U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

i 

28–966 2019

[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 
(II) 

SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES 

ELISE M. STEFANIK, New York, Chairwoman 

BILL SHUSTER, Pennsylvania 

BRAD R. WENSTRUP, Ohio 

RALPH LEE ABRAHAM, Louisiana 

LIZ CHENEY, Wyoming, Vice Chair 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

DOUG LAMBORN, Colorado 

AUSTIN SCOTT, Georgia 

(Vacancy) 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

JACKIE SPEIER, California 

MARC A. VEASEY, Texas 

TULSI GABBARD, Hawaii 

BETO O’ROURKE, Texas 

STEPHANIE N. MURPHY, Florida 

PETE VILLANO, Professional Staff Member 

LINDSAY KAVANAUGH, Professional Staff Member 

NEVE SCHADLER, Clerk 
(III) 

C O N T E N T S 

Page 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Langevin, Hon. James R., a Representative from Rhode Island, Ranking 

Member, Subcommittee on Emerging Threats and Capabilities ..................... 3 

Stefanik, Hon. Elise M., a Representative from New York, Chairwoman, 

Subcommittee on Emerging Threats and Capabilities ..................................... 1 

WITNESSES 

Carter, William, Deputy Director and Fellow, Technology Policy Program, 

Center for Strategic and International Studies ................................................. 7 

Cheng, Dean, Senior Research Fellow, Asia Studies Center, The Heritage 

Foundation ............................................................................................................ 4 

Scharre, Paul, Director and Senior Fellow, Technology and National Security 

Program, Center for a New American Security ................................................. 6 

APPENDIX 

PREPARED STATEMENTS: 

Carter, William ................................................................................................. 66 

Cheng, Dean ...................................................................................................... 41 

Scharre, Paul .................................................................................................... 51 

Stefanik, Hon. Elise M. .................................................................................... 39 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

[There were no Questions submitted during the hearing.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

[There were no Questions submitted post hearing.] 

(1) 

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- 
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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 
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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 
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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 
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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 Chinesemanufactured 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. 
6 

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 
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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 partic-
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ipate 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 
9 

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 
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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 
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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 
12 

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 decisionmaking 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 
13 

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 
14 

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. 
15 

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 selfimposed 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 
16 

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 
17 

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 longlasting 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? 
18 

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 crosscutting 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. 
19 

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. 
20 

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 technolo-
21 

gies 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 Kas-
22 

persky 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 
23 

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 break-
24 

throughs 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 cuttingedge AI systems. 
25 

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 meth-
26 

ods 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 lowcost 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, 
27 

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 
28 

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 multistakeholder 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. 
29 

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 
30 

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- 
31 

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 
32 

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. 
33 

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.] 

A P P E N D I X 

JANUARY 9, 2018 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

JANUARY 9, 2018 

(39) 

Opening Statement 

Chairwoman Elise M. Stefanik 

Emerging Threats and Capabilities Subcommittee 

China's Pursuit of Emerging and Exponential Technologies 

Jan.9,2018 

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 events, 

including the Science and Technology budget for the Department of Defense, and 

the continuation of the reform and Innovation efforts this committee has promoted 

over the past several years. Our committee, and ETC 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. But this hearing 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 oftheir technology gaps. More and 

more, we see China using only domestic Chinese firms and creating high marketaccess 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 ofhigh-paying, 

high-skill jobs there are also obvious national security implications should they 

comer 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% of the world's data 

by 2030. 

Many of China's published National-level plans, such as achieving 

dominance in Artificial Intelligence by 2030, indicate a top-down, governmentdriven agenda that provides a road-map 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 advanced 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 re-learn 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 forgone conclusion. What we learn today and in future hearings must 
40 

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 re-establishment of the Under 

Secretary of Defense for Research and Engineering. 

I finnly 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, 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 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 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. 

We have significant expectations of Dr. Mike Griffin the nominee to be 

the Under Secretary for Research & 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 & 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 all three of our witnesses and we look forward to your 

testimony. 

Thank you again to our witnesses for being here today. Mr. Cheng, we will 

begin with you. 
41 

CONGRESSIONAL TESTIMONY 

China's S&T and Innovation Efforts 

Testimony before the 

Armed Services Committee 

Emerging Threats and Capabilities Subcommittee 

U.S. House of Representatives 

[January 9, 2018] 

Dean Cheng 

Senior Research Fellow. Asian Studies Center 

The Heritage Foundation 

My name is Dean Cheng. I am a Senior Research Fellow in the Asian Studies Center at The Heritage Foundation. 

The views I express in this testimony are my ow11 and should not be construed as representing any official position of 

The Heritage Foundation. 

Over the past fot1y years, since Deng Xiaoping began his policy of"Reform and Opening," the People's Republic 

of China (PRC) has evolved from a less developed country to the second largest gross domestic product (GDP) in 

the world. Over the past25 years. it has also steadily transfonncd the People's Liberation Army (PLA) into a force 

that is capable of influencing regional, and increasingly global, security environments. 

An essential element of this growth, both in terms of China's economy and military, rests upon its ongoing 

investments and support for science and technology. including in critical technology areas. 

A Long-standing Emphasis on Science and Technology (S&T) 

Chinese leaders have long viewed science and technology as an essential part of China's "'comprehensive national 

power (zonghe guojia /iliang; #;k£3'[1IJ# )J lil:)." Comprehensive national power reflects the various factors that 

int1uence a nation's capabilities and international standing. It includes national military and economic strength, 

political unity, and diplomatic standing. An essential element of comprehensive national power is the nation's level 

of scientific and technological development. 

By Beijing's Chinese calculations, a capable scientific and technological base is essential in order to achieve 

economic autonomy. A state that has substantial capabilities in this regard, they believe. can chan its own course. 

determining what kinds of industries it will develop. Moreover, it can reap significantly better returns on its 

investments, by moving higher up the value chain. By contrast, a nation with a weak scientific and technological 

base will likely be relegated to subcontracting to other states, and will find it hard to break into those areas with 

better returns on investment. 

214 Massachusetts Avenue, NE • Washington, DC 20002 • (202) 546-4400 • heritage.org 
42 

CONGRESSIONAL TESTIMONY 

At the same time, science and technology are increasingly linked to military capacity. While militaries in the 

Industrial Age could rely on mass to overwhelm an adversary, in the Information Age, it is quality, as well as quantity, 

that matters. Chinese military and political leaders. analyzing the conflicts since the first Gulf War (1990-1991), 

have clearly concluded that the PLA can no longer rely on barely trained militia equipped with "rifles and millet" as 

they did during the Mao Zedong era. Instead. they have focused on developing ever more sophisticated weapons in 

order to "fight and win future informationized local wars." 

To this end, Chinese leaders have consistently supported programs that promote the PRC's scientific and 

technological capacity and support innovation. 

Deng Xiaoping put in place '·Pian 863." also known as the Program for High-Technology Research and 

Development. In March 1986, four leading Chinese scientists (who were also part of the military industrial complex) 

approached Deng, and urged him to support investments in high technology. Only by increasing China's scientific 

base, they argued, could the PRC hope to compete in the long tenn with the Soviet Union and the West. Deng 

authorized the creation of Plan 863, which directed investments of human, physical, and financial capital towards 

seven key high-technology areas: 

l) Automation. 

2) Biological sciences and genetic engineering, 

3) Energy. 

4) Information technology, 

5) Lasers, 

6) Advanced materials, and 

7) Aerospace technology.' 

Thirty years later, Plan 863 continues to support advanced research in these areas, as well as telecommunications 

and marine sciences (which were added to Plan 863's purview in the 1990s). 

Under Jiang Zemin, who became Party General Secretary and national leader in 1992. the PRC began to push 

investments in interdisciplinary research under '·Pian 973," also known as the National Basic Research Program of 

China. While oriented more towards basic (rather than applied) research. it supported a variety of efforts. Jiang also 

put in place two major programs ("Plan 985" and ·'Plan 211 '') to improve China's universities to world-class 

standards. As China produces tens of thousands of engineers and scientists evel)' year, many of these are likely to 

have benefited from the additional resources allocated to these universities. 

lfu Jintao made "indigenous innovation" one of his signature catch phrases. During Hu Jintao's administration 

(2002-2012), the PRC issued the "National Medium to Long-Term Plan for the Development of Science and 

Technology." This called for China to become a major source of global innovation by 2020, allocating 2.5 percent 

ofGDP to research and development. The Medium to Long-Term Plan includes an array of engineering and scientific 

megaprojects, as well as "frontier technologies'· which align with those previously enumerated as part of Plan 863. 

1Micah Springut, Stephen Schlaikjer, and David Chen, China's Program for Science and Technology Modernization: 

Implications for American Competitiveness (Washington, DC: Government Printing Office, 2011), p. 27, 

http: 1/sites.utexas.edu/ chinaecon /files /2015 /06/USCC Chinas-Program-for-ST.pdf (accessed January 5, 2 018). 

2 
43 

CONGRESSIONAL TESTIMONY 

Table 1-1 Key Areas, Technologies, and Programs Identified in China's Medium- and Long-Term Plan for 

Development of Science and Technology' 

Key Areas (ll ): 

• Agriculture 

• Energy 

• Environment 

• Information technology industry and modern services 

• Manufacturing 

• National defense 

• Population and health 

• Public securities 

• Transportation 

• Urbanization and urban development 

• Water and mineral resources 

Engineering Megaprojects (16): 

• Advanced numeric-controlled machinery and basic manufacturing 

technology 

• Control and treatment of AIDS, hepatitis, and other major diseases 

• Core electronic components, high-end generic chips, and basic 

software 

• Drug innovation and development 

• Extra-large-scale integrated -circuit manufacturing and technique 

• Genetically modified new-organism variety breeding 

• High-definition Earth observation systems 

• Large advanced nuclear reactors 

• Large aircraft 

• Large-scale oil and gas exploration 

• Manned aerospace and Moon exploration 

• New-generation broadband wireless mobile telecommunications 

• Water pollution control and treatment 

• Advanced energy 

• Advanced manufacturing 

• Aerospace and aeronautics 

• Biotechnology 

• Information 

• Laser 

• New materials 

• Ocean 

• Protein science 

• Quantum research 

During Hu's administration, the Chinese Academy of Sciences, a key part of China's research and scientific 

organizational infrastructure, also released a massive series of reports highlighting key Chinese technology targets 

by 2050. These included energy, aerospace technologies, advanced manufacturing, advanced materials, information 

technology, and oceanographic research.2 Hu also encouraged foreign direct investment-and also often required 

high-technology industries to open research campuses in China as part of those investments. 

Under Xi .!inping, this emphasis on science and technology and innovation has continued unabated. ln February 

20 16, a new key high-technologies program was announced. This would merge several ongoing programs, including 

Plan 863 and Plan 973, and reorganize them into five lines of effort3 

1) Natural sciences, 

'From U.S. National Research Council, The New Global Ecosystem in Advanced Computing: fmplications for U.S 

Competitiveness and National Security (Washington, DC: The National Academies Press, 2012}, p. 102. 

ZChina Academy of Sciences, Innovation 2050: Science, Technology, and China's Future (Beijing, PRC: Science 

Publishing House, 2009}. 

"'""~'"'"'"'National R&D Plan," Xinhua, February 16,2016, http:l/news.xinhuanetcom/english/2016· 

"'-"1-k'U-"J.ohWUCJChll-"'l.Wl.! (accessed january 5, 2018}. 

3 
44 

CONGRESSIONAL TESTIMONY 

2) Major science and technology projects, 

3) Key technologies R&D plan, 

4) Technical innovation, and 

5) Human resources for science and technology. 

China's S&T and Innovation Players 

These various programs have supported efforts by an extensive cross-section of Chinese institutions, reflecting not 

simply a who/e-of~go~·ernment approach to promoting science and technology, but a whole-of-society approach. The 

Chinese have employed all the various tools at their disposal. from their own substantial human capital to business 

deals to economic espionage, to foster and improve their scientific and technological prowess. Most important, 

arguably, has been the massive array of domestic research institutes and entities. These include:4 

The Chinese Academy of Sciences. With a staff of some 50,000 and an array of 100 subordinate institutions, this 

is the leading institution of Chinese scientific endeavors. 

Government Research Institutes. The various governmental ministries have their own research institutes, which 

provide more focused research on topics related to their areas of specialization. 

Institutions of Higher Education. As noted earlier, Jiang Zemii1 began a program to improve China's universities 

and elevate them to world-class status as research institutions. This has been concomitant with a major expansion of 

China's scientific human capital. One research report concludes that China is the world's foremost producer of 

undergraduates \Vith degrees in science and engineering, representing one-quarter of the global annual output. The 

report a)so concludes that the PRC produces more doctorates in natural sciences and engineering than any other 

nation. 5 

Industrial Enterprise Research Entities. This includes both research at state-owned enterprises (SOEs) and that at 

privately run corporations. For certain key sectors, such as aerospace, the supporting industries are still SOEs. One 

example is the Chinese Aerospace Science and Technology Corporation (CASC), which is one of the two main 

conglomerates in China's space industrial complex. CASC is a massive entity, with 90,000-120,000 employees and 

eight subordinate academies. Each of these academies, in turn, has an array of research laboratories and institutes, 

and some even have their own universities. 

Not all Chinese research is conducted through state-owned or state-directed enterprises, however. Chinese private 

companies are increasingly part of the landscape of Chinese science and technology. In October 2017, Jack Ma, 

perhaps China's wealthiest man and head of the private company Alibaba, announced that his company would be 

investing $15 billion over the next three years in a massive R&D push. This would include '~projects in areas such 

as data intelligence, financial technologies, quantum computing, and machine learning."6 

The Alibaba research initiative reflects China's growing economic clout. Chinese authorities recognize that many 

companies desire to be part of the Chinese market, and have therefore taken advantage of this to access key 

4This section draws from Micah Springut, Stephen Schlaikjer, and David Chen, China's Program for Science and 

Technology Modernization: Implications for American Competitiveness (Washington, DC: Government Printing 

Office, 2011), pp. 18-22, http: l/sites.utexas.edu/chinaecilll.ffi!§/2.1l12J.Q6/USCC Chinas·mgram·fQT·ST.pdf 

(accessed january 8, 2018). 

'Reinhilde Veugelers, The Challenge of China's Rise as a Science and Technology Powerhouse, Bruegel Policy 

Contribution No. 19, july 2017, http://bruegel.org/wp·content/uploads/2017/07/PC·19·2017.pdf (accessed 

January 5, 2018). 

6Saheli Choudhury, "Aiibaba Says It Will Invest Over $15 Billion Over Three Years in Global Research Program," 

CNBC, October 11. 2017, https:l/www.cnbc.com/ZOJ 7/10/11/alibaba·says·will·pour·lS·billion·into·global· 

research·program.html (accessed January 5, 2018). 

4 
45 

CONGRESSIONAL TESTIMONY 

technologies. Chinese authorities have welcomed foreign direct investment in the PRC··-but foreign companies are 

generally required to form joint ventures with Chinese partners, who in turn will have access to key processes and 

intellectual property. The ability even to form a joint venture is often predicated upon the willingness to transfer 

technology, processes, or patents to the PRC. 

Augmenting these various open efforts has been an extensive economic espionage program. This has included the 

use of PI.A assets to acquire information and technology. The indictment of five Chinese military officers in 2014 

by the U.S. Department of Justice was not for military spying, but for "computer hacking, economic espionage, and 

other offenses directed at six American victims in the U.S. nuclear power, metals, and solar products industries.'' 

The officers were specifically accused of stealing information "that would be useful to their competitors in China, 

including state-owned enterprises. 

Expanding Payoffs 

These various efforts have already begun to bear significant fruit. From being primarily reliant on foreign technology, 

Chinese scientists have scored a number of major innovations and successes in recent years. These include 

achievements in: 

Genetic Engineering. Chinese scientists have been the first to conduct human trials involving cells modified through 

Clustered Regularly lnterspaced Short Paindromic Repeals (CRISPR) gene-editing technology. This includes a case 

involving aggressive lung cancer,8 and another involving editing cloned human embryos with genetic diseases.9 

Space Systems. China will launch a lunar lander to the far side of the Moon in 2018, something neither Russia nor 

the United States have done before (despite much more extensive lunar exploration programs). In order to support 

this mission, the Chinese are also deploying a data-relay satellite to Lagrange Point-2, one of the five points in the 

Earth-Moon-Sun system where the various gravitational fields create '"parking spots.'" While a number of nations 

have deployed scientific satellites to various Lagrange points, China will launch the first data-relay satellite to such 

a location in 2018, in support of its pioneering tar-side lander mission. 10 

China has also deployed the first quantum computer on a satellite, launching Micius in August 2016. In August 2017, 

they used the quantum satellite to transmit data 1200 kilometers, an unprecedented distance." This was followed in 

September 2017 with a videophone call from Beijing to Vienna, which was encrypted using keys generated on the 

satellite. 12 

7News release, "US Charges Five Chinese Military Hackers for Cyber Espionage Against US Corporations and Labor 

Or'""rlizcrtirm for Commercial Advantage," U.S. Department of)ustice, May 19, 2014, 

5 
46 

CONGRESSIONAL TESTIMONY 

lnformation Technology. China·s advances in quantum computing are part of a larger eft'ort that has seen China 

rise to the top in certain key areas of information technology. China, for example, has the world's fastest and second 

fastest super-computers (Sunway TaihuLight and Tianhe-2, respectively); the fastest U.S. supercomputer ranks 

fifth." It should also be noted that the Sunway TaihuLight uses only Chinese-manufactured microprocessors, 

reflecting the maturing of China ·s microprocessor indust1y. J.J 

Chinese leaders have meanwhile echoed Vladimir Putin in emphasizing the need to develop artificial intelligence 

(AI). [n July 2017, Beijing issued the "New Generation Artificial Intelligence Plan," outlining China's goal to 

become a major center for artificial intelligence research and applications by 2030. Alibaba and Baidu, the Chinese 

search engine, are meanwhile pushing development of AI. 15 In this regard, the massive Chinese censorship 

infrastructure they have put in place, including the Great Firewall of China, ls likely to be a major facilitator in this 

etiort. To some extent, Chinese censors already rely on AI as an initial filter to screen messages for acceptability. 

This trend will likely accelerate, as China puts in place the ''social credit score" which will take even more factors 

into account-and require even more monitoring. 

Drone Technology. Chinese drones span the gamut of sophistication and capability. At one end are dedicated 

military drones such as the CH-3, CH-4, and CH-5. These resemble American unmanned combat aerial vehicles 

(UCAVs) such as the Reaper and Predator. In this area, Chinese engineers have deployed an experimental drone to 

82,000 feet, substantially higher than the U.S. military's RQ-4 Global Hawk, which had been the previous high flyer 

at 60,000 feet. 16 

At the other end, Dajiang Innovation Technology Corporation (DJI) dominates the consumer drone market. It 

apparently also collected audio, visual, and telemetry data from its hundreds of thousands of drones used around the 

world. This has become such a concern that the U.S. Army banned the further use ofDJJ drones in August 2017-" 

These various advances highlight the increasing synergies among Chinese high-technology efforts. Advances in 

artificial intelligence help improve drone performance, while the drones themselves provide potential access to tens 

of thousands of data feeds. Advances in information technology are at the heart of the recent advances in genetic 

engineering. 

The Growing Challenge from Chinese Science, Technology, and Innovation 

This brief survey of Chinese technological advances provides a glimpse to the extent of the growing challenge the 

PRC poses to U.S. technological and scientific preeminence. Indeed. in some areas such as super-computing, it is 

lSLouise Lucas, "Chinese Tech Groups Look for Edge in Using Artificial Intelligence," Financial Times, December 

18, 2017, https: llwww.ft.com/contentle8bba054-d02f-1! e7-b781-794ce08b24dc (accessed january 5, 2018), 

and Kuhn, "Chinese Advances in Artificial NPR, january 1, 2018, 

january 5, 

6 
47 

CONGRESSIONAL TESTIMONY 

China, not the United States, that is the leader. It is therefore essential that the United States government including 

Congress, recognize the nature of the challenge posed by Beijing's science and technology juggernaut. 

First, the PRC is not reliant on stealing teclmolo?J!; it is increasingly an innovator. China may benefit from reduced 

R&D costs by engaging in economic and scientific espionage, but the growing number of'"firsts~' that it has scored, 

whether in deploying a lander to the far side of the Moon or a quantum communications satellite that can support 

video telephone calls across continents, should dispel the belief that it is wholly dependent upon exploiting others' 

innovations. Indeed, the Chinese themselves have emphasized that they do not want to rely on outside technologyas seen with the Sunlight TaihuLight super-computer. 

Second, China is competinK 1vith its entire society. That the PRC has employed its military cyber forces to engage 

in espionage is already well known. But China's actions go beyond having the military help its economic 

competitiveness. It is also important to recognize that civilian and nongovernmental entities, in turn, are likely to 

help military and security efforts. This apparent integration of civilian and military efforts, at least in the realm of 

computer network operations, is supported by the observation in the 2013 edition of The Science a/Military 

Strategy that there are three broad categories of Chinese computer network warfare forces. These are comprised of: 

I) Specialized military units, specifically tasked for implementing network offensive and defensive 

operations; 

2) Specialist units organized with military permission, drawn from local capabilities (e.g., from within a 

military region or war zone), including the Ministry of State Security and the Ministry of Public Security, 

and other relevant government departments; and 

3) Civilian strength, comprised of voluntary civilian participants who can conduct network operations after 

being mobilized and organized." 

The PRC government is also likely to draw upon the resources and personnel of Chinese private companies. As a 

Council on foreign Relations conference report warned, U.S. policymakers should view many Chinese private-sector 

firms as essentially operating at the behest of the PRC government "There is little functional distinction between 

private firms and ... [state-owned enterprises], one participant noted; another underscored the role that Chinese state 

financing plays in lending a political overtone to what might otherwise appear to be private-sector investment 

de-cisions. "l'J 

Finally, it is important to recognize that the PRC's efforts at promoting science and technology, and innovation more 

broad~y, encompasses a variety of approaches. The American focus is typically on technological innovation; what 

new widgets might be on the horizon? But there are other forms of innovation. During the 1980s, when there was 

great concern about Japan's challenge to the United States, it was recognized that companies like Sony and Honda 

were competing, not by making entirely new things, but by improving how things were made. While the VCR was 

invented in the United States, it was Japanese companies that manufactured them by the commercial container-load 

cheaply yet reliably. Japanese production techniques were the innovation. 

Similarly, there can be doctrinal and organizational innovation. In !940, Great Britain and France both fielded more 

tanks than Nazi Germany. Moreover, many of the Allies' tanks were arguably superior to their German counterparts. 

on a I: 1 basis. But the Gcnnans had developed the doctrine of blitzkrieg, and organized their forces accordingly, 

whereas the Allies remained wedded to a doctrine that largely saw tanks as subordinate to lhe infantry, to be dispersed 

across the front. 

18Academy of Military Science Military Strategy Research Office, The Science of Military Strategy (Beijing, PRC: 

Military Science Publishing House, 2013), p. 196. 

7 
48 

CONGRESSIONAL TESTIMONY 

Taken together, technological, production, doctrinal, and organizational innovation presents the potential of 

synergistic, reinforcing developments that can potentially leave an adversary far behind. In the case of the PRC, and 

especially the PLA, the development of the PLA Strategic Support Force (PLASSF) may well be this kind of 

fundamental, devastating breakthrough. 

The PLASSF brings together China's electronic warfare, network (including cybcr) warfare, and space warfare 

forces. It is noteworthy that no other military has brought these kinds of capabilities into a single force. China has 

concentrated within a single service forces familiar with a variety of cutting edge technologies, from hacking to space 

warfare to advanced electronic operations. Not only is PLASSF therefore most likely to benefit from advances in 

Chinese technologies, but it is organized to develop suitable doctrines to exploit those same advances. 

For the United States, then, the challenge from China is likely to be increasingly from a combination of both new 

technologies that China itself has developed, and old and new technologies organized and employed innovatively. 

An effective response cannot simply be focused on one or another technological development (although emerging 

and exponential technologies clln be game-changers). Instead, it must involve both the U.S. government and the 

broader American society. It must include flexibility in our approach to organizations, roles, and missions, as well 

as openness to new technologies. Only in this manner can we effectively meet the Chinese challenge. 

******************* 

The Heritage Foundation is a public policy, research, and educational organization recognized as exempt under 

section 501(c)(3) of the Internal Revenue Code. 1t is privately supported and receives no funds from any government 

at any level, nor does it perf01m any government or other contract work. 

The Heritage Foundation is the most broadly supported think tank in the United States. During 2016, it had 

hundreds of thousands of individual, foundation, and corporate supporters representing every state in the U.S. Its 

2016 income came from the following sources: 

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Program revenue and other income 2.6% 

The top five corporate givers provided The Heritage Foundation with 1.0% of its 2016 income. The Heritage 

Foundation's books are audited annually by the national accounting firm ofRSM US, LLP. 

Members of The Heritage Foundation staff testify as individuals discussing their own independent research. The 

views expressed are their own and do not reflect an institutional position for The Heritage Foundation or its board 

of trustees. 

8 
49 

Dean Cheng 

Dean Cheng brings detailed knowledge of China's military and space capabilities to bear as The 

Heritage Foundation's research fellow on Chinese political and security affairs. 

He specializes in China's military and foreign policy, in particular its relationship with the rest of 

Asia and with the United States. 

Cheng has written extensively on China's military doctrine, technological implications of its 

space program and "dual use" issues associated with the communist nation's industrial and 

scientific infrastructure. 

He previously worked for 13 years as a senior analyst, first with Science Applications 

International Corp. (SAIC), the Fortune 500 specialist in defense and homeland security, and 

then with the China Studies division of the Center for Naval Analyses, the federally funded 

research institute. 

Before entering the private sector, Cheng studied China's defense-industrial complex for a 

congressional agency, the Office of Technology Assessment, as an analyst in the International 

Security and Space Program. 

Cheng has appeared on public affairs shows such as John McLaughlin's One on One and 

programs on National Public Radio, CNN International, BBC World Service and International 

Television News (ITN). He has been interviewed by or provided commentary for publications 

such as Time magazine, The Washington Post, Financial Times, Bloomberg News, Jane's 

Defense Weekly, South Korea's Chosun llbo and Hong Kong's South China Morning Post. 

Cheng has spoken at the National Space Symposium, National Defense University, the Air Force 

Academy, Massachusetts Institute of Technology (MIT) and Eisenhower Center tor Space and 

Defense Studies. 

Cheng earned a bachelor's degree in politics from Princeton University in 1986 and studied for a 

doctorate at MIT. lie and his wife reside in Vienna, Va. 
50 

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House of Representatives for the l15'h Congress requires nongovernmental witnesses 

appealing before House committees to include in their written statements a curriculum 

vitae and a disclosure of the amount and source of any federal contracts or grants 

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lbrcign government, received during the cun·ent and two previous calendar years either 

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51 

January 9, 2018 

Testimony before the House Armed Services Subcommittee on Emerging 

Threats and Capabilities 

China's Pursuit of Emerging and Exponential Technologies 

Paul Scharre, Senior Fellow and Director 

Technology and National Security 

Center for a New American Security 

Chairwoman Stefanik, Ranking Member Langevin, and distinguished members, thank you for 

indting me to testify today. 

\'il/c live in a time of dizzying technological change. The information revolution, which has now been 

underway for several decades, continues to unfold in surprising ways. The United States was a firstm(wer in information technology. By leveraging advances in the microprocessor revolution in the 

1970s and 1980s, the Cnited States led the world in the development of personal computers, the 

internet, the Global Positioning System (GPS), and other information-based technologies. Today, 

information technology has spread to nearly ewry corner of our lives. It has also spread around the 

world. \\'bile the United States is still the global leader in information technology, other nations are 

now also significant players. China, in particular, is a major and fast -growing player in information 

technology1 

As the world's third largest economy behind the United States and the European Union and as the 

most populous nation in the world, China has major structural advantages that make it a key 

competitor in information technology. China's population, in particular, 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 prh-acy, this data can help fuel advances 

artificial intelligence and synthetic biology.' 

The Information Revolution 

There arc three broad trends underlying the information revolution: the datafication of our world, 

increasing networking and connectivity, and increasingly intelligent machines. These trends intersect 

and reinforce each other in powerful ways, and understanding these trends can help in 

understanding some of China's structural advantages. 
52 

Datafication of our world: The modern information economy produces over 2.5 exabytes of data 

daily (an exabyte is one quintillion bytes, or 10A18 bytes) 3 In the past few years the information 

revolution has generated more data than existed in the entire 5,000 years of recorded hmnan history. 

This data comes in a variety of forms: mapping data showing patterns of human activity and the 

locations of people and things; human communications data showing people's networks and the 

content of their interactions; search, shopping, and entertainment data showing people's preferences 

and interests; and as gene sequencing becomes cheaper, the digitization of human genetic data. This 

trend in the datafication of our world is digitizing and quantifying the world around us: our lives, our 

bodies, and om likes and desires. ,\"luch of this data is unstructmed and unlabeled, making it a sea of 

potential information, if one can sort and organize this da1·a to yield useful insights. 

Networking and connectivity: The world is increasingly networked, making it possible to transmit 

and share this new ocean of digital data. In 2017, global internet users topped 3.8 billion people, 

more than balf of the world's population. Nearly 5 billion people usc cell phones- roughly twothirds of the world. Nearly 3 billion people are active social media users. And global connectivity 

continues to grow at a breakneck pace. Every day more than a million new people join social media! 

}\s more people come online, their data comes online as well. They, too, become digitized. People 

and companies are also sharing this data, sending it over networks that are growing in scale and 

bandwidth. The number of connected devices is growing even faster than internet users. An 

estimated 20 billion devices will be connected to this sprawling global network in 2018. Internet of 

Things (loT) devices, which include smart meters, medical devices, home appliances, and industrial 

applications, are growing at the fastest rate and by 2021 are expected to account for over half of all 

connected devices 5 These devices create data and share it across a global network that will traffic 

over 150 exabytes of data per month in 2018. Global internet traffic is growing even faster than 

connectivity, at a rate of 24% per year. Broadband speeds are increasing to account for this data and 

are expected to roughly double over the next 5 years." It is not just the amount of connected people, 

devices, and data and that is increasing, but the volmne and speed at which they arc communicating. 

More intelligent machines: These trends have been made possible because of exponential growth 

in computer processing power, which enables ever-smaller and more powerful computers, tablets, 

smartphones, and devices. For the past fifty years, this trend has been encapsulated in a maxim 

known as },foote's Law, named for Intel co-founder Gordon Moore, which has observed that chip 

performance has doubled roughly every two years. The rate of advancement of CPU ( centtal 

processing unit) performance has slowed in recent years. \X:11ilc still improving exponentially, it has 

been at a markedlv slower pace as chips have approached the nanometer scale-' ,-\t the same time, in 

d1e past few years there has been an explosion in deep learning, a powerful machine learning 

technique used to enable artificial intelligence (AI). This has yielded resulted in tremendous progress 

on long-standing AI problems such as object recognition and natural language processing. Deep 

learning draws on large amounts of parallel computer processing, made possible because of 

advances in graphics processing units (GPUs) driven by tbe gaming industry; as well as large 

amounts of data. In deep learning, deep neural networks train on millions of pieces of data to learn 

how to recognize objects, translate between languages, or perform many other cognitive tasks. Deep 

learning systems can even learn from unlabeled data, a process known as unsupervised learning9 

Thus, advances in increasingly powerful computer processors have enabled the production of 

myriad devices that coUect vast quantities of data, which in tLU:n have fueled learning machines that 

can process and make sense of this data. 
53 

China's population is a major structural advantage in this information revolution, as it allows the 

pooling of large amounts of data. China already has 730 million internet users, a figure that \\~ll grow 

as the country becomes increasingly urbanized and connected. Chinese users also appear more 

comfortable sharing their data than \\'estern counterparts, which companies can use to train more 

sophisticated algorithms to understand human behavior.w 

China also combines a dynamic pri,·ate sector with a government that plans and executes long· term 

strategies to increase China's competitiveness in key technology areas. China has used this in recent 

years to execute plans to leap forward on artificial intelligence, synthetic biology, and quantum 

computing, all key technologies tied to the information revolution. 

Artificial Intelligence 

China is a global leader in artificial intelligence, second only to the l'nited States. Baidu, Tencent, 

and Alibaba- all Chinese firms are top·tier AI companies, and China also has a vibrant AI startup 

scene11 Since 2014, China has surpassed the United States in the total number of publications and 

cited publications in deep learning, an important sub· field of AI." The United States still leads the 

world in AI patents, but China is growing at a faster rate. u \Vhile the quantity of publications docs 

not necessarily equate to quality, Chinese AI researchers perform well in international 

competitions." Chinese teams "dominated" the lmageNet visual image recognition competition for 

the past two years and a Chinese start·up won the Facial Recognition Prize Challenge hosted by the 

Intelligence Advanced Projects Agency (IARP"·\). 15 Overall, Chinese Al researchers are not as 

experienced as U.S. counterparts, but they are improving." In the 2017 meeting of the Association 

of the ,\dvancement of Artificial Intelligence (,\AAI), there were roughly as many papers accepted 

from China as there were from the United Stares.'' 

In July 2017, China published a national strategy for artificial intelligence, the "New Generation AI 

Development Plan." 18 Under this plan, China's goal is to be the "premier global AI innovation 

center" by 2030. 19 To achieve this goal, China's plan includes improving in areas where China is 

currently weak, such as human capital, by focusing on the education and recruitment of top :\1 

talent. As one example, Chinese-born and American-educated AI researcher Qi Lu recently left an 

executive vice president role at Microsoft to become the Chief Operating Officer at Baidu."' News 

reports indicate Chinese firms sec 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 ad,·ances in AI into national 

security applications because of its model of military··eivil fusion. In the United States, the 

Department of Defense (DoD) has struggled to break down largely self· imposed barriers to working 

with non-traditional 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 through their strategy of militarycivil fusion. This means that not only is China a significant global player in artificial intelligence 

with a plan to be the global leader by 2030 but that China has major advantages in translating these 

private·sector gains into national security applications. 
54 

Synthetic Biology and Genomics 

The information revolution has opened up new opportunities in biotechnology as computers haYe 

made genome sequencing increasingly affordable. The cost of sequencing the human genome has 

been falling exponentially at a rate faster than Moore's Law.'; In turn, the acquisition of large 

datasets of human genomes has significant research potential, as these datasets can be mined by data 

analytics and AI for cortelations between genes and health outcomes. A Chinese company, Beijing 

Genomics Institute (BGI), is rhe world's largest genetic research center. BGJ has a U.S.-based center 

headquartered in Cambridge and has sequenced the genomes of millions of Americans. BGI has 

robust support from the Chinese government and partnerships with Chinese military research 

institutes such as the Academy of 1\filitary Medical Sciences. 24 

At the national level, the Chinese government is proacth·ely engaged in developing its biotech sector 

and has created multiple national-level biotechnology development plans. One of the strategies 

China uses to advance its biotechnology industry, as in other areas, is "going out" and "bringing in" 

foreign innovation by investing in foreign companies. For example, in 2013 BGI acquired nextgeneration genome sequencing technologies by purchasing the U.S. company Complete Genomics. 

The importance of genomics is likely to increase as the cost of gene sequencing continues to fall and 

larger datasets of human genomes are established, making possible large-scale analysis of human 

genes. Given that the ultimate aim is modifying life itself, it is nearly impossible to overstate the 

long-term potential of synthetic biology and gcnomics. As this field mahu:cs, China is wellpositioned to be a global leader. 

Quantum Computing 

Quantum computing is another important area of information-related technologies and one in 

which China has shown striking recent advances. Quantum computing is an entirely different 

method of computing from current approaches and relies on the tmusual properties of quanhtm 

physics. Quantum technology has many potential national security applications, including 

cryptography, remote sensing, and secure communications.'" Chinese researchers have made recent 

strides in quantum technology, demonstrating a 1 0-qubit quanrum processor and a quantum 

communications satellite in 2017. China is following up on these advances with national-level 

inYestments in quantum technologies. China recently launched the .Jinan Project, a plan to build a 

secure quantum computer network, and is building a $10 billion National Laboratory for Quantum 

Information Sciences. 29 

Conclusion 

1\s the world's third-largest economy and most populous nation, China has many inherent sttuchu:al 

ach·antages in competing in high-technology areas. China has a dynamic private sector, with both 

large established firms and dynamic start-ups, and a large pool of potential talent to draw upon. Iu 

places where China has weaknesses, such as the quality of human capital in some fields, China is 

acth·ely working to improve by recruiting top talent from abroad. China's population, increasingly 

networked and digitized, is a major source of potential data, which is a critical resource for 
55 

infonnation-enabled innovation. One of China's biggest strengths relative to the United States, 

however, is the government's willingness to develop and follow through on large-scale long-tern 

investment plans in key technology areas. China has repeatedly demonstrated an ability, in multiple 

technology areas, to acquire foreign expertise by investing in foreign companies and then using that 

to improve Chinese indigenous capabilities. China's capacity for executing long-term strategies for 

technology development should not be underestimated, and Chinese plans to become the global 

leader in critical technology areas such as artificial intelligence should be taken seriously. 

Further Reading 

For further reading, see: 

i\!ichaelj. Biercuk and Richard Fontaine, "The Leap Into Quantum Technology: A Primer for 

National Professionals," \Vat on the Rocks, November 17, 2017, 

Elsa Kania, "Battlefield Singular-ity: Artificial 

Power~" Center for a Nc\v A1nerican 

CNAS Funding 

i\!ilitary Revolution, and China's Future 

\\':>Shin,~to:n, DC, Nm·ember 2017, 

CNAS is a national security research and policy institution committed to the highest standards of 

organizational, intellectual, and personal integrity. The Center retains sole editorial control over its 

ideas, projects, and productions, and the content of its publications reflects only the views of their 

authors. In keeping with its mission and values, CNAS does not engage in lobbying activity and 

complies fully with all applicable federal, state, and local laws. _-\ccordingly, CNAS will not engage in 

any representation or advocacy on behalf of any entities or interests and, to the extent rhat the 

Center accepts funding from foreign sources, its activities \\-ill be limited to bona fide scholastic, 

academic, and research-related activities, consistent with applicable federal law. A full list of CN AS 

supporters and the center's funding t,'uidelines can be found here: 'O'c.'i2''L~-"==""="'~'L""l'f.'-"''--

9J-.a_s_. 

Consistent with Rule 11, clause 2(g)(5), of the Rules of the l J.S. House of Representatives for the 

115th Congress, a detailed list of CN,-\S federal contracts or grants (including subcontracts and 

subgrants), or contracts or payments originating with a foreir,m government, received during the 

current and two previous calendar years has been provided to this committee as an attachment. 
56 

Notes 

1 Chris Dong, "China ICT Market: Trends, Complexity, Potential," presentation, !DC Web Conference, july 6, 

2017. 

3 IBM, "10 Key Marketing Trends for 2017," 3, 

lillg;;:,LL'!lli_ll!k.<l_h e.i bm,comLcommi2!1L~iLITm_Lwr I en l"l'rll_ 2 34 5 us<;n /wa tson_cmsto m er-engag emJ)!l_t: 

"l'atsOJ1c marketing,wr-othg r,pape rs-and ,reJJo_rts -yy rl12 ~ 45 us en 0 2 Q 1_7 0719. pc]J, 

4 Simon Kemp, "The Global State of the Internet 2017," TheNextWeb, 

5 CISCO, "The Zettabyte Era: Trends and Analysis," june 7, 2017, 

6 Ibid. 

7 For several decades, computing power doubled roughly every 20 months. Over the past decade, this pace 

has slowed to every 2 to 2.5 years. Michael Kanellos, "Moore's Law to roll on for another decade," CNet, 

February 11, 2003, Don Clark, 

"Intel Rechisels the 

List," presentation, slides 6-8, 

Tom Simonite, "Moore's Law is Dead. Now What?," MIT 

9 Robert D. Hof, "Deep Learning: With massive amounts of computational power, machines can now recognize 

objects and translate speech in real time. Artificial MIT Technology 

Review,b~l's:LLwlvw.techrl~O~irc·v~'W,grmL~/~21:2Q:l6J~e·ePJe.asr1ill.&£. 

1o "The Algorithm Kingdom." 

11 Elsa Kania, "Battlefield Singularity: Artificial Intelligence, Military Revolution, and China's Future Military 

Power," Center for a New American DC, November 2017, 

17 U.S. National Science and Technology Council, "The National Artificial Intelligence Research and 

Development Strategic Plan," October 2016, b_ttp_s:JLIA'wWcnitrd.govjP[JB_sjna_tional_a_i_rd_strategit:_plan,Qdf. 

13 "The Algorithm Kingdom." 

14 Kania, "Battlefield Singularity," 8. 

15 Aaron Tilley, "China's Rise In The Global AI Race Emerges As It Takes Over The FinallmageNet 

Competition," july 31, 2 01 7, llt1:n;;_:lLW'01...}YJ'Qrb_e~-;.c_gJrr/sH!'.e/Jlc'!IQD.ti!1~YL:Z.Q_ULQJf::l_i}s_hinlbJi: 

"Yitu Tech Wins the 1st Place in Identification Accuracy In Face Recognition Prize 

2017," PRNewswire, November 03, 2017, 

16 Kania, "Battlefield Singularity," 8. 
57 

17 "AAAI-17 Accepted Papers," http:/ jwww.aaai.org/Conferences/ AAAI/2017 jaaai17accepted-papers.pdf or 

Sarah Zhang, "China's Artificial-Intelligence Boom," The Atlantic, February 16, 2017, 

https :jjwwyv ,thea tlan ti r;,c0 n1jtech n olggy jarclliye f?,Q 1 7j 0 2/<:.h i na:arti fi ci. al.: inte lligen<:e/51_661.5 j. 

18 "State Council Notice on the Issuance of the New Generation AI Development Plan," August 20, 2017, 

http:jfwww.gov.cnjzhengce[ <;:Qntent/2 017:0}/20 I cont_ent_Szl) 996,btm. 

19 Kania, "Battlefield Singularity," 9. 

zo "The Algorithm Kingdom." 

lfl!f!ll,~1''m-J_LIJC.,I!L1Ul-'J.''V. Sara 

visa, CNN.com, December 2, 2017, 

entreprengur-rulg-g_e,layjingex,htmL U.S. and Immigration Service, "USCIS to Begin Accepting 

Applicat:im1s under the International Entrepreneur Rule," December 14, 2017, 

en tr~l?r_~D~tJ.r-rul~. 

22 Kania, "Battlefield Singularity," 12. 

23 U.S. National Human Genome Research Institute, "The Cost of Sequencing a Human Genome," 

https:/ jwww.genome.gov j2 75651 09/the-cost-of-sequencing-a,human-gcnomej. 

Elsa Kania, unpublished manuscript. 

zs Ibid. 

26 Complete Genomics, "About Us," http:fjwww,t:Qmple_teg~nomi_t;~,com[ 

27 Michael j. Biercuk and Richard Fontaine, "The Leap Into Quantum , e<.uJwJ•ugJI; 

Security Professionals," War on the Rocks, November 17, 2017, 1AI_arQJ[jl:ht<:r•ocJc;o . .<:()!1tl[::O]lZi'll,ll_,,ill\'c 

q_u~tn_tum_:-Je_c;l;moJ_q_gy-prin1~r~n~_tton_?.l::sG~ur:tty-QIQ{e_:?,?ion_al~J. 

za Chao Song et al., "10-qubit entanglement and parallel logic operations with a superconducting circuit," 

Physical Review Letters 119 (2017), ]1ttps:£fan:iv.org/pclf/1703,10302.JJ<lf. Gabriel Popkin, "China's quantum 

satellite achieves 'spooky action' at record distance," Science, june 15, 2017, 

http:/Lw\Yw.sc:i~ncemagorgjnewsj2Q_17j06jc!Ji.!la:S-g_tlantum-satellite-achieyes:,;pQoky-action:record: 

d_is_t~n~-~· 

29 Tom Ward, "China Set to Launch the World's First Quantum Communication Network," Futurism, july 16, 

2 017, h_t_tps:LL fi1 turism,com f china -~et cto-l'clun <:h-the:wo rlt],;- tl.r~t :q\l<.\11 [u m ,comm J,mig!lon-netyv_or]<j. jeffrey 

Lin and P.W. Singer, "China is opening a research "Australian Popular Science, 

October12,2017,~li.lld~'1AI'~~9.llo£LfQJTI~~fj~~hu~QDQJ.llllli'giQbjJEt:bcP.ll~1lle~~t~vy~qR~()illll':~~()ITlJ: 

supercen_ter,4 ]527 5. 
58 

Paul Scharre 

Paul Scharre is a Senior Fellow and Director of the Technology and National Security Program 

at the Center for a New American Security. He is author of the forthcoming book, Army of None: 

Autonomous Weapons and the Future r<fWar, to be published in April 2018. 

From 2008-2013, Mr. Scharre worked in the Office of the Secretary of Defense (OSD) where he 

played a leading role in establishing policies on unmanned and autonomous systems and 

emerging weapons technologies. Mr. Scharre led the DoD working group that drafted DoD 

Directive 3000.09, establishing the Department's policies on autonomy in weapon systems. Mr. 

Scharre also led DoD etlorts to establish policies on intelligence, surveillance, and 

reconnaissance (ISR) programs and directed energy technologies. Mr. Scharre was involved in 

the drafting of policy guidance in the 2012 Defense Strategic Guidance, 2010 Quadrennial 

De{ense Review, and Secretary-level planning guidance. His most recent position was Special 

Assistant to the Under Secretary of Defense for Policy. 

Prior to joining OSD, Mr. SchatTe served as a special operations reconnaissance team leader in 

the Army's 3rd Ranger Battalion and completed multiple tours to Iraq and Afghanistan. He is a 

graduate of the Army's Airborne, Ranger, frnd Sniper Schools and Honor Graduate of the 75th 

Ranger Regiment's Ranger Indoctrination Program. 

Mr. Scharre has published articles in The New York Times, Foreign Policy, Politico, 

Proceedings, Armed Forced Journal, Joint Force Quarterly, Military Review, and in academic 

technical journals. He has presented at the United Nations, NATO Defence College, Chatham 

House, National Defense University and numerous other defense-related conferences on robotics 

and autonomous systems, defense institution building, ISR, hybrid warfare, and the Iraq war. He 

has appeared as a commentator on CNN, MSNBC, NPR, the BCC, and Swiss and Canadian 

television. Mr. Scharre is a term member of the Council on Foreign Relations. He holds an M.A. 

in Political Economy and Public Policy and a B.S. in Physics, cum laude, both from Washington 

University in St. Louis. 
59 

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HQ0034-16-C-0085 

lntragovernmental Personnel Act of 1970 Agreement 

H92222-16-D-0013 

N00244-15-1-0056 

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GSOOF002CA 

FA3300-13-G-0014 

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W91QF0-16.P.0031 

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HQ0034-16-C-0085 

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The Return of Marco Polo's World and the U.S. Military Resp

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The Return of Marco Polo's World and the U.S. Military Resp

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Strategic Capabilities Office {SCO) Wargame 

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leveraging History 

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American Security and the Embassy of the Republic of Lithuania to the Embassy of the Republic of Lithuania 

United States 

$30,000 

$36,000 

$181,819 $39,960 

Testing Possible Challenges to the Greenland, Iceland, UK (G

Table Top Exercise 

Quarterly briefings and counsel sessions 

Building Capabilities for the US-Japan A!!iance in the East Ch

Testing Possible Challenges to the Greenland, Iceland, UK (G

Table Top Exercise 

$210,000 CNAS-TECRO Partnership 

$25,000 $30,000 

$36,000 $252,500 

$230,000 

$250,000 $25,000 $75,000 

Testing Possible Challenges to the Greenland, Iceland, UK (G

Table Top Exercise 

Testing Possible Challenges to the Greenland, Iceland, UK (G

Table Top Exercise 

Quarterly briefings and counsel sessions 

Beyond the San Hai: Implications of China's Emerging Bluew

Maritime Strategy 

CNAS-TECRO Partnership 

UAE Missile Technology Control Regime (MTCR) Study 

Testing Possible Challenges to the Greenland, Iceland, UK (G

Table Top Exercise 

Assured Resolve: Testing Possible Challenges to Baltic Secur
MOU between the Center for a New American Security and the 

Government ot Finland Represented by the Ministry of Foreign Affairs Government of Finland 

and the Ministry of Defense 

Agreement dated 26 May 2015 

Agreement between the Kingdom of Denmark and the Center for a 

New American Security dated 4 December 2014 

MOU between the Center for a New American Security and the 

Ministry of Defence of Estonia 

Grant Letter for USA-15/0001 Assured Resolve: Testing Possible 

Challenges to Baltic Security 

Government of Japan 

Kingdom of Denmark 

Ministry of Defence, Estonia 

Norwegian Ministry of Foreign Affairs 

Agreement between the Ministry of Defence of the Republic of Latvia 

and the Center for a New American Security on Co-operation Republic of Latvia 

Assured Resolve: Testing Possible Royal Norwegian Ministry of Defence 

Accepted proposal for "U.S.-Taiwan Strategic Partnership" Taiwan Economic and Cultural Representative Office (TECRO) 

Contribution to Center for a New Ameri:an (CNAS)- Sweden, Ministry of Foreign Affairs 

the proJect "Assured Resolve- challenges to Ba!t1c Secunty" 

$75,000 $252,500 

$91,953 $20,000 

$38,220 

$75,000 $36,780 

Assured Resolve: Testing Possible Challenges to Baltic Secur

Staying Ahead of the Curve: Alliance Requirements for Mana

Maritime Might 

Climate Change in the Developing World 

Assured Resolve: Testing Possible Challenges to Baltic Secur

Assured Resolve: Testing Possible Challenges to Baltic SecurAssured Resolve: Testing Challenges to Baltic SecurAssured Resolve: Testing Possible Challenges to Baltic Secur

$200,000 CNAS-TECRO Partnership 

$75,000 Assured Resolve: Testing Possible Challenges to Baltic Secur
66 

Statement Before the 

House Armed Services Committee 

Subcommittee on Emerging Threats and Capabilities 

A Testimony by: 

William Carter 

Deputy Director and Technology Policy Program 

January 9, 2018 

2118 Rayburn House Office Building 
67 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 2 

Introduction and Main Points 

Chairman Stefanik, Ranking Member Langevin, thank you for the opportunity to participate in 

today's hearing on this important topic. China's significant progress in key emerging 

technologies like [artificial intelligence, cyber, space-based capabilities and antisatellitc 

weapons, electronic warfare and quantum computing] have transfonned the global security 

environment in recent years, and require a rethink of the way that we approach securing our 

nation. 

Asia is a critical part of America's future, economically and strategically, and we are in a new 

era of strategic competition with China, one defined by our competing progress in advanced 

technologies. Our response to China's progress in technology is essential to our future. The goal 

of my testimony is to amplify some of these issues and to propose potential solutions for how we 

can implement an effective strategy to deal with this challenge. 

Since the Cold War, U.S. national security has been built upon the unparalleled strength of 

American technology. In the 1950s, the Department ofDefense successfully "offset" the Soviet 

Union's conventional military superiority by strengthening our nuclear deterrent, and in the 

1970s we again cemented our military dominance through innovation in precision munitions, 

stealth, and a new generation of space based ISR and communications technologies, the so-called 

"second offset." Today, this offset dynamic is being reversed. China is pursuing an "offset 

strategy" of its own to overcome our conventional superiority by winning the race to dominate 

the next generation of technology. 

In 2014, the Department of Defense (DoD) announced a "third offset," developing the next 

generation of technological dominance based on artificial intelligence and robotics, 

miniaturization and ubiquitous connectivity, and quantum computing, but this technological race 

is very different than the others. The success of previous offsets was based on investing in 

winning a race our adversaries didn't even know they were in while allowing them to focus their 

resources on an area of advantage that we could overcome through innovation. But today, even 

as we are pursuing our "third offset," China is pursuing a "lirst offset" of its own, and is 

investing in the same technologies to challenge us that we are investing in to maintain our 

strategic edge. They have developed a national strategic plan- in fact many of them- to 

overtake us in the race to dominate these new technologies, and are rapidly closing the gap in 

innovation, deployment, and militarization of these new systems with the U.S. 

China's Technology is Catching up with, and Perhaps Surpassing Our Own 

China sees offensive cyber capabilities, anti-satellite weapons, electronic warfare tools, 

hypersonic weapons, artificial intelligence, and quantum technologies as key to enabling the 

PLAto win wars in future, high-tech conditions and offset the advantages of the U.S. military, 

and has made significant strides in all ofthcse areas. These technologies can be divided into two 

broad buckets: technologies to disrupt and degrade our military capabilities by exploiting our 

vulnerabilities in the information domain, and technologies that will determine the future global 

balance of both economic and strategic power. 
68 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 

The PLA correctly views the U.S. military as highly vulnerable to a first strike in the 

"infonnation domain," and is developing capabilities in this domain that will overcome their 

conventional disadvantages. We may have more and better aircraft carriers, tanks, and missiles 

than the PLA, but without access to data and connectivity many of these systems are inetTective 

or even inoperable. Chinese military thinkers describe the U.S. military's Achilles heel simply: 

"No satellites, no fight." 

3 

China has demonstrated the ability to significantly disrupt, degrade, and even destroy the ICT 

infrastructure on which our military depends. The PLA has tested a range of anti-satellite 

weapons, including conventional ground-based kinetic kill vehicles, 1 directed energy weapons, 2 

jamming and spoofing capabilities,3 and "kill-satellites" designed to disable or destroy other 

satellites on orbit.4 They have expanded their electronic warfare capabilities, testing their 

capabilities to jam radar and communications and spoof GPS systems. 5 China has also 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 (AI) and quantum 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 its own right. 

Competition in AI between the U.S. and China has become neck-and-neck. Chinese researchers 

now publish more papers on AI than any other country in the world, although U.S. papers are 

still more widely cited, suggesting that they are more impactful and highly respected in the 

field.6 Chinese companies have also made significant breakthroughs in AI applications including 

1 Shirley Kan, "CRS Report for Congress, RS22652, April 

23,2007 

2 Richard D. Fisher, Jr., " Testimony before 

the U.S.-China Economic and Security Review Commission hearing, "China's Advanced 

Weapons," February 23, 2017 3 U.S.-China Economic and Security Review Commission, 

November 17, 2015, p. 297 4 U.S.-China Economic and Security Review Commission, 

November 17, 2015, p. 294 5 Bill Gertz, "Asia Times, August 

29,2017 

6 Simon Baker, Times Higher 

Education, May 22, 2017 
69 

Carter: Written Testimony, House Armed Services Committee l/9/2018 

natural language processing, 7 real-time translation, 8 imagery analysis, 9 and autonomous 

driving. 10 

4 

In quantum, China may already be well ahead. China has launched a quantum communications 

satellite called Micius, 11 established a quantum fiber link between Beijing and Shanghai, 12 has 

invested billions of dollars into research on quantum computing, and even claims to have tested 

functioning quantum radar that can detect stealth aircraft. 13 Some of China's claimed advances in 

quantum technology are likely embellished, but we have seen enough of China's capabilities in 

this field that we must take them seriously. Where the U.S. stands in quantum research is murky, 

as much of the research is classified. However, a number of US researchers have recently noted 

that the US seems to be lagging, owing primarily to the comparative willingness of the Chinese 

government to aggressively fund new quantum initiatives. 14 

Investing in Resiliency and Avoiding Conflict 

Going forward, the U.S. must adopt a national strategy to counter China's offset in the short and 

long term. China's short-term strategy is to exploit the U.S. military's weaknesses and exert 

constant pressure to undermine us. In 2015, the PLA created the Strategic Support Force (SSF) 

to centralize information warfare units within the PLA. Notably, the SSP includes not only 

cyber, but also space and electronic warfare operations. The Chinese do not view information 

warfare as limited to computer networks, but rather as a domain spanning intelligence, 

communications, and the entire electromagnetic spectrum. 

China's offensive cyber capabilities should be of greatest concern to us in the short term because 

they are being used against us every day to strengthen China's strategic position in incremental 

ways. There is much debate about whether we are in a "cyber war" with China. My answer to 

that is simple: no. "War" implies an all or nothing conflict against an enemy, one where we must 

do what it takes to defeat them. China is a "trenemy" of the United States, not an enemy, and we 

7 

Yiting Sun, -''-'"-'-·"-"-'"--'-'~'='-'-'~""'""~~"'-'-""'·!.22-"--'~··'-"""'--'~-'"''-' "," MIT Technology 

Review, September 14,2017 8 Chen Na, 

September 21, 2017 9 Tom Simonite, 

~~''"'-""':'•" MIT Technology Review, May 13,2015 

Charles Clover, Emily Feng, and Sherry Fei Ju, 

;';"'"'-""-'·""'-""--"'"'-"·"'-·"'-""'""''"Financial Times, November 23, 2017 

Gabriel Popkin, 

Science Magazine, june 15, 2017 12 Zhang Zihao, 11 Jeffrey Lin and P.W. Singer, 

Popular Science, September 27,2016 14 Tim Johnson, 

McClatchy DC, 

Sixth Tone, 
70 

Cmter: Written Testimony, House Armed Services Committee l/9/2018 

are not prepared to do whatever it takes to defeat them in response to the low-level espionage 

and network reconnaissance activities that both sides engage in every day. 

We are in a new era of strategic competition with China in the information domain, a form of 

low-level, protracted back and forth in which both sides constantly prepare for possible conflict 

and seek to develop asymmetric capabilities that would allow them to dominate in a potential 

conflict. In China, this stance is referred to by PLA strategists as " 15 By 

conducting peacetime network operations, PLA officers aim to identify vulnerabilities in US 

systems that could be exploited for active disruption if an attack were ever launched against 

China. The PLA see such network reconnaissance as unlikely to lead to escalation or retaliation, 

but taken together they allow China to slowly improve its strategic position. 

5 

Though the active defense doctrine is ostensibly concerned with self-defense and post-emptive 

strike, the Chinese view cyber warfare as being highly effective for a first strike, and assume that 

very quickly afterwards vulnerabilities will be mitigated, defenses erected, and the advantage of 

surprise taken away. If the PLA were ever to attain a level of network penetration sut1icient for 

them to feel confident in their ability to cripple US military forces long enough to attain a 

conventional or nuclear advantage, the US strategic position would be irreparably compromised. 

It is important to note that, while we often talk of"technological parity," when it comes to these 

technologies, in many ways it is less important whether their technology is "as good as ours" 

than whether it is good enough to render our capabilities ineffective. Our most important goal 

should be to invest in resiliency so that China is never confident enough to launch a preemptive 

strike. This means both hardening our networks and infrastructure, particularly in cyberspace and 

outer space, and developing and demonstrating our ability to operate in denied environments. 

We must re-train our military to operate in analog mode without access to data and technology. 

We must ensure that any new system or platlorm DoD buys has at least some basic level of 

functionality without access to space-based capabilities, instead of buying systems that arc 

extremely effective when connected but cannot operate at all in denied environments. We must 

build a secure supply chain and develop new ways to test and ensure the security of the chips that 

we use in our weapons systems. We must develop new space architectures that do not rely on a 

small number of exquisitely capable, but also vulnerable, govemment satellites, leveraging 

commercial satellite capabilities, international partnerships, and constellations of smaller, 

cheaper satellites that are individually less capable, but are more survivable and replaceable. And 

we must develop ground-based backups and redundant capabilities so that we are not entirely 

reliant on space. These are not new answers to new questions. We know what needs to be done, 

but we need to get serious about implementing these solutions. 

15 Note: This is different from the "active defense" debate in the U.S., which refers to the 

discussion around allowing private companies to engage in cyber operations outside their own 

networks to counter cyber threats. 
71 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 6 

Leveraging Our Unique Strengths to Maintain a Long-Term Technological Edge 

Ultimately, however, simply countering China's immediate efforts to exploit our vulnerabilities 

will not be enough to confront the emerging threat of China's growing technological capabilities. 

In the long term, China's strategy is not just to exploit the weaknesses in our military technology 

but to develop their own innovative, dynamic high technology sector to dominate the next 

generation of civilian and military technologies, particularly AI. They seek to leverage both 

commercial and military innovation in ways that complement each other and build both military 

and economic power. Their national strategies anticipate a shift from today's "informatized 

warfare" to "intelligentized warfare," 16 and their strategy to dominate in intelligentized warfare 

is to dominate key commercial industries in AI, quantum technology, augmented and virtual 

reality (ARIVR) and robotics. 

We Need a National Strategy to Maintain Our Technological Dominance 

China has a strategic plan-in tact many of them-to develop a technological edge over the 

United States. National policies like the New GenerationAl Development Plan, the 13'h Five 

Year National Science and Technology and Innovation Plan, and the Made in China 2025 Plan 

represent a concerted effort to leverage the full resources available to China in order to cultivate 

indigenous technological innovation. China recognizes that military technology does not exist in 

a vacuum. It is a part of an ecosystem that spans the public and private sector, and has 

dependencies ranging from access to basic materials to massive quantities of data. In the digital 

age, virtually all technological breakthroughs are fundamentally dual-use. 

The Chinese system of industrial planning offers advantages in its ability to coordinate the 

activities of myriad groups and direct them all towards a single aim. An example of this is the 

case of high-end computer chips, a critical enabler for strategically-significant technologies like 

artificial intelligence. Realizing the significance of a robust integrated chip (IC) industry in 

China, the central government released its 2014 National Guidelines for the Development and 

Promotion of the IC Industry, established a national lC investment fund, which has provided 

over $20 billion so far to support the industry, and introduced new financing tools, insurance 

products, and tax policies introduced by the central government to encourage innovation. 17 

The result of these policies has been a dramatic expansion of China's IC industry, with revenues 

increasing by almost 20% for the sector in 2017 compared to just 3.4% for the rest of the 

world. 18 Further, 2017 represented the first year that chip design brought in more revenues than 
72 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 

chip packaging and testing, indicating that China's policies have been effective not only at 

expanding the industry, but at promoting the development of technologically sophisticated 

enterprises with high strategic value. 

7 

That said, there arc enonnous bureaucratic inefficiencies involved in China's centrally-planned 

approach to industrial policy, which can waste resources and create severe market distortions. 

We should not try to replicate China's approach, but instead strive to formulate a cohesive, 

whole-of-government strategy based not on central planning, costly oversight procedures and 

elaborate coordination mechanisms, but on a common understanding of the strategic goals ofthe 

nation and how all of the levers of government can be used to support them. 

Invest in Long-Term Fundamental Research and Development 

An important component of this strategy should be government investment in R&D and 

innovation. China has realized the essential role that both public and private R&D investments 

play in technologies like AI, but the U.S. increasingly depends on commercial R&D alone. 

Corporate research has a major role to play in advancing our nation's technological capacity, but 

the developers in these groups arc often only focused on projects with immediate and guaranteed 

commercial applications. There is little incentive for most companies to fund sustained work on 

exploratory projects with long incubation periods and uncertain prospects for returns like 

fundamental research into quantum computing. The federal government is in a unique position to 

be able to support basic research which may not pay off for 20-30 years, but, like the internet, 

may prove revolutionary. 

Unfortunately, U.S. commitment to support public sector R&D is flagging. After the July 2017 

announcement of China's new AI development plan, local and provincial governments 

announced billions of dollars of support to the industry, with the cities of Xiangian and Tianjin 

alone pledging a collective $7 billion to MI projects. 19 In comparison, total U.S. government 

R&D investment in AI was $1.1 billion in 2015,20 and the Trump administration's proposed 

budget would have cut the NSF's AI research funding by 10%. The U.S. government should be 

expanding, not curtailing, R&D funding for technologies like AI, leveraging research vehicles 

like DARPA, IARPA, and the national labs to advance our nation's technological capacity and 

ensure we arc investing in the capabilities our defense and intelligence communities will need to 

manage emerging threats in the future. 

Leverage the World-Leading Innovation of the US. Private Sector 

19 Paul Mozur and John Markoff: 

May 27,2017 and Paul Mozur, 

Times, July 20, 2017 20 Executive Office of the President, 

National Science and Technology 
73 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 8 

In addition, the U.S. must continue to support private sector innovation, which represents our 

greatest competitive advantage as a nation. In the past, major defense innovations took place in 

government labs, giving the military easy and monopolized access to strategically-significant 

innovations. Today, this is no longer the case. The private sector is now the source for most new 

strategic technologies, and our military's future effectiveness will depend on leveraging 

commercial advances more effectively than our opponents. 

There are two key things we can do to better leverage private sector innovation. First, we must 

support and enable the development of commercial markets for transfonnative new technologies. 

Technology has gotten decades ahead of our laws, policies, and regulations. Innovations like 

artificial intelligence, ubiquitous sensors, big data, and virtual reality raise significant questions 

about safety, security, privacy, and liability, and commercial markets for these technologies 

cannot thrive without a clear roadmap of how we will approach governing their development and 

use. 

Second, we must t\.mdamentally rethink our approach to bringing private sector innovations into 

the national security world. The Chinese government has recently taken a number of steps to 

promote what they call "military-civil fusion" by creating opportunities for government and 

military researchers to partner with leading technology companies in the development of new 

products.21 China's approach is based off of similar efforts in the U.S., notably through programs 

like DoD's Defense Innovation Unit Experimental (DIUx) and In-Q-Tel, which offer the security 

establishment a way to bypass cumbersome contract processes and accelerate the deployment of 

cutting-edge technologies within our military. 

But these programs are tiny compared to the behemoth of traditional federal acquisitions, and we 

cannot expect a tiny part of the federal acquisitions process to produce the bulk of our next 

generation of military capabilities. As the share oftransfonnative innovation continues to shift 

toward the commercial sector, these lean, agile acquisition programs cannot remain the 

exception, they must become the norm, and we must expect and tolerate stumbles and problems 

as we leam to leverage these approaches at scale. 

We also need to have a deeper conversation about how we can maintain a technological edge in 

national security in a world in which technology is fast-moving, ubiquitous, and develops outside 

of the government and outside our own borders. Our way of thinking about the relationship 

between technology and national security dates back to the Cold War, and is based on the 

concept of controlling access to technologies that have military applications. Most oftoday's 

most popular technologies have at least a theoretical military application, whether FitBits, 

quadcopters, Google Maps or Shazam, and the military is barely able to keep up its awareness of 

the latest developments in the commercial sector, much less try to control cutting edge 

technologies. 
74 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 9 

It is no longer plausible or useful to base our national security strategy on the assumption that 

our military will have sole access to the best technology. As China becomes more innovative, 

they will develop their own cutting-edge military technologies that we will not be able to control. 

Trying to control our own commercial technologies as "dual usc" only deters private companies 

from working with DoD to protect their freedom to market their products internationally, and 

paying defense contractors to re-invent the wheel by building bespoke versions of commercial 

technologies for a DoD client has proven ineffective and wasteful, draining our resources and 

causing the military to fall dramatically behind the private sector in even simple day-to-day 

technologies. Perhaps it is time for a new way of thinking about maintaining a technological 

edge for the military. We may not be the only ones who have access to the cutting-edge 

technologies of the future, but we can try to adapt faster and make better use of new technologies 

than our adversaries. 

Counter Chinese Efforts to Exploit the US. Education System and Innovation Economy in Ways 

that Work for Us 

That does not mean we should be blind to our adversaries' efforts to acquire our technology and 

exploit U.S. innovation. In February 2017, DIUx released a report on China's technology 

transfer strategy which identified more than ten major strategies employed by China to acquire 

U.S. technologies, including early stage investments in U.S. tech startups, industrial espionage 

and cyber theft of intellectual property, and attracting talented engineers and students back to 

China along with all of their knowledge and experience of what U.S. companies and researchers 

are working on in their ficlds. 22 

The current debate in the U.S. around Chinese tech transfer is focused on preventing them from 

exploiting our education and investment environment by keeping China out, but this is 

misguided. If China wants to send their best and brightest students to be educated in our 

universities and graduate programs, and invest billions of dollars in startups and R&D in the 

United States, so much the better for us. We should instead focus on keeping them here, allowing 

the talented researchers and engineers that we educate to innovate and build businesses that 

employ Americans and add to the U.S. economy. We must ensure that the next generation of 

innovators, wherever they are born, build the technology of the future here in the United States. 

The D!Ux report recommends that we look at ways to restrict Chinese investment in U.S. 

technology companies, particularly those with potential military applications. This is unlikely to 

work it is easier to disguise the source of investment capital than to investigate it- and will not 

stop China from acquiring our technology through its other tech transfer strategies. Such an 

effort could also quickly become impossibly broad. Thousands of entrepreneurs seek capital in 
75 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 10 

the U.S. each year to build businesses in AI, AR and VR, robotics, and loT devices, and 

attempting to anticipate all those technologies which might one day have military applications is 

impractical, if not impossible. Furthermore, if anything, restricting China's access to U.S. 

technologies through investment could cause them to redouble their etTorts to acquire our 

technology through more damaging means like industrial espionage and cybcr theft, and to invest 

more of their money in domestic innovation. 

That said, Congressional eftorts to reform the CFIUS process are essential. The proposed 

legislation modernizes the process and makes it more flexible, which is important not just in our 

technological competition with China, but to ensure our continuing security against a range of 

global threats. ln particular, expanding the Committee's oversight of joint ventures and noncontrolling investments is important. We should do more to identify and prevent deals that truly 

threaten our nation's strategic industries, but our goal should not be to cut off Chinese 

investment in U.S. companies. If China wants to pour their money into U.S. companies instead 

of their own domestic entrepreneurs, we should not turn the money away, but instead push back 

against anti-competitive practices and IP theft that exploit the companies that take their capital. 

Instead of restricting investment, policymakers should tocus on ways to support companies that 

take Chinese investment, such as pressuring China to open up market access to U.S. companies. 

Invest in the WorkfiJrce of the Future 

In the long term, we need to build in a workforce capable of leading the next generation of 

technological developments. Establishing new education and training resources for talent 

development was included as one of the main pillars of China's New Generation Artificial 

Intelligence Development Plan, and the country has followed through by creating several new 

graduate programs in AI at Chinese universities to support need for trained researchers. China 

has also set its sights on attracting foreign talent, investing through its Thousand Talents 

Program to entice outside academics to relocate to China. 

The U.S. must also invest in cultivating domestic talent, expanding computer science education 

initiatives in schools and increasing funding for universities to support the next generation of 

researchers and slow the brain drain that is threatening the U.S.' ability to train successive 

generations oftalent.23 Universities are under financial pressure as the government retrenches, 

making it even more difticult to compete with the huge salaries commanded by people with 

specialized skills in cutting edge fields like machine learning and artificial intelligence. This is 

imperiling our ability to train the next generation of talent in these crucial fields. 

As we think about where to focus our resources in education, we must move away from thinking 

in terms of the "STEM" disciplines, science, technology, engineering and math. STEM is both to 

broad and too narrow a category. On one hand, while the U.S. faces significant workforce 
76 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 ll 

shortages in some STEM fields like artificial intelligence, materials science and data science, 

there are significant surpluses in other STEM fields like chemistry and biotechnology. 24 On the 

other hand, as automation plays an increasingly important role in the economy, the hard skills 

that STEM advocates so highly value will be the first to be automated, and the skills that we will 

need most from human beings will be soft skills like critical thinking, empathy and 

communication that are emphasized in the liberal arts. Our education strategy should focus on a 

two-pronged approach: develop a strong pool of technical talent that can build and operate the 

technology of the future, and build a broad workforce of quick thinking, adaptable people with 

basic digital literacy and the soft skills to complement and work with machines. 

Build an Open Data Ecosystem and Leverage International Partnerships to Combat China's 

Advantage ofScale 

China's scale is one of its greatest advantages over the United States. China has 1.4 billion 

people; the U.S. has less than 330 million.25 The Chinese economy is the second largest in the 

world, and is projected to overtake the U.S. in 15 to 20 years. China will be home to 20% of the 

world's data by 2020 and 30% by 2030/6 a huge advantage in the development of AI, which 

depends on massive volumes of data on which to train learning algorithms. The size of the 

Chinese market also attracts innovators and entrepreneurs and allows China to lure talent and IP 

from overseas. 

But U.S. innovators also have advantages. China may have a huge consumer market but U.S. 

companies have larger global market share. Chinese companies dominate the domestic market, 

but have struggled to compete globally. China may have over 1 billion people, but Facebook has 

more than 2 billion users worldwide. Google has more Gmail users than any Chinese email 

service, and Facebook Messenger and WhatsApp have more users than any Chinese messaging 

service. As a result, while China may have 30% of the world's data, U.S. companies have a 

tremendous head start on cornering the other 70% of the global data market. These users are also 

more diverse and more global than users of Chinese services like WeChat and QQ. China's data 

is almost entirely on Chinese consumers, whereas U.S. companies like Facebook and Google 

have users around the world. This is an important advantage. 

But U.S. tech companies' position in foreign markets is under threat from policies that make it 

more difficult for foreign companies to compete. Privacy advocates in the U.S. are also pushing 

for greater protections for data. Even close allies like the EU are developing policies like the 

General Data Protection Regulation (GDPR) that target U.S. companies' ability to compete. The 

24 Yi Xue and Richard Larson, 

Review, U.S. Bureau of Labor 25 World Bank Global n~ .. ~•·~~~ 
77 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 12 

U.S. government must develop a strategy to combat protectionism, data localization and privacy 

policies that harm our global tech companies. Doing this effectively will require balancing 

legitimate concerns around privacy and consumer protection both in the U.S. and abroad with the 

need for an open, flexible data ecosystem that supports innovation and experimentation in AI. 

We can also use trade agreements and establish bilateral and multilateral partnerships to promote 

the free flow of data and support collaboration in R&D for emerging technologies. 

Avoid Dogmatic Views of New Technologies like Autonomous Weapons 

As we plan for the future, particularly in the military context, we cannot afford to adopt dogmatic 

views of new technologies that prevent us from exploring their potential. China looks at our 

strategies and policies, identifies their gaps and flaws, and seeks to exploit them for their own 

advantage. If we disavow potentially transformative technologies, we open a door to China to 

leapfrog our capabilities. 

A prime example is autonomous weapons. In the US, lethal autonomous weapons systems 

(LAWS) often dominate conversations around AI, and discussions around AI policy too often 

revolve around the dangers of the military developing "killer robots" that could become available 

to malicious actors like criminals and terrorists. This conversation is both premature and behind 

the times. Fully autonomous weapon systems remain far from combat-ready, and human soldiers 

are not going anywhere anytime soon. At the same time, the technology for private individuals to 

build simple autonomous killing machines at little cost already exists, as a professor from UC 

Berkeley ironically demonstrated while advocating against the development of autonomous 

weapons.27 

In 2016, the Secretary of Defense said, "whenever it comes to the application of force, there will 

never be true autonomy, because there'll be humans (in the loop )."28 This argument makes sense 

for today's AI technology. Human-machine partnerships are far more effective and reliable than 

fully autonomous systems in complex and dynamic combat environments, and are likely to 

remain so for a while. But if we rule out the possibility of fully autonomous combat systems, 

DoD risks missing out on a class of technologies that could fundamentally transform warfare. 

Other countries like Russia and China are unlikely to exercise the same restraint when it comes 

to fully autonomous weapons systems, which they view as an opportunity to leapfrog US 

military dominance. 29 If these countries were to field fully autonomous weapons systems that 

could analyze and adapt to our tactics and strategies at machine speed, it could render our 

defenses ineffective if we do not do the same. DoD should invest in the next generation of 
78 

Carter: Written Testimony, House Armed Services Committee 1/9/2018 13 

combat systems that leverage the full potential of AI, including the potential future development 

of lethal AI systems that can operate without humans in the loop. Instead of LAWS "never," our 

policy should be "not until they can outperform human!Ml collaboration," including making 

ethically acceptable choices about when to pull the trigger. 

Responding to Chinese Technological Progress and Maintaining our Technological 

Leadership in the Short and Long Term 

China has taken a page out of the U.S. playbook, pursuing an off.set 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 and our future strategy and doctrine, 

looking for the gaps and weaknesses of our approach so that they can exploit them for their own 

advantage. We must develop a new national security strategy of our own to win the race and 

overcome China's efforts to undermine our global position. 

In the short term, we must counter China's efforts to exploit our military's dependencies on ICT 

technologies by investing in resiliency and ensuring that China never develops enough 

confidence in their ability 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. We 

should rethink the relationship between private sector innovation and our military's 

technological edge to better leverage our greatest strength, our private technology industry, to 

secure our nation. We should push back against China's efforts to acquire our technology and the 

fruits of our innovation, but not push away China's brightest minds and innovation capital if they 

want to send them to the United States. We should 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 moonshot research that private companies are less 

willing to support. And we should build a strong base on which our private sector innovators can 

thrive by reinvesting in education, creating strong commercial markets for trans formative 

technologies, and protecting our companies' ability to compete in global markets. 

Finally, we must remember that China is not the only threat we need to worry about. Russia, Iran 

and North Korea, among others, see the same weaknesses and vulnerabilities in our approach to 

national security that the Chinese do. To appropriately manage the range of threats the U.S. 

faces, we must focus not just on "beating China," but on increasing our strength and agility 

across the technological domain. We are no longer the disruptor offsetting an adversary with a 

conventional advantage by sprinting to disruptive technologies, we are the conventional 

hegemon and we must be prepared to face any challenger. Policymakers must wake up to the 

threat faced by all of these countries, and ensure that our country is investing in the technologies 

and systems that wi II define the next era of warfare. 

I thank the Committee for the opportunity to testify and will be happy to answer any questions. 
79 

William A. Carter 

Deputy Director and Fellow, Technology Policy Program 

William A. Carter is deputy director of the Technology Policy Program at CSIS. His research 

focuses on international cyber and technology policy issues, including artificial intelligence, 

surveillance and privacy, data localization, cyber conflict and deterrence, financial sector 

cybersecurity, and law enforcement and technology, including encryption. He has spoken at 

events and conferences around the world and participated in Track 2 dialogues on cyber and 

technology policy issues with China, Russia, and Australia. Before joining CSIS, he worked in 

the Goldman Sachs Investment Strategy Group, where he performed research and analysis on 

geopolitics and the macro economy and produced reports and presentations on international 

affairs and current events and their impact on markets. He previously worked at the Council on 

Foreign Relations and at Caxton Associates, a New York hedge fund. He graduated from New 

York University with a B.A. in economics. 
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