[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

EFFORTS TO TRANSFER AMERICA'S LEADING EDGE SCIENCE TO CHINA

=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

NOVEMBER 2, 2011

__________

Serial No. 112-74

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Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

______

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COMMITTEE ON FOREIGN AFFAIRS

ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California BRAD SHERMAN, California
STEVE CHABOT, Ohio ELIOT L. ENGEL, New York
RON PAUL, Texas GREGORY W. MEEKS, New York
MIKE PENCE, Indiana RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina ALBIO SIRES, New Jersey
CONNIE MACK, Florida GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas DENNIS CARDOZA, California
TED POE, Texas BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania KAREN BASS, California
TIM GRIFFIN, Arkansas WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New YorkAs
of October 5, 2011 deg.
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
------

Subcommittee on Oversight and Investigations

DANA ROHRABACHER, California, Chairman
MIKE KELLY, Pennsylvania RUSS CARNAHAN, Missouri
RON PAUL, Texas DAVID CICILLINE, Rhode Island
TED POE, Texas KAREN BASS, California
DAVID RIVERA, Florida

C O N T E N T S

----------
Page

WITNESSES

The Honorable Frank Wolf (R-VA), chairman, Appropriations
Subcommittee on Commerce, Justice, Science, and Related
Agencies....................................................... 8
Mr. Thomas Armstrong, Managing Associate General Counsel,
Government Accountability Office............................... 17
The Honorable John Holdren, Ph.D., Director, Office of Science
and Technology Policy.......................................... 35
The Honorable Charles Bolden, Jr., Administrator, National
Aeronautics and Space Administration........................... 44
Mr. Rick Fisher, senior fellow, International Assessment and
Strategy Center................................................ 60
Adam Segal, Ph.D., senior fellow, Council on Foreign Relations... 75

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Dana Rohrabacher, a Representative in Congress from
the State of California, and chairman, Subcommittee on
Oversight and Investigations: Prepared statement............... 4
Mr. Thomas Armstrong: Prepared statement......................... 19
The Honorable John Holdren, Ph.D.: Prepared statement............ 37
The Honorable Charles Bolden, Jr.: Prepared statement............ 46
Mr. Rick Fisher: Prepared statement.............................. 63
Adam Segal, Ph.D.: Prepared statement............................ 77

APPENDIX

Hearing notice................................................... 92
Hearing minutes.................................................. 93
The Honorable Frank Wolf (R-VA), chairman, Appropriations
Subcommittee on Commerce, Justice, Science, and Related
Agencies: Material submitted for the record.................... 94

EFFORTS TO TRANSFER AMERICA'S LEADING EDGE SCIENCE TO CHINA

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WEDNESDAY, NOVEMBER 2, 2011

House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:10 p.m., in
room 2172, Rayburn House Office Building, Hon. Dana Rohrabacher
(chairman of the subcommittee) presiding.
Mr. Rohrabacher. This hearing will come to order. This is
the Subcommittee on Oversight and Investigations of the Foreign
Affairs Committee.
Good afternoon, we are here to discuss the activities of
NASA and the White House Office of Science and Technology
Policy, OSTP, in regards to international cooperation,
particularly in regards to cooperation with communist China.
When personnel from either of these organizations travel to
the People's Republic of China, collaborate on projects, share
data or attend conferences, yes, there is ample reason for
concern.
The transfer of technology know-how is a serious national
security problem. The Chinese communist party is aggressively
using its military, economic and political power to extend its
influence and diminish ours. Its government is the world's
single largest human rights abuser, and its assistance to other
countries is well-known, but the countries that it is assisting
happened to be those countries which are run by governments who
are oppressing their own people.
The Chinese also facilitate the proliferation of weapons of
mass destruction to our enemies, even as they expand their own
offensive capabilities. Our conversation here today must be
viewed within that context and any effort on our part to reach
out to the communist Chinese, to engage them on matters of
technology is, quite frankly, not just naive but dangerous.
Today's hearing was inspired by a legal opinion by the
Government Accountability Office released last month which
states that, Despite clear legislative language, which passed
both Houses of Congress and that President Obama signed, that
accordingly, despite all of that, banning the OSTP and NASA
from using appropriated funds for meetings with Chinese
officials; the OSTP did so anyway.
The GAO opinion states that by doing so the OSTP violated
the Antideficiency Act and accordingly, ``should report the
violation as required to the GAO,'' which they have done so.
The OSTP cites a Department of Justice legal opinion that
Congress has no authority to limit the executive branch from
pursuing ``diplomacy'' in any way as they see fit. They can do
whatever they want in terms of diplomacy, with whatever they
see fit, with whatever funds that they see fit.
My colleagues and I will fight this overreach, and as we
have, in the past, when we have seen such power grabs from
whatever administration. And we believe in maintaining the
constitutional division of power between the first and second
branches of government and the limits of executive privilege,
but that is not today's purpose. Today's purpose is to discuss
the inherent dangers of transferring America's leading-edge
science to China. China is an increasingly hostile and
disruptive force in the world.
The idea that we are cooperating with them in any capacity
is alarming. China has aggressively sought our technologies
through legal and illegal methods for decades. Anything that
allows China any access to our technology or planning brings
forth some major counterintelligence issues. Let me remind
everyone about the Communist Chinese party's 16-character
policy, directing China to ``combine the civil with the
military.''
The Chinese Government does not separate civilian and
military programs. The People's Liberation Army runs the
Chinese space program, and the People's Liberation Army is
loyal to the communist party that runs the Government of China.
The Chinese National Space Administration is not like NASA,
an independent civilian agency. Their space office is merely a
public relations front under the command of the Commission of
Science, Technology and Industry for National Defense. Thus
China's space facilities are all manned and operated by the
People's Liberation Army.
I look forward to hearing from the OSTP exactly what was
discussed at the meetings with Chinese officials and what was
the purpose of those meetings. I understand that NASA
Administrator Bolden, who we have as a witness today, also
traveled to China and met with Chinese officials there, but
this was prior to the law prohibiting that exchange. I would
like to understand the reason for those trips and their
meetings and to find out why those risks that we have
recognized in Congress are not recognized by the executive
branch.
If Administrator Bolden and Director Holdren, if they
believe in what the Communist Chinese are talking about in
terms of space technology, if they believe that cooperating
with these people, with their Communist Chinese counterparts
can be beneficial to the United States, I would like to know
how we will then, if we are cooperating with the Chinese, avoid
a repeat of what happened in the 1990s with the Hughes and
Lorall corporations, a scandal that advanced the Chinese
missile program and put the entire world at risk.
Now the stakes of technology transfer are even greater
today than it was then, as China is now engaged in human space
flight and intent on building a space station and a Moon Base
in the coming years. Ten years ago we thought we could manage
the Chinese Government and limit cooperation to only national,
nonnational defense areas, but we were wrong.
What happened in the 1990s and the transfer of technology
to the Chinese was a major disaster for the national security
of our country. And the fact that the Chinese today are as far
ahead in their space program as they are--this is a regime that
is the world's worst human rights abuser--the fact that they
are so far advanced in their missile and rocket technology can
be traced right back to the transfer of technology in the 1990s
from American corporations. They did not have to do the tens of
billions of dollars of research and development necessary to
have this kind of power their hands.
Why are we willing to give to that to them? Why are we
willing to take the chance that they will become more powerful
based on our investment in technology?
Well, we were wrong then, and the access we gave the
Chinese military, not just their space program but their
military, was a huge leap forward, whereas they would say a
great leap forward. And, of course, it saved them billions of
dollars.
So how can cooperating with China now, which is a vicious
tyranny and a strategic rival, how can that be a smart policy
when our experience tells us just the opposite? That's what
this is about today.
Mr. Carnahan, our ranking member, if you have an opening
statement, I will get rid of this cough.
[The prepared statement of Mr. Rohrabacher follows:]

----------

Mr. Carnahan. Thank you, Mr. Chairman, for holding this
hearing today so we have an opportunity to review the issues
that we expect to be raised.
Respectfully, I have a different view on how we can
positively engage with China and, at the same time, push
aggressively for reforms.
It is important that Congress exercise its oversight
responsibilities seriously, over expenditure of U.S. taxpayer
dollars. We need to ensure that all appropriations are expended
in accordance with U.S. law. Regardless of what the
administration may think, or what I may think of a certain
provision, the administration should work with Congress to
ensure that they are complying with all the requirements set
forth in the appropriation bills passed by Congress.
In addition to our oversight responsibilities, we should
focus our time working on policies that grow and expand the
U.S. economy. A strong engagement policy with China provides
economic opportunities for both countries. It is clearly in our
economic interest.
Back home, the State of Missouri where I come from, we have
worked for several years to establish a Midwest-China air
freight hub in St. Louis as an example of the type of
partnership that can exist between our two countries that is in
both of our economic interests.
As a result of working together, St. Louis is poised to
become a major export hub for domestically manufactured
products. As of 2010, China was the world's third largest buyer
of Missouri products, with nearly 1 billion in sales last year
alone Missouri-made products, export to China, are creating
jobs here at home. With nearly 20 percent of the world's
population, the Chinese market represents an opportunity for
American businesses to create jobs here in the U.S. by making
American products here at home and exporting them to an ever-
growing group of Chinese consumers.
Strong relations and cooperation also create political
space for progress in areas of disagreement, such as currency
manipulation and intellectual property protection. Science and
technology cooperation is an indispensable part of U.S. foreign
policy and has been for decades, the growing belief that
science diplomacy is a critical part of our tool case for
advancing our diplomatic interests.
Mr. Chairman, your former boss, President Reagan, was a
great proponent of U.S.-China cooperation. In 1983, in his
submission to Congress he stated, ``It is in our fundamental
interest to advance our relations with China. Science and
technology are an essential part of that relationship.''
And on his trip to China in 1984, he stated that the U.S.
and China needed to ``expand our economic and scientific
cooperation, strengthen the ties between our peoples and take
an important step toward peace and a better life.''
Science and technology cooperation is a bipartisan policy
that has been effectively used by many different
administrations. We absolutely need to advocate for policies
that offer the strongest protection for U.S. businesses and the
best economic opportunities for our citizens.
But we absolutely need to continue science and tech
cooperation between our two countries. I look forward to
hearing from our witnesses today as we address this important
issue. I yield back.
Mr. Rohrabacher. Thank you very much, and I think that
demonstrates the respectful difference of opinion that people
can have on these issues. I do want to note that you quoted me
several times, whereas I was the one who worked with President
Reagan on those very statements.
What was left out was the little clauses that Ronald Reagan
said. Of course, that will all disappear if liberalization of
China ceases to happen.
Go back and read the speeches. And I know, because I was
assigned to work with President Reagan on those speeches, and
it is very clear, very clear from what he said when he went
there and before that we should not be sending technology
transfers, and all of these--all of these great things that we
are doing with trade and investment should not happen unless
China continues liberalizing, which it was at that time.
When China murdered and slaughtered the democracy movement
at Tiananmen Square, that ended those statements for Ronald
Reagan. Reagan would never have gone along with that policy.
Unfortunately, his Vice President hadn't learned the lesson
because President Herbert Walker Bush was President at the time
and let the slaughter of Tiananmen Square go unanswered. We as
Americans shouldn't have that type of value system.
We have with us a champion of freedom, and Frank Wolf, who
is a Member of Congress from Virginia, chairman of the
Appropriations Subcommittee on Commerce, Justice and Science
and is the chairman of the Tom Lantos Human Rights Commission.
Congressman Wolf has been deeply involved in the issues of
human rights issues and legislation, especially about the
legislation that we are going to hear about today. He has
admirably applied our shared desire for human rights to all
areas of Congress' works, and he is a Member I deeply respect,
and frankly appreciate you being with us here today.
Could you shed some light on this particular part of the
legislation, what it means and whether you believe the intent
of Congress has been violated?

STATEMENT OF THE HONORABLE FRANK WOLF (R-VA), CHAIRMAN,
APPROPRIATIONS SUBCOMMITTEE ON COMMERCE, JUSTICE, SCIENCE, AND
RELATED AGENCIES

Mr. Wolf. Thank you, Mr. Chairman, for calling this
hearing, and I think the American people would thank you also
for calling this hearing.
I have been very troubled by this administration's apparent
eagerness to work with China on its space program, a
willingness to share other sensitive technologies. I want to be
clear the United States has no business cooperating with the
People's Liberation Army to help develop its space program.
We should also be wary of any agreements that involve the
transfer of technology or sensitive information to Chinese
institutions or companies, many of which are controlled by the
government and the PLA.
Space is the ultimate high ground that has provided the
U.S. with countless security and economic advantages over the
last 40 years. As a victor of the Cold War space race with the
Soviet Union, the U.S. has held an enormous advantage in space
technology, defense capabilities and advanced sciences
generating entirely new sectors of our economy and creating
thousands of private sector jobs.
China has developed its own space program at a surprising
pace, having gone from launching their first manned spacecraft
to launching components for an advanced space station in just
10 years. But the Chinese space program is being led, as you
said, Mr. Chairman, by the People's Liberation Army, the PLA.
And to state the obvious, the PLA is not a friend, as evidenced
by their recent military posture and aggressive espionage
against U.S. agencies and firms and actually against this
Congress and against this committee.
That is why I was troubled to learn from the press last
fall about NASA Administrator Charlie Bolden's imminent
departure for a week-long visit to China to discuss areas of
cooperation between NASA and the PLA space program.
I was more concerned to learn that Dr. John Holdren, head
of the White House Office of Science and Technology Policy, had
spent 21 days in China on three separate trips in 1 year, 3
weeks, 1 year, one China, one visit, 3 weeks, more than any
other country. Very little information about these cooperative
agreements with China were being provided to Congress and to
the American people.
So I included language in section 1340 of the Fiscal Year
2011 continuing resolution preventing NASA and OSTP from using
Federal funds to develop, design, plan, promulgate, implement
or execute a bilateral policy program, order or contract of any
kind to participate, collaborate or coordinate bilaterally in
any way with China or any Chinese-owned company.
The provision in the omnibus appropriation bill was agreed
to by Republican and Democratic conferees. It passed both
Houses with bipartisan support and was signed into law by the
President. The provision was clear, unambiguous and
noncontroversial.
However, less than 1 month after its enactment, I learned
that Dr. Holden and OSTP had defied the provision. Even more
troubling is that he withheld information about his intention
to do so during an appearance before the House Commerce,
Justice, and Science Appropriations Subcommittee when we
discussed, among other things, the implementation of section
1340 and Dr. Holden's participation in the U.S.-China strategic
and economic dialogue from May 2010.
It is almost like not telling the truth by omission because
if he never said anything there, and then sent a letter up the
next day after his hearing.
This is why I asked the Government Accounting Office to
investigate this violation and issue an opinion. I also asked
GAO to determine whether the Office of Legal Counsel opinion
provided by the Justice Department was legitimate. In an
October 11 opinion, GAO found,

``The plain meaning of section 1340 is clear, OSTP may
not, may not use as appropriations to participate,
collaborate, or coordinate bilaterally in any way with
China or any Chinese-owned company.''

Further, GAO found that, ``OSTP's participation in
innovation, dialogue and S&ED contravened the appropriation
restriction'' and added, ``OSTP does not deny that it engaged
in activities prohibited by section 1340.''
The GAO finding also rebuts a September 11 memorandum
prepared by the Justice Department OLC on the constitutionality
of the provision. GAO stated,

``In our view, legislation that was passed by Congress,
signed by the President, thereby satisfying the
Constitution's bicameralism and presentment requirement
is entitled to a heavy presumption in favor of
constitutionality.''

Finally, the GAO finding clearly notes,

``As a consequence of using its appropriation in
violation of Section 1340, OSTP violated the
Antideficiency Act by using its Fiscal Year 2011
appropriation in a manner specifically prohibited, OSTP
violated the Antideficiency Act. Accordingly, they
should report the violation as required by law.''

I also wrote Attorney General Eric Holder asking him to
hold Dr. Holdren to full account for his violation of the
Antideficiency Act by ensuring that it complies with all the
reporting requirements and provisions of the law.
I take the GAO findings very seriously, following the law
is not voluntary for the administration officials. That is why
Dr. Holdren should commit today to full compliance with section
1340 and publicly acknowledge his error in participating in the
bilateral conference with the Chinese Government.
Now, Mr. Chairman, I would like to take a few minutes to
put the administration's posture toward China in the broader
context of the Chinese Government, and I say government.
The Chinese people are wonderful people. The Chinese people
yearn for freedom. So when I say today, I am talking about the
Chinese Government and their grave human rights abuses,
espionage efforts and detrimental economic policies.
In June 1989, peaceful prodemocracy demonstrators gathered
in Tiananmen Square. They were met with a brutal crackdown. As
events unfolded, the world was captivated with the now-famous
image of the tank man, a lone, brave, brave student protester
who stood his ground in the face of the advancing Chinese tank,
and to this day his fate is unknown.
During my first trip to China in 1991 with Congressman
Chris Smith, we visited Beijing Prison Number 1 where
authorities informed us and we saw them that approximately 30
Tiananmen Square demonstrators were behind bars. They were
making these socks for export to the United States. They were
making socks, Tiananmen Square demonstrators, and these socks
were held up on the floor when we got back by Senator Moynihan
at that time. We left with a pair, and they are the socks.
Tellingly, the image of the tank man, while famous around
the globe, is virtually unknown within China, thanks to the
great firewall, which censures so-called offensive speech. It
is estimated that China employs 30,000 to 50,000 special
Internet police. Shockingly, the country has a thriving
business of harvesting and selling for transplant kidneys--and
we can furnish all the members of all the videos that cover
this in detail, corneas and other human organs from executed
prisoners.
The image here, and I have the one picture over there, the
image here shows the PLA, the same PLA that runs the space
program, the PLA offers in preparing to execute prisoners,
later footage from the same story shows an unmarked van driving
toward the prison to harvest the organs. When you watch the
video, it will make you sick.
Like many repressive regimes, the Chinese Government
maintains a brutal system of labor camps. The Soviet, the State
Department's annual Human Rights Report found ``forced labor
remained a serious program.''
Famed Chinese dissident Harry Wu spent nearly 20 years in a
Chinese gulag. In congressional testimony earlier this year he
said, ``When I finally came to the U.S. in 1985, although I was
already 48 years old, that was the first time in my life I felt
truly free.''
He concluded by urging ``President Obama and the U.S.
Congress to be bold and take a firm stand against China's human
rights abuses, exactly the way that President Reagan did with
regard to the Soviet Union.'' And he did it in a very
appropriate way, and I know you were at his funeral--if you
will recall, he said tear down the wall, he said. Evil empire.
And Gorbachev came to his funeral.
But boldness is hardly the order of day when it comes to
U.S. policy. That same could be said of some companies.
Congressman Chris Smith, and the late chairman of this
committee, Congressman Tom Lantos--himself a Holocaust
survivor--convened a hearing in 2006 in which they publicly
challenged Yahoo to look behind the bottom line and consider
the moral implications of their complicity, their complicity in
imprisoning Chinese dissidents.
New York Times columnist Nicholas Kristof--and I appreciate
he is been very good on these issues--authored a piece after
the hearing writing, ``Suppose that Anne Frank had maintained
an email account while in hiding in 1944 and that the Nazis had
asked Yahoo for cooperation in tracking her down.'' It seems,''
he said, ``based on Yahoo's behavior in China that it might
have complied.''
Yahoo isn't the only U.S. company to come under fire for
pursing business interests at the expense of human rights. A
May 22 New York Times article reported that Cisco, customized,
``customized its technology to help China track down members of
the Falun Gong spiritual movement.''
There are multiple suits now against Cisco.
These allegations reflect a worrying trend. American
companies ought to represent American values. Instead, it seems
that time and again major U.S. corporations are embracing the
Chinese Government's policies that are completely at odds with
what America stands for.
China, in turn, exports its repressive technology to like-
minded governments. In October 27, a Wall Street Journal piece
reported that the Chinese telecom giant Huawei, now operating
in the United States, Now dominates Iran's Government-
controlled mobile phone industry. It plays a role in enabling
Iran state security network, the same people that killed all
the people in Iran when we watched last year.
It seems that not only is the U.S. failing to change China,
but rather China is changing us. Is it any surprise considering
what China is spending on high-powered lobbying firms in this
town?
According to a January 9 Washington Post story, in recent
years China has tripled the amount it spends on lobbying firms.
But well-heeled lobbyists can't explain away China's abysmal
human rights records.
Thousands of political and religious prisoners languish in
prison. According to the Cardinal Kung Foundation, Cardinal
Kung was a Catholic cardinal, currently one of approximately 25
underground bishops of the Catholic Church is either under
house arrest, in jail or under strict surveillance or in
hiding. Congressman Chris Smith took holy communion from Bishop
Zhu, he has never been seen since.
According to China in 2010, 2010, 336 Protestant House
church leaders were arrested and persecuted.
Since March 10th, 10 Tibetan Buddhist monks and nuns have
set themselves aflame, aflame in desperation. I was in Tibet,
the desperation. What drives nine Buddhist monks and a Buddhist
nun to set themselves aflame? Every monastery in Tibet has a
public security police in the monastery. It would be like in
your church or your synagogue, the FBI would be in there.
What sets them aflame like that to drive them--and the
Buddhist monks and nuns are a very, very peaceful people.
Chinese authorities continue to use Uighur, Muslim activist
Rebiya Kadeer, her children and grandchildren as pawns, as
pawns and to silence her. And her two sons are serving a length
in prison. And the Chinese public security police sent people
to Fairfax County to spy on her, Fairfax County.
We have now seen that the Chinese Government is unmoved
and, in fact, emboldened in its ongoing repression, while at
the same time, experiencing an explosive economic growth. We
have seen our own short-sightedness in making the protection of
basic liberties and the advancement rule of law secondary to
unfettered market access and normal trade relations.
These flawed policies, Mr. Chairman, have strengthened the
oppressors. They have strengthened the oppressors and enabled
China to advance economically at our expense.
Every member here and every Member in the Congress has
constituents whose livelihood have been negatively impacted by
China's blatant economic espionage, predatory and protectionist
and illegal activity, every single district.
Meanwhile, U.S. companies are increasingly sending American
jobs to China. General Electric's health care unit, their
health care unit. You have seen their ads almost every Sunday
on the Sunday news. Their health care unit recently announced
it was moving its headquarters of 115-year-old X-ray business
to Beijing.
Ironically, the president of--the head of President Obama's
Council on Jobs and Competitiveness, GE Chairman Jeffrey
Immelt, they are leaving the United States and they are
creating jobs in China.
According to a March 24 New York Times article--and we will
submit it for the record--GE paid zero taxes in the U.S. in
2010. Meanwhile, the Congressional Research Service found that
the Chinese State Tax Administration and China Tax Magazine
recently jointly released a number of lists of the top
taxpayers, taxpayers in 2007 and GE featured prominently. The
Beijing subsidiary of GE was number 32. GE pays taxes in China,
does not pay tax in America.
There is something wrong with that.
It is noteworthy that GE, which pays no Federal taxes in
its home country, is honored, is honored for being a
significant source of tax revenue in China.
Now engagement with China has not only empowered the
government and failed to change their political system,
undermine their economic security, it has fueled China's
military apparatus. Again the President's job czar is at the
center of these concerns.
An October 28 Defense News piece reported that ``U.S. air
space companies may unknowingly be helping China's military.''
Specifically the article wanted to ``last January's
announcement by General Electric and the Aviation Industry
Corporation of China, the government, that they would launch a
joint venture for integrated avionics.''
And cited the soon-to-be-released report of the
Congressional-Executive Commission on China which indicated,
that ``China has a robust, largely military space program,''
with all but 13 of its roughly satellites--70 satellites in
orbit controlled by the military.
And NASA wants to work with a PLA killing people for their
organs, spying against them, doing this and a direct threat to
the American military.
And in a May 17 article in Wired.Com, it reported that
Chinese troops had begun using a first-person shooter video
game called ``Glorious Mission'' backed by the PLA, which
simulates basic training in which the enemy is apparently the
U.S. military.
On April 11, Aviation Week reported, ``The PLA''--the
people who run this space program--``has made great strides
toward implementing a strategy to deter or defeat U.S. forces
in the western Pacific.''
The 2010 annual Pentagon report cited earlier found ``In
the case of key national security technologies, controlled
equipment and other materials not readily obtainable through
commercial means or academia, the PRC resorts to a more focused
effort, including the use of its intelligence services and
other than legal means in violation of U.S. laws and export
controls.''
Let's be perfectly clear about China and how its advancing
militarily. They are using ``other than legal means.'' They are
spying. They are stealing.
The FBI has come before our committee approps, they have
got the most aggressive spying program of anybody in the
history this Nation, much more aggressive than the KGB. The
report also highlighted cyber China's espionage efforts.
The U.S. intelligence community notes that China's attempt
to penetrate U.S. agencies are the most aggressive of all
foreign intelligence organizations. According to a 2008 FBI
statement, Chinese intelligence services ``pose a significant
threat both to the national security and to the compromise of
U.S. national assets, i.e., you are losing jobs,'' you are
losing jobs, 9 percent unemployment and you are losing jobs.
Their espionage isn't limited to government agencies.
An October 4 Washington Post article, Representative Mike
Rogers, chairman of the House Intelligence Committee remarked

``When you talk to these companies behind closed doors,
they describe attacks that originate in China and have
a level of sophistication and are clearly supported by
a level of resources that can only be a nation state
entity.''

These breaches in our national security infrastructure are
rampant and pose a very real threat. A May 14 Reuters story
indicated

``North Korea and Iran appear to have been regularly
exchanging ballistic missile technology in violation of
U.S.--U.N. sanctions according to a confidential U.N.
report. The report said the illicit technology transfer
had transferred shipments through a neighboring third
country, China.''

China is also a major arms supplier and source of economic
strategy to the regime in Sudan, in Khartoum, Sudan. According
to Human Rights Watch, first during the years of the worse
violence in Darfur, China sold $55 million worth of small arms
to Khartoum. I was the first Member of the House to go to
Darfur. Sam Brownback was with me.
We heard the stories of rape, and killing and displacement
and America gave guns to them, America's giving food to
Chinese, the weapons. The Janjui circulate around the camps.
And when the women go out in the morning to collect wood--and
China is the number one supporter--the largest Embassy in
Khartoum is the Chinese Embassy.
And they are aiding them and meanwhile, Beijing, right
there, that picture of Beijing, rolled out the red carpet this
year for Sudanese President Omar al-Bashir, an internationally
indicted war criminal. Bashir's crimes are not just things of
the past, Bashir's crimes are going on today.
In the Nuba Mountains, we have reports they are going door
to door pulling black people out and killing them. We had a
hearing before the Tom Lantos committee, the number one
supporter is China. They are blocking the U.N. missions that go
there. I mean, they have been--and Bashir is indicted by the
International Criminal Court.
Why did we go after and help get Milosevic, which we should
have, and get Radic, which we should have, and get Karadzic,
which we should have. And yet we close our eyes and do nothing
with regard to Bashir who goes to China.
They had an obligation that they wanted to be part of the
world nation to arrest Bashir when he landed and to keep him
on. He is an indicted war criminal.
Speaking of the red carpet, President Obama, the 2009 Nobel
Prize winner, welcomed Chinese President Hu Jintao, who was the
author of the crackdown in Tibet, crackdown in Tibet and is
pushing what is taking place to a Nobel--to a dinner in the
White House when the 2010 Nobel Prize winner, Xiaobo was in
jail, his wife was under house arrest and nobody could even go
to Oslo to pick up the prize.
In closing, and I am closing, there will come a day--I
think the Chinese Government has got to hear this--there will
come a day when the Chinese Government will fall. Repressive,
totalitarian regimes always do because the good efforts of
President Reagan, and God bless him, and Pope John Paul and
Margaret Thatcher, the Soviet Union collapsed. Many people in
1986 never thought it would collapse.
This Chinese Government, they have taken Ceausescu's
playbook. And where it led Ceausescu it will lead this
government. They will fall and books will be written about who
helped sustain this government in their final days.
Will U.S. companies feature in that narrative? Will U.S.
Government officials feature in that narrative?
In 2001, a book was published, every member ought to read
it, entitled ``IBM and the Holocaust.'' A New York Times book
review describes how IBM had ``global control over technology
that was enormously helpful, indeed, indispensable to the Nazi
machinery of war and annihilation.''
The New York Times review quotes the author of the book as
saying that many companies did what IBM did. He then said they
``refused to walk away from the extraordinary profits
obtainable from trading with a pariah state.''
Arguably that assessment rings today. Only the pariah has
changed. Those in position of leadership, be they in the
private sector or in government, do our country a disservice
when they gloss over or ignore the actions of the Chinese
Government. They put us, quite frankly, squarely on the wrong
side of history.
The Chinese Government brutally represses its own people.
It persecutes people of faith, Catholic, bishops, protestant
pastors, Buddhist monks and Buddhist nuns, Muslims. It censors
the Internet. It maintains labor camps. The Chinese Government
is actively engaged in a cyber espionage. It steals state
secrets. It aligns itself with the countries directly at odds
with U.S. interests. It supports genocidal governments and
buttresses regimes that should not be in power.
There is a legal term for this: It is called willful
blindness, that aptly describes the dealings to date with
China.
Faced with these painful truths, blindness is no longer an
option. In the words of British abolitionist, William
Wilberforce he said, ``Having heard all of this, you may choose
to look the other way but you can never again say that you did
not know.''
Mr. Rohrabacher. Thank you very much, Mr. Wolf, and
obviously the chair agrees with everything that you just said,
so I would leave it to my ranking member, if you have some
questions for Mr. Wolf.
Mr. Carnahan. No, just, again, I want to--you raised a
number of serious questions, I think that we need to be
contemplating. I appreciate your work on the Human Rights
Commission, and I do believe we need to--personally, I believe
our approach should be one of engagement but also pushing for
reforms in many of these areas that you have brought forth here
today.
So--but I think this is a very important conversation that
we are having here today, and I appreciate you taking the time
to be here.
Mr. Rohrabacher. Mr. Wolf, let me just note for the record
that while--what brought about the change in the world when the
Soviet Union collapsed and Democratic Russia was born--and it
is not quite totally matured yet and it is still struggling to
be a free country--but they have made great strides since the
1980s.
But what brought the Communist party to the point where it
collapsed and spared the world, an incredible Holocaust where
military exchange between the Soviet Union and the United
States would have caused millions of lives, it would have been
horrible--what saved us from that was a lack of engagement.
The fact is that we did not give the Soviet Union any of
the economic rights that you have just outlined that we have
given China. We have permitted China basically a one-way free-
trade policy. We have permitted--we have turned our backs and
they manipulate the currency. We have turned our backs when
they steal technology. We actually have invested huge amounts
of our technology and our capital in building up their economy.
We didn't do any of that with the Soviet Union. The people
would have been laughed at if they would have said, well, why
don't we turn GE loose in Russia when Russia was controlled by
the Communist party to work out a good relationship with their
industry that produces jet aircraft?
We, I don't believe that by this current strategy that we
have permitted our country to move forward with China despite
these atrocities that you have outlined, I don't believe that
is going to lead to a free China, and I would hope that we, in
our lifetime, can see the Chinese people break their chains,
and we can be proud that we helped and sided with the Chinese
people rather than the dictatorship.
So, thank you, one last question before you go. You are
then convinced that the law, as written, as you actually helped
put it into the law, was violated by these exchanges with OSTP?
Mr. Wolf. I do believe that we are going to continue this
issue and stay with it until the very, very end. But I do
believe, and, also, the GAO also believes.
And the comment is, I think you are exactly right. No
company or law firm would have ever represented or dealt,
represented to the Soviet Union during the days of President
Reagan. I remember there was someone talking about doing
something for a bus company and Reagan spoke out.
Reagan, President Reagan said the words in the Constitution
were our covenant with the rest of the world. The students in
Tiananmen knew those words and Reagan, one party called him in
1983, said tear down that wall, and yet he did it in the
appropriate way. But our Government, when they would go to
Moscow, as you know, George Schultz would--the Embassy was a
island of freedom and they would meet with the dissidents and
everything else. We are not seeing that today, you are exactly
right.
Mr. Rohrabacher. An amendment to this question, the last
question is, if this is a violation of law or not, do you
believe that the executive branch is immune from these types of
restrictions that you placed, they helped place in the law and
that we all placed in the law when we voted on that piece of
legislation? Does the legislative branch have a right to limit
what the executive branch does in foreign policy?
Mr. Wolf. Under the Constitution it does, yes, sir.
Mr. Rohrabacher. Thank you very much, and thank you for
your testimony.
On panel number II, we have Thomas Armstrong, who is the
managing associate general counsel at the U.S. Government
Accountability Office and is one of the leading attorneys
working on the budget and appropriations group. He is
responsible for the controller general's appropriations law
opinions that the GAO issued to Congress.
Mr. Armstrong joined the GAO Office of General Counsel in
1978 and is a member of the bar in Virginia.
Mr. Armstrong, you just heard a long bit of testimony, but
we will get now to some of the specifics. I think it is
important for us to realize that we aren't talking about some
esoteric situation where people's lives are not at stake, that
there is just a difference in trade policy or something. No, we
are talking about a fundamental historic perception and the
laws that go with those perceptions in terms of an adversary of
the United States or someone who could be a friend of the
United States.
You may proceed with your testimony.

STATEMENT OF MR. THOMAS ARMSTRONG, MANAGING ASSOCIATE GENERAL
COUNSEL, GOVERNMENT ACCOUNTABILITY OFFICE

Mr. Armstrong. Thank you, Mr. Chairman, and I do appreciate
this opportunity. I am here to talk about the law. I am here to
talk about the prohibition that was enacted to serve the
Congress' constitutional power of the purse. I have a short
written statement to submit for the record, if I may,
Mr. Rohrabacher. So ordered.
Mr. Armstrong. Thank you. A copy of our October 11 legal
opinion that Mr. Wolf mentioned and that you mentioned in your
opening statement is included as an appendix to that written
statement.
In the opinion, we determined that OSTP violated a
statutory provision prohibiting the agency from using its
appropriations for bilateral engagements with China. That
provision, enacted on April 15, 2011, in the Full-Year
Continuing Appropriations Act for Fiscal Year 2011 prohibited
OSTP, as well as NASA, from using appropriations to ``develop,
design, plan, promulgate, implement or execute a bilateral
policy, program, order or contract of any kind to participate,
collaborate or coordinate bilaterally in any way with China or
any Chinese-owned company.''
Because OSTP had no funds available for that purpose,
OSTP's actions also violated the Antideficiency Act. The
Antideficiency Act is a fiscal statute that is central to
Congress' constitutional power of the purse.
Between May 6 and May 10, 2011, OSTP, as they told us,
participated in a series of meetings with Chinese officials as
part of two events here in Washington, DC: The U.S.-China
Dialogue on Innovation Policy, and the U.S.-China Strategic and
Economic Dialogue. OSTP also hosted a dinner for Chinese
dignitaries.
OSTP did not deny that it engaged in these prohibited
activities. Rather, OSTP asserted that the prohibition, as
applied to these activities, is an unconstitutional
infringement on the Executive's conduct of foreign affairs.
As we stated in our opinion, it is not GAO's role to
adjudicate the constitutionality of legislation that has been
enacted into law. That role is properly reserved for the
judiciary, not an agency like GAO that is part of the
legislative branch.
Legislation like this, which was passed by both Chambers of
Congress and signed into law by the President, thereby
satisfying the Constitution's requirements of bicameralism and
presentment, is entitled, in our view, to a heavy presumption
of constitutionality until a court indicates otherwise or until
Congress changes that law. In other words, in our opinion, and
in opinions like this, we at GAO apply the law as written to
the facts before us. By using its appropriations in violation
of that prohibition, the OSTP also violated that Antideficiency
Act.
In addition to audits and investigations, GAO serves an
important function by providing legal opinions to Members of
Congress and Federal agencies on matters of appropriations law,
that is to say, those laws, including the Antideficiency Act,
that governed the proper use of Federal funds, and that help
protect Congress' constitutional power of the purse.
The Antideficiency Act is a funds-control statute designed
to impose fiscal discipline on Federal agencies. Under the Act,
an officer or an employee of the United States Government may
not make or authorize an obligation or an expenditure exceeding
the amount of an available appropriation. Simply put, agencies
may not spend more than Congress gives them.
When OSTP used Federal funds to engage in the Innovation
Dialogue, the Strategic and Economic Dialogue, and the dinner
to host Chinese dignitaries, OSTP spent funds in excess of the
amounts available, in excess of the amount Congress gave them
for this purpose. Congress, with the prohibition, had made
clear that OSTP had no funds available for this purpose. OSTP,
therefore, violated the Antideficiency Act.
In order to emphasize sound funds control and to advance
oversight of agencies' fiscal activity, the Antideficiency Act
requires that executive agencies report violations to the
President and Congress and transmit copies of their reports to
GAO. In the opinion, we advised OSTP to report its violation as
required by law. Late Monday afternoon, OSTP provided us with
its Antideficiency Act report. In the report OSTP disagreed
with GAO's conclusion.
Thank you, Mr. Chairman. Thank you, Mr. Carnahan. I am
happy to answer any questions you may have.
[The prepared statement of Mr. Armstrong follows:]

----------

Mr. Rohrabacher. Thank you very much for that succinct
testimony, and you stated then that there is, when something is
put, wording is put into legislation, that is very clear,
specific wording, that your--that you have a heavy presumption
of constitutionality. Maybe you could tell me is there a
difference between what is legal and is constitutional?
Mr. Armstrong. No, not really because all of our laws are
derived the Constitution.
We have a long history at GAO in serving Congress'
constitutional power of the purse to presume, accept the
constitutionality of any law that is enacted via the
constitutional legislative process, any law that is passed by
both Houses of Congress and signed by the President, which is
what happened in this case.
Mr. Rohrabacher. Okay. Is there a constitutional
restriction on the legislative branch from putting limits to
which money can be spent concerning American foreign policy?
Mr. Armstrong. The Supreme Court and other Federal courts,
lower Federal courts, have long recognized that Congress does
have the right to impose restrictions on the Executive's use of
public funds. It all relates to Congress' constitutional
prerogatives of the purse.
Mr. Rohrabacher. So this is, the power of the purse is a
supreme constitutional prerogative of the legislative branch,
and that if the restrictions that we put on the power of the
purse affects foreign policy, that is within the jurisdiction
of the legislative branch?
Mr. Armstrong. We didn't look specifically at OLC's, Office
of Legal Counsel over at the Department of Justice, at the
arguments that they presented to OSTP. We felt we didn't need
to go beyond the fact that this law was enacted via the
constitutional legislative process.
Mr. Rohrabacher. Okay, so it was a constitutional
legislative process, but they were actually asking about the
constitutionality of the outcome of the process and not
necessarily the process itself, which is interesting.
You have stated very clearly that the OSTP spent funds in
excess to what the government, meaning what the legislative
branch had declared was legal for them to spend. Thus it was in
violation of that particular law.
And, again, I guess I am looking for and I will discuss
with the administration later on this theory that they can do
whatever they damn well want to do if it has to do with foreign
policy, and dealing with China has some--is by its nature
dealing with foreign policy.
All right, you have given us some insights.
Mr. Carnahan.
Mr. Carnahan. Thank you, Mr. Chairman. Welcome, Mr.
Armstrong.
Mr. Armstrong. Thank you.
Mr. Carnahan. I want to jump right into this question that
you have raised and what I understand your earlier testimony in
that GAO did not make an assessment of constitutional claims
put forth by the Justice Department, has GAO made
determinations in other instances where an administration has
made constitutional claims and, if so, how did GAO handle that?
Mr. Armstrong. We have--we do steer clear of addressing
constitutional issues. We do have a long history since our role
here in the appropriations law decision writing function is to
serve Congress and Congress' oversight of the Executive's use
of public money.
Mr. Carnahan. So just to be clear, steer clear, you mean
they never have addressed any constitutional issues or they
generally don't, and that is what I am trying to get down to.
Mr. Armstrong. I have been at GAO for 33 years now, and I
have been involved in the appropriations law function for about
20, 21 of those years, and I have never been involved in
addressing a constitutional issue in the context of Congress'
power of the purse.
Mr. Carnahan. And again, just to be specific, you have
never been involved with that. Has GAO ever been involved in
addressing a constitutional issue to your knowledge?
Mr. Armstrong. I am not aware of it, no.
Mr. Carnahan. So----
Mr. Armstrong. In the context of appropriations law.
Mr. Carnahan. So in other context you are aware, but not
with regard to appropriations?
Mr. Armstrong. I can tell you that I am not aware of it,
but I am not necessarily in a position to have been aware of it
because of my focus on appropriations law and my responsibility
with regard to the appropriations law decision writing
function.
Mr. Carnahan. I think I understand that, Mr. Armstrong. Let
me move on. Since the administration submitted its report to
GAO, has it fully complied with the requirements pursuant to
the Antideficiency Act?
Mr. Armstrong. We do consider that report to be satisfying
the reporting requirement of the Antideficiency Act.
Mr. Carnahan. And describe that for the committee, please.
Mr. Armstrong. When an agency violates the Antideficiency
Act, as it did here, the Act requires that the agency report it
to Congress, the President and to GAO.
Mr. Carnahan. And that was done?
Mr. Armstrong. And that was done, yes.
Mr. Carnahan. And can you describe that report just in
brief?
Mr. Armstrong. Yes, I can. They did acknowledge GAO's
conclusion. OSTP reported its disagreement with GAO's
conclusion. OSTP summarized Justice Department's advice to
OSTP. The report fairly short, about four or five pages, didn't
go further than that. But it did serve to put the matter before
the Congress in Congress' oversight capacity, which is the
point of the Act.
Mr. Carnahan. In bottom line dollars, how much money are we
talking about?
Mr. Armstrong. OSTP told us that they spent about $3,500.
Mr. Carnahan. Okay. Well, with regard to an Antideficiency
Act issue such as this, what is the enforcement mechanism once
the reporting requirements are met and what is the typical
resolution in a case like this?
Mr. Armstrong. The enforcement mechanism is really
Congress' enforcement in how Congress wants to respond, react,
to the Antideficiency Act report. The Act is there to serve
Congress in Congress' oversight of agency activities. So it
really is up to the discretion of this committee, of the
appropriations committees, of the Congress.
Mr. Carnahan. Very good. Thank you.
Mr. Rohrabacher. When did the OSTP actually provide you a
report to this violation?
Mr. Armstrong. It was late Monday afternoon this week.
Mr. Rohrabacher. Are you talking about this Monday?
Mr. Armstrong. Yes. Today is Wednesday. The day before
yesterday, yes.
Mr. Rohrabacher. So this Monday after this hearing had
already been scheduled was when they saw fit to comply with
this request. I think that has to be taken into consideration.
And we just--the ranking member just asked several questions I
thought were important. And you suggest that if there are any
penalties, Congress must be the one to provide some reaction to
this violation. But you are suggesting that the money we spent
that was illegally spent and now it is up to Congress to act,
is that it?
Mr. Armstrong. Yes. That is the way the mechanism is
designed under the Antideficiency Act.
Mr. Rohrabacher. Okay. And there is no criminal penalty to
this?
Mr. Armstrong. Well, the Act does include criminal
penalties for knowing and willful violation of the Act. That is
in the Justice Department's discretion. My understanding is
that the Justice Department has never prosecuted anyone for a
knowing and willful violation, so we don't have any clue from
their case law and their activity what Justice would consider
to be a knowing and willful violation.
Mr. Rohrabacher. Okay. And one last question about, if a
piece of legislation like this is signed into law, which it was
by the President of the United States, President Obama signed
the bill, do we then presume that President Obama agrees with
the constitutionality of the restriction that has been placed
upon him by the bill?
Mr. Armstrong. I am really reluctant to make a presumption
about what the President might think.
Mr. Rohrabacher. Well, are we presuming if a President
signs a bill into law and there is a restriction in that law,
the executive branch, that the President is signing that bill
into law and thus any President that does that is reaffirming a
constitutional acceptance of the law?
Mr. Armstrong. There are occasions when a President, in
signing a bill into law, might question the constitutionality
of provisions. In the President's signing statement, the,
President may make a point about his concerns about the
constitutionality of a provision. We did look at the signing
statement for this law and there was nothing in this signing
statement that raised any concerns about this provision.
Mr. Rohrabacher. So in the past, if the President did have
a concern about constitutionality of any restriction to law and
he wanted to sign it anyway because of other provisions, that
would be in his statement upon signing the bill?
Mr. Armstrong. There is a tradition there. That doesn't
mean that we can presume, I think, that because the President
did not make a point in his signing statement, that he accepts
the constitutionality of it. But I can tell you that there was
no point made in the signing statement for this law about this
provision.
Mr. Rohrabacher. Mr. Carnahan.
Mr. Carnahan. Just one more question. I am going to put
this in context. Has in your experience, and you have been
doing this for a number of years over a number of
administrations, has this issue come up with prior
administrations?
Mr. Armstrong. Not with GAO. But I can tell you, although I
am not a constitutional law scholar, as a lawyer, I am well
aware that there has been tension over the years between
Presidents and Congress over the conduct of foreign affairs.
But that is not something that we have looked at, it is not
really in GAO's purview.
Mr. Carnahan. I appreciate that. Thank you.
Mr. Rohrabacher. Thank you for joining us today. And our
third panel will be Charles Bolden, Administrator of NASA.
Mr. Armstrong. Thanks very much.
Mr. Rohrabacher. We have our next panel seated. And I guess
we are going to have Holdren and Bolden together. I was
noticing that their names, there is a similarity there between
the names of all the witnesses today. That is interesting.
So we have--our first witness will be Charles Bolden who is
currently Administrator of NASA and has served at post since
2009. So we can say the Honorable Charles Bolden, but I would
prefer to call him General Bolden. My father was a pilot in the
U.S. Marine Corps, and as I have said many times would be very
proud to know that we have a Marine pilot now heading up NASA.
And I think he has done a great job since he has been there
under very, very strenuous circumstances. He graduated from the
U.S. Naval Academy and went on to fly over 100 combat missions
in Vietnam. Afterwards he joined NASA and flew four space
shuttle missions, two of which he commanded.
And we also have with us Dr. John Holdren who is director
of the White House Office of Science and Technology Policy and
co-chairman of the President's Council of Advisors on Science
and Technology. Dr. Holdren went to the White House from his
post at Harvard University where he was a professor. And he
holds a degree from MIT and Stanford and has a long and
distinguished record of service in scientific bodies and is one
of the more respected scientists in the United States of
America. And we appreciate the service that both of you are
providing to our country. That doesn't mean we don't have our
disagreements, which is what this is all about today, but that
does not diminish the gratitude that we should have toward
people like yourselves who are willing to take on these kind of
responsibilities. You both may proceed with your opening
statements and then we will go into questions and answers.
Mr. Holdren. Mr. Chairman, do you have a preferred order
for those statements?
Mr. Rohrabacher. Yes. I can see that the General is giving
us a direction over there. You go first.

STATEMENT OF THE HONORABLE JOHN HOLDREN, PH.D., DIRECTOR,
OFFICE OF SCIENCE AND TECHNOLOGY POLICY

Mr. Holdren. I will proceed. Thank you very much. Chairman
Rohrabacher and Ranking Member Carnahan, I do appreciate the
opportunity to testify today on U.S.-China Cooperation in
Science and Technology.
Mr. Rohrabacher. Put the microphone a little closer. There
you go.
Mr. Holdren. In general, the United States benefits from
science and technology cooperation with other countries when
the sharing of facilities or expertise and costs speeds up
discoveries that can be applied in this country to address
economic and other challenges that we face. We also benefit
from such cooperation when it enhances the understanding of and
access to foreign markets by U.S. firms enabling them to sell
more abroad. We benefit as well when such cooperation
accelerates innovation in other countries in ways helpful to
U.S. interests, such as by reducing their pressure on world oil
supplies and their emissions of greenhouse gases.
And we benefit when science and technology cooperation
provides a set of positive interactions and incentives with
countries with which we have difficult relations. Those general
benefits of cooperating with other countries in science and
technology all apply with particular force to the case of
China, as my written statement explains. Of course the benefits
of cooperating with other countries in science and technology
have to be weighed against the costs and the risks. Those risks
include theft of intellectual property and classified
information and loss of economic or military advantage. And
just as the benefits of science and technology cooperation
apply with particular force in the case of cooperation with
China, so do the risks.
The relations of the United States with China are complex
overall. The two countries behave as partners in some arenas,
as competitors in some and as potential adversaries in some.
This administration strongly objects to China's human rights
abuses, its theft of intellectual property and much else that
goes on there. But we in this administration do not believe
that the solution to these challenges is to cut off our science
and technology cooperation with China.
On the contrary, we believe that U.S.-China science and
technology cooperation benefits both countries and strengthens
our hand in the effort to get China to change the aspects of
its conduct that we oppose. And we believe that the overall
benefits to our country of properly focused and managed science
and technology cooperation with China outweigh the costs and
risks. That proposition was the reason that the Carter
administration concluded the U.S.-China science and technology
cooperation agreement within weeks of the normalization of
relations with China in January 1979. And it is the reason that
that agreement has been renewed by every administration since,
Republican and Democratic alike.
My written statement describes some of the ways that U.S.-
China science and technology cooperation under this framework
has benefited United States interests. The only one I will
mention here is how the ongoing U.S.-China dialogue on
innovation policy, which I co-chair on the U.S. side, has led
to the Chinese Government's rolling back aspects of Chinese
innovation policy that discriminate against U.S. businesses
active in Chinese markets. As has already been pointed out by
earlier witnesses, section 1340(a) of the Continuing
Appropriations Act of 2011 contains language intended to bar
OSTP from continuing to engage in bilateral interactions with
China.
I am a scientist and not a lawyer, so I am only going to
state here very briefly why OSTP has not complied with that
prohibition. For the details I refer you to the formal opinion
issued on September 19th of 2011 by the Office of the Legal
Counsel in the Department of Justice, and I ask that that be
added to the hearing record as an addendum to my testimony.
Mr. Rohrabacher. Without objection.
[Note: The information referred to is not reprinted here
but is available in committee records.]
Mr. Holdren. OSTP sought the Department of Justice's
guidance on Section 1314(a)'s legal effect because of the
extent and the importance of OSTP's role in bilateral diplomacy
with China on science and technology issues. The Department of
Justice advised us that the activities that OSTP has been
carrying out in connection with that role fall under the
President's exclusive constitutional authority to conduct
foreign diplomacy, and thus are not precluded by the statute.
Let me conclude by referring once more to President Reagan.
As Congressman Wolf pointed out, President Reagan did call the
Soviet Union an evil empire. He also continued, throughout his
two terms, the extensive U.S. cooperation on science and
technology with the Soviet Union that had begun in 1958 under
President Eisenhower and that continued until the Soviet Union
disintegrated in 1991. I very much hope that the value to this
country on balance of appropriately focused and managed
cooperation with China on science and technology is something
about which this administration and this Congress can also come
to agree. I am happy to try to answer any questions you may
have. Thank you very much.
[The prepared statement of Mr. Holdren follows:]

----------

Mr. Rohrabacher. Thank you very much, Dr. Holdren. And
General Bolden.

STATEMENT OF THE HONORABLE CHARLES BOLDEN, JR., ADMINISTRATOR,
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Mr. Bolden. Chairman Rohrabacher and Ranking Member
Carnahan, thank you very much for the opportunity to appear
here today. This is a critical time for our Nation's space
exploration program. We have embarked upon an ambitious plan
agreed to by President Obama and the bipartisan majority in
Congress to maintain U.S. leadership in space for many years to
come. Private U.S. companies will soon be taking over
transportation of cargo and crew to the international space
station. A deep space exploration vehicle and crew capsule to
take humans farther into the solar system than we have ever
gone before is in development. Science missions to Jupiter and
asteroid, the moon and Mars are getting underway. Our
technology development efforts are getting closer to
demonstration, and our air aeronautics research is helping to
advance cleaner and safer air travel.
For 50 years now, America has led the world in space
exploration. Under the plan we have committed to as a nation,
we will continue to do so for the next 50 years. It is
important to note that our national success has been achieved
in part thanks to international cooperation. Strategically we
have entered into agreements that advance our national
objectives and furthered the causes of science, space
exploration and discovery. Currently, we have over 500 active
agreements in place with 120 nations, excluding China. The
United States has always led, but we also work with other
countries when it serves our national interests. Having the
flexibility to enter into these partnerships has been an
important part of America's success in space exploration. Over
the last decade NASA has had a very limited bilateral
cooperation with China entities due to U.S. law and policy. In
fact, NASA has only signed one agreement with the Chinese
Academy of Sciences for the exchange of data for geodynamics
research related to the prediction, monitoring of and response
to natural disasters.
Additionally, joint working groups on earth and space
science were established in 2007 under the Bush administration,
and there have been reciprocal visits of NASA and People's
Republic of China officials to facilities in each nation. I
would like to emphasize that support for cooperation with China
has spanned multiple administrations. NASA's bilateral
cooperation with China was initiated under President George W.
Bush and continued under President Barack Obama. Following a
summit between President Bush and Chinese President Hu Jintao
in 2006, it was agreed that the NASA administrator, one of my
predecessors, would travel to China to begin exploratory
discussions on space cooperation with Chinese officials.
Subsequent to that successful visit in 2007, NASA and China
established working groups focused on earth and space science
cooperation. In their November 2009 joint statement, President
Obama and President Hu noted that they look forward to
``expanding discussions on space science cooperation and
starting a dialogue on human space flight and space exploration
based on the principles of transparency, reciprocity and mutual
benefit.''
As a result, I traveled to China in October 2010 to
continue and expand our discussions on potential space
cooperation. In response to limitations enacted by public law
112-10, NASA immediately suspended all activities under NASA's
agreement with the Chinese Academy of Sciences. The suspension
of this agreement precludes NASA from directly receiving a
global navigation satellite system, satellite laser ranging and
very long baseline interferometry data from stations in China.
In addition, NASA cancelled all plans for reciprocal visits
and bilateral activities. NASA employees and contractors
continue to participate in multi-lateral activities through
such multi-national organizations as the U.N. Committee on the
Peaceful Uses of Outer Space in which representatives of the
PRC organizations or companies may also participate.
In closing, let me assure this subcommittee that any NASA
engagement with China entities will be conducted in a manner
that is consistent with all existing U.S. laws and regulations.
I believe, however, that some level of engagement with China in
space-related areas in the future can form the basis for
dialogue and cooperation in a manner that is consistent with
the national interest of both our countries when based on the
principles of transparency, reciprocity and mutual benefit.
Initial discussions in areas such as orbital debris mitigation
and disaster management can provide benefits to the United
States and perhaps eventually form the basis for a continued
dialogue in other areas of space exploration.
Mr. Chairman, I thank you very much for your continued
support of NASA. I would be pleased to respond to any questions
you or other members of the committee may have.
[The prepared statement of Mr. Bolden follows:]

----------

Mr. Rohrabacher. Well, thank you both for your testimony.
And we appreciate you coming here today to have this
discussion. Let's get right down to some of the details here.
Dr. Holdren, who was it who suggested to you that only things
like this in terms of your interaction with foreign governments
is only based on Presidential authority and that thus, I say
the only word means the legislative branch does not have
jurisdiction.
Mr. Holdren. Mr. Chairman, I wouldn't formulate it in that
particular way, but I have been advised by the Department of
Justice, and I have suggested that their written opinion to
this effect on September 19th be added to the record. And they
were very clear in their language that section 1340(a) is
unconstitutional as applied to certain activities undertaken
pursuant to the President's constitutional authority to conduct
the foreign relations of the United States. That is an exact
quote. And they went on to say that OSTP's officers and
employees therefore may engage in those activities as agents
designated by the President for the conduct of diplomacy with
the People's Republic of China.
I am not a lawyer. The White House asked that a Department
of Justice lawyer be provided here to answer those legal
questions. I can't debate the law with you. But our request was
unfortunately not granted.
Mr. Rohrabacher. It wasn't granted by us or by the
Department of Justice?
Mr. Holdren. My understanding it was not granted by the
committee. That is my understanding.
Mr. Rohrabacher. All right. I probably would have granted
that had I known personally about it because I think that that
proposition certainly deserves a great deal of discussion. And
you are saying that this was the position of the Department of
Justice, but it is not necessarily your position, is that what
we are hearing today?
Mr. Holdren. Mr. Chairman, I am not qualified to reach
positions on matter of constitutional law. I am advised by the
Department of Justice that their opinion is binding on me as an
officer of the executive branch, even if their opinion is in
conflict with that of the General Accounting Office. That is
what I have been advised by the Department of Justice.
Mr. Rohrabacher. All right. So let's just note that when--
let me ask you this then. This came from the Department of
Justice. This did not come from your superiors at the White
House?
Mr. Holdren. I don't generally talk about the content of my
conversations with the President, who is my superior----
Mr. Rohrabacher. Well, conversations don't have to be
personal conversations.
Mr. Holdren [continuing]. In the White House. But the
Department of Justice opinion represents the administration's
view of this matter. And as I say, it is binding on me in the
judgment of the Office of the Legal Counsel in that department.
Mr. Rohrabacher. So if indeed Congress was to pass a law
that said that government employees could not do certain
actions as long as they were involved with, as long as these
government employees were under the command of the executive
branch, then that would be meaningless, right?
Mr. Holdren. I think that is a more general statement than
the one the Department put out. And I, again, would refer you
to the statement they put out. I am not going to speculate on a
broader interpretation.
Mr. Rohrabacher. It is an interpretation, but let me note
it is a principle, and I think that that is--I will tell you
that if any of the--and let me just acknowledge what both you
and General Bolden said. This is not a partisan issue. These
discussions about cooperation with China have certainly been
Republican and Democratic administrations have both taken the
position that you have in terms of the cooperation is worth the
benefits, it is worth getting those benefits. We understand the
risks, but it is worth the benefits, obviously which I disagree
with, and Congressman Wolf and others. And obviously to the
point that those who disagree with that were able to get that
enacted into law.
The only question now is whether or not the executive
branch feels compelled to obey that law. And what we are
getting now is that--which is not bipartisan. If this was a
Republican administration, believe me, there would be, and the
Democrats were in charge of Congress, this would be a
holocaust, I mean, it would be an uproar beyond imagination
having an administration saying that really, Congress doesn't
have the right to say where appropriated funds will be spent as
long as it deals with foreign policy.
Let's go into some of the--before we get more into that,
let's go into the benefits and the risks, which is what both of
your basic testimony is. Do you believe that the cooperation
that we had during the Clinton administration bore any
similarity to the cooperation that is now being advocated by
this administration in terms of space and technology
cooperation?
Mr. Bolden. Mr. Chairman, I would say that every
administration has advocated reasonable cooperation with China.
The former Soviet Union, now Russia. And you can see where that
decision has borne the fruits of the decision, though it may
have been controversial at the time. And the greatest example I
can give you is the benefit of the international space station,
which orbits today and has been for 11 years. And had we
followed the philosophy of those who believed that engagement
is not the proper course of action we would not have the
international space station today.
Mr. Rohrabacher. And at the time of that cooperation, what
was the level of the Russian space program as compared to the
MACE space program as compared to back in those days the
American space program versus the Chinese space program?
Mr. Bolden. When the cooperation began, which was with the
Apollo Soyuz test project in 1975, and it was the Soviet Union,
we had already been to the moon, as you know, we had
demonstrated that we were better than everybody else in the
world, much more technically capable.
So I would say that we were at the same position we are
today where we are the number one space-faring nation in the
world and intend to stay that way.
Mr. Rohrabacher. Okay. But you don't recognize that the
Chinese missile and rocket capabilities at that time were very
limited, and in fact, as was the task force reported after this
whole crisis and scandal emerged, that we had dramatically
improved a rocket-missile technology?
Mr. Bolden. Mr. Chairman, I think you may misunderstand
what I said. I was comparing where we are today with China with
where we were in 1975 with the Soviet Union.
Mr. Rohrabacher. Right.
Mr. Bolden. And at that time we were engaged, heavily
engaged in the Cold War, and both nations had nuclear missiles
poised at each other. And so I think we were in much more dire
stress then than we are today.
Mr. Rohrabacher. General, let me point this out to you,
that the Russian rockets that were available then were very
capable and at the same level as our own rockets now. Whether
or not they were able to get to the moon is another issue. The
Chinese rockets, when we began cooperating with them during the
1990s, the Long March rocket had a huge failure rate until, of
course, Americans cooperated by them and their failure rate was
diminished dramatically, meaning they became very, going to
like nine out of 10 would be, couldn't make it up because they
didn't have the right stage separation or the right bearings,
or they could carry one payload.
Do you think it is a good thing that now that the Chinese
were able, after our cooperation to carry more than one payload
on their rockets and that now nine out of 10 of their rockets
succeed rather than blow up on a launch pad?
Mr. Bolden. Mr. Chairman, I can only speak as the NASA
administrator. And my number one job is as to facilitate is to
ensure the success of our crews as we go to and from space, as
we fly through the atmosphere in aeronautics and as we conduct
the international cooperation that we do. And I can only say
that from the standpoint of NASA, as far as I know, since our
engagement with China, Russia, any other nation began, there
are no documented cases of transfer of technology that gave
advantage to any other nation. Not from NASA arrangements, NASA
agreements. We have guarded our technology and kept it from
being transferred.
Mr. Rohrabacher. Let me just suggest that you have not read
the task force, the congressional task force on technology
transfer to China that was done and voted on and unanimously
voted in a bipartisan fashion that totally contradict your last
statement. I am not saying you are lying or anything, I am just
saying that you haven't read that or you wouldn't have made
that statement. Because there was a major investigation into
the transfer of technology because of this cooperation, a
bipartisan task force, was the Cox report was issued, and it
was unanimously accepted by both parties, which goes, which
concluded that there had been great damage to our security
based on that cooperation.
Dr. Holdren, have you read that report, that task force?
Mr. Holdren. I have read a summary of it, I have not read
the report. And I think the question that is not clear from the
summaries so far is whether that was NASA cooperation or the
cooperation that went on between a private company and China at
the time.
Mr. Rohrabacher. Correct. And that is a very good
distinction. And let me note that when NASA cooperates quite
usually what happens and follows is there is cooperation by
major high tech corporations in the United States. And that is
what usually is the purpose of the NASA cooperation, is to
further that direct contact.
I don't think that the people that I know would agree with
you, either one of you, in terms of the benefits outweigh the
risks. I am not sure what the benefits to the American people
are. We know that the Chinese have now been producing major
consumer items in the United States with capabilities that our
companies, major corporations involved in technology, have been
able to ship there. I don't understand how that benefits the
American people.
Maybe it is good for American workers to have those jobs
earning a little bit more money rather than having the Chinese
produce these products which they have not developed and that
our companies have. And let me just note as far as your last
statement, I personally investigated this issue in the 1990s. I
was here and I spent a considerable amount of time in the field
going to the actual companies and seeing exactly how they were
cooperating back and forth. And one of the things the Chinese
did not have was state separation at the time. After this
cooperation, there was stage separation among their rockets and
nine out of 10 worked. Before, nine out of 10 didn't work. That
is not good.
I don't know if that, in and of itself, says that is--how
does that stack up to us being able to get certain things
manufactured there at a cheaper price, especially when the
other thing that we gave them was the ability to have more than
one payload on their rockets, meaning merving in the military
sense. We provided that to the Chinese.
Now, providing the world's worst human rights abuser which
is now building up its military and making, and being
demonstrably hostile to the United States in the South China
Sea and elsewhere and making alliances with every other vicious
gangster regime in the world, I do not understand what benefit
we get by perfecting their rockets and giving them the ability
to merve and to throw three nuclear weapons at us per rocket
rather than one. But that is what this is all about, that is
what this hearing is all about. That is why that was written
into the law.
It was written into law because Frank Wolf, who is a Member
of Congress, who also went through that same investigation and
Dana Rohrabacher and others who have been watching this issue
for a long time are aware of the specifics. And we are, we
convinced our friends in the legislative branch to put that
into law. The President then signed it into law without a
reservation stating that there is a constitutional question
here whether or not the legislative branch has a right to limit
the expenditure of money that is used by the executive branch
in determining foreign policy relationships. So this issue
seems to be--please feel free to answer those points.
Mr. Holdren. Yes, I would, Mr. Chairman, like to respond on
a couple of points.
Mr. Rohrabacher. Yes, sir.
Mr. Holdren. First of all, I certainly don't dispute that
there have been instances of technology transfer to China that
we did not wish and should not have welcomed. That is part of
the cost in liability that has to be traded off against the
benefits. I think it is possible to exaggerate the importance
of any one technology transfer by assuming the Chinese would
never have figured that out on their own if they hadn't gotten
it by technology transfer. Usually what happens is these
technology transfers accelerate by some amount but not always a
great deal the acquisition of a capability that is important to
a country. But I don't dispute there was a loss there. But
there have been many benefits.
And I point out on pages 5 and 6 of my written testimony a
number of them. I will mention a few more. We have cooperated
with China in the domain of public health and disease in ways
that have greatly increased our capacity to respond to
epidemics that originate in China, which many influenzas do,
and have enhanced our capacity to deal in the biological regime
with invasive species with pests that originate in China. Our
cooperation with China on nuclear safety has reduced the
chances that a Chinese nuclear reactor will suffer an accident.
If a Chinese nuclear reactor suffers a big accident, as
reactors in Fukushima, Japan recently did, that puts in
jeopardy our own capacity to operate our nuclear reactor
system. It puts in jeopardy the consent of the public to
operate this important component.
Mr. Rohrabacher. You have just given us good examples of
mutual benefit.
Mr. Holdren. Exactly.
Mr. Rohrabacher. But can you give us an example of just
benefit? I mean, this is--yeah, I can understand why they would
want us to come in and help make sure that they don't have
epidemics and I can understand why they would be happy to have
us perfect their nuclear program.
Mr. Holdren. Yes, I would be happy to give you an example
of a straight benefit. Again, in the dialogue on innovation
policy, which was a negotiation, the Chinese were persuaded to
relinquish policies they had put in place which discriminated
against American businesses. And I can tell you that the
American business community that works in China is very
grateful for the effort we made and for the benefit we got.
Mr. Rohrabacher. So the benefit, you are saying now, is we
persuaded them, the Communist Chinese Government, to quit
restricting our American businessmen who want to put our
technology in China? That is a benefit to us?
Mr. Holdren. No. Our businessmen who want to sell products
made in America----
Mr. Rohrabacher. Okay. Sell products.
Mr. Holdren [continuing]. In the Chinese market. And that
is a benefit to American workers, it is a benefit to our
economy, it is a benefit to our balance of payment.
Mr. Rohrabacher. Okay. So the benefit is that there were
certain things that we were not permitted to sell in China, and
you weren't saying that we eliminated their restrictions on
actually putting things into China, meaning technology that
would permit them to have greater manufacturing capabilities,
things like that?
Mr. Holdren. First of all, Mr. Chairman, I would not
guarantee that in some of the forms of cooperation, including
joint ventures between U.S. companies and Chinese companies,
there will be some transfer of technology. The key issue there
is one of intellectual property rights and that that transfer
of technology be compensated at the satisfaction of the owners
of the intellectual property. But I would assert that among the
benefits of the agreements we secured from the Chinese on their
innovation policy was increased access to Chinese markets for
American products made in America by American workers.
Mr. Rohrabacher. Well, we have read it differently because
the read that I have had of American access to their markets
has been that they have continued to have major restrictions on
our ability to sell finished goods, but they are perfectly
willing to permit us to go to their market and sell them what
is necessary to, the technology necessary to build up their own
manufacturing capabilities. We may be talking about the same
thing.
Mr. Holdren. I think we have more to do in these
negotiations. That is one of the reasons why I am eager to
continue them. We haven't gotten everything that we need in
terms of access to Chinese markets and nondiscrimination
against American firms. But we are making progress. We need to
make more. It will be to the benefit of American firms,
American workers and the American economy when we do.
Mr. Rohrabacher. All right. And we will have a second
round, but I have been taking up too much time already. Mr.
Carnahan, would you like to, or Mr. Cicilline?
Mr. Carnahan. Thank you, Mr. Chairman, and to our witnesses
for being here today. You have given us, I think, a fuller
picture of this bigger debate. Certainly the give and take tug-
of-war between Congress and the administration on foreign
affairs is not new. That has been going on probably since the
very beginning of this country. But--and I appreciate Dr.
Holdren, you know, you very succinctly and simply described the
relationship with China as complex. That is probably an
understatement.
But, you know, I, too, am of the belief that it is
important that we look for ways to maximize the benefits of
engagement, while at the same time minimizing those risks and
that certainly engagement outweighs any of those risks. And I
appreciate also the fact that in the context of the executive
branch, that you sought the appropriate legal advice in
pursuing this meeting. Folks in Congress may disagree with
this, and I think this is a legitimate issue for us to be
talking about here today, but I wanted to really get into an
area that really gets to the heart of this matter in terms of
what protections are in place to ensure that as we engage in
this dialogue at all levels, that we are maximizing those
benefits and minimizing those risk. And let me start with Dr.
Holdren.
Mr. Holdren. Sure. There are a wide variety of protections
in place that apply to these interactions and other
interactions. We have a variety of restrictions on the kinds of
technologies that can be transferred to China and appropriately
so in our export restrictions. We have a variety of programs in
place, including under the Committee on Foreign Investment in
the United States, CIFIUS, that tracks acquisitions by Chinese
and other foreign entities of businesses in the United States
that could have adverse impacts on our national security
through technology transfer or by other means.
OSTP, by the way, is a voting member of the Committee on
Foreign Investment in the United States and reviews all of
these matters. In the domains of cybersecurity which have been
alluded to by some of the previous witnesses, we have a very
wide and robust interagency set of measures that address the
cybersecurity threats associated with China and other
countries. When we travel to China, we take extensive
precautions in interaction with the appropriate U.S.
intelligence agencies to ensure that no sensitive or classified
information is compromised. We are very well aware in this
administration, as previous administrations have been, of the
liabilities and the risks associated with these kinds of
interactions, and we are taking every step that we can think of
to minimize those risks and liabilities. Some of those
measures, of course, fall in the classified domain. We would
not be able to discuss them here. But I would be happy, in a
suitable venue, to provide more detail.
Mr. Carnahan. Thank you. And General Bolden, the U.S.,
China and Russia are the only three countries with manned space
flight capability. We recently ceased operating our shuttle
fleet. What risks are posed to the U.S. space program if we are
not cooperating with China and Russia and with the broader
international coalition that we work with in terms of our space
program?
Mr. Bolden. Mr. Carnahan, what risk we take is that we lose
our position of leadership in the world. And it is tenuous even
as we speak today because we are the only one of the
international partners involved with the international space
station that does not have a working relationship with China.
But again, I would say in my case, I am responsible for the
space agency and not science and technology advice to the
President, as is Dr. Holdren. So my area of expertise and my
area of responsibility is very limited. When we did have
bilateral dealings with China, they were in the area of
geodynamics research, which was essentially talking about how
can we predict earthquakes and then what do we do after it
occurs, areas like orbital degree mitigation. And so there is
not my concern that NASA will be subjected to providing
technical information as the chairman is concerned. And we
limit it that way.
We have an agency-wide export control board that determines
what we can do in terms of export control, and we are part of
the interagency process, as Dr. Holdren described. NASA is very
limited in what we do in terms of the concerns that are
expressed by the committee.
Mr. Carnahan. And finally, I want to get your comment. You
describe limitations in suspending or canceling certain
bilateral activities with China pursuant to the law, but of
course, you are authorized to continue multi-lateral engagement
in activities with China. Does this make any real practical
difference that that engagement has to be done in a
multilateral setting that you cannot do in a bilateral setting?
Mr. Bolden. Let me make sure I understand your question.
Are you saying that by not being able to do it in a bilateral
setting, does it limit my ability to carry out what NASA is
supposed to do?
Mr. Carnahan. Right. To really continue the mission of
NASA.
Mr. Bolden. To date or right now it does not limit my
ability to do the three primary things that the Congress of the
United States and the President have designated for us, the
three priorities that we have right now, which is the
formulation of an exploration program consisting of a heavy
lift launch vehicle, a crew module, expansion of the
utilization of the international space station by bringing
about the vibrant commercial industry that can provide us
transportation to and from space so that I can stop having to
pay our Russian partners to do that as I do right now, and then
thirdly focusing in the area of science on the James Webb Space
Telescope as the dominant science project, but also in the area
of earth science where we did cooperate with the Chinese. But
we have other entities that provide us that information so it
is not critical right now. Cessation of multi-lateral
participation would put us on the outside looking in.
We would not be able to participate in things like UN-
COPUOS. I can go on and on with international conferences,
congresses, the U.N. again. NASA would just be on the outside
looking in and we would serve no purpose for the Nation.
Mr. Carnahan. Thank you. I am going to wrap up my time
because I know we have got a colleague that wants to engage in
this as well. I am going to yield at this point.
Mr. Rohrabacher. Wait a minute now. I want to know
specifically how to pronounce your name.
Mr. Cicilline. Cicilline.
Mr. Rohrabacher. Cicilline. Mr. Cicilline, you take as much
time as you would like.
Mr. Cicilline. Thank you, Mr. Chairman. Thank you General
Bolden and Dr. Holdren for being here. As I reviewed both the
testimony that you just provided as well as the written
testimony that was provided and reviewed by me last evening,
certainly the subject of the dangers of engagement with China
was the subject of a lot of this material. But what struck me
in reviewing this is that there is another danger, which I
would really like to ask Dr. Holdren about. And it really stems
from an intention by the Chinese to really invest in innovation
in a very, very serious way. In February 2006 China's state
council issued the national medium and long-term program for
science and technology development which we often refer to as
MLP. And in that, they committed to changing China within 15
years from a major manufacturing center to a major global
source of innovation.
And by 2050, to make China a global leader in innovation.
And the plan further says that by 2020 gross expenditures for
research and development would rise to 2.5 percent of GDP from
1.3 percent in 2005, so nearly doubling it. And when you look
at sort of that kind of a serious investment in innovation and
research and development in a time when we are being, when some
of my colleagues in the Congress of the United States are, in
fact, making strong arguments for reducing investments in
research and development and innovation, and it struck me as I
reviewed this that that poses a great danger to our innovation
economy and to the long-term economic prosperity of our
country.
And I would like to know some of your thoughts generally
about what sort of policies we should be pursuing so that we
remain competitive, particularly when faced with that sort of
investment by the Chinese. And then I have a second part to the
question, but I would like you to go to that part first.
Mr. Holdren. Well, thank you Congressman for that question.
Certainly, the Chinese intend to be our competitor in high
technology. They are already our economic competitor in a
variety of regimes. I noted that in my testimony. And they
intend to do better. We still have the best colleges and
universities in the world, we still have the best research
laboratories in the world, we still out-innovate everybody in
the world. In order to maintain that lead, we are going to need
to continue to make the investments in research and
development, the investments in our research universities and
our national laboratories, and the investments in our education
system, particularly science, technology, engineering and math
education, that the President is calling for, and which again,
have historically been a matter of bipartisan agreement.
The need to make these investments in the basis of our
future in science, technology, innovation and their application
to the economy, to our security, to the environment, this is
something in which we have been the best. We need to continue
to be the best. But the notion that China intends to compete
with us does not mean the solution is to disengage from them.
Germany competes with us; England competes with us; Russia
competes with us; increasingly, countries in South America want
to compete with us.
We do not generally conclude that the solution to
competition is disengagement. The solution is intelligent
engagement measured, focused, appropriately managed so that we
get the benefits for our own innovation system, that we help
other countries get particular benefits that are in our
interest and that we stay engaged with the best minds and the
best facilities in the world, wherever they may be. The
President has said very clearly that to win the future, we need
to out-educate, out-build, and out-innovate everybody else. We
plan to continue to do that. But part of doing that is also
staying engaged with everybody else.
Mr. Cicilline. Thank you, Doctor. And the second issue, and
I apologize if you addressed this, I had to step out for a
minute. If you did, I apologize. But I wonder if you could just
comment on how effective the strategic and economic dialogue
has been or any other dialogues that have been, that have been
engaged with between the United States and China over the theft
of intellectual property and forced technology transfer of
policies. Particularly, I am interested to know whether China
has followed through on its commitments to delink indigenous
innovation policies from public procurement at all levels of
government. I represent a State that has a long history of
manufacturing and have heard from a number of manufacturers in
my home State about experiences they have had with the theft of
intellectual property and the challenges they face.
And I think we all agree that in a level playing field, we
have the greatest innovators, the greatest innovators and the
greatest workers in the world, but the theft of intellectual
property and this opportunity for public procurement only to
come about as a result of the transfer of intellectual property
remains an issue. And I just wondered what your thoughts are on
where we stand and whether the dialogue has been helpful in
protecting American workers and American manufacturers in that
regard?
Mr. Holdren. First of all, it does remain an issue. We have
made progress. But as I said a moment ago, we need to make much
more. One of the interesting things to which the Chinese have
agreed is the result of our interaction in the dialogue on
innovation policy and the strategic and economic dialogue, is
to have a bilateral team of technology experts set up that
actually goes out into the field, into the provinces, into the
cities to find out whether the new instructions from the
Central Government about eliminating some of these
discriminatory policies and being unattentive to the theft of
intellectual property, to see whether that is really happening.
And this is extraordinary. I mean, this is the equivalent of
accepting on-site verification in arms control, which was
always a great challenge to achieve. The Chinese have accepted
this. The President of China in the summit in January announced
that China was abandoning these particular policies, and they
are committed to make stronger efforts to protect intellectual
property. I might just add that probably no American company
has suffered a greater loss of intellectual property to China
than Microsoft. And we have the chief strategy officer of
Microsoft as a member of the President's Council of Advisors on
Science and Technology, Craig Mundie, and he is participating
energetically and enthusiastically with me as part of the U.S.
delegation to the dialogue on innovation policy as a member of
PCAST because he believes that we are making progress and of
course that we need to make more and therefore we need to
continue it.
Mr. Cicilline. Thank you. Thank you, Mr. Chairman.
Mr. Rohrabacher. Well, I want to thank the witnesses. I
know I took a long time, and the chairman's prerogative. It
took me a long time for me to be chairman so I could actually
take that time. But I was hoping that Mr. Carnahan would have
another chance if he had anything else to ask. Just a couple of
thoughts. And that is, I think, number one, that we were
talking about an issue of legality, the constitutionality which
these witnesses have made sure that they are--we understand
that you are not the definers of what is constitutional and
what is not, and you are part of an administration and will
take direction from your President, which is appropriate.
I think there is a major constitutional issue here. After
hearing the testimony, I believe there is a major
constitutional issue to be determined about whether or not
Congress does have the rights to limit you and your jobs and
what your personnel can do in the area, that steps in the
foreign policy arena.
Are we permitted then, as Congress, to say that you cannot
expend those funds. Thus, you cannot have your people doing
these things. And the Department of Justice obviously has said
that, no foreign policy belongs to the executive branch and
that will have to be determined. And I appreciate you coming
here realizing that is the core of the dispute, an issue, I
also appreciate both of you coming here in order to argue your
case for the benefit of the policy itself, and not the
constitutionality, necessarily, of it.
And I think on that, we have some major disagreements, and
I would think that the great investment--the only thing I know
personally is, well, you know, I was working with the Reagan
administration for 7 years. And, again, I noted earlier that
when Reagan increased the level of cooperation with the
Chinese, it was predicated in those very agreements and
statements that he made that this is based on a liberalization
continuing in China that has led to a very robust democracy
movement, which after Tiananmen Square was slaughtered and
China actually has less democratic rights now than they had
then, although they have had a lot of economic progress.
I am not convinced that making a dictatorship more
efficient and providing more wealth will lead to
democratization, but I understand there are people who honestly
believe that if we increase the level of wealth of a country,
you will eventually eliminate the ghouls and the goons and the
gangsters who run some of these countries.
I did not see that in Russia. Ronald Reagan did agree that
there was some cooperation going on, would never have agreed to
most-favored nation status, and, in fact, ratcheted up the
other types of confrontations that we had with Russia which
actually bankrupted their system.
It was not benevolent acts that won them over that led to
the destruction of the Communist Party dictatorship in Russia,
it was just the opposite. And so with that said--at least that
is in the chairman's opinion.
And I want to thank you again for coming today, and there
will be, if there is any written questions that we have, we
will submit them to you and hope that you can get them back to
us in a timely manner.
And so this part of the hearing is over and, again, thank
you to the witnesses.
Mr. Rohrabacher. For our final panel, we have Rick Fisher,
who is a senior fellow at the International Assessment and
Strategy Center and an expert on Chinese military development.
He has previously served as a senior fellow for the Center or
Security Policy and editor of the Jamestown Foundation's China
Brief and as a senior fellow with the White House Republican
Policy Committee.
Adam Segal is the Ira Lipman Senior fellow at the
Counterterrorism and National Security Studies for the Council
on Foreign Relations.
Before going to the council on foreign relations Dr. Segal
was an arms control analyst for the China Project at the Union
of Concerned Scientists and has recently written a book
entitled, ``Advantage: How American Innovation Can Overcome the
Asian Challenge.''
We appreciate both of you being here, and you may proceed
with your testimony. Mr. Fisher.

STATEMENT OF MR. RICK FISHER, SENIOR FELLOW, INTERNATIONAL
ASSESSMENT AND STRATEGY CENTER

Mr. Fisher. Thank you, Mr. Chairman. It is an honor to
appear before this committee to assist your deliberations on
this very important issue.
Mr. Chairman, I very much appreciate your leadership in
working tirelessly to alert the country to the dangers emerging
from the People's Republic of China and the need to protect
ourselves, defend ourselves. I am also very grateful for the
leadership of Congressman Wolf. I am grateful for his testimony
today.
I am also grateful for your mentioning of the Cox report.
As you mentioned, I had the opportunity briefly to work for
Chris Cox just after his report was released. And at that time,
I remember the crisis in our relationship with the PRC. We were
discovering the espionage, the military potential was very
great.
One of my favorite stories that emerged from that period
was about the Martin, former Martin Marietta Corporation and
how a Chinese engineer explained to me one evening how solid
fuel rocket technology from a kick motor that Martin Marietta
had sold or had used on a U.S. satellite revealed to the
Chinese how to perfect their own solid fuel rocket motors.
Well, that rocket motor became the basis for the DF-21
medium range ballistic missile. The DF-21 became the basis for
the anti-satellite system used successfully in 2007, and is
also the basis for the new anti-ship ballistic missile, the DF-
21(D) that is a revolutionary weapon targeting our aircraft
carriers and other large ships in Asia.
So what I stressed in my written testimony was the real
dangers that can emerge from uncontrolled and unmonitored
cooperation with China in space. I have been studying the
People's Liberation Army, writing about its modernization for
about 15 years. A large part of that time, I have spent focused
on monitoring China's space program.
And there are two fundamental observations that one must
make. The first is that the Chinese space program is controlled
by the People's Liberation Army. They are the ones that set the
priorities, they control the programs.
The second, an obvious conclusion that I have drawn, is
that China's space program is nearly entirely dual use.
Everything that the Chinese put into space, including their
manned space program, is designed to produce military benefit
for the People's Liberation Army and the conduct of military
operations on Earth.
All of the first seven Shenzhou missions, their first
manned space capsule, conducted some form of military mission
and I have listed those in my testimony.
Shenzhou 7 in 2008, September 2008 did something completely
different, though, it flew to a point about 27 miles from the
International Space Station. Just before it reached that point,
though, it launched a micro satellite so you essentially had
this body moving 17,000 miles an hour with a projectile out in
front of it and there was two Russians and an American on the
International Space Station.
I have written that this raised the possibility of real
danger to those on board the ISS. But, Mr. Chairman, I cannot
find a single statement by a U.S. Government official
questioning this incident or reacting to it.
And so this will continue. The space lab that was launched
on September 29 has surveillance capabilities. The future space
station that will be launched in about the 2020 timeframe will
be easily configured for military missions. Space claim, the
same thing. In my opinion this dual-use character will continue
with the PLA's space program to the moon and beyond.
So to help illuminate these dangers, I have suggested in my
testimony three questions that the administration should answer
to try to satisfy the many concerns that have been expressed
today and for many years by the Congress.
The first question is does the vast difference in PRC and
U.S. space transparency mean that any level of contact between
official, corporate or university sectors could pose a
disproportionate threat to the United States?
All individuals that we could possibly invite to the United
States from China to cooperate in space programs, how do we
know who they really worked for?
A second question, does the clear dual-use nature of the
PLA, Chinese space program, mean that potential Chinese space
cooperation will never produce the same mutual benefit for the
United States?
Whatever China learns from our space program will be
applied to assist military goals. Our space program is
civilian. It is not producing military benefit, at least
directly for the U.S. military.
Third, does the PRC's aggressive pursuit of pervasive
espionage also dictate that the benefits of U.S.-PRC space
cooperation will never be mutual?
And, finally, I ask, does the proposition that U.S.-PRC
cooperation in space can improve their relations on Earth
really stand up to historical examination? We have heard in the
testimony today reference to the 1975 U.S.-Russia Soyuz
mission. Well, that was all fine and good after, but after
1975, China--Russia, the Soviet Union, proceeded to build a lot
greater and more dangerous weapons to put into space. And they
would have done so had the Soviet Union survived past 1990.
I think the proposition is simply not backed up by history
and those who feel that we can advance terrestrial relations
with China by cooperating in space have really got it
backwards, and I will stop there.
Mr. Rohrabacher. Thank you, Mr. Fisher.
[The prepared statement of Mr. Fisher follows:]

----------

Mr. Rohrabacher. Dr. Segal.

STATEMENT OF ADAM SEGAL, PH.D., SENIOR FELLOW, COUNCIL ON
FOREIGN RELATIONS

Mr. Segal. I want to thank the chair and the other
distinguished members of the committee for the invitation to
speak here today. It is a real honor.
While I share many of the committee's concerns about
China's rise as a scientific technology power, I respectfully
differ on the means for addressing that challenge.
One of China's great strengths has been a laser-like focus
on shaping foreign interactions to serve its national
innovation goals. By comparison, the United States is greatly
handicapped as it lacks the ability to gather a comprehensive
picture of science and technology exchanges with China and to
coordinate its response to some of the most malevolent aspects
of China's rise.
The solution is not to cut off all exchanges with China.
What is needed is a more comprehensive approach. And so instead
of limiting funding for the Office of Science and Technology
Policy, the more strategic response would be to actually expand
support for the OSTP. To be sure, there are challenges in how
China is pursuing its objectives in scientific technology and
how it might use the results for economic and military power.
It is clear that China's goals are ambitious. As the 2006
Medium-Long-term Plan states, China's goal is to become an
innovation nation by 2020 and a global scientific power by
2050. Investment in R&D has grown by 20 percent a year since
1999, and it is expected to top $153 billion by this year.
China, as is well-known to this committee, has adopted
mercantilist policies to foster indigenous innovation.
Procurement strategies, competing technologies, standards and
the failure to protect IPR have all been adopted in order to
create new barriers and force technology transfer.
U.S. intellectual property is now widely targeted by cyber
hackers and industrial spies. Since 2010, Google NASDAQ,
DuPont, Johnson & Johnson and General Electric, RSA and at
least a dozen others have had proprietary information stolen.
And on Monday, Symantec released a new report tracing attacks
on 48 chemical and defense industries back to China.
China has also leveraged the globalization of scientific
technology to improve the technological capabilities of its
defense sectors. Shifting research centers to China and
developing collaborative business relations with Chinese
companies inadvertently involves American institutions in the
diffusion process, speeding Beijing's military modernization.
The shipping and telecommunications industries, for
example, have made steady improvements in R&D through their
engagement with the international economy, and this has
resulted in quieter subs and more advanced C4ISR capabilities.
But the rise of new science powers China, but also India
and Brazil, presents an extremely viable opportunity for the
United States. For the last 50 years, we have assumed that the
scientific dominance of the United States will continue. This
assumption is now in question as scientific capabilities will
be more widely distributed in the future.
From 2002 to 2007, for example, developing countries,
including China, India and Brazil, more than doubled their
expenditures on R&D, increasing their contributions to world
R&D spending from 17 to 24 percent.
The United States has been one of the major beneficiaries
of globalization and science and technology. An American
society is probably better positioned than any other to tap
into these new sources of discovery.
The dominance of the American computer industry was built
on the ability to develop global design and manufacturing
networks. Immigrant scientists and entrepreneurs have been a
major source of dynamism in our universities and our start-up
culture.
The globalization of science and technology has also played
a role in American military dominance. American universities
and private companies, not Federal labs, provide much of the
technology required for the U.S. military to keep its
qualitative lead over potential challenges.
These same universities and private companies need access
to talented markets and developing economies, especially China,
to remain competitive. Abandoning S&T exchanges is not a
strategy.
The United States needs a strategy that is not just whole
of government that entails the numerous views of department and
agencies, but a whole of society strategy that includes the
companies, entrepreneurs, scientists and universities that
drive the globalization and scientific technology.
While parts of that strategy are clear, and I include
reinvigorating the U.S. innovation system and pressing China
broadly on indigenous innovation and other predatory policies,
much of it remains uncertain because China is opaque in the
bilateral relations that are so complicated.
The OSTP should be well positioned to help develop that
strategy to provide insight into Chinese motivations and plans
and into a larger context of how global science and technology
is evolving.
For most of the last 36 years, the bilateral science and
technology relationship was basically an afterthought in U.S.-
China relations. Though it was often a source of stability in a
relationship that has often seen its ups and downs over Taiwan,
trade and human rights.
Today, science and technology plays an increasingly central
role in economic and national security interests and relations
with China. These interests are better served by a more capable
OSTP, one that has access to more information and is better
able to coordinate a U.S. response than one that is severely
limited.
Thank you very much, and I will take any questions.
[The prepared statement of Mr. Segal follows:]

----------

Mr. Rohrabacher. Thank you both, and just a couple of
questions here.
So, Mr. Fisher, you, when people talk about cooperating
with or actual investment by American companies that was
described by Dr. Holdren there, that technology, that
investment that we have, you know, when we are going over there
selling those products, you are suggesting that there is almost
always a dual use to those products?
Mr. Fisher. Well, in many cases, yes, Mr. Chairman. When
we, when General Electric proposes to help develop a new turbo
fan engine with China, that definitely has a dual use. The
engine that will emerge from that cooperation will inform,
significantly, an indigenous Chinese engine that will power
transport aircraft, that will power bombers, that will be
taking troops around the world.
Mr. Rohrabacher. Okay, so let me be real clear here about
what we are talking about because when we were discussing the
benefit that all this China trade had had to the United States,
we were saying that we would had some great progress and that
we have convinced the Chinese to permit us to sell some of our
technology products over there.
General Electric might be one of those examples that where
they now--they are permitting us to sell our technology over
there, which will then permit them to have an aerospace
industry that will put our people out of work. Is that the sort
of----
Mr. Fisher. It is a painful character, Mr. Chairman. For
decades, we have been complaining about the trade imbalance
with China. The Chinese invariably always respond, well, you
could sell us some more of your technology. We will buy that
and, of course, they want that technology because of the dual-
use implication.
Mr. Rohrabacher. Right. So we end up creating their
manufacturing base by selling them things that, technology,
what a great victory it is. They have agreed to buy our
technology that will make them better at producing things that
eventually can be sold here but also can be used to upgrade
their military capabilities like jet engines and things such as
that.
And the PLO--or, excuse me, the PLA, owns many of these
companies that are partnering with these American companies,
isn't that right?
Mr. Fisher. Well, the companies are controlled by
government. The PLA exercises control. I wouldn't so much call
it ownership but control. The PLA controls the money that funds
them, funds their programs. The PLA sets the priorities that
then are carried out in terms of research, development and
production.
Mr. Rohrabacher. Dr. Segal, you mention in your testimony
that tens of thousands of Chinese students have come to the
United States to learn, and you see, and have returned home.
And you see this as a good thing, that we have now taken
Chinese students, Ph.D level, which we have spent millions if
not billions of dollars developing the technology and the
science that we now are imparting to them and then they go home
and use it to develop their country to be more competitive?
Mr. Segal. Actually, my preference would be that they would
stay here quite honestly, that we encourage Chinese PhDs,
engineers, other graduates with scientific and engineering
degrees to stay here, to start companies and be involved in the
U.S. innovative capabilities. And that, I think, is what we
should be trying to do.
We should be trying to promote them. That is what
traditionally has happened. In fact, we have only started
seeing an early phase of some scientists going back.
Mr. Rohrabacher. Of course, your preference is they stay
here, but how many do, and you want to say something to that,
Mr. Fisher?
Mr. Fisher. When you are finished.
Mr. Rohrabacher. Okay. I was just going to suggest that,
number one, we have a limited number of Ph.D. Programs. We have
a limited number of students that we are going to permit into
our major universities at this high level, we are now talking
about tens of thousands a year, I think we are probably talking
a couple thousand a year.
For us to try to suggest that we should fill those ranks
with as many Chinese students as we can, as compared to filling
the ranks with, say, American students that were A-minus
students rather than A-plus students, I think it might be more
beneficial to our country to have those Americans--by the way,
those Americans might be Chinese Americans too, and they might
be, you know, Afro Americans or Irish Americans, but they are
Americans, as compared to Chinese nationalists.
Mr. Segal. I think the problem has been, is, as you have
said, over the last two decades that American universities at
the Ph.D. Level have been very dependent on overseas students
to fill Ph.D. and master's programs.
That has been because American-born students, no matter
what their ethnic or other heritage, have chosen not to go into
the sciences, mainly for economic incentive reasons, right. If
you are a smart young American, you are going to look at what
the financial sector was making versus what it was going to be
for a Ph.D. for 10 years.
Mr. Rohrabacher. Well, the Chinese actually said we are
going to pay all of your experience if you go over and to that
university and get that Ph.D. And come back. And the Americans
have been told, if you get this Ph.D. You are going to be able
to graduate and have a $200,000 debt to pay back the rest of
your life.
Mr. Segal. Well, that is why I think, you know, the answer
to that solution is to make science and engineering degrees
more attractive to American University students.
In fact, you know, the widespread assumption is that
Americans aren't interested in science and math. But if you do
most surveys of freshman classes, about a third of them in fact
say, yes, I am interested in science and math.
Mr. Rohrabacher. Well, I think that is true that we should
be encouraging our students, our schools to be taking American
students and we should be making it easier for them. But that
still doesn't really get to the point where you have--we are
now bolstering China's capabilities and bolstering China's
capabilities, this is the debate.
I mean, people, some people, and I think the title of your
book does suggest that innovation in itself is a good thing,
but maybe you are just suggesting--the innovation on the
American side would be what would make this a better world, not
necessarily a general innovation that encompasses the
dictatorships of the world as well.
Mr. Segal. The book is focused on how to improve American
innovation capabilities. But historically those students that
you are talking about have stayed, right. We look at Chinese
and Indians in Silicon Valley and Route 128 and all those
others places that have stayed. We are now starting to see
people going back.
But, again, most of those people are maintaining
connections to the United States, right. They are in the
language of Anneliese Aksidian from Berkeley, argonauts, right,
travelling in space all of the time back and forth between the
U.S. and China. That, I think, is a better outcome, right, than
them just going back to China.
Mr. Rohrabacher. I would think that anything is a better
outcome when after a 10-year period you can show that the
standard of living that the American people has been increased
and improved because of that and the safety of our people has
been improved and the prosperity of our country has been
improved, as compared to what I see, which is our relationship
with China has led to an improvement in their situation but not
ours.
It seems to me that there is wealth being transferred here
via the knowledge that goes into producing wealth that we have
taken, the intellectual property that we have invested,
hundreds of billions of dollars in, and it now is working for
the benefit of other people, and worst of all, the other people
happen to be run by a government that is the most vicious anti-
human rights government in the world.
Mr. Segal. But, again, I think if you just look at the
numbers again on immigrant entrepreneurship, right, those
people are starting companies in the United States. They are
hiring locally, they are developing locally and they are
innovating locally. So that is, I think----
Mr. Rohrabacher. I am not against legal immigration in the
United States and making it targeted toward people who want to
invest from there.
But when they send people over here so that they can be
educated and then they go home with billions of dollars worth
of information in their head that the American people have paid
for, that is not in our benefit.
Mr. Fisher, and then we will go on to our colleagues.
Mr. Fisher. Mr. Chairman, I just wanted to comment that for
many years, I have been hearing from colleagues that the
counterintelligence challenge of monitoring Chinese students,
graduate students that come to the United States to learn very
specific technical skills, which they take back to China, is
one of the most, one of the greatest unaddressed
counterintelligence challenges that we face.
In my testimony on page 11, I describe an example of how a
Chinese student actually gained a visiting fellowship in a
laboratory connected to the former Lewis but now John Glenn
Research Center of NASA in Cleveland, Ohio, and got a head
start in creating China's competency in ceramic matrix
composite materials, which are used for re-entry and for other
things like missile warheads, nose cones.
Professor Zhoan Latong was able to come to Cleveland in--I
believe it was April 1989. Despite the Tiananmen embargo she
was able to remain at these NASA laboratories until 1991 and
her biographies, her Chinese biographies are all glowing about
how she took her foreign research back home to China to create
China's competency in ceramic matrix composites.
Just this last January, she was featured on a Chinese
television show that was about how her laboratory was
contributing to China's first small experimental space plane.
Mr. Rohrabacher. I think that speaks for itself.
Thank you. Mr. Cicilline.
Mr. Cicilline. Cicilline.
Mr. Rohrabacher. Cicilline, I am going to get that right,
yes, sir.
Mr. Cicilline. Thank you, Mr. Fisher and Dr. Segal for your
thoughtful and informative testimony.
I want to just pick up on, first on this issue of
innovation and entrepreneurship and the great universities of
America, because one of the things that was interesting during
our orientation for new Members of Congress at the Kennedy
School at Harvard University, the President of Harvard
University spoke to us and actually challenged us to focus on
what she saw as one of the biggest challenges facing our
country, and that was the loss of this great intellectual
capacity that is graduating out of the world's best
universities here in America, and that the challenge is that it
is not that they come here to study at the great universities--
the greatest universities in the world like Brown University in
my district--and then they choose to leave, but we actually
kick them out. They are not free to stay.
So I think one of the challenges we have to look at is how
do we encourage people from all over the world to continue to
see America as a great beacon of intellectual development and
innovation so that they not only come to study at our great
universities, but they remain here to start companies, hire
Americans, locally, innovate and build companies, and rather
than lose that capacity, go back and do the same thing in
another country.
And so I think we lose that.
The second part is that I think we lose the opportunity to
show people all over the world the power of democracy, to be a
student here and study and see how America functions as the
world's best and strongest, the most productive democracy, has
huge value. It changes students forever and they become very
often ambassadors to democracy back in their own home.
So I just wanted to--I think you, Dr. Segal, have made that
point, and I think it is an important one.
What I would like you to address, as I reviewed your
testimony today, in your written testimony what really struck
me was that you--I would just like to point out a couple things
that you mentioned, and that is first the importance of the
United States maintaining its scientific strength here at home,
that the United States remains the world leader in science and
technology, but that there are some developing nations like
China and India and Brazil who have more than doubled their
expenditures on research and development in 2002 to 2007.
And China, in particular, has grown its investment by 20
percent a year since 1999 and is expected to exceed $153
billion of investment this year alone.
And what I think is really alarming is China is producing
an enormous number of scientists and engineers from their
graduate schools in excess of 2 million in 2009 alone.
And so I think when we look at what do we do, what are the
policies we should put into place as a country, they obviously
include investments in science and research and particularly
focusing on STEM education, to ensure that we have the
workforce and the ability to compete successfully.
But one of the challenges we face is even if we make all
the right investments, the science and research and innovation
and higher education, we end up with an uneven playing field
because of the theft of intellectual property and because of
Chinese practices of requiring the transfer of intellectual
property.
So while I am going to keep advocating for what we need to
do to compete successfully and win. If at the end of the
process, the Chinese or others simply get to steal what we, you
know, the results of that investment, you know, from pre-K-12,
to Head Start, to Pell Grants, and all of the infrastructure
that is necessary, I am going to continue to advocate for that.
But at the end of it, if we haven't protected our investment by
successfully protecting American intellectual property, then it
is hard to kind of keep advocating for it.
And so what I would like to know is what do you think we
should be doing, why aren't we doing more enforcement at the
WTO?
What tools could we make better use of to protect this huge
investment we are making in order to be sure at the end of this
process we are competing successfully and winning?
Mr. Segal. Thank you very much for your question. I totally
agree that there is no way we can continue innovating and have
the Chinese completely tip the table toward them, right. The
free trade system is based on comparative advantage. Our
comparative advantage is innovation. And if they are going to
undermine that, then you can't have that system continue to
work.
So besides doing things at home, I think we have to keep
pressuring China on indigenous innovation and intellectual
property rights. The fact that it was now at the top of the
list for this strategic and economic dialogue I think was an
important step--it's only the first step, right. What we have
to see, as your earlier question to Dr. Holdren suggested, we
have to see how they are going to follow it through.
But we know what works, right. There have been specific
instances with either IPR or with indigenous innovation where
the Chinese have backed away. That has primarily happened when
both U.S. companies and foreign countries all push in the same
position, right. What has typically happened in other cases is
you get a lot of detection, right.
U.S. companies don't want to be seen as the one who
publicly embarrassed China because they know that the Chinese
Government is going to punish them sometime in the future with
safety inspection or other types of interference with their
business.
And the Chinese are often very good at splitting countries,
right. The EU may have this position, we may, and the Japanese
may be somewhere else. So in those instances where everyone is
in a row, the Chinese have backed down. We saw this with the
WAPI standard for WiFi. Everybody stayed together and didn't
back down.
So I think in those kinds of instances where you can get
that type of thing, that is what we should be working for, then
we can push the Chinese.
The other thing to do, of course, is that R&D is mobile.
And so what you see is that if a U.S. company takes the
benefits from a grant from the NSF or something at a U.S.
university and then scales it up in China, that doesn't serve
our purpose, right? So we have to think about how do we tie
that scaling up side to local, right? How do we improve
manufacturing jobs, how do we get those people?
And I think part of the way to do that is to make those
grants collaborative, right, to insist that companies work with
other U.S. companies, that they work with U.S. universities and
tie them locally. Those are the two ideas.
Mr. Cicilline. And it would seem to me another approach
would be to repeal existing tax incentives and tax breaks to
give to American companies who do that kind of scaling up in
China rather than here in the U.S.
Mr. Segal. Yeah, that would also be one.
Mr. Cicilline. Thank you, Mr. Chairman.
Mr. Rohrabacher. I want to thank the witnesses. Mr. Fisher,
did you have a final comment that you would like to make and
Mr. Segal, did you have a final comment?
Let me then close this hearing by saying and emphasizing
something that was said by Mr. Wolf, Congressman Wolf when he
was here at the beginning of the hearing, and that is don't
mistake any of the criticism that we have made of China with a
criticism of the Chinese people. China is a dictatorship in
which the people do not choose their own leaders. The political
leadership in China suppresses the people. It is--the
relationship is different than here.
Our Government reflects the will of the people, at least it
should, and, there, that is just not the case.
So, who are our greatest allies in correcting a bad
situation that is developing between China and the United
States? Our greatest ally are those people in China who want to
live in freedom and in peace and want prosperity for their
families as we do.
And so nothing in this hearing should be interpreted as
being anti-Chinese. This is anti the Beijing dictatorship. This
is all these things that we are talking are based on the fact
that you have a militaristic human rights abusing government in
Beijing that is oppressing their own people as much as they are
threatening the stability of the rest of the world. We have
seen, with that regime a transfer, a major transfer of wealth,
perhaps the most historic transfer, voluntary transfer of
wealth from one country to another in the history of the world.
We have seen money and wealth that would be in the United
States transferred to uplift the people of China.
Now I happened to have been there in the beginning when
Reagan made this, and again, let me assert when people are
talking about Ronald Reagan, he was very clear the reason why
he was agreeing, and the American establishment agreed to
permit this type of policy establishing itself, everything was
established during that time period, was that there was a
liberalization going on in China that would have resulted in a
more democratic country that was at peace with its own people
and at peace with the world.
At that moment, that is what was evolving into place. Had
Ronald Reagan been the President at Tiananmen Square, I have no
doubt that he would have sent a telegram to the leadership of
the Communist Party and said if you unleash the party on the
army on the democratic movement in Tiananmen Square, the deal
is off. No more technology transfers, no more investment, no
more of the United States turning around and letting this theft
of our technology and investment go there. It is all over. All
of our credits, it is done, the economic deal--that is what he
would have said in this telegram. I would have written it for
him.
And, guess what. He wasn't President. Herbert Walker Bush
was President. And do you know what the telegram that Herbert
Walker Bush said that he sent to the Communist Party
leadership?
That is it, nothing.
And when they slaughtered those people and they turned
China back on course to dictatorship and they kept China on a
course of belligerency toward the western world and toward
massive repression of their own people, they didn't pay any
economic price whatsoever. They benefited from it and our
witnesses were correct.
This is not a partisan issue. It was bipartisan governments
here in the United States, both Republican and Democrat, have
permitted this transfer of wealth and power to go on to this
vicious dictatorship which rivals, certainly rivals the
monstrous behavior of the Hitler regime who, of course, we
shouldn't forget that IBM and a lot of American companies did
business with Hitler too, didn't they? Did that make that any
more peaceful in the world? No.
And Germany, let us remember, was a very advanced economic
country. So it is not out of poverty you have this
dictatorship, no. What you have got is evil forces in this
world. And then you have a lot of wonderful people who populate
this planet, where wonderful people should work together and
side with each other when they see someone being oppressed and
someone--and we have a government in China that takes people in
the Falun Gong, and their crime is that they believe in
meditation and yoga, and that is, in a religious way, and that
is appealing to the Chinese and the Communist Party is
arresting them by the thousands, murdering them and selling
their organs.
I don't even think that we can get past the corporate
people who are backing China here. I don't think we can get a
law passed that even says that you can't buy organs from China
as long as they keep taking them from prisoners who they have
executed because a lot of their prisoners are political
prisoners and religious prisoners.
When we lose sight of the moral underpinnings of our
policy, our country will go down and is going down in
relationship to its influence and power to a vicious
dictatorship by a dictatorship that does those sort of heinous
deeds to their own people and bolsters the strength of gangster
regimes around the world.
I hope that this has been interesting to those people who
are reading the Record and who are watching on C-SPAN. And I
want to thank my fellow colleagues here, especially on the
Democratic side of the aisle, because they showed up, and I
hope that I have given, I know I have spoken longer than
others, but I wanted my colleagues to know that they have just
as much time as I would ever use, and I usually try to be fair
about that.
Mr. Cicilline. I thank the chairman for his accommodation.
Mr. Rohrabacher. So with that said, thank you to the
witnesses, and this hearing is adjourned.
[Whereupon, at 5:47 p.m., the subcommittee was adjourned.]

A P P E N D I X

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Material Submitted for the Hearing RecordNotice deg.

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Material Submitted for the Record by the Honorable Frank Wolf (R-VA),
chairman, Appropriations Subcommittee on Commerce, Justice, Science,
and Related Agencies