and researchers 21:45.

The Scale of Theft

• The Great Heist: A systematic campaign driven by initiatives like “Made in China 2025” 24:35.
• Economic Impact: Estimates suggest the transfer of wealth and knowledge is approximately $600 billion annually 24:51.
• Target Sectors: Telecommunications, AI, quantum computing, hypersonic weapons, biotechnology, and agriculture 21:21.

Recommendations for Protection

Shed suggested a “small yard with high fences” approach 51:22:

1. Education: Better informing corporate America about specific Chinese threats.
2. Investment Oversight: Monitoring venture capital and private equity investments from CCP-linked entities.
3. Executive Integration: Elevating security to the C-suite level within private companies.

Witness Testimony: Michael Luchi on Subnational Security 25:48

Michael Luchi, CEO of State Armor, argued that the “American homeland is contested” and that states are on the front lines 26:03.

Physical Prepositioning 26:39

The CCP is physically positioning assets near critical U.S. infrastructure:

• Texas: A former PLA officer purchased land near Laughlin Air Force Base to access the energy grid 27:07.
• Nebraska: Huawei equipment was found near nuclear missile silos 27:15.
• Missouri/Louisiana: Properties tied to Chinese intelligence touch the fence lines of Air Force bases 27:36.

State-Level Responses 28:51

States like Nebraska and Texas have led bipartisan efforts to protect themselves through:

• Bans on CCP funds in lobbying 29:22.
• Protections for research security and genetic data 29:52.
• Creation of state cyber commands 30:06.

Pressure Campaigns 30:22

State lawmakers have faced sophisticated pressure, including digital threats and economic coercion, when attempting to pass protective legislation 30:34.

Witness Testimony: John Yang on Civil Rights 32:36

John Yang, President of Asian Americans Advancing Justice, emphasized the need for evidence-based enforcement rather than ethnicity-based suspicion 33:23.

Avoiding Historical Mistakes

Yang warned against repeating patterns of discrimination, such as the Chinese Exclusion Act and the internment of Japanese Americans 33:50. He argued that the China Initiative failed by targeting researchers for administrative errors rather than actual espionage 35:07.

Five Recommendations for Policy 36:23

1. Evidence-based Conduct: Predicate policies on specific conduct, not ancestry 36:41.
2. Avoid Overcriminalization: Do not criminalize simple administrative errors 36:57.
3. Tailored Restrictions: Focus on actual indicators of foreign government control 37:14.
4. Civil Rights Protections: Build in anti-bias training and due process 37:14.
5. Language Access: Invest in education and transparency 37:14.

Q&A and Technical Inquiries 37:59

AI and “Distillation” Attacks 38:18

In response to questions about Alibaba’s alleged targeting of Anthropic, David Shed explains “distillation”:

• Definition: Simplifying data from expensive, high-end AI models to create cheaper, more accessible versions 38:36.
• Goal: This allows the CCP to bypass the massive R&D investments made by U.S. companies and “leapfrog” into the market 40:12.

The Role of TikTok 40:56

Shed suggests that addressing the ownership structure of TikTok (ByteDance) would cut off CCP access to data and mitigate malign influence via algorithmic control 41:13.

Denaturalization Debate 43:55

A contentious exchange occurs regarding Michael Luchi’s social media comments about citizens born in U.S. territories who were raised in China.

• Luchi’s Position: Argues that those with no real nexus to the U.S. despite birthright citizenship may pose a security risk 45:55.
• Counter-argument: Ranking Member Kaan argues these statements are discriminatory and promote racial profiling 46:32.

Corporate Security and the “Small Yard, High Fences” 50:37

Shed recommends a “small yard with high fences” approach to protect IP:

• Education: Encouraging companies to protect their “crown jewels” through better internal security.
• Investment Oversight: Increased scrutiny of venture capital and private equity involving Chinese interests.
• Executive Responsibility: Elevating security to the C-suite level 52:34.

Q&A: AI, Espionage, and Policy Debates 37:59

AI and “Distillation Attacks” 38:18

A discussion on how companies like Alibaba may target AI models (e.g., Anthropic) via distillation attacks—simplifying expensive data to create cheaper, accessible versions of advanced models 38:36. This allows China to “leapfrog” the massive R&D investments made by U.S. companies 40:12.

The Denaturalization Debate 43:55

A contentious exchange occurred regarding whether individuals born in U.S. territories who are raised in China should be subject to denaturalization 44:42.

• The Argument for Scrutiny: Some members argued that those with zero nexus to the U.S. who are loyal to the CCP pose a security risk 45:55.
• The Argument Against: Others labeled such stances as discriminatory and harmful to the democratic principle of birthright citizenship 46:32.

Debate: Citizenship, Loyalty, and National Security 46:32

A contentious exchange continued over the relationship between birthright citizenship, loyalty, and national security.

Competing Perspectives

Security-Based Argument

• Michael Lucci argued that individuals born in U.S. territories but raised entirely in China with little practical connection to the United States may warrant additional scrutiny if they demonstrate loyalty to the CCP 48:06.
• Several Republican members defended Lucci, arguing that his comments reflected a national security concern rather than racial animus 60:40.

Civil Rights Argument

• Ranking Member Ro Khanna maintained that proposals targeting broad categories of Chinese-born or Chinese-descended individuals risked racial profiling and undermined constitutional protections 46:32.
• Members emphasized that security investigations should remain evidence-based rather than based upon ancestry or ethnicity 47:50.

Protecting American Intellectual Property and Corporate Security 50:10

Representative Dusty Johnson questioned David Shedd about balancing national security with free-market principles.

“Small Yard, High Fences”

Shedd recommended protecting only the nation’s most sensitive technologies rather than broadly regulating all commercial activity 51:22.

Key recommendations included:

Shedd emphasized education and voluntary security improvements rather than broad government regulation 53:02.

Strengthening Economic Espionage Prosecutions 55:20

Representative Kathy Castor asked how Congress could improve enforcement against Chinese industrial espionage.

Shedd’s Recommendations

• Increase Department of Justice emphasis on prosecuting economic espionage 55:36.
• Build stronger witness and evidence capabilities even when suspects flee to China 56:08.
• Better educate prosecutors regarding the strategic scale of CCP intellectual property theft 56:39.

Foreign Malign Influence Infrastructure 57:07

Representative Castor questioned recent reductions to federal offices focused on foreign malign influence.

Key Points

Shedd argued that reducing specialized counter-influence capabilities creates vulnerabilities because:

• CCP influence operations continue expanding 58:04.
• Foreign influence remains an active national security threat.
• Existing offices should be evaluated and improved rather than eliminated 58:30.

Research Security and University Partnerships 58:58

John Yang discussed balancing research security with scientific competitiveness.

Recommendations

Yang highlighted National Security Presidential Memorandum-33 (NSPM-33) as a positive framework because it:

• Standardizes disclosure requirements across federal research grants 59:12.
• Improves transparency while reducing confusion among researchers.
• Helps distinguish genuine conflicts of interest from administrative mistakes 59:44.

He also noted:

• Approximately 75% of foreign scientists remain in the United States after completing their education 60:13.
• Retaining this talent is itself a national security advantage.

Responses to Allegations of Racism 60:40

Representative Randy Feenstra allowed Michael Lucci to respond to accusations made earlier during the hearing.

Lucci’s Position

Lucci argued:

• Policy debates about immigration and national security should not automatically be characterized as racial discrimination 61:08.
• Accusations of racism undermine discussion of legitimate security concerns.
• His own family includes Chinese-American members, which he cited when rejecting allegations of racial bias 61:35.

Foreign Investment and Legal Acquisition Risks 62:10

Representative August Pfluger questioned David Shedd about legal Chinese acquisitions of U.S. companies.

Key Assessment

Shedd argued that:

• Legal investment may provide access to the same sensitive technology that cyber espionage attempts to steal 69:04.
• Existing review mechanisms contain potential blind spots regarding venture capital, mergers, and private equity investments 68:35.
• Intelligence collection on Chinese economic objectives should better inform investment reviews under CFIUS 64:22.

CCP Influence Through Corporate Ownership 65:32

Representative Troy Nehls examined whether Chinese-owned firms operating under American brands influence state governments.

Michael Lucci’s Observations

Examples included:

• Chinese-owned subsidiaries lobbying state legislatures.
• Foreign-adversary companies receiving state economic incentives 66:56.
• Smithfield Foods cited as an example of an American brand owned by a Chinese company that engaged state lawmakers over foreign agent legislation 67:28.

Balancing Research Security and Civil Liberties 69:50

Representative Troy Carter asked whether aggressive counterintelligence efforts can coexist with protections for Chinese-American researchers.

Yang’s Recommendations

He proposed:

• Continuing standardized disclosure requirements.
• Better education for universities regarding genuine security risks.
• Improved training for law enforcement on distinguishing open scientific collaboration from espionage.
• Immigration reforms that encourage talented researchers to remain in the United States while reducing vulnerability to transnational repression 71:05.

Birthright Citizenship and CCP Ethnic Policies 71:27

Representative Carlos Gimenez discussed differences between U.S. and Chinese citizenship policies.

Discussion Points

Members noted:

• China does not recognize dual citizenship 74:02.
• The CCP increasingly asserts authority over overseas ethnic Chinese regardless of nationality 74:19.
• Witnesses argued this creates opportunities for transnational repression directed at diaspora communities.

AI Competition and Strategic Sabotage 75:26

Representative Gimenez questioned whether opposition to American AI infrastructure benefits China’s strategic interests.

Shedd’s Assessment

Shedd stated:

• China benefits from slowing American AI development 75:58.
• CCP influence operations seek to generate domestic political conflict surrounding AI infrastructure and data centers 76:16.
• Artificial intelligence represents one of the principal arenas of strategic competition between the United States and China.

Corporate Operations Inside China 76:57

Witnesses discussed risks facing Western companies operating within China.

Shedd’s Assessment

He stated that companies operating in China face several structural constraints:

• CCP party organizations exist within major corporations operating in China 77:39.
• Chinese cybersecurity laws limit foreign control over corporate data infrastructure 77:55.
• China’s National Intelligence Law obligates cooperation with state intelligence agencies when requested 78:28.

Yang’s Perspective

Yang added that companies can mitigate many risks through:

• Strong internal protection of intellectual property.
• Careful legal compliance.
• Better education regarding evolving Chinese regulations 78:59.

Civil Liberties and Historical Lessons 79:34

Representative Jill Tokuda emphasized avoiding historical mistakes made during previous periods of national security concern.

Central Themes

Tokuda argued that:

• National security policy should focus on conduct rather than ethnicity 80:30.
• Chinese intelligence recruits individuals based primarily upon access and expertise rather than race 81:02.
• Overemphasis on ethnicity creates propaganda opportunities for Beijing while weakening effective counterintelligence 83:18.

Counterintelligence Organization and Federal Capacity 84:04

Discussion turned to reports that responsibility for counterintelligence could shift away from the FBI.

Shedd’s Position

He stated:

• Counterintelligence expertise should remain with experienced FBI professionals 85:02.
• Weakening institutional expertise could reduce America’s ability to counter CCP operations effectively.

Foreign Malign Influence Infrastructure 86:38

Representative Greg Stanton criticized reductions in federal offices responsible for tracking foreign influence.

Discussion

Shedd acknowledged that:

• Dedicated counter-influence capabilities remain necessary 87:39.
• Existing offices could be improved but should not simply be dismantled.

Patent Protection and Economic Security 88:59

The hearing concluded with discussion of U.S. patent protections granted to Chinese firms designated as national security threats.

Key Issues

Members cited estimates placing annual losses from Chinese intellectual property theft between $225 billion and $600 billion 88:59.

Representative Stanton questioned whether firms identified as security risks should continue receiving U.S. patent protections that can subsequently be used in litigation against American companies.

Shedd responded that:

• Companies identified as national security threats should not be permitted to weaponize U.S. intellectual property protections against American firms 89:31.
• Allowing this creates a significant contradiction in U.S. national security policy.