[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                                     

                         [H.A.S.C. No. 115-63]
 
        CHINA'S PURSUIT OF EMERGING AND EXPONENTIAL TECHNOLOGIES

                               __________

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            JANUARY 9, 2018


                                     
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                             ________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
28-966                WASHINGTON : 2019      



                                     
  


           SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES

                ELISE M. STEFANIK, New York, Chairwoman

BILL SHUSTER, Pennsylvania           JAMES R. LANGEVIN, Rhode Island
BRAD R. WENSTRUP, Ohio               RICK LARSEN, Washington
RALPH LEE ABRAHAM, Louisiana         JIM COOPER, Tennessee
LIZ CHENEY, Wyoming, Vice Chair      JACKIE SPEIER, California
JOE WILSON, South Carolina           MARC A. VEASEY, Texas
FRANK A. LoBIONDO, New Jersey        TULSI GABBARD, Hawaii
DOUG LAMBORN, Colorado               BETO O'ROURKE, Texas
AUSTIN SCOTT, Georgia                STEPHANIE N. MURPHY, Florida
(Vacancy)
                Pete Villano, Professional Staff Member
              Lindsay Kavanaugh, Professional Staff Member
                          Neve Schadler, Clerk
                          
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Langevin, Hon. James R., a Representative from Rhode Island, 
  Ranking Member, Subcommittee on Emerging Threats and 
  Capabilities...................................................     3
Stefanik, Hon. Elise M., a Representative from New York, 
  Chairwoman, Subcommittee on Emerging Threats and Capabilities..     1

                               WITNESSES

Carter, William, Deputy Director and Fellow, Technology Policy 
  Program, Center for Strategic and International Studies........     7
Cheng, Dean, Senior Research Fellow, Asia Studies Center, The 
  Heritage Foundation............................................     4
Scharre, Paul, Director and Senior Fellow, Technology and 
  National Security Program, Center for a New American Security..     6

                                APPENDIX

Prepared Statements:

    Carter, William..............................................    66
    Cheng, Dean..................................................    41
    Scharre, Paul................................................    51
    Stefanik, Hon. Elise M.......................................    39

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
        CHINA'S PURSUIT OF EMERGING AND EXPONENTIAL TECHNOLOGIES

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
         Subcommittee on Emerging Threats and Capabilities,
                          Washington, DC, Tuesday, January 9, 2018.
    The subcommittee met, pursuant to call, at 2:00 p.m., in 
room 2118, Rayburn House Office Building, Hon. Elise M. 
Stefanik (chairwoman of the subcommittee) presiding.

 OPENING STATEMENT OF HON. ELISE M. STEFANIK, A REPRESENTATIVE 
FROM NEW YORK, CHAIRWOMAN, SUBCOMMITTEE ON EMERGING THREATS AND 
                          CAPABILITIES

    Ms. Stefanik. The subcommittee will come to order. I would 
like to welcome everyone to our first subcommittee event for 
2018. Today we will examine China's pursuit of emerging and 
exponential technologies and the resultant impact on U.S. 
national security. This is a critically important topic and 
will inform our future hearings, including the science and 
technology budget for the Department of Defense [DOD] and the 
continuation of the reform and innovation efforts this 
committee has promoted over the past several years.
    Our committee, and ETC [Emerging Threats and Capabilities] 
Subcommittee in particular, has most recently reviewed in 
detail China's advances in cyber capabilities and information 
warfare, and also monitored their development of advanced 
weapons systems such as hypersonics and directed energy [DE]. 
But this hearing today will take a broader focus and touch on 
many of the newer technologies that China is investing in to 
support their national objectives.
    China continues to increase their research and development 
investments at an alarming pace and is rapidly closing many of 
their technology gaps. More and more we see China using only 
domestic Chinese firms and creating high market access barriers 
to support domestic capacity. The effect is to replace any and 
all dependency on foreign companies, investments, and 
technologies.
    Aside from the obvious economic benefit of China being able 
to create millions of high-paying, high-skilled jobs, there are 
also obvious national security implications should they corner 
the market on advanced technologies critical to national 
security. We also see them aggressively moving to acquire 
enabling commodities such as data, and current trajectories 
have China on track to have roughly 30 percent of the world's 
data by 2030.
    Many of China's published national level plans, such as 
achieving dominance in artificial intelligence [AI] by 2030, 
indicate a top-down government-driven agenda that provides a 
roadmap for strategic collaboration between industry, academia, 
and their civil society. These plans, when combined with 
resourcing effort and patience, may propel China to leap ahead 
in many of the technology sectors we will talk about today.
    Most notably China's leadership appears to recognize the 
connection between the development of many of these advance 
technologies and economic growth. This is something we should 
remind ourselves of as we continue to examine this important 
topic. Perhaps it is a lesson we need to relearn amidst our 
debates on sequestration and continuing resolutions.
    But China's dominance in many of the technology sectors we 
will discuss today is not a foregone conclusion. What we learn 
today and in future hearings must be translated into action to 
inform and reform the Department of Defense in support of 
national-level efforts so that the United States remains home 
to the world's leading experts, researchers, and technological 
breakthroughs.
    Today's hearing is also timely because of the 
organizational changes currently underway in the Pentagon, 
namely the reestablishment of the Under Secretary of Defense 
for Research and Engineering [R&E]. I firmly believe that the 
Under Secretary for R&E needs to be the prime mover to drive 
change and foster innovation within the Department. A primary 
mission of this office should be to provide distinct direction 
and leadership to energize the defense industrial base, the 
military services, the Department of Defense labs, and to guide 
even newer initiatives such as the Strategic Capabilities 
Office [SCO] and the Defense Innovation Unit Experimental, or 
DIUx, the Defense Digital Service, and the Algorithmic Warfare 
Working Group.
    And while many of these newer initiatives have created 
tremendous momentum and energized a conversation about changing 
the culture of the Department of Defense, much more work needs 
to be done to make these more than one-off quick gains
    If properly empowered and resourced, I also believe that 
the Under Secretary for R&E will be in a unique position to 
drive a national-level dialogue for science and technology 
[S&T] policy that will, in addition to helping maintain a 
battlefield advantage, energize our domestic industrial base, 
and provide technology jobs and opportunities across many of 
the sectors we will talk about today.
    So therefore, we have significant expectations of Dr. Mike 
Griffin, the nominee to be Under Secretary for Research and 
Engineering, but we do so while also offering him our support 
and confidence because the threats we face from China and 
others demand that we energize and organize our government to 
ensure that policy keeps pace with technology in order to 
define a national science and technology strategy and to close 
the gap with China.
    To guide us through this important topic of China's pursuit 
of emerging and exponential technologies, we have before us a 
panel of experts: Mr. Dean Cheng, Senior Research Fellow with 
the Asia Studies Center at The Heritage Foundation; Mr. Paul 
Scharre, Director and Senior Fellow with the Technology and 
National Security Program at the Center for a New American 
Security; and Mr. William Carter, Deputy Director and Fellow 
with the Technology Policy Program at the Center for Strategic 
and International Studies.
    Welcome to the three of our witnesses. We look forward to 
hearing your testimony, and now I would like to recognize my 
friend, the ranking member, Jim Langevin of Rhode Island for 
his opening comments.
    [The prepared statement of Ms. Stefanik can be found in the 
Appendix on page 39.]

  STATEMENT OF HON. JAMES R. LANGEVIN, A REPRESENTATIVE FROM 
RHODE ISLAND, RANKING MEMBER, SUBCOMMITTEE ON EMERGING THREATS 
                        AND CAPABILITIES

    Mr. Langevin. Thank you, Madam Chair, and I want to thank 
the witnesses for being here today. I am looking forward to 
your testimony.
    The members of the Emerging Threats and Capabilities 
Subcommittee have long been champions for Department of Defense 
investments in emerging technologies to advance U.S. 
warfighting and deterrence capabilities. Congress recently 
restructured the DOD to create an Under Secretary for Research 
and Engineering to enhance the Department's ability to foster 
and harness innovation, and Congress has also provided 
significant funding and authorities for progression of R&D 
[research and development] and prototypes including other 
transaction authorities.
    DOD has also made several efforts on this front. The 
Strategic Capabilities Office, as the Chair mentioned, DIUx, 
and the third offset strategy are just a few of the recent 
initiatives that are working to ensure that our warfighters are 
never sent into a fair fight by providing them with the very 
best tools and capabilities that are available.
    But despite significant efforts by Congress and the 
Department, other nation-state actors have made advances of 
their own in emerging technology areas that endanger and in 
some cases obviate U.S. technological superiority.
    Today's witnesses will provide us with their insight on 
China's technological advancements and how such advancements 
impact U.S. national security. I am particularly interested in 
hearing about China's advancement in hypersonics, artificial 
intelligence, cyber tools, and directed energy. Application of 
these technologies in the battlefield are absolute game 
changers in the areas where I believe the United States must 
maintain its superiority.
    In addition to insight on China's specific technological 
advancements it is important to understand what strategy, 
practices, policies, and investments China has employed and 
what they have exploited to achieve parity with or superiority 
to the United States.
    In addition, it should trouble us all that the Organization 
for Economic Cooperation and Development has predicted that 
China could overtake the United States in total R&D spending by 
2019. Such an understanding will allow us to fine-tune our own 
strategy, policies, and priorities, and investments to maintain 
our technological edge.
    That said, I believe it is imperative U.S. strategy be 
holistic in nature, one that fosters technological superiority 
as opposed to a strategy that simply attempts to counter one 
country's activities. It is equally important that the U.S. 
continues to promote collaboration and sharing, rather than 
closing ranks in alienating the global S&T community. We must 
also focus on the future of our S&T workforce and promote 
education in the STEM [science, technology, engineering, and 
math] fields of science, technology, engineering, art and 
design, and mathematics.
    So with all of that said, in closing, I just want to again 
thank our witnesses for being here today before us on this 
important issue. I look forward to your testimony, and with 
that I yield back.
    Ms. Stefanik. Thank you, Mr. Langevin. I ask unanimous 
consent that nonsubcommittee members be allowed to participate 
in today's hearing after all subcommittee members have had an 
opportunity to ask questions. Is there objection? Without 
objection, nonsubcommittee members will be recognized at the 
appropriate time for 5 minutes.
    Thank you again to our witnesses for being here today. Mr. 
Cheng, I will start with you for your opening statement.

 STATEMENT OF DEAN CHENG, SENIOR RESEARCH FELLOW, ASIA STUDIES 
                CENTER, THE HERITAGE FOUNDATION

    Mr. Cheng. Chairwoman Stefanik, Ranking Member Langevin, 
distinguished members. My name is Dean Cheng. I am the senior 
research fellow for Chinese political and security affairs at 
The Heritage Foundation. I want to thank you for the 
opportunity to testify before you this afternoon. Let me note 
here, however, that my testimony reflects only my own views and 
do not represent the views of The Heritage Foundation.
    To begin, it is essential to recognize that the PRC 
[People's Republic of China] sees itself as competing with the 
United States in the Information Age. What this means is first 
that China is competing with the United States in a long-term 
struggle for ultimately political supremacy, but that is 
founded upon economic and technological bases. This does not 
preclude cooperation with other countries in pursuit of 
economic benefits, but it does require recognizing that China 
sees this ultimately as a political struggle. And by the 
Information Age we mean that the currency of power in the 
Chinese view is information as much as the amount of the 
electricity generated or the steel smelted was the foundation 
for power during the Industrial Age.
    Information dominance is the key to the Information Age in 
the Chinese view. This means the ability to gather, to 
generate, to transmit, to assess, and to exploit information 
more rapidly and accurately than others. And this is all 
reflected in the broader concept of ``comprehensive national 
power (zonghe guojia liliang),'' which includes military, 
economic, and cultural aspects, but also the level of the 
nation's science and technology base.
    It is important to recognize the aspect of comprehensive 
national power because it reflects the reality that China is 
engaged in a whole-of-society, not simply a whole-of-government 
approach to this competition.
    In terms of science and technology, the top Chinese 
leadership has long recognized the central role of S&T and 
innovation in this competition. There have been longstanding 
efforts dating back three decades beginning with Plan 863, 
which was approved by Deng Xiaoping. This is a sustained effort 
that every Chinese leader has supported. Various strands to 
this effort reflecting the comprehensive approach includes 
improving Chinese universities; leveraging foreign investment 
through things such as mandatory joint ventures or the 
requirement to set up R&D campuses in China; economic 
espionage, including by governmental entities as reflected by 
the DOJ's [Department of Justice's] indictment of PLA [People's 
Liberation Army] hackers; and increasingly including the 
funding of foreign technology development, as well as outright 
acquisition.
    As China's science and technology base has improved, China 
is increasingly competing as a technology developer, not simply 
a technology acquirer. Where in the past there has been perhaps 
more emphasis on legal and illegal acquisition of technology, 
now China is developing technology on its own, which means both 
a reduced time lag and a greater ability of China to set the 
very terms of the technology debate.
    Increasingly we see China developing technology as fast or 
faster than the United States. The fastest super computer in 
the world, the top two, in fact, are both Chinese. And the 
Sunway TaihuLight, the number one in the world, is entirely 
powered with Chinese-manufactured microchips. China was the 
first to deploy a quantum communication satellite and has 
engaged in longer distance quantum encrypted communications 
than any other country.
    The national security implications of this I would hope are 
obvious. The level of competition means that from the Chinese 
perspective improving the economy and S&T base benefits the 
military, while the military is available as part of the larger 
effort at strengthening the economy.
    In the context of information dominance this is a very 
broad set of concepts which goes beyond cyber, and therefore, 
touches on an enormous array of technologies. When the Chinese 
talk about improving information gathering, we are not talking 
about just cyber, we are talking about space capabilities, 
including countering potential adversaries through things like 
ASATs [anti-satellite weapons], as well as jamming.
    Information monitoring, supercomputers, even genetic 
information. Information transmission improvements include 
quantum computing, 5G, better processors. Information 
exploitation includes artificial intelligence, virtual reality, 
and augmented reality. Information protection includes things 
like quantum encryption and inoculating the Chinese people 
through instruments such as the Great Firewall of China.
    It is important, therefore, when we think about the future 
and the possible policies that you, the Congress, may help 
pursue to recognize above all else that from the Chinese 
perspective innovation comes in many different forms. We, as 
Americans, tend to focus on technology specific innovation 
individual items, but there is also innovation in production 
processes. Japan's competition with the United States in the 
1980s was not that they invented the VCR [videocassette 
recorder]--they didn't; it was the United States--but in the 
ability to manufacture them by the container shipload with low 
failure rates. Toyota, the machine that would go of itself is 
another example of production innovation.
    Doctrinal innovation, the German blitzkrieg harnessed known 
technologies in different ways. And finally organizational 
innovation. We see this with the Chinese and the PLA Strategic 
Support Force, which has brought together their electronic 
network warfare and cyber warfare capabilities.
    The various combinations and synergies that the Chinese are 
hoping to exploit pose a challenge across a variety of areas. 
Thank you very much.
    [The prepared statement of Mr. Cheng can be found in the 
Appendix on page 41.]
    Ms. Stefanik. Thank you, Mr. Cheng.
    Mr. Scharre.

    STATEMENT OF PAUL SCHARRE, DIRECTOR AND SENIOR FELLOW, 
  TECHNOLOGY AND NATIONAL SECURITY PROGRAM, CENTER FOR A NEW 
                       AMERICAN SECURITY

    Mr. Scharre. Chairman Stefanik, Ranking Member Langevin, 
and distinguished members, thank you for inviting me to testify 
today. Chinese is a major and fast-growing player in 
information technology. As the world's third largest economy 
and most populous nation in the world, China has major 
structural advantages. China's population is a key source of 
strength because it is a potential source of data on human 
behavior and genomics. Combined with a more lax cultural 
attitude towards data protection and personal privacy, this 
data can help fuel advances in artificial intelligence and 
synthetic biology.
    China also combines a dynamic private sector with a 
government that plans and executes long-term strategies to 
increase China's competitiveness. China has used this in recent 
years to execute plans to move forward on artificial 
intelligence, synthetic biology, and quantum computing.
    China is a global leader in artificial intelligence, second 
only to the United States. Baidu, Tencent, and Alibaba are all 
Chinese firms that are top tier AI companies, and China also 
has a vibrant AI startup scene.
    Since 2014 China has surpassed the United States in the 
total number of publications in deep learning, an important 
subfield of AI. While the quantity of publications does not 
necessarily equate to quality, Chinese AI researchers have won 
a number of recent high-profile competitions, including one 
sponsored by the U.S. Intelligence Advanced Research Projects 
Activity, IARPA. At the 2017 meeting of the Association for the 
Advancement of Artificial Intelligence, there were roughly as 
many papers accepted from China as there were from the United 
States. The U.S. still leads the world in AI patents, but China 
is growing at a faster rate.
    Earlier last year, in July 2017, China published a national 
strategy for artificial intelligence. Under this plan China's 
goal is to be the global leader in AI by 2030. China's plan 
includes focusing on the education and recruitment of top AI 
talent, and they have followed this through with notable 
acquisitions of top-tier Silicon Valley AI researchers.
    News reports indicate that Chinese firms see the Trump 
administration's anti-immigrant policies as an opportunity to 
draw away top U.S. technology talent, as immigrants are 
responsible for one quarter of startups in the United States.
    China also has significant advantages in translating 
private sector advances in AI into national security 
applications because of its model of military-civil fusion. In 
the United States, the Defense Department has struggled to 
break down largely self-imposed barriers to working with 
nontraditional defense companies that lock the DOD out of 
crucial innovation in places like Silicon Valley.
    China has a closer relationship between the public and 
private sector and is able to more easily spin in private 
sector innovations into the military. This means that not only 
is China a significant player in AI, with the plan to be the 
world leader by 2030, but that China has major advantages in 
translating these private sector gains into national security 
applications.
    The information revolution has opened up new opportunities 
in biotechnology as computers have made genome sequencing 
increasingly affordable. A Chinese company, Beijing Genomics 
Institute, BGI, is the world's largest genetic research center. 
BGI has a U.S.-based center and has sequenced the genomes of 
millions of Americans. BGI has robust support from the Chinese 
Government and partnerships to the Chinese military research 
institutes.
    The Chinese Government has created multiple national-level 
biotechnology development plans. One of the strategies China 
uses is going out and bringing in foreign innovation by 
investing in foreign companies. For example, in 2013 BGI 
acquired next-generation genome sequencing technologies by 
purchasing the U.S. company, Complete Genomics.
    Quantum computing is another area of important information-
related technologies and one in which China has seen striking 
recent advances. In 2017 Chinese researchers made major 
breakthroughs in developing a 10-qubit quantum processor and a 
quantum communications satellite. China is following up on 
these advances with national-level investments, including a $10 
billion national laboratory for quantum technology.
    In these and other areas, one of China's biggest strengths 
relative to the United States is the government's willingness 
to develop and follow through on large scale long-term 
investment plans. China has repeatedly demonstrated an ability 
to acquire foreign expertise by investing in foreign companies 
and then use that to improve Chinese indigenous capabilities. 
Chinese capacity for executing long-term strategies for 
technology development should not be underestimated, and 
Chinese plans to be the global leader in critical technology 
areas such as artificial intelligence should be taken 
seriously. Thank you.
    [The prepared statement of Mr. Scharre can be found in the 
Appendix on page 51.]
    Ms. Stefanik. Thank you, Mr. Scharre.
    Mr. Carter, you are recognized.

   STATEMENT OF WILLIAM CARTER, DEPUTY DIRECTOR AND FELLOW, 
      TECHNOLOGY POLICY PROGRAM, CENTER FOR STRATEGIC AND 
                     INTERNATIONAL STUDIES

    Mr. Carter. Chairwoman Stefanik, Ranking Member Langevin, 
members of the committee, thank you for the opportunity to 
participate in today's hearing. As you mentioned in your 
opening statements, China's significant progress in key 
emerging technologies like artificial intelligence, cyber, 
space-based capabilities and antisatellite weapons, electronic 
warfare, and quantum computing have transformed the global 
economy and global security environment and require a rethink 
of the way we approach securing our Nation.
    Asia is a critical part of America's future economically 
and strategically, and we find ourselves in a new era of 
strategic competition with China, one defined by competing 
progress in advanced technologies. Our response to China's 
progress in technology is essential to our future.
    As we look at what China is doing, they have taken a page 
out of our playbook pursuing an offset strategy to overcome our 
conventional superiority by beating us in the race to the next 
generation of transformative technology. They are evaluating 
our military technology, our future strategy and doctrine, 
looking for gaps and weaknesses in our approach so they can 
exploit them for their own advantage, and developing national 
strategies to leverage both the private sector and their 
military complex to advance their own agenda. We must develop a 
national security technology strategy of our own to overcome 
China's efforts to undermine our global position.
    China's technological efforts can be divided into two broad 
categories. First, they are developing technologies to disrupt 
and degrade our military capabilities by exploiting our 
vulnerabilities in the information domain. Second, they are 
investing in technologies that will determine the future 
balance of both global economic and strategic power. They have 
made significant strides in both of these areas.
    China has already demonstrated the ability to significantly 
disrupt, degrade, and even destroy the infrastructure on which 
our military depends. The PLA has tested a range of 
antisatellite weapons, expanded their electronic warfare 
capabilities, and developed some of the most sophisticated 
offensive cyber capabilities in the world. China is also 
investing heavily in building its technological base to 
dominate the technologies of the future.
    In particular, China sees artificial intelligence and 
quantum technology as foundational to both economic and 
military competitiveness in the long term, and has become not 
just a copycat or adopter of these technologies, but an 
innovator in their own right. Competition in AI between the 
U.S. and China has become neck and neck. Chinese researchers 
are now a fixture at AI conferences. Chinese companies have 
made significant breakthroughs in AI applications, including 
natural language processing, real-time translation, imagery 
analysis, facial recognition, and autonomous driving. And China 
has an advantage in translating these private sector gains and 
innovations into national security outcomes.
    In quantum, China may already be ahead. As Paul mentioned, 
China has launched a quantum communications satellite, 
established a quantum link between Bejing and Shanghai, has 
invested billions of dollars into quantum computing, and even 
claims to have tested quantum radar. Some of China's claimed 
advances in quantum technology and in AI are likely 
embellished. We have seen enough of China's capabilities in 
this field that we must take them seriously.
    Our strategy to address China's rise in technology and 
power must address both the long-term and the short-term 
threats. In the short term, we must counter China's efforts to 
exploit our military's dependence on ICT [information and 
communications technology] technologies by investing in 
resiliency and ensuring that China never has enough confidence 
in their abilities to compromise our systems to justify a first 
strike.
    In the long term, we must ensure that our world-leading 
education system and business environment work for us, not for 
China. We must rethink the relationship between private sector 
innovation and our military's technological edge to better 
leverage our greatest strength, our private technology 
industry. We must push back against China's efforts to acquire 
our technology and innovation, but not push away China's 
brightest minds and innovation capital if they want to send 
them to the United States.
    We must invest in fundamental R&D that will form the basis 
of the next generation of technologies, not by replicating or 
subsidizing the private sector's efforts, but by supporting the 
kind of long-term research that private companies are less 
willing to fund.
    And we should build a strong base on which our private 
sector innovators can thrive by investing in education, 
creating strong commercial markets for transformative 
technologies, and by protecting our companies' ability to 
compete in international markets.
    I thank the committee for the opportunity to testify, and I 
would be happy to answer any questions.
    [The prepared statement of Mr. Carter can be found in the 
Appendix on page 66.]
    Ms. Stefanik. Thank you, Mr. Carter.
    We will now move to questions. My question is for each of 
you since all of you touched upon this. I am concerned about 
China's national-level plans, as Dean Cheng describes it, this 
whole-of-society approach. How do we, knowing that we have a 
fundamentally different form of government and fundamentally 
different society in the U.S., how do we compete? What are our 
limitations?
    Mr. Scharre, you talked about some of the self-imposed 
barriers between the Department of Defense and the private 
sector. What specifically do we need to do as policymakers to 
ensure that we are able to have a moonshot goal when it comes 
to technological advancements. I will start with you, Mr. 
Cheng.
    Mr. Cheng. Ma'am, I think that one of the key parallels was 
the Eisenhower administration. Confronted with the Soviet 
Union, President Eisenhower had a choice between trying to 
replicate a very top-down government-led approach, which is 
what we ultimately saw in the Soviet military industrial base, 
and an American approach, which ultimately relied more on the 
private sector, certain incentives, taxes, tax policies, things 
like that.
    I would suggest that the same will be true. As all of us 
here have noted, the Chinese are pursuing a top-down approach. 
At the end of the day they believe that a small group at the 
top is smarter than the broad set of people pursuing various 
elements. I would suggest, therefore, that a less top-down, 
more broadly incentivized set of structures that nonetheless 
allows our private sector to push across an array of new 
technologies, driven ultimately by the profit motive, may well 
prove strategically better off just as our defense industrial 
complex ultimately defeated the Soviet one.
    Mr. Scharre. Yeah, I mean I would agree that our system is 
clearly better in the sense that it enables the private sector 
to come up with these solutions on their own, and we don't want 
to try to strangle that or choke that off, but how do we create 
kind of the right conditions to make sure that we are bringing 
in the top talent from around the world? I think education and 
recruitment of human capital is really critical. Making sure 
that we are educating people in the United States, we are 
encouraging others to come here, the best researchers, the best 
entrepreneurs, and then stay here is really critical. China is 
very proactive about this, and we need to be proactive, too.
    I think there are some places where we want to protect some 
of these innovations from others, so that could be involved 
with export control reform or CFIUS [Committee on Foreign 
Investment in the United States] reform. And then I think in 
particular there is a lot more we can do on defense reform, as 
you mentioned initially in your opening statement, to try to 
free up some of the money that DOD is spending so that it is 
available to some of these more emerging technology areas 
because we do have a lot of barriers--some are legislative, 
some are policy--in place that make it very difficult for 
nontraditional defense companies to work with DOD.
    And so some of these initiatives like DIUx and SCO and 
others to kind of build on those to continue to make it easier 
for DOD to access this innovation.
    Mr. Carter. I agree. I would also add that I think that 
there is a tendency in the U.S. to think that freedom is both a 
necessary and a sufficient condition for innovation. I don't 
think that is necessarily true. If you look at what Russia was 
able to do in the space race, for example, they lacked freedom 
and they innovated. But also, if you look at what is happening 
now, we give freedom to our private sector, but there are other 
things that we need to do to enable them to innovate.
    Building our human capital is I think one essential one, 
but another is to ensure that we create markets for these 
commercial innovations so that the private sector is 
incentivized to invest.
    There are a huge number of policy hurdles to new 
technologies like AI, so think of the example of autonomous 
driving. There are huge potential implications both in what the 
fundamental research into autonomous driving will yield in 
terms of better knowledge of how to build learning systems that 
deal in complex, unstructured environments, and direct 
applications of self-driving vehicles in military contexts.
    But we need to remove some of the liability, regulatory, 
and governance hurdles and questions around what our approach 
will be so that the private sector will invest.
    Ms. Stefanik. Thank you. I now recognize Mr. Langevin for 
his questions.
    Mr. Langevin. Thank you, Madam Chairwoman, and I thank our 
witnesses for your testimony once again.
    One question that I wanted to raise off the bat since, Mr. 
Scharre, you touched on it and the others have touched on it, 
as well, the issue of quantum computing is something that I 
have followed for quite some time, and I don't know if you are 
in a position to assess this, but who do you feel right now has 
the advantage in who is going to develop the first quantum 
commuter, the United States or China? I understand that the 
overall strategic importance of quantum computing as one former 
four-star general that I deeply respect stated to me that 
whoever develops the next quantum computer--first quantum 
computer holds the keys to the kingdom, so this is a big deal.
    Mr. Scharre. Yeah, it is clearly a critical issue in terms 
of cryptography and protected communications. I think it is 
difficult from like open source materials to assess because--
and reasonably so. So much of what is being done is classified. 
It is clear that what China is doing at a basic science level 
they are making some serious breakthroughs that all of us have 
mentioned, so I think they certainly should be taken serious as 
a competitor.
    Mr. Carter. I would just add to that that if you speak to 
researchers in the quantum field in the U.S. they may not 
always be able to tell you exactly what they are doing, but 
they will tell you about some of the challenges that they are 
facing. Just getting money for a lot of their projects is 
difficult, if not impossible, and a lot of them see China 
offering them funding for this research. It is the best option 
that they have, and they ask themselves the question of do I 
give up my research, which I know is valuable, or do I allow it 
to be funded by China and possibly co-opted by China?
    Mr. Langevin. Good point. Next to all of our witnesses, 
China obviously is pursuing policies and subsidies, as well as 
demonstrating a willingness to experiment on things like 
directed energy technology. Can you describe China's approach 
to DE and how does their approach impact our edge in this field 
specifically as it pertains to electromagnetic railgun?
    Mr. Scharre. Yeah, I don't have a lot of details on China's 
advancement in DE and electromagnetic railgun. They are 
certainly doing things and they are making investments, but I 
don't have a lot of details on that.
    Mr. Langevin. Okay. Mr. Cheng.
    Mr. Cheng. My understanding is that the Chinese in their 
own reporting do seem to be engaging in a broad set of directed 
energy efforts. One of my focuses is on space issues, and it 
does seem that China views directed energy as potentially 
overcoming the political problem of kinetic energy kill again 
satellites. That is, if you hit one with something like what 
they did in 2007 you generate a lot of debris, but if you fire 
up a sufficiently high-powered laser or particle beam you can 
fry the electronics, you can destroy the sensor package, but 
you don't generate a lot of debris in orbit, which has 
important political implications.
    Mr. Langevin. So oftentimes the lack of policies and 
doctrine I think we found can stymie the Department of 
Defense's willingness to invest in and transition technology. 
Mr. Scharre, based on your experience in the Department of 
Defense work in issues such as the use of autonomous weapons 
systems what is your assessment on the impact of current policy 
on investment in technological development and transition? And 
what more remains to be done on the policy front to foster 
technological transfer and development of doctrine with respect 
to autonomous weapons systems and other technologies?
    Mr. Scharre. Thanks. We have some ad hoc policies in place 
for some emerging technologies where these issues come up like 
autonomous weapons, directed energy weapons. There is no 
overarching process in the Department for dealing with policies 
that might arise in some kind of new technology.
    Now, many new technologies don't raise interesting policy 
questions, but some of them do. Hypersonics might raise 
interesting questions for strategic stability. Anything 
involving genomics or human enhancement or human performance 
modification raises a whole host of interesting and challenging 
policy questions.
    There is no process or organization inside the Department 
to harness and deal with these things as they come up, and so 
the biggest gap that exists today in terms of policy is on the 
human enhancement side. There is simply no--there is no policy 
decision-making process, there is no mechanism in DOD, to try 
to guide investments or applications.
    So things are happening inside the Department in various 
research labs, but there is actually no decision-making body 
that you can go to if you wanted to either do research or 
actually operationally use something that would modify people 
in some significant way, give them a drug to make them, you 
know, perform better on some task. There is no, like, way to 
actually do that right now in the Department. I think that is a 
significant gap.
    Mr. Langevin. Thank you. I yield back. Thank you for your 
testimony.
    Ms. Stefanik. Dr. Abraham.
    Dr. Abraham. Thank you, Madam Chair. My basic understanding 
of AI is that you have this computer that not only is reacting 
to programming, but actually thinks for itself, but not only 
does that, but then acts on that thought process. And Mr. Cheng 
said that China not only develops, but has the fastest 
computers in the world.
    We on HASC [House Armed Services Committee] have had the 
discussion of the cumbersome acquisition process that we in 
America face with DOD that sometimes it may take 18 months 
simply to do a study and by the time the technology comes out 
we are already way behind the curve and certainly with the 
testimony we heard today that certainly could be true.
    My question is we know that many, many Chinese private 
companies are vested, are owned--very elite and very 
sophisticated American companies not only in the navigational 
field, aviation field, you name it they have a piece of the pie 
in some of these companies. Mr. Scharre, you alluded to it 
about protecting some of these technologies with some export 
prohibits something like that, but, again, China owns these 
companies already in the United States.
    So the question to each of you gentlemen just quickly, what 
organizational, what bureaucratic barriers can we throw up, are 
there any that can protect our technology on this side of the 
ocean?
    Mr. Cheng, you go first.
    Mr. Cheng. Yes, sir. I think that obviously we have CFIUS, 
the Committee on Foreign Investment in the United States. One 
of the key things to keep in mind, however, is that CFIUS is a 
gatekeeper entity. It keeps new acquisitions of already 
existing companies, it reviews those. What we now confront is 
the distinct possibility of corporate entities perhaps set up 
by China or others within the United States who would then be 
able to acquire. So it is not China Comp Corp. buying 
something, it is Orange Venture Capital investing in something 
headquartered in New York or Delaware.
    So what we would seem to need here is a new entity that 
would at least monitor, and perhaps also be able to pass 
judgment, on investments that would be able to demand 
background, perhaps embedded with something like the SEC [U.S. 
Securities and Exchange Commission] so that Orange Investments 
would have to report who are their members, where is there are 
money coming from.
    The other aspect here that I would like to emphasize here 
is as our allies, countries like Germany and Japan think about 
creating their version of CFIUS would be coordinating our 
experience and our lessons learned with their efforts because 
at the end of the day nations like China exploit a variety of 
different methods and approaches. If they are shut down here 
they may try to acquire it through a Canadian subsidiary or a 
German subsidiary, and that is one of the other things to keep 
in mind, sir.
    Mr. Scharre. Yes, sir, I think CFIUS reform probably makes 
sense in probably two key dimensions that would give--expand 
the scope of it and give greater flexibility to the executive. 
One would be in the types of commercial activities that it 
applies to, lowering the threshold for foreign investment that 
would trigger it, and if you are looking at other types of, 
say, joint ventures that might fall under the scope of CFIUS.
    But also from a substantive standpoint expanding the scope 
of technologies, and so giving the executive branch more 
flexibility to establish some critical technologies, emerging 
technologies like we are discussing today that would then fall 
under the scope of CFIUS.
    Mr. Carter. I would agree with Mr. Scharre on expanding the 
scope, giving the government more flexibility. I also think 
that as we saw in the case with Ant Financial, the recent 
acquisition that was blocked, thinking about those enabling 
commodities that the chairwoman mentioned in her opening 
statement is another important dimension that we have to add to 
CFIUS. What are some enabling commodities and enabling 
technologies that may not themselves be a huge national 
security threat, but could enable China to develop a 
significant national security threat. But I would also just 
caution that I think this will be extremely difficult to do.
    As you mentioned, when you think about AI, the real value 
of AI, particularly from a national security perspective, is 
the integration of a bunch of technologies that individually 
might not seem very threatening.
    And so I think looking at it on a deal basis, looking on it 
on an individual technology basis is going to be a really 
challenging thing to do.
    Dr. Abraham. Thank you, Madam Chair.
    Ms. Stefanik. Mr. Larsen.
    Mr. Larsen. Thanks for all coming in. And along those lines 
as well sort of talking about playing defense, talk CFIUS 
reform or export control reform and wondering about offense, 
what can we do in the U.S.
    Before I get to that point though I do want to go back to 
defense and the point that Mr. Carter has made about on CFIUS 
reform. The challenge of sort of outlining this technology or 
that technology because when we wrote CFIUS, in fact, when--I 
wasn't here, but when we last reformed it I was here, and this 
was not an issue at all. It was about whether or not ports 
should be purchased by Middle Eastern companies. That was the 
deal. It wasn't anything else.
    And so how to rewrite a CFIUS to anticipate, make it broad 
enough to address these issues, and I wonder if you've thought 
about that in particular as opposed to chasing the next, you 
know, quantum computing issue or the next AI issue. Anyone 
thought through that more broadly?
    Mr. Scharre. Yeah, I mean, certainly one approach could 
simply be to give the executive branch, in fact, require them 
to come up with a list of critical technology areas that are 
regularly updated. That might be one area that bakes in more 
flexibility to the law.
    Mr. Larsen. Kind of like what you do with export control.
    Mr. Cheng. Sir, the problem actually though is exactly what 
we have seen with export controls. There is every incentive to 
add yet another technology to the list and every disincentive 
to ever remove any technology from the list; and therefore, I 
respectfully disagree with my colleagues here on this panel 
because one of the things that worries me is we want to 
maintain a positive investment environment and economic 
environment.
    We do not want to kill that golden goose. And in particular 
when we talk about increasing the flexibility of the executive 
branch, too often what that means is, well, that is great, I 
will be flexible and I will add four more new technologies that 
are now going to have to be reviewed.
    I think that is why I mentioned President Eisenhower 
earlier, is he felt it important to maintain a light touch, 
that, yes, there should be the option of flexibility, but at 
the same time there still needs to be that check and balance 
because at the end of the day an overly regulatory emphasizing 
top-down emphasize the executive branch could easily wind up 
strangling as much as nurturing key technologies.
    Mr. Larsen. Thank you, sir.
    Mr. Carter. Maybe just to build off of Dean's comments, I 
agree that it is extremely difficult to outline any list of 
technology that doesn't suddenly become, you know, all-
encompassing. I think you have to differentiate the current 
situation from some of the past arms control efforts in that 
maybe the parallel is this is more a discussion around 
computers than it is around stealth technology or hypersonics, 
for example.
    There are technologies that are easier to control, but when 
you think about AI, when you think about quantum, the potential 
in the commercial sector and the civilian uses are so massive, 
and particularly the importance of developing those 
technologies to our economic competitiveness is so vast that I 
think that any effort to create a list that would actually 
capture the technologies that will have the greatest national 
security implications risks crippling our future economic 
potential.
    Mr. Larsen. Yes. I have about a minute and a half left. So 
a little bit more on offense than playing defense and thinking 
about how we organize or reorganize. It is my impression that, 
you know, perhaps in the past the Defense Department has 
defined the defense industrial base as much too narrow, that it 
has been about steel and airplanes, large platforms and things 
when, in fact, what you are talking about is an industrial base 
that is a lot of electrons, a lot of wires, and a lot of 
people.
    So on that point organizationally is the Pentagon--other 
than DIUx--is the Pentagon thinking beyond the traditional 
defense industrial base, what is your thought on that?
    Mr. Scharre. I think it is a challenge. If you talk to the 
services their key metric is still metrics in steel and iron 
and people. If you talk to the Navy they are going to talk 
about ships and number of aircraft carriers. If you talk to the 
Air Force they are going to talk about number of tactical 
fighter aircraft and bombers. And the Army cares about number 
of brigade combat teams. And those are the kind of key metrics 
of national power.
    And, you know, in World War II that was a war won by steel 
and iron, right? The Allies outproduced the Axis powers. That 
is not the era we are in today and so those are not necessarily 
the right metrics. And so I think there are obviously some 
people thinking this kind of way inside the Department, but it 
is still a challenge.
    Mr. Larsen. I have got 17 seconds left. I will just take 
that and yield back. Thanks.
    Ms. Stefanik. Mr. Scott.
    Mr. Scott. Thank you, Madam Chair. Is it Scharre?
    Mr. Scharre. Yes.
    Mr. Scott. Mr. Scharre, I wrote down your comment about 
self-imposed barriers, and I know you were in the Army. You 
know, it took 10 years to pick out a pistol for the Army, and 
obviously with technology we don't have a decade to wait to 
pick a new system.
    And so I have got another line of questions for Mr. Carter, 
but assuming I have time I want to come back to what you think 
the self-imposed barriers are and what can be done to remove 
them, and if I don't get there if you have any suggestions on 
that I would appreciate that for the committee in writing.
    Mr. Carter, you put in your testimony, and I agree with you 
on this, we must retrain our military to operate in analog mode 
without access to data and technology. We must ensure that any 
new systems or platforms DOD buys has at least some basic level 
of functionality without access to space-based capabilities. Is 
that because of our vulnerabilities?
    Mr. Carter. Yes, it is.
    Mr. Scott. And would you agree with me that the DOD is 
actually moving in the opposite direction and becoming more and 
more dependent on the space-based capabilities?
    Mr. Carter. I would agree with that. I think there is a 
recognition of that vulnerability in the Department and that 
they would like to move away from it, but they find themselves 
balancing the impressive new capabilities they can get out of 
some of these platforms that are dependent on these 
technologies with the vulnerability that it creates and also 
they are struggling with the fact that the conflicts that we 
are actually engaged in today are not conflicts where our 
space-based assets are threatened----
    Mr. Scott. That's right, that's absolutely right
    Mr. Carter [continuing]. Are not conflicts where our 
networks are really threatened.
    So I think that leadership from Congress can be really 
meaningful in this area of pointing them towards the next era 
of threats.
    Mr. Scott. Sure. And I suppose, and this is a personal 
thing for me, but one of the things that bothers me about the 
DOD's actions is they propose to eliminate weapons systems that 
work in the current environment for a system that may work in a 
future environment.
    And so when you talk about getting rid of the A-10 or 
getting rid of the JSTARS [Joint Surveillance and Target Attack 
Radar System], which are currently being used in the conflicts 
that we are in today, for a system that may work in a conflict 
that may or may not exist 10 or 15 or 20 years from now, it 
just doesn't follow logic to me. But a specific question with 
PLA's assessment of the U.S. military and our vulnerability in 
space, do you believe there should be an increased emphasis on 
the development of defensive space capabilities, as well as 
application of quantum communications to overcome challenges in 
the electromagnetic spectrum?
    Mr. Carter. I do. I think that defensive space capabilities 
are important. Also thinking of our space-based capabilities in 
terms of resilience, so, you know, one key area I think is 
creating more survivable, more replaceable, space-based 
architectures, larger constellations of smaller, less 
sophisticated satellites that together generate a lot of 
capability, but are not individually as sophisticated. They are 
cheaper, they are easier to replace when they break, they are 
faster to produce. That is an example of the kind of thinking 
that I think we need to bring to DOD.
    Mr. Scott. And if they kill one, there are three or four 
others out there to take its place?
    Mr. Carter. Exactly.
    Mr. Scott. Mr. Scharre, could you explain some of the self-
imposed barriers and how we could remove them, and do you 
believe that--it is pretty clear you believe we are better off 
partnering with private industry rather than holding all of 
this inside the DOD.
    Mr. Scharre. Yeah, we have a very vibrant private industry 
in the United States willing to harness that technology and 
bring that in. The problem is that we have created this 
acquisition system that works very well if you are working with 
a traditional defense company to build a large capital asset 
over several years.
    So if you are building an aircraft carrier, it is kind of 
the right system to have actually. You are going to keep it for 
50 years. It costs a heck of a lot of money. And you want to 
take your time to do it right. So a deliberative process makes 
sense. It is completely unsuitable for these kinds of rapidly 
evolving technologies. You want to be able to tap into a whole 
wide range of companies, including those that don't specialize 
in working with DOD and we move very, very quickly.
    And so some of the concerns I hear of people in the private 
sector are things about red tape dealing with the government, 
slowness of the process, the government trying to acquire 
intellectual property, which for many of these companies that 
is really what is most vital to them, and then the profit 
margins actually not being as significant as in the private 
sector.
    Mr. Scott. I am almost out of time. If I could just to 
follow up, one of the things that also has to be thought of 
though is if you have partnered with those private sectors they 
are private companies and the Chinese do have the ability to 
buy private companies and then, therefore, highjack that 
technology, and I think that is just kind of one of the 
highlights of the complexity of the issues we face here, but 
thank you for being here.
    Ms. Stefanik. Mr. O'Rourke.
    Mr. O'Rourke. A couple questions. Mr. Scharre, you had 
mentioned the opportunity cost of either really being or just 
being perceived as being anti-immigrant in terms of attracting 
intellectual capital and the kind of people that are going to 
come up with the innovations that will allow us to excel in 
these areas. How long-lasting is the damage that you are 
already seeing? What would it take for the United States to 
correct the balance and be able to lead in the race to attract 
the best and the brightest from around the world?
    Mr. Scharre. I think it is absolutely critical. We had Eric 
Schmidt, the Chairman of Alphabet, at an event a couple months 
ago and he raised this as his top concern coming from a major, 
you know, U.S. company that he wants to be able to draw in the 
best help from around the world and have them work for them.
    I think it is too early to tell whether we will see 
significant damage from the current administration's policies 
and how long-lasting it will be. Some of them have been 
challenged in court, like the entrepreneur rule, and if not, 
you know, basically the administration's policy change has not 
survived in court.
    But the cultural perception is certainly very damaging if 
people simply say, look, there is too much uncertainty, and if 
I am going to figure out where to pursue a degree or where to 
try to pursue a visa or where to pursue a postdoctorate or set 
up a company I am going to go elsewhere, and that can have 
major long-lasting effects.
    Mr. O'Rourke. And we are just reading story after story 
about graduate institutions having a hard time attracting 
foreign graduate students, and it seems to be totally connected 
to what we are talking about today.
    And then I don't know if you want to start in answer to 
this question, the ranking member talked about mastery of 
quantum technologies being the keys to the kingdom and others 
have likened it to the U.S.-Soviet space race about who is 
going to get there first and what we are willing to invest.
    And Mr. Carter talked about there is some things that the 
government will need to invest in that the private sector is 
just not willing to or doesn't have the capacity to do it. Tell 
me why this matters? I think I only if I am honest barely 
understand the importance of quantum radar, quantum 
communications, quantum processors, quantum satellites. Can you 
put it into big picture perspective for me?
    Mr. Scharre. Sure. So there is a couple things that quantum 
technology can do that you simply cannot do with existing 
computers. Remote sensing is one of them, but probably the most 
significant national security applications are in cryptography. 
In essence a quantum computer in principle can be used to crack 
all known cryptography. That is a sort of theoretical concept. 
Building one that is practical would be very, very challenging.
    Mr. O'Rourke. We wouldn't have any more secrets of the 
Chinese if the Chinese were able to master this before we did.
    Mr. Scharre. Well, you would have to sort of upgrade 
cryptography now because it is not even the question of when it 
is broken, it is that one could go back and then if you have 
stored data for communications you could go back and analyze 
this and crack old codes, which can be very damaging from a 
national security standpoint.
    Quantum cryptography also enables more secure 
communications. So it is both a way to break current 
cryptography and then a solution to that problem; but yes, you 
have got to get there first.
    Mr. O'Rourke. And, Mr. Cheng, do you have anything to add 
to that?
    Mr. Cheng. Michael Howard, the noted British military 
historian, has said that we need to reexamine the entire 
history of World War II now that the scale of cryptography, how 
much we and the British have broken the German codes has now 
finally come to light, that most of our decisions were actually 
made in light of the fact that we were reading the German mail 
and they were not reading ours. To have that kind of conclusion 
about World War II suggests the scale upon which successful 
encryption by a country like China would influence our ability 
to operate against them and conversely their ability to operate 
against us.
    Mr. O'Rourke. And, Mr. Carter, since you brought the 
question of public sector investment to compliment private 
sector investment, can you give us an idea of what this would 
take?
    Mr. Carter. Yes, I think that just to build very quickly on 
my colleagues, I think that, yes, there are the applications in 
cryptography. There is communications radar, but really kind of 
the cross-cutting theme for quantum is that it renders a whole 
bunch of technologies we depend upon ineffective, and it 
enables a whole generation of technologies against which we are 
utterly defenseless if we don't also have quantum computing 
capabilities.
    In terms of investment I think I mentioned, you know, 
speaking to quantum researchers one theme that comes up is they 
just can't get money. The private sector doesn't want to put a 
lot of money into this. Some of them just don't believe it will 
work. There is a school of thought that shouldn't be completely 
discounted that quantum computing will never actually work at 
scale, but even if it does it will be a long time before we 
actually see the fruits of any of that, and the commercial 
value of it has yet to be demonstrated.
    So I would put a lot of money into quantum computing, 
particularly the fundamental technologies, so computing and 
communications that we can build a lot of other things on top 
of.
    Mr. O'Rourke. Thank you.
    Ms. Stefanik. Dr. Wenstrup.
    Dr. Wenstrup. Thank you, Madam Chair. Thank you all for 
being here today. I appreciate the input you are giving us.
    As I look at the members of CFIUS, the Chair from the 
Department of Treasury and then we have Justice, Homeland 
Security, Commerce, Defense, State, Energy, U.S. Trade 
Representative, and Science and Technology Policy. From a 
national security standpoint, is that ideal? Is that working 
well for us or what would your suggestions be as far as who 
actually makes up CFIUS?
    Mr. Scharre. It is as we have discussed in some of the 
responses to CFIUS there are a lot of competing concerns that 
you need to have, so I think it makes sense to have a wide 
variety of government actors to have a seat at the table. I 
think the best thing to do would be to give them more 
flexibility on what they can actually respond to in terms of 
potential investments, but I think it does make sense to people 
to have all those equities raised.
    Mr. Carter. The other thing I would add to that is it may 
depend on the case who you want to have the strongest voice. I 
think having a system that is flexible, that gives everyone the 
opportunity to participate gives everyone who has an important 
point of view the opportunity to be louder than the other 
folks.
    Mr. Cheng. I mean, the issue here, sir, is that every one 
of these folks has a different set of incentives, and not one 
of them obviously where naturally should dominate. If you are 
talking to the intelligence community [IC] and the national 
security establishment that should obviously take priority over 
commercial opportunities.
    On the other hand very few economists seem to work for DOD 
and the intelligence community seems to sometimes lack economic 
background, as well. That has distinct implications for the 
ability to foster new business. You know, they may well 
consider fostering business to be secondary to protecting 
certain technologies.
    I think that at the end of the day it is messy, but it is 
probably better than handing it to a much more limited set of 
perspectives.
    Dr. Wenstrup. And I can see the advantages of having 
variety of input, everyone looking at it a little bit 
differently, and I guess what my concern is that can work two 
ways. One, it can be very beneficial because you get so many 
opinions, or two, you can get so many opinions you get nothing 
done. And you kind of alluded to that before about taking some 
things away as opposed to adding things, et cetera.
    And so I wondered if you had an opinion does it happen both 
ways, one way more than the other or is it smooth sailing? I 
just think, you know, we do things the way we do things. Is it 
always the best way to do things is really where I am coming 
from.
    Mr. Cheng. I think, sir, when we look abroad and we look at 
the Germans as an example where they had no CFIUS at all, and 
it was pretty much open season, they are now coming to the 
scared realization of just how much has probably left the 
borders of Germany. So clearly, you know, this is not perfect, 
but it is probably--it is a little bit like the old story about 
the bear that walks on its hind legs. It is not that it walks 
poorly, it is that it walks at all, and I think that that may 
be perhaps the best we can hope for here is good enough.
    Dr. Wenstrup. Anyone else? Thank you. I yield back.
    Ms. Stefanik. Ms. Speier.
    Ms. Speier. Thank you, Madam Chairwoman. Thank you for your 
sobering testimony today.
    I have a series of questions, but let me just start with 
this one. The White House has an Office of Science and 
Technology Policy [OSTP]. For the last year there has been no 
one who has been appointed by the administration as the 
director and it is responsible for emerging and exponential 
technologies, and it appears that the OSTP division of national 
security has no personnel whatsoever.
    So I guess I am concerned that we from--the White House has 
not the conveyed an alarm really that this function is 
critical, and I wonder to what extent you think that this is 
serious and whether or not it is creating a national security 
risk.
    Yes, Mr. Cheng.
    Mr. Cheng. Ma'am, under the previous administration there 
was an OSTP director who felt it incumbent to promote U.S.-
China space cooperation, who wanted to see more interaction 
between the American space program, which as we know is vital 
to American national security, and China's space program, which 
is run pretty much through the military.
    I would say that if we were to adopt a Hippocratic 
approach, which is to say first do no harm, I think I might 
prefer to have an absent seat, rather than someone who is 
actively pushing for greater interaction and cooperation with 
the People's Republic of China in high-technology areas.
    Ms. Speier. Mr. Scharre.
    Mr. Scharre. Yeah. So thank you. I do think the lack of 
leadership in the White House on this issue is a concern. For 
example, in artificial intelligence there were a number of 
initiatives taken at the end of the last administration. At the 
sort of working level of the government, a lot of these things 
are still moving forward. There is inertia, people that are 
trying to execute things.
    But there are a lot of critical things where you are going 
to need leadership in OSTP at the White House to do things like 
look at whole-of-government investment in science and 
technology, particularly in some of these areas like quantum 
technology where government investment is really important, 
because it is not quite mature enough where the private sector 
is going to pick it up; on things like immigration policy, to 
make sure we are bringing in top talent and keeping them. I 
think one of the challenges on some of those topics, it does 
run counter to where the administration currently is.
    Ms. Speier. Mr. Carter.
    Mr. Carter. I would agree with Mr. Scharre. And I would 
just add that a lot of what was done at the end of the Obama 
administration was to ask some very important questions to task 
people with gathering information, with finding answers to some 
of these tough policy challenges.
    And I worry that, yes, at the working level people are 
continuing to pursue these initiatives. They are going to have 
no one to report to when they find answers. Those weren't just, 
you know, kind of black holes into which we were pitching our 
resources.
    Those were important questions that we are going to need to 
answer not just for national security purposes but because we 
need to think about building these commercial markets for AI 
technologies and things like that. And leadership at the top 
level is going to be important.
    Ms. Speier. I always worry that we are kind of late. The 
Office of Personnel Management [OPM] that was hacked into, we 
really didn't know about it for over a year. So China had 
access for a full year into some of the most sensitive 
information about Federal employees.
    Kaspersky operated in this country for years and was 
actually hired by government entities as the purveyor of 
software or malware detection; and yet, it wasn't until 2 
months ago that Kaspersky has been identified as not being a 
good actor.
    What do we do about this? Are there other Kasperskies out 
there, from a Chinese perspective, that we should be concerned 
about or from other countries? Mr. Cheng.
    Mr. Cheng. Absolutely, yes, there are other entities out 
there. It is interesting to note that while on the one hand we 
have tried to limit access for companies like Huawei, other 
Chinese companies have been able to sell products. I believe 
the Federal Government only recently recommended not acquiring 
Lenovo computers, which are another Chinese entity.
    What can we do about it? I think one of the most important 
aspects here is recognizing we are in the competition. I think 
that for too long we have been focused, for good reason, on the 
ongoing conflicts in places like Afghanistan and Iraq. But 
these are countries that do not pose a technology challenge to 
us.
    Recent events involving Russia, ongoing events involving 
China, I think, are providing a wakeup call. But I think that 
outside of perhaps this room and some quarters in the think 
tank and policy community, there is still this view that at the 
end of the day, China and Russia really are somehow distant 
threats and laggard competitors, rather than in some ways, 
increasingly our peers.
    Ms. Speier. I have actually 20 seconds or I have expired. 
Maybe you could just finish the answer to that question.
    Mr. Scharre. Yeah. I am sorry. I lost my train of thought.
    Ms. Speier. Kaspersky, OPM.
    Mr. Scharre. Yes. I think the fundamental problem here is 
that our cybersecurity architecture is just simply very porous 
and has a lot of vulnerabilities across the board. And part of 
this is about, you know, really we have incentivized efficiency 
over robustness and security as we have built up different 
kinds of computer architectures.
    And so--and this is a place where finding ways to change 
the incentive structures on things like who pays when there is, 
you know, a hack at a company that releases, you know, vital 
personal data. To change the incentive structure so that 
companies are incentivized to take cybersecurity more seriously 
might be ways to address that problem.
    Ms. Stefanik. Quickly.
    Mr. Carter. I agree, and I would just add to that that when 
you look at Kaspersky in particular, for us to fully recognize 
what had happened and to kind of announce at a national level 
that, oh, my God, Kaspersky has done this to us took a while.
    But I think a number of years ago if you had talked to 
folks in the cybersecurity community and asked them about 
Eugene Kaspersky and some of the other folks in that company, 
they would have known full well what their background is and 
their relationship to the Russian state. So partly it is just 
about getting the right people to listen to the right people.
    Ms. Speier. Thank you. I yield back.
    Ms. Stefanik. Mr. Lamborn.
    Mr. Lamborn. Thank you. Thanks for having this hearing. 
Thank you, all, for being here.
    China's satellite manufacturing industry is growing at an 
alarming rate. In the past 2 years, Chinese factories have 
pumped out 40 satellites. I am concerned that China is using 
unfair trade practices, such as subsidizing launch costs, to 
prop up its state-owned entities.
    This, in turn, places our own satellite manufacturers at a 
competitive disadvantage. So it is for this reason, as well as 
for the threat that they pose to our Nation's cybersecurity, 
that I included a provision in last year's Defense 
Authorization Act that bans the procurement of SATCOM 
[satellite communication] systems if such systems use 
satellites or components designed or manufactured by the 
Chinese.
    So, Mr. Cheng, given your expertise in China's military and 
space sector, are you aware of this or any other trends that 
China is employing to prop up its satellite export industry?
    Mr. Cheng. Sir, I am not sure that--with state-owned 
enterprises, almost by definition, it is subsidized. When you 
have a state-run banking system, you can also make very clear 
investment choices where profit motive is not an issue. 
However, our ITAR [International Traffic in Arms Regulations] 
regulations have, in a sense, really affected already China's 
ability to play in things like the satellite launch industry.
    With regards to the satellite-specific aspect, where the 
Chinese seem to be going right now is two aspects: One, lower-
end countries, countries that are new to space, Nigeria, 
Bolivia, Venezuela, where they can sell satellites, design, 
build the ground facilities all for a price that frankly no 
country can really compete with.
    The other aspect here is that in the private sector, as 
there are talked about, thousands satellite--ten--4,000 
satellite constellations of small sets. We expect to see the 
Chinese start moving into that arena. But that is dealing with 
private companies, not with the government.
    These are areas that will potentially constitute 
revolutionary capabilities, and the Chinese recognize that it 
is important to play there. So therefore, it is also very 
likely that they won't care about, one, cost, and, two, 
punishment, unless it is truly meaningful and deep impacting, 
not on these companies themselves, which are probably 
invulnerable, but rather to a larger thing like access to 
western capital, listing on stock exchanges, et cetera.
    Mr. Lamborn. And as a follow-up to that, Mr. Cheng, as they 
continue to gain market share in satellite manufacturing, 
sometimes through the use of unfair trade practices, how does 
that impact our own manufacturers, and, more specifically, the 
price point that we pay for DOD and IC satellites?
    Mr. Cheng. I am not aware that our DOD and intelligence 
community satellite programs are actually open to competition. 
I don't think that the Chinese are likely to be able to step in 
to--at this point and persuade the National Reconnaissance 
Office----
    Mr. Lamborn. Don't you think there are indirect effects?
    Mr. Cheng. Absolutely.
    Mr. Lamborn. That is what I am getting at.
    Mr. Cheng. At the subsystem level it is certainly possible. 
Again, ITAR regulations, however, do limit the ability for 
launch and things like that. So that, I think, is a factor.
    The ITAR has succeeded really in limiting and channeling 
Chinese access. Where this is much more of a problem will be in 
the truly commercial sectors, just as with other high-
technology areas. The question is whether Intelsat and Eutelsat 
are going to necessarily buy a satellite from Boeing if the 
Chinese can offer a satellite of relatively comparable 
capability for a purely commercial purpose. Now, subsystems, 
solar panels, batteries, things like that, in the longer term 
in the supply chain, that is certainly a possibility.
    I do also want to note here that the Chinese are almost 
certainly going to be offering data, not just the physical 
hardware, but more and more as they deploy constellations, we 
should expect to see them offering data at very competitive, 
potentially undercutting prices to a variety of users, which 
will then, of course, justify everything from imaging to SIGINT 
[signal intelligence] about a variety of targets.
    Mr. Lamborn. Mr. Carter or Mr. Scharre, is there more we 
should do to protect against China's unfair trade practices 
when it comes to satellite manufacturing or the selling of 
data?
    Mr. Carter. I would actually--looking at what is happening 
in the space industry now, there is actually a huge amount of 
innovation happening in the United States in the private 
sector, and a large part of that seems driven by the fact that 
U.S. companies know that they can't compete on price with the 
current technology. But there is also a clear free-market 
mechanism that is driving them to innovate and find ways to cut 
cost and deliver better capabilities.
    So I think there may be room to do more to combat China's 
anticompetitive practices, but I would also say that there is 
probably more reason for optimism about the U.S. commercial 
space sector today than there has been in a while.
    Mr. Lamborn. Thank you.
    Ms. Stefanik. Mr. Khanna.
    Mr. Khanna. Thank you, Chairwoman Stefanik, for allowing me 
to participate on this subcommittee.
    I read your testimony about China proposing almost $150 
billion in the next 5 years of funding on artificial 
intelligence. And I think Mr. Carter pointed out that our 
investment--total U.S. Government investment is about $1 
billion.
    I wonder what you would recommend for the United States 
Government to be competitive going forward in the next 10 years 
on artificial intelligence?
    Mr. Carter. I would say two things in AI in particular. One 
is, China understands that certain technologies are building 
blocks that enable other technologies to develop. We should 
take the same approach, think about what are the most 
fundamental breakthroughs that need to happen and then allow 
the private sector to commercialize and develop applications 
based on those breakthroughs.
    A second piece is they look at the technology ecosystem 
fundamentally differently than we do. So when they think about 
AI, they are thinking in the same breadth about the internet of 
things, about ubiquitous connectivity, miniaturization, 
material science, energy science. And when we think about our 
approach to R&D to support artificial intelligence, we also 
need to look at all of these enabling technologies.
    And, finally, it is not just the R&D space. Another example 
that I would point to in this area is China's pursuit of basic 
resources. And I think that that is something that we haven't 
quite gotten to connecting to AI yet, but China's approach to 
controlling lithium supplies and rare earth minerals is 
entirely based on their view of the potential of autonomous 
vehicles and other devices that are going to be using 
batteries.
    And they are pursuing diplomatic government and commercial 
relationships with countries like Bolivia that have lithium 
supplies, Chile. And it is not just lithium; it is a range of 
other minerals.
    We need to take this approach. All these technologies are 
linked. All of these basic sciences feed into the development 
of AI. AI is a system of systems. That is the biggest thing 
that I would encourage. We should invest in the most 
fundamental building blocks across all of these areas on which 
people can then build really good AI.
    Mr. Scharre. You know, artificial intelligence is an area 
where there is so much investment happening in the private 
sector that I don't know that dollars is what the government 
needs to bring to the table.
    The U.S. Government is never going to bring as much money 
as Google and Facebook are throwing at AI right now. And those 
advances are already happening. The trick for the government is 
to be able to bring that technology into the national security 
space and make sure that the government is able to go out and 
access that, in particular because these are not companies that 
typically work with the government, right. They are not 
building normal weapons systems.
    Project Maven, the algorithm warfare cross-functional team 
that Chairwoman Stefanik mentioned, is something that is 
happening right now with DOD. They are trying to break down 
some of these barriers, grab ahold of this technology.
    I think we want to expand the scope of that so that we find 
these acquisition tools that are working, give them to other 
people across the Department and other parts of the government 
as well, so they can go ahead and bring this technology in and 
use it very rapidly for near-term applications. They can think 
in, you know, months instead of years is what they are going to 
have to do to bring this in.
    I think there are also some unique policy challenges the 
government needs to confront when they do this. There are a lot 
of safety and control and vulnerability problems with current 
sort of cutting-edge AI systems.
    They are not the same as cybersecurity vulnerabilities, but 
it is a good analogy that machine learning systems have their 
own kinds of weaknesses and vulnerabilities. And the government 
has got to be conscious of that when we use them in national 
security applications.
    So that if, for example, we use object recognition to do 
scanning for luggage for TSA [Transportation Security 
Administration] that there is not some vulnerability, people 
can find a way to kind of trick the system to sneak a bomb 
through that.
    Mr. Khanna. A quick follow-up. What would you think of 
creating an artificial intelligence center in the Department of 
Defense to do the things you are talking about? Quickly, I 
guess, and Mr. Cheng too.
    Mr. Cheng. I think that that would be less useful than 
something like replicating things like the XPRIZEs. When we 
look at the explosion in space technology--no pun intended--
what we have seen is that that has incentivized the private 
sector to go into things.
    Another one is we are relaxing a lot of regulations that 
are preemptively already strangling things. Antimonopoly rules 
to facilitate smaller companies interacting with each other 
without having to look over their shoulder about legal 
vulnerabilities, liability concerns, these are, I think, much 
more useful than setting up yet another bureaucracy within DOD 
that would probably operate still under the standard current 
acquisition regulations that are the problem that I think all 
of us have identified here as more an obstacle than a 
facilitator.
    Mr. Scharre. I think a DOD AI innovation center makes 
sense. I do think you would want to think about how you 
structure it so that the primary function is tapping into what 
the private sector is already doing.
    Mr. Carter. I would just add that the Defense Innovation 
Board recommended exactly this, and I think that when you have 
industry leaders that they are calling for it saying they could 
work better with DOD if they had it, that is a sign in itself. 
But we should probably also get their input on how to structure 
it, how to operationalize it.
    Mr. Khanna. Thank you.
    Ms. Stefanik. Thank you. Your time is expired.
    We will now go to the second round of questions. My 
question has to do with the broader data question.
    Mr. Scharre, in your opening statement, you noted that 
internet users top 3.8 billion people, nearly 5 billion people 
using cell phones, nearly 3 billion people using social media, 
and more than 20 billion devices connected via the internet of 
things.
    What does this mean with respect to the amount of data 
available and being generated, especially in my opening 
statement when I referenced the potential for China to control 
30 percent of the world's data by 2030? How does this impact 
the intelligence community, for example, which is a community 
that is grappling with this pace of technological change?
    Mr. Scharre. So right now, we have these oceans of digital 
data, and it is very hard to actually make sense of it and 
process it. Artificial intelligence is changing that. And, in 
fact, the current methods of machine learning, deep learning in 
particular, need large volumes of data.
    And so you actually have this synergy between these two 
kinds of digital technologies, this proliferation of large 
amounts of data, this huge accumulation of it, and AI that 
needs this data and then can learn from it and then can learn 
very complex things that you can't teach people. It can learn 
to recognize faces, translate languages.
    For a country like China, that means that having this, you 
know, indigenously within their own countries, having hundreds 
of millions of internet users, people doing banking over mobile 
devices, all of that is this pool of data that they can draw 
into to then feed into their AI sector and they can begin 
learning things about human behavior. And so that is a 
significant advantage. Then they can translate that to a whole 
variety of applications.
    Ms. Stefanik. Thank you.
    Another topic that you touched upon in your opening 
statements but I don't think we have dived into is genomics and 
synthetic biology. With respect to health care, gene editing, 
and synthetic biology, we have seen China position itself with 
plentiful and very low-cost gene-editing technologies. You've 
referenced the genetic research center, China is home to the 
largest genetic research center.
    China also has passed laws making it illegal to export 
healthcare and genomic data about the Chinese population, that 
combined with some of their recent hacks on U.S. healthcare 
systems that were attributed to China. Can you discuss what 
your concerns are in this area?
    Mr. Scharre. Yes. So this is, I mean, an area that is--we 
are seeing these incredible fundamental breakthroughs because 
now computer costs have driven down the cost of sequencing the 
human genome. So it will accumulate not just individual 
genomes, but large dataset, and they are beginning to do 
analysis across them.
    It is almost hard to overstate how significant this could 
be in the long term. We are talking about understanding human 
biology, changing the actual code of human biology. And so that 
is places where we want to be a dominant player, and we want to 
think about how do we protect that kind of genetic data.
    You know, how do we protect--I think this is a broader 
policy question really involving both national competitiveness, 
but also privacy issues of the United States, things like who 
owns your genome, right, who owns your genetic data, who has 
access to that.
    When you look at cybersecurity practices today, right, if 
we can't protect people's credit card numbers and OPM data and 
their Equifax data, the idea that we are building giant 
databases that have human genomes in them is a little bit 
actually scary, right? And so I think we need to think hard 
about how we begin to protect that data.
    Ms. Stefanik. Mr. Langevin.
    Mr. Langevin. Thank you, Madam Chair.
    If we could just go back to--so I could clarify the 
investment that China is making in AI and what we are investing 
in AI, it is a little confusing. And I just want to understand 
when you talk about $7 billion and that is just with the city--
the two Chinese cities, and then our R&D investment in AI is 
$1.1 billion for the U.S. Government.
    Are we comparing apples and apples in terms of the total 
investment of--in AI, both government and private sector on 
both, or is this--are you talking about just government to 
government?
    Mr. Carter. So that comparison is not strictly apples to 
apples. I think that the key point is that if you look at 
everything that the U.S. Government is doing, it amounts to a 
tiny amount of actual direct funding for research in AI. I 
think that statistic came from the report from a couple years 
ago, the NSIC [National Security Investment Consultant 
Institute] report.
    And what you see in China is they have investment at all 
levels of government, so those municipal governments are 
investing. Beijing just announced that they are going to build 
a new AI center that is going to be kind of an off shot of 
Zhongguancun, which is an innovation center in the center of 
Beijing.
    But if you look at the private sector, I do think that is 
an area where we have a huge advantage. Part of it is that U.S. 
companies are investing huge amounts of money in AI. Part of it 
is that U.S. investors are, I think, smarter technology 
investors than Chinese investors. They have got decades of 
experience doing it. People have been throwing money at all 
kinds of crazy ideas in Silicon Valley for, you know, 40-plus 
years.
    So when you look at what is happening in China, they are 
putting a lot of money into companies and into technologies 
that I don't think will necessarily actually bear fruit. So on 
the private sector side, I think we are putting in a lot of 
money and we are making better investments. On the government 
side we are putting in essentially no money, and there is 
probably room for us to do more.
    Mr. Langevin. Yeah, I would agree to do both. And having 
that collaboration with the private sector, you know, 
purchasing commercial off-the-shelf also is something where we 
can leverage the amazing investments that the private sector is 
making as well. But I think it is important that the government 
invest in this R&D technology as well, without a doubt.
    Let's also talk to something else. I know we have touched 
on this a bit, but to give you an opportunity to expand on it. 
You know, I believe a comprehensive whole-of-government 
approach is needed to maintain U.S. technological advantage. 
And it also--it must include investment in our future workforce 
and collaboration of all agencies.
    I also believe the strategy should not be focused on 
countering activities of one country, but rather should force a 
culture of innovation. And so what are your thoughts on this 
issue? Again, I know we have touched on this, but further 
thoughts that you would like to share on this.
    And also what are your recommendations for Congress for 
policies that maintain our technological edge in critical areas 
by appropriately addressing exploitations in activities of 
other nations while also fostering a culture of innovation in 
the U.S.?
    And the other thing, if we don't get it, if you can maybe 
touch on it before the time runs out, China is a keen 
competitor in the international community in developing 
regulatory mechanisms and addressing legal and ethical issues 
regarding the use of emerging technologies.
    In your view, how can the U.S. remain the leader in the 
international community for developing regulatory policies, 
setting of international norms, and addressing ethical issues 
in adopting sound doctrine for emerging technologies?
    You know, it was a real wakeup call for me when I heard 
Elon Musk talk about artificial intelligence being the biggest 
fundamental existential threat in the existence of mankind that 
we face today. So how do we make sure that other nations are 
using--developing and using these technologies responsibly and 
that we are leading in that area as well?
    Mr. Cheng. Sir, one of the things that we can take away 
from the U.S. versus Chinese experience on the internet is that 
the Chinese very much want only nation-states to have a say in 
the establishing regulations. They have really hated ICANN 
[Internet Corporation for Assigned Names and Numbers] and 
wanted to move administration of the internet to the U.N.'s 
[United Nations] International Telecommunications Union.
    I would suggest that that is not in our interest for 
multiple reasons, not least of which is that our private sector 
is vibrant and powerful. We should, therefore, be a strong 
advocate for a multi-stakeholder approach in the development of 
rules, norms, standards, including in the areas of artificial 
intelligence and genetic engineering.
    Mr. Scharre. You know, when it comes to fostering U.S. 
competitiveness, I mentioned this before, what I really think 
the most essential thing is human capital. We have talked for 
example on CFIUS and the balance of, you know, constraining 
foreign-directed investment. But dollars are fungible; people 
are ultimately the most valuable asset in innovation.
    And so I think things like investing in STEM [science, 
technology, engineering, and math] education in the United 
States and then encouraging immigration policies that look for 
bringing the best and brightest over and keeping them here are 
really essential so that we remain a place where people want to 
come, want to innovate, want to build new technologies and new 
companies.
    Mr. Carter. I would agree, and I would add that I think 
there is an overlap between the two themes that you talked 
about. So one of the greatest advantages of the U.S. private 
sector over the Chinese private sector is that our companies 
are global.
    You talk about 30 percent of the data--the world's data is 
going to be in China. Well, we have a huge advantage on the 
other 70. U.S. companies--China has 1.4 billion people. China 
has--Facebook has over 2 billion users. The largest social 
media platforms, communications apps, email services are all 
based in the United States.
    So much of the data that is being generated in other 
countries is our data. So that goes to your point, Mr. 
Langevin, that we need to establish relationships, build 
communities of like-minded nations in order to give ourselves 
an advantage of scale. That has always been China's greatest 
advantage.
    Ms. Stefanik. Time is expired.
    Dr. Abraham.
    Dr. Abraham. Thank you, Madam Chair.
    As much as AI gives me pause, synthetic biology gives me 
more. Because we are to the point with CRISPR/Cas9 [Clustered 
Regularly Inerspaced Short Palindromic Repeats] where we can 
modify not only single genome or genes, but an entire sequence 
of genes.
    But going back to the chairwoman's comment and Mr. 
Langevin's, yes, state players certainly want rules and 
regulations in place that control this because we know where 
this can lead. We have truly gone from science fiction to 
reality, and if not now, very soon.
    But there are groups globally that are very, very well-
funded that could take this technology and do very, very evil 
things with very limited resources as far as labs. We know 
CRISPR/Cas9 can be done in any normal molecular biology lab and 
then right now.
    Just an opinion, because I understand it is that, is there 
anything we as Americans, we as Congress, we as a group of 
people with moral standards can do to limit our--you can't put 
the genie back in the bottle, literally. But is there anything 
that could be done to prevent some of the potential that is out 
there? And I know it is a very subjective question, but I would 
like your opinions.
    Mr. Scharre. Yeah, I think on biotechnology threats, the 
most significant thing we can do is invest in things that might 
involve responses or defenses. So government organizations like 
Defense Threat Reduction Agency or CDC [Centers for Disease 
Control and Prevention] that will be thinking about how to 
respond to natural or artificial pathogens and ways to react to 
that.
    In part because the nature of information technology is 
such that constraining it is so very difficult, because it is 
not something like stealth. The essence of it is information. 
It spreads very easily. These techniques are widely available, 
and so we are going to have think about how we prepare 
ourselves for a world where there may be potentially, in the 
long term, somewhat scarier threats on the horizon.
    Dr. Abraham. Mr. Cheng.
    Mr. Cheng. I hope that this never comes to pass.
    Dr. Abraham. That is wishful thinking.
    Mr. Cheng. Yes, sir. But if it does, I think it is also 
going to be very important that the response, not just the 
medical response but the law enforcement legal response, be 
swift and be punitive.
    To make--if deterrence is going to work against nation-
states, we have a--ironically, we have more options. But 
against non-state actors and things like that, we need to make 
very clear that you cannot hide, that you cannot get away with 
this, that there will not be some kind of excuse made, well, 
but they are an oppressed peoples, or, gee, you know, we can't, 
you know--it needs to be swift and it needs to be sure and it 
needs to be strong, because that is the only way you are going 
to deter--you may not deter the first incident, but hopefully 
you can deter the second or third.
    Dr. Abraham. Mr. Carter.
    Mr. Carter. I agree. I really hope this never comes to 
pass. I would just add that one of our great defenses is the 
ethical framework of the scientific community. I think that 
around the world you have people who have come through a 
certain set of institutions that instill within them a certain 
set of values. In the short term, I hope that that is enough to 
keep us safe.
    Longer term, the only thing that I would add to what my 
colleagues said is there will probably come a time when we need 
to think about how we can use these technologies to make 
ourselves stronger and more resilient against some of these 
threats.
    Biotechnology is like AI or quantum in many ways, in that I 
think the technology presents the threat, but it can also 
present solutions to the threat and so we should look into 
that.
    Dr. Abraham. Thank you, Madam Chair.
    Ms. Stefanik. Ms. Speier.
    Ms. Speier. Thank you.
    Yeah, we have talked a number of times in this last hour 
about CFIUS and the reforms that CFIUS needs. You have spoken 
in generalities for the most part. Could you give us some 
specifics of the kinds of things that should be reforms that we 
undertake?
    Mr. Scharre. Certainly. I think the things that would make 
sense would be expanding the scope of CFIUS so that it 
enables----
    Ms. Speier. By scope--you said that before. Tell us what 
you mean by scope?
    Mr. Scharre. Right. So in two particular ways. One, that it 
covers potentially more--that it is triggered by a wider 
variety of more commercial activities, so foreign investment at 
maybe a lower level, a percentage of investment in that 
company.
    Ms. Speier. What is it now?
    Mr. Scharre. I want to say it is 50. I have got it right 
here. Fifty percent, I want to say. So lower than that, like 
down by 25, and then looking at maybe other things like joint 
commercial ventures or other types of commercial activities 
that might cover.
    I think the second thing would be expanding the type of 
technologies that you are doing. And I think probably the best 
approach there, because of the challenge of sort of some of 
these technologies be evolving, will be giving the executive 
some flexibility in creating a list of technologies that fall 
into the scope that might be reviewed periodically they would 
have to report back to Congress on.
    Ms. Speier. Mr. Cheng.
    Mr. Cheng. In this case, I think it may be not an issue of 
reform, but establishing a new entity, perhaps embedded within 
something like the Securities and Exchange Commission, 
Department of Treasury, Department of Commerce that would be 
overseeing and monitoring investments in new developing 
technologies, joint ventures, and things like that, not by 
outsiders, but by entities that may be influenced from abroad.
    As I said earlier, a joint venture company, where did the 
capital come from? Who is sitting on that board? How are they 
going--what kind of access did a--newly developed intellectual 
property, possibly in technologies that we don't even recognize 
could be in the longer term strategically important.
    That is not a CFIUS role right now because, again, it is 
not an outside investor, but this is something that I think 
especially, when we look at the Chinese and others, they 
recognize that it is startups, it is new technologies, 
especially cutting-edge, where the long-term strategic 
consequences simply can't be predicted. So the Chinese and 
others invest in everything in the expectation that you may 
have longer-term payouts and payoffs.
    Ms. Speier. Mr. Carter.
    Mr. Carter. I would say that--well, with what Mr. Scharre 
was referring to, I think it is the issue of noncontrolling 
investments. So control has always been a key principle for 
CFIUS. Does a foreign entity control a U.S. company?
    And I think that that is where there is a lot of room to 
say we need to think about a broader issue than them 
controlling the company. It is them having access to the 
company, to its way of thinking, to its technology.
    Also, I think I mentioned earlier, this idea of enabling 
commodities. Of thinking not just in terms of what are 
technologies we don't want other people to have but what are--
what is a resource base that we want the United States to have 
and that we don't want other countries to have that feeds into 
technology, things like data. China will have 30 percent of the 
world's data. Do we need to give them our data as well?
    And then the last thing that I would add is, I think CFIUS 
already has a mechanism. Often, instead of rejecting a deal 
they propose constraints, firewalls within companies, internal 
procedures which can be used to address some of the issues that 
can arise from foreign control of the company or foreign 
investment in the company.
    I think we definitely need to keep that as an element of 
our CFIUS strategy because we want to make--we want to have an 
open investment environment. We want to be part of a global 
investment ecosystem. But there are other ways than blocking 
deals that we can ensure that companies aren't being used to 
transfer technology out of the United States.
    Ms. Speier. Francis Collins, maybe 2 years ago, who was, in 
fact, one of the creators or the--one of the individuals who 
was able to decipher the genome, was invited to China. And he 
went to what was a shoe factory previously and was shown this 
lab, so to speak, with 3,000 Chinese working on the genome. For 
all intents and purposes, have they eclipsed us?
    Mr. Carter. It is not just a question of the number of 
people that are doing it. And in synthetic biology and 
artificial intelligence in particular, quantum as well 
actually, I think you would get pretty broad consensus from 
people in the field that there is a huge difference between the 
top 50 percent, the top 10 percent, the top 1 percent and the 
top 1 percent of the 1 percent.
    They may have more people doing it, but I do think that the 
best people in many of these fields are still in U.S. 
institutions.
    Ms. Speier. That is a little bit of good news. Thank you.
    I yield back.
    Ms. Stefanik. Mr. Khanna.
    Mr. Khanna. Thank you, Madam Chair.
    You had said that the key is for our military Department of 
Defense to harness the--what is going on in the private sector 
and to--in artificial intelligence. And so I had a two-part 
question. One, if we were to create a center like the Defense 
Innovation Board recommends, do you think it would be better to 
house that within the Department of Defense, or would it be 
better to have something like that outside like we have at Los 
Alamos or Sandia? What would be better?
    And second, what would you say is the importance of Google 
and some of these tech companies in Silicon Valley to our 
national security? The reason I ask that is, you know, Steve 
Bannon is very concerned about the threat of China, and yet, he 
also often refers to my district as the technology lords. And I 
wonder with too many agency [inaudible], I wonder what people 
would think of technology in Silicon Valley as critical to our 
national security.
    Mr. Scharre. I do think an AI innovation center would make 
sense for the Department of Defense. It would be a different 
kind of entity than if you created a national-level one. I 
think it makes sense for DOD, because I see the central problem 
is DOD's ability to import this technology.
    It is not that we need to create a government agency or 
government entity to create artificial intelligence. These 
companies are doing it. It is that we need something inside, 
really a strong and central organization inside DOD that can 
allow the import of these into the military kinds of space. And 
so I think that that is certainly valuable.
    Mr. Carter. I completely agree. And I think that it is not 
just a question of setting up an AI center. It is also 
addressing the perennial challenge of Federal acquisitions, 
particularly defense acquisitions.
    If we acknowledge that the private sector is the main 
engine of innovation in a lot of these key fields, and if we 
acknowledge that these technologies are going to be the basis 
of military advantage going forward, we can't ask programs like 
DIUx and In-Q-Tel, which are a tiny part of Federal 
acquisitions, to provide the bulk of our capabilities going 
forward.
    So we either need to make those kinds of programs a much 
bigger part of our overall acquisitions machine or we need to 
fix our overall acquisitions machine so that it can actually 
tap into these technologies effectively.
    Mr. Cheng. I mean, the reality here is that for Google, for 
Facebook, for Microsoft, DOD is a relatively small piece of 
their market. The problem is, DOD still acts as though this is 
the 1950s and these companies should appreciate all the work 
and budgetary dollars and, therefore, should be more than happy 
to comply with a defense Federal acquisition system that I 
think many, many, many people would agree is badly broken.
    So the other issue here is if you set up this center for 
artificial intelligence, you can lead the horse to AI. But 
getting services, et cetera, to accept it--when we look at, for 
example, the resistance that we see towards unmanned aerial 
vehicles and unmanned underwater vehicles in terms of their 
ability to be integrated into the current system--this is a 
relatively mature technology, comparatively speaking--there is 
a lot of bureaucratic opposition, I would suggest.
    And I am not sure that a center like this--this is not an 
argument against it. But it is not--creating one is not going 
to somehow magically have everybody sort of say, oh, well, 
okay, then, you know, I will be happy to accept a model 700 in 
my command post.
    Mr. Khanna. And any quick comments on how important tech 
companies in Silicon Valley are to our national security?
    Mr. Scharre. I think in principle they are vitally 
important, but we need to make sure that we are actually 
leveraging that also for national security purposes then.
    Mr. Carter. I would also add that our adversaries clearly 
see them as important, which is why, for example, they subject 
them to industrial espionage, cyber attacks every day.
    In some ways, I think we are asking them to actually be 
soldiers particularly in the information domain and fight on 
our behalf, but they are not really being compensated for that. 
And we don't have a strategy for how that is integrated with 
our national defense capabilities, and we probably need to 
address that.
    Mr. Khanna. Thank you.
    Ms. Stefanik. Thank you to our witnesses, and thank you to 
our members for their excellent questions and the excellent 
testimony.
    As I mentioned in my opening statement, this is a 
critically important topic that we will continue to focus on in 
future hearings and as we continue to develop the NDAA 
[National Defense Authorization Act], specifically the science 
and technology budget.
    Thank you very much. And with that, this meeting is 
adjourned.
    [Whereupon, at 3:40 p.m., the subcommittee was adjourned.]



      
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