[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
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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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A P P E N D I X
January 9, 2018
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
January 9, 2018
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