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71–037PDF 2011

EFFORTS TO TRANSFER AMERICA’S LEADING

EDGE SCIENCE TO CHINA

HEARING

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 2, 2011

Serial No. 112–74

Printed for the use of the Committee on Foreign Affairs

(

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

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

ROBERT TURNER, New York 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

DANA ROHRABACHER, California, Chairman 

MIKE KELLY, Pennsylvania 

RON PAUL, Texas 

TED POE, Texas 

DAVID RIVERA, Florida 

RUSS CARNAHAN, Missouri 

DAVID CICILLINE, Rhode Island 

KAREN BASS, California 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Frank Wolf (R–VA), chairman, Appropriations Subcommittee 

on Commerce, Justice, Science, and Related Agencies ..................................... 8

Mr. Thomas Armstrong, Managing Associate General Counsel, Government 

Accountability Office ............................................................................................ 17

The Honorable John Holdren, Ph.D., Director, Office of Science and Technology Policy ......................................................................................................... 35

The Honorable Charles Bolden, Jr., Administrator, National Aeronautics and 

Space Administration .......................................................................................... 44

Mr. Rick Fisher, senior fellow, International Assessment and Strategy Center 60

Adam Segal, Ph.D., senior fellow, Council on Foreign Relations ........................ 75

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Dana Rohrabacher, a Representative in Congress from the 

State of California, and chairman, Subcommittee on Oversight and Investigations: Prepared statement ............................................................................. 4

Mr. Thomas Armstrong: Prepared statement ....................................................... 19

The Honorable John Holdren, Ph.D.: Prepared statement .................................. 37

The Honorable Charles Bolden, Jr.: Prepared statement .................................... 46

Mr. Rick Fisher: Prepared statement .................................................................... 63

Adam Segal, Ph.D.: Prepared statement ............................................................... 77

APPENDIX 

Hearing notice .......................................................................................................... 92

Hearing minutes ...................................................................................................... 93

The Honorable Frank Wolf (R–VA), chairman, Appropriations Subcommittee 

on Commerce, Justice, Science, and Related Agencies: Material submitted 

for the record ........................................................................................................ 94

(1)

EFFORTS TO TRANSFER AMERICA’S LEADING 

EDGE SCIENCE TO CHINA 

WEDNESDAY, NOVEMBER 2, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON FOREIGN AFFAIRS, Washington, DC. 

The subcommittee met, pursuant to notice, at 3:10 p.m., in room 

2172, Rayburn House Office Building, Hon. Dana Rohrabacher 

(chairman of the subcommittee) presiding. 

Mr. ROHRABACHER. This hearing will come to order. This is the 

Subcommittee on Oversight and Investigations of the Foreign Affairs Committee. 

Good afternoon, we are here to discuss the activities of NASA 

and the White House Office of Science and Technology Policy, 

OSTP, in regards to international cooperation, particularly in regards to cooperation with communist China. 

When personnel from either of these organizations travel to the 

People’s Republic of China, collaborate on projects, share data or 

attend conferences, yes, there is ample reason for concern. 

The transfer of technology know-how is a serious national security problem. The Chinese communist party is aggressively using 

its military, economic and political power to extend its influence 

and diminish ours. Its government is the world’s single largest 

human rights abuser, and its assistance to other countries is wellknown, but the countries that it is assisting happened to be those 

countries which are run by governments who are oppressing their 

own people. 

The Chinese also facilitate the proliferation of weapons of mass 

destruction to our enemies, even as they expand their own offensive capabilities. Our conversation here today must be viewed within that context and any effort on our part to reach out to the communist Chinese, to engage them on matters of technology is, quite 

frankly, not just naive but dangerous. 

Today’s hearing was inspired by a legal opinion by the Government Accountability Office released last month which states that, 

Despite clear legislative language, which passed both Houses of 

Congress and that President Obama signed, that accordingly, despite all of that, banning the OSTP and NASA from using appropriated funds for meetings with Chinese officials; the OSTP did so 

anyway. 

The GAO opinion states that by doing so the OSTP violated the 

Antideficiency Act and accordingly, ‘‘should report the violation as 

required to the GAO,’’ which they have done so. 

2

The OSTP cites a Department of Justice legal opinion that Congress has no authority to limit the executive branch from pursuing 

‘‘diplomacy’’ in any way as they see fit. They can do whatever they 

want in terms of diplomacy, with whatever they see fit, with whatever funds that they see fit. 

My colleagues and I will fight this overreach, and as we have, 

in the past, when we have seen such power grabs from whatever 

administration. And we believe in maintaining the constitutional 

division of power between the first and second branches of government and the limits of executive privilege, but that is not today’s 

purpose. Today’s purpose is to discuss the inherent dangers of 

transferring America’s leading-edge science to China. China is an 

increasingly hostile and disruptive force in the world. 

The idea that we are cooperating with them in any capacity is 

alarming. China has aggressively sought our technologies through 

legal and illegal methods for decades. Anything that allows China 

any access to our technology or planning brings forth some major 

counterintelligence issues. Let me remind everyone about the Communist Chinese party’s 16-character policy, directing China to 

‘‘combine the civil with the military.’’

The Chinese Government does not separate civilian and military 

programs. The People’s Liberation Army runs the Chinese space 

program, and the People’s Liberation Army is loyal to the communist party that runs the Government of China. 

The Chinese National Space Administration is not like NASA, an 

independent civilian agency. Their space office is merely a public 

relations front under the command of the Commission of Science, 

Technology and Industry for National Defense. Thus China’s space 

facilities are all manned and operated by the People’s Liberation 

Army. 

I look forward to hearing from the OSTP exactly what was discussed at the meetings with Chinese officials and what was the 

purpose of those meetings. I understand that NASA Administrator 

Bolden, who we have as a witness today, also traveled to China 

and met with Chinese officials there, but this was prior to the law 

prohibiting that exchange. I would like to understand the reason 

for those trips and their meetings and to find out why those risks 

that we have recognized in Congress are not recognized by the executive branch. 

If Administrator Bolden and Director Holdren, if they believe in 

what the Communist Chinese are talking about in terms of space 

technology, if they believe that cooperating with these people, with 

their Communist Chinese counterparts can be beneficial to the 

United States, I would like to know how we will then, if we are 

cooperating with the Chinese, avoid a repeat of what happened in 

the 1990s with the Hughes and Lorall corporations, a scandal that 

advanced the Chinese missile program and put the entire world at 

risk. 

Now the stakes of technology transfer are even greater today 

than it was then, as China is now engaged in human space flight 

and intent on building a space station and a Moon Base in the coming years. Ten years ago we thought we could manage the Chinese 

Government and limit cooperation to only national, nonnational defense areas, but we were wrong. 

3

What happened in the 1990s and the transfer of technology to 

the Chinese was a major disaster for the national security of our 

country. And the fact that the Chinese today are as far ahead in 

their space program as they are—this is a regime that is the 

world’s worst human rights abuser—the fact that they are so far 

advanced in their missile and rocket technology can be traced right 

back to the transfer of technology in the 1990s from American corporations. They did not have to do the tens of billions of dollars of 

research and development necessary to have this kind of power 

their hands. 

Why are we willing to give to that to them? Why are we willing 

to take the chance that they will become more powerful based on 

our investment in technology? 

Well, we were wrong then, and the access we gave the Chinese 

military, not just their space program but their military, was a 

huge leap forward, whereas they would say a great leap forward. 

And, of course, it saved them billions of dollars. 

So how can cooperating with China now, which is a vicious tyranny and a strategic rival, how can that be a smart policy when 

our experience tells us just the opposite? That’s what this is about 

today. 

Mr. Carnahan, our ranking member, if you have an opening 

statement, I will get rid of this cough. 

[The prepared statement of Mr. Rohrabacher follows:]

4


71037f-1.eps
5


71037f-2.eps
6


71037f-3.eps
7

Mr. CARNAHAN. Thank you, Mr. Chairman, for holding this hearing today so we have an opportunity to review the issues that we 

expect to be raised. 

Respectfully, I have a different view on how we can positively engage with China and, at the same time, push aggressively for reforms. 

It is important that Congress exercise its oversight responsibilities seriously, over expenditure of U.S. taxpayer dollars. We need 

to ensure that all appropriations are expended in accordance with 

U.S. law. Regardless of what the administration may think, or 

what I may think of a certain provision, the administration should 

work with Congress to ensure that they are complying with all the 

requirements set forth in the appropriation bills passed by Congress. 

In addition to our oversight responsibilities, we should focus our 

time working on policies that grow and expand the U.S. economy. 

A strong engagement policy with China provides economic opportunities for both countries. It is clearly in our economic interest. 

Back home, the State of Missouri where I come from, we have 

worked for several years to establish a Midwest-China air freight 

hub in St. Louis as an example of the type of partnership that can 

exist between our two countries that is in both of our economic interests. 

As a result of working together, St. Louis is poised to become a 

major export hub for domestically manufactured products. As of 

2010, China was the world’s third largest buyer of Missouri products, with nearly 1 billion in sales last year alone Missouri-made 

products, export to China, are creating jobs here at home. With 

nearly 20 percent of the world’s population, the Chinese market 

represents an opportunity for American businesses to create jobs 

here in the U.S. by making American products here at home and 

exporting them to an ever-growing group of Chinese consumers. 

Strong relations and cooperation also create political space for 

progress in areas of disagreement, such as currency manipulation 

and intellectual property protection. Science and technology cooperation is an indispensable part of U.S. foreign policy and has 

been for decades, the growing belief that science diplomacy is a 

critical part of our tool case for advancing our diplomatic interests. 

Mr. Chairman, your former boss, President Reagan, was a great 

proponent of U.S.-China cooperation. In 1983, in his submission to 

Congress he stated, ‘‘It is in our fundamental interest to advance 

our relations with China. Science and technology are an essential 

part of that relationship.’’

And on his trip to China in 1984, he stated that the U.S. and 

China needed to ‘‘expand our economic and scientific cooperation, 

strengthen the ties between our peoples and take an important 

step toward peace and a better life.’’

Science and technology cooperation is a bipartisan policy that has 

been effectively used by many different administrations. We absolutely need to advocate for policies that offer the strongest protection for U.S. businesses and the best economic opportunities for our 

citizens. 

8

But we absolutely need to continue science and tech cooperation 

between our two countries. I look forward to hearing from our witnesses today as we address this important issue. I yield back. 

Mr. ROHRABACHER. Thank you very much, and I think that demonstrates the respectful difference of opinion that people can have 

on these issues. I do want to note that you quoted me several 

times, whereas I was the one who worked with President Reagan 

on those very statements. 

What was left out was the little clauses that Ronald Reagan said. 

Of course, that will all disappear if liberalization of China ceases 

to happen. 

Go back and read the speeches. And I know, because I was assigned to work with President Reagan on those speeches, and it is 

very clear, very clear from what he said when he went there and 

before that we should not be sending technology transfers, and all 

of these—all of these great things that we are doing with trade and 

investment should not happen unless China continues liberalizing, 

which it was at that time. 

When China murdered and slaughtered the democracy movement at Tiananmen Square, that ended those statements for Ronald Reagan. Reagan would never have gone along with that policy. 

Unfortunately, his Vice President hadn’t learned the lesson because 

President Herbert Walker Bush was President at the time and let 

the slaughter of Tiananmen Square go unanswered. We as Americans shouldn’t have that type of value system. 

We have with us a champion of freedom, and Frank Wolf, who 

is a Member of Congress from Virginia, chairman of the Appropriations Subcommittee on Commerce, Justice and Science and is the 

chairman of the Tom Lantos Human Rights Commission. 

Congressman Wolf has been deeply involved in the issues of 

human rights issues and legislation, especially about the legislation 

that we are going to hear about today. He has admirably applied 

our shared desire for human rights to all areas of Congress’ works, 

and he is a Member I deeply respect, and frankly appreciate you 

being with us here today. 

Could you shed some light on this particular part of the legislation, what it means and whether you believe the intent of Congress 

has been violated? 

STATEMENT OF THE HONORABLE FRANK WOLF (R–VA), 

CHAIRMAN, APPROPRIATIONS SUBCOMMITTEE ON COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES 

Mr. WOLF. Thank you, Mr. Chairman, for calling this hearing, 

and I think the American people would thank you also for calling 

this hearing. 

I have been very troubled by this administration’s apparent eagerness to work with China on its space program, a willingness to 

share other sensitive technologies. I want to be clear the United 

States has no business cooperating with the People’s Liberation 

Army to help develop its space program. 

We should also be wary of any agreements that involve the 

transfer of technology or sensitive information to Chinese institutions or companies, many of which are controlled by the government and the PLA. 

9

Space is the ultimate high ground that has provided the U.S. 

with countless security and economic advantages over the last 40 

years. As a victor of the Cold War space race with the Soviet 

Union, the U.S. has held an enormous advantage in space technology, defense capabilities and advanced sciences generating entirely new sectors of our economy and creating thousands of private 

sector jobs. 

China has developed its own space program at a surprising pace, 

having gone from launching their first manned spacecraft to 

launching components for an advanced space station in just 10 

years. But the Chinese space program is being led, as you said, Mr. 

Chairman, by the People’s Liberation Army, the PLA. And to state 

the obvious, the PLA is not a friend, as evidenced by their recent 

military posture and aggressive espionage against U.S. agencies 

and firms and actually against this Congress and against this committee. 

That is why I was troubled to learn from the press last fall about 

NASA Administrator Charlie Bolden’s imminent departure for a 

week-long visit to China to discuss areas of cooperation between 

NASA and the PLA space program. 

I was more concerned to learn that Dr. John Holdren, head of the 

White House Office of Science and Technology Policy, had spent 21 

days in China on three separate trips in 1 year, 3 weeks, 1 year, 

one China, one visit, 3 weeks, more than any other country. Very 

little information about these cooperative agreements with China 

were being provided to Congress and to the American people. 

So I included language in section 1340 of the Fiscal Year 2011 

continuing resolution preventing NASA and OSTP from using Federal funds to develop, design, plan, promulgate, implement or execute a bilateral policy program, order or contract of any kind to 

participate, collaborate or coordinate bilaterally in any way with 

China or any Chinese-owned company. 

The provision in the omnibus appropriation bill was agreed to by 

Republican and Democratic conferees. It passed both Houses with 

bipartisan support and was signed into law by the President. The 

provision was clear, unambiguous and noncontroversial. 

However, less than 1 month after its enactment, I learned that 

Dr. Holden and OSTP had defied the provision. Even more troubling is that he withheld information about his intention to do so 

during an appearance before the House Commerce, Justice, and 

Science Appropriations Subcommittee when we discussed, among 

other things, the implementation of section 1340 and Dr. Holden’s 

participation in the U.S.-China strategic and economic dialogue 

from May 2010. 

It is almost like not telling the truth by omission because if he 

never said anything there, and then sent a letter up the next day 

after his hearing. 

This is why I asked the Government Accounting Office to investigate this violation and issue an opinion. I also asked GAO to determine whether the Office of Legal Counsel opinion provided by 

the Justice Department was legitimate. In an October 11 opinion, 

GAO found,

‘‘The plain meaning of section 1340 is clear, OSTP may not, 

may not use as appropriations to participate, collaborate, or coVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
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ordinate bilaterally in any way with China or any Chineseowned company.’’

Further, GAO found that, ‘‘OSTP’s participation in innovation, 

dialogue and S&ED contravened the appropriation restriction’’ and 

added, ‘‘OSTP does not deny that it engaged in activities prohibited 

by section 1340.’’

The GAO finding also rebuts a September 11 memorandum prepared by the Justice Department OLC on the constitutionality of 

the provision. GAO stated,

‘‘In our view, legislation that was passed by Congress, signed 

by the President, thereby satisfying the Constitution’s bicameralism and presentment requirement is entitled to a heavy presumption in favor of constitutionality.’’

Finally, the GAO finding clearly notes,

‘‘As a consequence of using its appropriation in violation of Section 1340, OSTP violated the Antideficiency Act by using its 

Fiscal Year 2011 appropriation in a manner specifically prohibited, OSTP violated the Antideficiency Act. Accordingly, they 

should report the violation as required by law.’’

I also wrote Attorney General Eric Holder asking him to hold Dr. 

Holdren to full account for his violation of the Antideficiency Act 

by ensuring that it complies with all the reporting requirements 

and provisions of the law. 

I take the GAO findings very seriously, following the law is not 

voluntary for the administration officials. That is why Dr. Holdren 

should commit today to full compliance with section 1340 and publicly acknowledge his error in participating in the bilateral conference with the Chinese Government. 

Now, Mr. Chairman, I would like to take a few minutes to put 

the administration’s posture toward China in the broader context 

of the Chinese Government, and I say government. 

The Chinese people are wonderful people. The Chinese people 

yearn for freedom. So when I say today, I am talking about the 

Chinese Government and their grave human rights abuses, espionage efforts and detrimental economic policies. 

In June 1989, peaceful prodemocracy demonstrators gathered in 

Tiananmen Square. They were met with a brutal crackdown. As 

events unfolded, the world was captivated with the now-famous 

image of the tank man, a lone, brave, brave student protester who 

stood his ground in the face of the advancing Chinese tank, and to 

this day his fate is unknown. 

During my first trip to China in 1991 with Congressman Chris 

Smith, we visited Beijing Prison Number 1 where authorities informed us and we saw them that approximately 30 Tiananmen 

Square demonstrators were behind bars. They were making these 

socks for export to the United States. They were making socks, 

Tiananmen Square demonstrators, and these socks were held up on 

the floor when we got back by Senator Moynihan at that time. We 

left with a pair, and they are the socks. 

Tellingly, the image of the tank man, while famous around the 

globe, is virtually unknown within China, thanks to the great firewall, which censures so-called offensive speech. It is estimated that 

11

China employs 30,000 to 50,000 special Internet police. Shockingly, 

the country has a thriving business of harvesting and selling for 

transplant kidneys—and we can furnish all the members of all the 

videos that cover this in detail, corneas and other human organs 

from executed prisoners. 

The image here, and I have the one picture over there, the image 

here shows the PLA, the same PLA that runs the space program, 

the PLA offers in preparing to execute prisoners, later footage from 

the same story shows an unmarked van driving toward the prison 

to harvest the organs. When you watch the video, it will make you 

sick. 

Like many repressive regimes, the Chinese Government maintains a brutal system of labor camps. The Soviet, the State Department’s annual Human Rights Report found ‘‘forced labor remained 

a serious program.’’

Famed Chinese dissident Harry Wu spent nearly 20 years in a 

Chinese gulag. In congressional testimony earlier this year he said, 

‘‘When I finally came to the U.S. in 1985, although I was already 

48 years old, that was the first time in my life I felt truly free.’’

He concluded by urging ‘‘President Obama and the U.S. Congress 

to be bold and take a firm stand against China’s human rights 

abuses, exactly the way that President Reagan did with regard to 

the Soviet Union.’’ And he did it in a very appropriate way, and 

I know you were at his funeral—if you will recall, he said tear 

down the wall, he said. Evil empire. And Gorbachev came to his 

funeral. 

But boldness is hardly the order of day when it comes to U.S. 

policy. That same could be said of some companies. 

Congressman Chris Smith, and the late chairman of this committee, Congressman Tom Lantos—himself a Holocaust survivor—

convened a hearing in 2006 in which they publicly challenged 

Yahoo to look behind the bottom line and consider the moral implications of their complicity, their complicity in imprisoning Chinese 

dissidents. 

New York Times columnist Nicholas Kristof—and I appreciate he 

is been very good on these issues—authored a piece after the hearing writing, ‘‘Suppose that Anne Frank had maintained an email 

account while in hiding in 1944 and that the Nazis had asked 

Yahoo for cooperation in tracking her down.’’ It seems,’’ he said, 

‘‘based on Yahoo’s behavior in China that it might have complied.’’

Yahoo isn’t the only U.S. company to come under fire for pursing 

business interests at the expense of human rights. A May 22 New 

York Times article reported that Cisco, customized, ‘‘customized its 

technology to help China track down members of the Falun Gong 

spiritual movement.’’

There are multiple suits now against Cisco. 

These allegations reflect a worrying trend. American companies 

ought to represent American values. Instead, it seems that time 

and again major U.S. corporations are embracing the Chinese Government’s policies that are completely at odds with what America 

stands for. 

China, in turn, exports its repressive technology to like-minded 

governments. In October 27, a Wall Street Journal piece reported 

that the Chinese telecom giant Huawei, now operating in the 

12

United States, Now dominates Iran’s Government-controlled mobile 

phone industry. It plays a role in enabling Iran state security network, the same people that killed all the people in Iran when we 

watched last year. 

It seems that not only is the U.S. failing to change China, but 

rather China is changing us. Is it any surprise considering what 

China is spending on high-powered lobbying firms in this town? 

According to a January 9 Washington Post story, in recent years 

China has tripled the amount it spends on lobbying firms. But 

well-heeled lobbyists can’t explain away China’s abysmal human 

rights records. 

Thousands of political and religious prisoners languish in prison. 

According to the Cardinal Kung Foundation, Cardinal Kung was a 

Catholic cardinal, currently one of approximately 25 underground 

bishops of the Catholic Church is either under house arrest, in jail 

or under strict surveillance or in hiding. Congressman Chris Smith 

took holy communion from Bishop Zhu, he has never been seen 

since. 

According to China in 2010, 2010, 336 Protestant House church 

leaders were arrested and persecuted. 

Since March 10th, 10 Tibetan Buddhist monks and nuns have set 

themselves aflame, aflame in desperation. I was in Tibet, the desperation. What drives nine Buddhist monks and a Buddhist nun to 

set themselves aflame? Every monastery in Tibet has a public security police in the monastery. It would be like in your church or your 

synagogue, the FBI would be in there. 

What sets them aflame like that to drive them—and the Buddhist monks and nuns are a very, very peaceful people. 

Chinese authorities continue to use Uighur, Muslim activist 

Rebiya Kadeer, her children and grandchildren as pawns, as pawns 

and to silence her. And her two sons are serving a length in prison. 

And the Chinese public security police sent people to Fairfax County to spy on her, Fairfax County. 

We have now seen that the Chinese Government is unmoved 

and, in fact, emboldened in its ongoing repression, while at the 

same time, experiencing an explosive economic growth. We have 

seen our own short-sightedness in making the protection of basic 

liberties and the advancement rule of law secondary to unfettered 

market access and normal trade relations. 

These flawed policies, Mr. Chairman, have strengthened the oppressors. They have strengthened the oppressors and enabled 

China to advance economically at our expense. 

Every member here and every Member in the Congress has constituents whose livelihood have been negatively impacted by China’s blatant economic espionage, predatory and protectionist and illegal activity, every single district. 

Meanwhile, U.S. companies are increasingly sending American 

jobs to China. General Electric’s health care unit, their health care 

unit. You have seen their ads almost every Sunday on the Sunday 

news. Their health care unit recently announced it was moving its 

headquarters of 115-year-old X-ray business to Beijing. 

Ironically, the president of—the head of President Obama’s 

Council on Jobs and Competitiveness, GE Chairman Jeffrey 

13

Immelt, they are leaving the United States and they are creating 

jobs in China. 

According to a March 24 New York Times article—and we will 

submit it for the record—GE paid zero taxes in the U.S. in 2010. 

Meanwhile, the Congressional Research Service found that the Chinese State Tax Administration and China Tax Magazine recently 

jointly released a number of lists of the top taxpayers, taxpayers 

in 2007 and GE featured prominently. The Beijing subsidiary of GE 

was number 32. GE pays taxes in China, does not pay tax in America. 

There is something wrong with that. 

It is noteworthy that GE, which pays no Federal taxes in its 

home country, is honored, is honored for being a significant source 

of tax revenue in China. 

Now engagement with China has not only empowered the government and failed to change their political system, undermine 

their economic security, it has fueled China’s military apparatus. 

Again the President’s job czar is at the center of these concerns. 

An October 28 Defense News piece reported that ‘‘U.S. air space 

companies may unknowingly be helping China’s military.’’

Specifically the article wanted to ‘‘last January’s announcement 

by General Electric and the Aviation Industry Corporation of 

China, the government, that they would launch a joint venture for 

integrated avionics.’’

And cited the soon-to-be-released report of the Congressional-Executive Commission on China which indicated, that ‘‘China has a 

robust, largely military space program,’’ with all but 13 of its 

roughly satellites—70 satellites in orbit controlled by the military. 

And NASA wants to work with a PLA killing people for their organs, spying against them, doing this and a direct threat to the 

American military. 

And in a May 17 article in Wired.Com, it reported that Chinese 

troops had begun using a first-person shooter video game called 

‘‘Glorious Mission’’ backed by the PLA, which simulates basic training in which the enemy is apparently the U.S. military. 

On April 11, Aviation Week reported, ‘‘The PLA’’—the people 

who run this space program—‘‘has made great strides toward implementing a strategy to deter or defeat U.S. forces in the western 

Pacific.’’

The 2010 annual Pentagon report cited earlier found ‘‘In the case 

of key national security technologies, controlled equipment and 

other materials not readily obtainable through commercial means 

or academia, the PRC resorts to a more focused effort, including 

the use of its intelligence services and other than legal means in 

violation of U.S. laws and export controls.’’

Let’s be perfectly clear about China and how its advancing militarily. They are using ‘‘other than legal means.’’ They are spying. 

They are stealing. 

The FBI has come before our committee approps, they have got 

the most aggressive spying program of anybody in the history this 

Nation, much more aggressive than the KGB. The report also highlighted cyber China’s espionage efforts. 

The U.S. intelligence community notes that China’s attempt to 

penetrate U.S. agencies are the most aggressive of all foreign intelVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
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ligence organizations. According to a 2008 FBI statement, Chinese 

intelligence services ‘‘pose a significant threat both to the national 

security and to the compromise of U.S. national assets, i.e., you are 

losing jobs,’’ you are losing jobs, 9 percent unemployment and you 

are losing jobs. Their espionage isn’t limited to government agencies. 

An October 4 Washington Post article, Representative Mike Rogers, chairman of the House Intelligence Committee remarked

‘‘When you talk to these companies behind closed doors, they 

describe attacks that originate in China and have a level of sophistication and are clearly supported by a level of resources 

that can only be a nation state entity.’’

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

‘‘North Korea and Iran appear to have been regularly exchanging ballistic missile technology in violation of U.S.—U.N. sanctions according to a confidential U.N. report. The report said 

the illicit technology transfer had transferred shipments 

through a neighboring third country, China.’’

China is also a major arms supplier and source of economic strategy to the regime in Sudan, in Khartoum, Sudan. According to 

Human Rights Watch, first during the years of the worse violence 

in Darfur, China sold $55 million worth of small arms to Khartoum. I was the first Member of the House to go to Darfur. Sam 

Brownback was with me. 

We heard the stories of rape, and killing and displacement and 

America gave guns to them, America’s giving food to Chinese, the 

weapons. The Janjui circulate around the camps. And when the 

women go out in the morning to collect wood—and China is the 

number one supporter—the largest Embassy in Khartoum is the 

Chinese Embassy. 

And they are aiding them and meanwhile, Beijing, right there, 

that picture of Beijing, rolled out the red carpet this year for Sudanese President Omar al-Bashir, an internationally indicted war 

criminal. Bashir’s crimes are not just things of the past, Bashir’s 

crimes are going on today. 

In the Nuba Mountains, we have reports they are going door to 

door pulling black people out and killing them. We had a hearing 

before the Tom Lantos committee, the number one supporter is 

China. They are blocking the U.N. missions that go there. I mean, 

they have been—and Bashir is indicted by the International Criminal Court. 

Why did we go after and help get Milosevic, which we should 

have, and get Radic, which we should have, and get Karadzic, 

which we should have. And yet we close our eyes and do nothing 

with regard to Bashir who goes to China. 

They had an obligation that they wanted to be part of the world 

nation to arrest Bashir when he landed and to keep him on. He is 

an indicted war criminal. 

Speaking of the red carpet, President Obama, the 2009 Nobel 

Prize winner, welcomed Chinese President Hu Jintao, who was the 

author of the crackdown in Tibet, crackdown in Tibet and is pushVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
15

ing what is taking place to a Nobel—to a dinner in the White 

House when the 2010 Nobel Prize winner, Xiaobo was in jail, his 

wife was under house arrest and nobody could even go to Oslo to 

pick up the prize. 

In closing, and I am closing, there will come a day—I think the 

Chinese Government has got to hear this—there will come a day 

when the Chinese Government will fall. Repressive, totalitarian regimes always do because the good efforts of President Reagan, and 

God bless him, and Pope John Paul and Margaret Thatcher, the 

Soviet Union collapsed. Many people in 1986 never thought it 

would collapse. 

This Chinese Government, they have taken Ceausescu’s playbook. And where it led Ceausescu it will lead this government. 

They will fall and books will be written about who helped sustain 

this government in their final days. 

Will U.S. companies feature in that narrative? Will U.S. Government officials feature in that narrative? 

In 2001, a book was published, every member ought to read it, 

entitled ‘‘IBM and the Holocaust.’’ A New York Times book review 

describes how IBM had ‘‘global control over technology that was 

enormously helpful, indeed, indispensable to the Nazi machinery of 

war and annihilation.’’

The New York Times review quotes the author of the book as 

saying that many companies did what IBM did. He then said they 

‘‘refused to walk away from the extraordinary profits obtainable 

from trading with a pariah state.’’

Arguably that assessment rings today. Only the pariah has 

changed. Those in position of leadership, be they in the private sector or in government, do our country a disservice when they gloss 

over or ignore the actions of the Chinese Government. They put us, 

quite frankly, squarely on the wrong side of history. 

The Chinese Government brutally represses its own people. It 

persecutes people of faith, Catholic, bishops, protestant pastors, 

Buddhist monks and Buddhist nuns, Muslims. It censors the Internet. It maintains labor camps. The Chinese Government is actively 

engaged in a cyber espionage. It steals state secrets. It aligns itself 

with the countries directly at odds with U.S. interests. It supports 

genocidal governments and buttresses regimes that should not be 

in power. 

There is a legal term for this: It is called willful blindness, that 

aptly describes the dealings to date with China. 

Faced with these painful truths, blindness is no longer an option. 

In the words of British abolitionist, William Wilberforce he said, 

‘‘Having heard all of this, you may choose to look the other way but 

you can never again say that you did not know.’’

Mr. ROHRABACHER. Thank you very much, Mr. Wolf, and obviously the chair agrees with everything that you just said, so I 

would leave it to my ranking member, if you have some questions 

for Mr. Wolf. 

Mr. CARNAHAN. No, just, again, I want to—you raised a number 

of serious questions, I think that we need to be contemplating. I 

appreciate your work on the Human Rights Commission, and I do 

believe we need to—personally, I believe our approach should be 

16

one of engagement but also pushing for reforms in many of these 

areas that you have brought forth here today. 

So—but I think this is a very important conversation that we are 

having here today, and I appreciate you taking the time to be here. 

Mr. ROHRABACHER. Mr. Wolf, let me just note for the record that 

while—what brought about the change in the world when the Soviet Union collapsed and Democratic Russia was born—and it is 

not quite totally matured yet and it is still struggling to be a free 

country—but they have made great strides since the 1980s. 

But what brought the Communist party to the point where it collapsed and spared the world, an incredible Holocaust where military exchange between the Soviet Union and the United States 

would have caused millions of lives, it would have been horrible—

what saved us from that was a lack of engagement. 

The fact is that we did not give the Soviet Union any of the economic rights that you have just outlined that we have given China. 

We have permitted China basically a one-way free-trade policy. We 

have permitted—we have turned our backs and they manipulate 

the currency. We have turned our backs when they steal technology. We actually have invested huge amounts of our technology 

and our capital in building up their economy. 

We didn’t do any of that with the Soviet Union. The people would 

have been laughed at if they would have said, well, why don’t we 

turn GE loose in Russia when Russia was controlled by the Communist party to work out a good relationship with their industry 

that produces jet aircraft? 

We, I don’t believe that by this current strategy that we have 

permitted our country to move forward with China despite these 

atrocities that you have outlined, I don’t believe that is going to 

lead to a free China, and I would hope that we, in our lifetime, can 

see the Chinese people break their chains, and we can be proud 

that we helped and sided with the Chinese people rather than the 

dictatorship. 

So, thank you, one last question before you go. You are then convinced that the law, as written, as you actually helped put it into 

the law, was violated by these exchanges with OSTP? 

Mr. WOLF. I do believe that we are going to continue this issue 

and stay with it until the very, very end. But I do believe, and, 

also, the GAO also believes. 

And the comment is, I think you are exactly right. No company 

or law firm would have ever represented or dealt, represented to 

the Soviet Union during the days of President Reagan. I remember 

there was someone talking about doing something for a bus company and Reagan spoke out. 

Reagan, President Reagan said the words in the Constitution 

were our covenant with the rest of the world. The students in 

Tiananmen knew those words and Reagan, one party called him in 

1983, said tear down that wall, and yet he did it in the appropriate 

way. But our Government, when they would go to Moscow, as you 

know, George Schultz would—the Embassy was a island of freedom 

and they would meet with the dissidents and everything else. We 

are not seeing that today, you are exactly right. 

Mr. ROHRABACHER. An amendment to this question, the last 

question is, if this is a violation of law or not, do you believe that 

17

the executive branch is immune from these types of restrictions 

that you placed, they helped place in the law and that we all 

placed in the law when we voted on that piece of legislation? Does 

the legislative branch have a right to limit what the executive 

branch does in foreign policy? 

Mr. WOLF. Under the Constitution it does, yes, sir. 

Mr. ROHRABACHER. Thank you very much, and thank you for 

your testimony. 

On panel number II, we have Thomas Armstrong, who is the 

managing associate general counsel at the U.S. Government Accountability Office and is one of the leading attorneys working on 

the budget and appropriations group. He is responsible for the controller general’s appropriations law opinions that the GAO issued 

to Congress. 

Mr. Armstrong joined the GAO Office of General Counsel in 1978 

and is a member of the bar in Virginia. 

Mr. Armstrong, you just heard a long bit of testimony, but we 

will get now to some of the specifics. I think it is important for us 

to realize that we aren’t talking about some esoteric situation 

where people’s lives are not at stake, that there is just a difference 

in trade policy or something. No, we are talking about a fundamental historic perception and the laws that go with those perceptions in terms of an adversary of the United States or someone who 

could be a friend of the United States. 

You may proceed with your testimony. 

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

OFFICE 

Mr. ARMSTRONG. Thank you, Mr. Chairman, and I do appreciate 

this opportunity. I am here to talk about the law. I am here to talk 

about the prohibition that was enacted to serve the Congress’ constitutional power of the purse. I have a short written statement to 

submit for the record, if I may, 

Mr. ROHRABACHER. So ordered. 

Mr. ARMSTRONG. Thank you. A copy of our October 11 legal opinion that Mr. Wolf mentioned and that you mentioned in your opening statement is included as an appendix to that written statement. 

In the opinion, we determined that OSTP violated a statutory 

provision prohibiting the agency from using its appropriations for 

bilateral engagements with China. That provision, enacted on April 

15, 2011, in the Full-Year Continuing Appropriations Act for Fiscal 

Year 2011 prohibited OSTP, as well as NASA, from using appropriations to ‘‘develop, design, plan, promulgate, implement or execute a bilateral policy, program, order or contract of any kind to 

participate, collaborate or coordinate bilaterally in any way with 

China or any Chinese-owned company.’’

Because OSTP had no funds available for that purpose, OSTP’s 

actions also violated the Antideficiency Act. The Antideficiency Act 

is a fiscal statute that is central to Congress’ constitutional power 

of the purse. 

Between May 6 and May 10, 2011, OSTP, as they told us, participated in a series of meetings with Chinese officials as part of two 

18

events here in Washington, DC: The U.S.-China Dialogue on Innovation Policy, and the U.S.-China Strategic and Economic Dialogue. 

OSTP also hosted a dinner for Chinese dignitaries. 

OSTP did not deny that it engaged in these prohibited activities. 

Rather, OSTP asserted that the prohibition, as applied to these activities, is an unconstitutional infringement on the Executive’s conduct of foreign affairs. 

As we stated in our opinion, it is not GAO’s role to adjudicate 

the constitutionality of legislation that has been enacted into law. 

That role is properly reserved for the judiciary, not an agency like 

GAO that is part of the legislative branch. 

Legislation like this, which was passed by both Chambers of 

Congress and signed into law by the President, thereby satisfying 

the Constitution’s requirements of bicameralism and presentment, 

is entitled, in our view, to a heavy presumption of constitutionality 

until a court indicates otherwise or until Congress changes that 

law. In other words, in our opinion, and in opinions like this, we 

at GAO apply the law as written to the facts before us. By using 

its appropriations in violation of that prohibition, the OSTP also 

violated that Antideficiency Act. 

In addition to audits and investigations, GAO serves an important function by providing legal opinions to Members of Congress 

and Federal agencies on matters of appropriations law, that is to 

say, those laws, including the Antideficiency Act, that governed the 

proper use of Federal funds, and that help protect Congress’ constitutional power of the purse. 

The Antideficiency Act is a funds-control statute designed to impose fiscal discipline on Federal agencies. Under the Act, an officer 

or an employee of the United States Government may not make or 

authorize an obligation or an expenditure exceeding the amount of 

an available appropriation. Simply put, agencies may not spend 

more than Congress gives them. 

When OSTP used Federal funds to engage in the Innovation Dialogue, the Strategic and Economic Dialogue, and the dinner to host 

Chinese dignitaries, OSTP spent funds in excess of the amounts 

available, in excess of the amount Congress gave them for this purpose. Congress, with the prohibition, had made clear that OSTP 

had no funds available for this purpose. OSTP, therefore, violated 

the Antideficiency Act. 

In order to emphasize sound funds control and to advance oversight of agencies’ fiscal activity, the Antideficiency Act requires 

that executive agencies report violations to the President and Congress and transmit copies of their reports to GAO. In the opinion, 

we advised OSTP to report its violation as required by law. Late 

Monday afternoon, OSTP provided us with its Antideficiency Act 

report. In the report OSTP disagreed with GAO’s conclusion. 

Thank you, Mr. Chairman. Thank you, Mr. Carnahan. I am 

happy to answer any questions you may have. 

[The prepared statement of Mr. Armstrong follows:]

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Mr. ROHRABACHER. Thank you very much for that succinct testimony, and you stated then that there is, when something is put, 

wording is put into legislation, that is very clear, specific wording, 

that your—that you have a heavy presumption of constitutionality. 

Maybe you could tell me is there a difference between what is legal 

and is constitutional? 

Mr. ARMSTRONG. No, not really because all of our laws are derived the Constitution. 

We have a long history at GAO in serving Congress’ constitutional power of the purse to presume, accept the constitutionality 

of any law that is enacted via the constitutional legislative process, 

any law that is passed by both Houses of Congress and signed by 

the President, which is what happened in this case. 

Mr. ROHRABACHER. Okay. Is there a constitutional restriction on 

the legislative branch from putting limits to which money can be 

spent concerning American foreign policy? 

Mr. ARMSTRONG. The Supreme Court and other Federal courts, 

lower Federal courts, have long recognized that Congress does have 

the right to impose restrictions on the Executive’s use of public 

funds. It all relates to Congress’ constitutional prerogatives of the 

purse. 

Mr. ROHRABACHER. So this is, the power of the purse is a supreme constitutional prerogative of the legislative branch, and that 

if the restrictions that we put on the power of the purse affects foreign policy, that is within the jurisdiction of the legislative branch? 

Mr. ARMSTRONG. We didn’t look specifically at OLC’s, Office of 

Legal Counsel over at the Department of Justice, at the arguments 

that they presented to OSTP. We felt we didn’t need to go beyond 

the fact that this law was enacted via the constitutional legislative 

process. 

Mr. ROHRABACHER. Okay, so it was a constitutional legislative 

process, but they were actually asking about the constitutionality 

of the outcome of the process and not necessarily the process itself, 

which is interesting. 

You have stated very clearly that the OSTP spent funds in excess 

to what the government, meaning what the legislative branch had 

declared was legal for them to spend. Thus it was in violation of 

that particular law. 

And, again, I guess I am looking for and I will discuss with the 

administration later on this theory that they can do whatever they 

damn well want to do if it has to do with foreign policy, and dealing with China has some—is by its nature dealing with foreign policy. 

All right, you have given us some insights. 

Mr. Carnahan. 

Mr. CARNAHAN. Thank you, Mr. Chairman. Welcome, Mr. Armstrong. 

Mr. ARMSTRONG. Thank you. 

Mr. CARNAHAN. I want to jump right into this question that you 

have raised and what I understand your earlier testimony in that 

GAO did not make an assessment of constitutional claims put forth 

by the Justice Department, has GAO made determinations in other 

instances where an administration has made constitutional claims 

and, if so, how did GAO handle that? 

32

Mr. ARMSTRONG. We have—we do steer clear of addressing constitutional issues. We do have a long history since our role here in 

the appropriations law decision writing function is to serve Congress and Congress’ oversight of the Executive’s use of public 

money. 

Mr. CARNAHAN. So just to be clear, steer clear, you mean they 

never have addressed any constitutional issues or they generally 

don’t, and that is what I am trying to get down to. 

Mr. ARMSTRONG. I have been at GAO for 33 years now, and I 

have been involved in the appropriations law function for about 20, 

21 of those years, and I have never been involved in addressing a 

constitutional issue in the context of Congress’ power of the purse. 

Mr. CARNAHAN. And again, just to be specific, you have never 

been involved with that. Has GAO ever been involved in addressing 

a constitutional issue to your knowledge? 

Mr. ARMSTRONG. I am not aware of it, no. 

Mr. CARNAHAN. So——

Mr. ARMSTRONG. In the context of appropriations law. 

Mr. CARNAHAN. So in other context you are aware, but not with 

regard to appropriations? 

Mr. ARMSTRONG. I can tell you that I am not aware of it, but I 

am not necessarily in a position to have been aware of it because 

of my focus on appropriations law and my responsibility with regard to the appropriations law decision writing function. 

Mr. CARNAHAN. I think I understand that, Mr. Armstrong. Let 

me move on. Since the administration submitted its report to GAO, 

has it fully complied with the requirements pursuant to the 

Antideficiency Act? 

Mr. ARMSTRONG. We do consider that report to be satisfying the 

reporting requirement of the Antideficiency Act. 

Mr. CARNAHAN. And describe that for the committee, please. 

Mr. ARMSTRONG. When an agency violates the Antideficiency Act, 

as it did here, the Act requires that the agency report it to Congress, the President and to GAO. 

Mr. CARNAHAN. And that was done? 

Mr. ARMSTRONG. And that was done, yes. 

Mr. CARNAHAN. And can you describe that report just in brief? 

Mr. ARMSTRONG. Yes, I can. They did acknowledge GAO’s conclusion. OSTP reported its disagreement with GAO’s conclusion. OSTP 

summarized Justice Department’s advice to OSTP. The report fairly short, about four or five pages, didn’t go further than that. But 

it did serve to put the matter before the Congress in Congress’ 

oversight capacity, which is the point of the Act. 

Mr. CARNAHAN. In bottom line dollars, how much money are we 

talking about? 

Mr. ARMSTRONG. OSTP told us that they spent about $3,500. 

Mr. CARNAHAN. Okay. Well, with regard to an Antideficiency Act 

issue such as this, what is the enforcement mechanism once the reporting requirements are met and what is the typical resolution in 

a case like this? 

Mr. ARMSTRONG. The enforcement mechanism is really Congress’ 

enforcement in how Congress wants to respond, react, to the 

Antideficiency Act report. The Act is there to serve Congress in 

Congress’ oversight of agency activities. So it really is up to the disVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
33

cretion of this committee, of the appropriations committees, of the 

Congress. 

Mr. CARNAHAN. Very good. Thank you. 

Mr. ROHRABACHER. When did the OSTP actually provide you a 

report to this violation? 

Mr. ARMSTRONG. It was late Monday afternoon this week. 

Mr. ROHRABACHER. Are you talking about this Monday? 

Mr. ARMSTRONG. Yes. Today is Wednesday. The day before yesterday, yes. 

Mr. ROHRABACHER. So this Monday after this hearing had already been scheduled was when they saw fit to comply with this 

request. I think that has to be taken into consideration. And we 

just—the ranking member just asked several questions I thought 

were important. And you suggest that if there are any penalties, 

Congress must be the one to provide some reaction to this violation. But you are suggesting that the money we spent that was illegally spent and now it is up to Congress to act, is that it? 

Mr. ARMSTRONG. Yes. That is the way the mechanism is designed 

under the Antideficiency Act. 

Mr. ROHRABACHER. Okay. And there is no criminal penalty to 

this? 

Mr. ARMSTRONG. Well, the Act does include criminal penalties for 

knowing and willful violation of the Act. That is in the Justice Department’s discretion. My understanding is that the Justice Department has never prosecuted anyone for a knowing and willful 

violation, so we don’t have any clue from their case law and their 

activity what Justice would consider to be a knowing and willful 

violation. 

Mr. ROHRABACHER. Okay. And one last question about, if a piece 

of legislation like this is signed into law, which it was by the President of the United States, President Obama signed the bill, do we 

then presume that President Obama agrees with the constitutionality of the restriction that has been placed upon him by the 

bill? 

Mr. ARMSTRONG. I am really reluctant to make a presumption 

about what the President might think. 

Mr. ROHRABACHER. Well, are we presuming if a President signs 

a bill into law and there is a restriction in that law, the executive 

branch, that the President is signing that bill into law and thus 

any President that does that is reaffirming a constitutional acceptance of the law? 

Mr. ARMSTRONG. There are occasions when a President, in signing a bill into law, might question the constitutionality of provisions. In the President’s signing statement, the, President may 

make a point about his concerns about the constitutionality of a 

provision. We did look at the signing statement for this law and 

there was nothing in this signing statement that raised any concerns about this provision. 

Mr. ROHRABACHER. So in the past, if the President did have a 

concern about constitutionality of any restriction to law and he 

wanted to sign it anyway because of other provisions, that would 

be in his statement upon signing the bill? 

Mr. ARMSTRONG. There is a tradition there. That doesn’t mean 

that we can presume, I think, that because the President did not 

34

make a point in his signing statement, that he accepts the constitutionality of it. But I can tell you that there was no point made in 

the signing statement for this law about this provision. 

Mr. ROHRABACHER. Mr. Carnahan.

Mr. CARNAHAN. Just one more question. I am going to put this 

in context. Has in your experience, and you have been doing this 

for a number of years over a number of administrations, has this 

issue come up with prior administrations? 

Mr. ARMSTRONG. Not with GAO. But I can tell you, although I 

am not a constitutional law scholar, as a lawyer, I am well aware 

that there has been tension over the years between Presidents and 

Congress over the conduct of foreign affairs. But that is not something that we have looked at, it is not really in GAO’s purview. 

Mr. CARNAHAN. I appreciate that. Thank you. 

Mr. ROHRABACHER. Thank you for joining us today. And our 

third panel will be Charles Bolden, Administrator of NASA. 

Mr. ARMSTRONG. Thanks very much. 

Mr. ROHRABACHER. We have our next panel seated. And I guess 

we are going to have Holdren and Bolden together. I was noticing 

that their names, there is a similarity there between the names of 

all the witnesses today. That is interesting. 

So we have—our first witness will be Charles Bolden who is currently Administrator of NASA and has served at post since 2009. 

So we can say the Honorable Charles Bolden, but I would prefer 

to call him General Bolden. My father was a pilot in the U.S. Marine Corps, and as I have said many times would be very proud to 

know that we have a Marine pilot now heading up NASA. And I 

think he has done a great job since he has been there under very, 

very strenuous circumstances. He graduated from the U.S. Naval 

Academy and went on to fly over 100 combat missions in Vietnam. 

Afterwards he joined NASA and flew four space shuttle missions, 

two of which he commanded. 

And we also have with us Dr. John Holdren who is director of 

the White House Office of Science and Technology Policy and cochairman of the President’s Council of Advisors on Science and 

Technology. Dr. Holdren went to the White House from his post at 

Harvard University where he was a professor. And he holds a degree from MIT and Stanford and has a long and distinguished 

record of service in scientific bodies and is one of the more respected scientists in the United States of America. And we appreciate the service that both of you are providing to our country. That 

doesn’t mean we don’t have our disagreements, which is what this 

is all about today, but that does not diminish the gratitude that we 

should have toward people like yourselves who are willing to take 

on these kind of responsibilities. You both may proceed with your 

opening statements and then we will go into questions and answers. 

Mr. HOLDREN. Mr. Chairman, do you have a preferred order for 

those statements? 

Mr. ROHRABACHER. Yes. I can see that the General is giving us 

a direction over there. You go first. 

35

STATEMENT OF THE HONORABLE JOHN HOLDREN, PH.D., 

DIRECTOR, OFFICE OF SCIENCE AND TECHNOLOGY POLICY 

Mr. HOLDREN. I will proceed. Thank you very much. Chairman 

Rohrabacher and Ranking Member Carnahan, I do appreciate the 

opportunity to testify today on U.S.-China Cooperation in Science 

and Technology. 

Mr. ROHRABACHER. Put the microphone a little closer. There you 

go. 

Mr. HOLDREN. In general, the United States benefits from 

science and technology cooperation with other countries when the 

sharing of facilities or expertise and costs speeds up discoveries 

that can be applied in this country to address economic and other 

challenges that we face. We also benefit from such cooperation 

when it enhances the understanding of and access to foreign markets by U.S. firms enabling them to sell more abroad. We benefit 

as well when such cooperation accelerates innovation in other countries in ways helpful to U.S. interests, such as by reducing their 

pressure on world oil supplies and their emissions of greenhouse 

gases. 

And we benefit when science and technology cooperation provides 

a set of positive interactions and incentives with countries with 

which we have difficult relations. Those general benefits of cooperating with other countries in science and technology all apply with 

particular force to the case of China, as my written statement explains. Of course the benefits of cooperating with other countries 

in science and technology have to be weighed against the costs and 

the risks. Those risks include theft of intellectual property and 

classified information and loss of economic or military advantage. 

And just as the benefits of science and technology cooperation 

apply with particular force in the case of cooperation with China, 

so do the risks. 

The relations of the United States with China are complex overall. The two countries behave as partners in some arenas, as competitors in some and as potential adversaries in some. This administration strongly objects to China’s human rights abuses, its theft 

of intellectual property and much else that goes on there. But we 

in this administration do not believe that the solution to these 

challenges is to cut off our science and technology cooperation with 

China. 

On the contrary, we believe that U.S.-China science and technology cooperation benefits both countries and strengthens our 

hand in the effort to get China to change the aspects of its conduct 

that we oppose. And we believe that the overall benefits to our 

country of properly focused and managed science and technology 

cooperation with China outweigh the costs and risks. That proposition was the reason that the Carter administration concluded the 

U.S.-China science and technology cooperation agreement within 

weeks of the normalization of relations with China in January 

1979. And it is the reason that that agreement has been renewed 

by every administration since, Republican and Democratic alike. 

My written statement describes some of the ways that U.S.-

China science and technology cooperation under this framework 

has benefited United States interests. The only one I will mention 

here is how the ongoing U.S.-China dialogue on innovation policy, 

36

which I co-chair on the U.S. side, has led to the Chinese Government’s rolling back aspects of Chinese innovation policy that discriminate against U.S. businesses active in Chinese markets. As 

has already been pointed out by earlier witnesses, section 1340(a) 

of the Continuing Appropriations Act of 2011 contains language intended to bar OSTP from continuing to engage in bilateral interactions with China. 

I am a scientist and not a lawyer, so I am only going to state 

here very briefly why OSTP has not complied with that prohibition. 

For the details I refer you to the formal opinion issued on September 19th of 2011 by the Office of the Legal Counsel in the Department of Justice, and I ask that that be added to the hearing 

record as an addendum to my testimony. 

Mr. ROHRABACHER. Without objection. 

[NOTE: The information referred to is not reprinted here but is 

available in committee records.] 

Mr. HOLDREN. OSTP sought the Department of Justice’s guidance on Section 1314(a)’s legal effect because of the extent and the 

importance of OSTP’s role in bilateral diplomacy with China on 

science and technology issues. The Department of Justice advised 

us that the activities that OSTP has been carrying out in connection with that role fall under the President’s exclusive constitutional authority to conduct foreign diplomacy, and thus are not precluded by the statute. 

Let me conclude by referring once more to President Reagan. As 

Congressman Wolf pointed out, President Reagan did call the Soviet Union an evil empire. He also continued, throughout his two 

terms, the extensive U.S. cooperation on science and technology 

with the Soviet Union that had begun in 1958 under President Eisenhower and that continued until the Soviet Union disintegrated 

in 1991. I very much hope that the value to this country on balance 

of appropriately focused and managed cooperation with China on 

science and technology is something about which this administration and this Congress can also come to agree. I am happy to try 

to answer any questions you may have. Thank you very much. 

[The prepared statement of Mr. Holdren follows:]

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Mr. ROHRABACHER. Thank you very much, Dr. Holdren. And 

General Bolden. 

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

Mr. BOLDEN. Chairman Rohrabacher and Ranking Member 

Carnahan, thank you very much for the opportunity to appear here 

today. This is a critical time for our Nation’s space exploration program. We have embarked upon an ambitious plan agreed to by 

President Obama and the bipartisan majority in Congress to maintain U.S. leadership in space for many years to come. Private U.S. 

companies will soon be taking over transportation of cargo and 

crew to the international space station. A deep space exploration 

vehicle and crew capsule to take humans farther into the solar system than we have ever gone before is in development. Science missions to Jupiter and asteroid, the moon and Mars are getting underway. Our technology development efforts are getting closer to 

demonstration, and our air aeronautics research is helping to advance cleaner and safer air travel. 

For 50 years now, America has led the world in space exploration. Under the plan we have committed to as a nation, we will 

continue to do so for the next 50 years. It is important to note that 

our national success has been achieved in part thanks to international cooperation. Strategically we have entered into agreements that advance our national objectives and furthered the 

causes of science, space exploration and discovery. Currently, we 

have over 500 active agreements in place with 120 nations, excluding China. The United States has always led, but we also work 

with other countries when it serves our national interests. Having 

the flexibility to enter into these partnerships has been an important part of America’s success in space exploration. Over the last 

decade NASA has had a very limited bilateral cooperation with 

China entities due to U.S. law and policy. In fact, NASA has only 

signed one agreement with the Chinese Academy of Sciences for 

the exchange of data for geodynamics research related to the prediction, monitoring of and response to natural disasters. 

Additionally, joint working groups on earth and space science 

were established in 2007 under the Bush administration, and there 

have been reciprocal visits of NASA and People’s Republic of China 

officials to facilities in each nation. I would like to emphasize that 

support for cooperation with China has spanned multiple administrations. NASA’s bilateral cooperation with China was initiated 

under President George W. Bush and continued under President 

Barack Obama. Following a summit between President Bush and 

Chinese President Hu Jintao in 2006, it was agreed that the NASA 

administrator, one of my predecessors, would travel to China to 

begin exploratory discussions on space cooperation with Chinese officials. 

Subsequent to that successful visit in 2007, NASA and China established working groups focused on earth and space science cooperation. In their November 2009 joint statement, President 

Obama and President Hu noted that they look forward to ‘‘expanding discussions on space science cooperation and starting a diaVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
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logue on human space flight and space exploration based on the 

principles of transparency, reciprocity and mutual benefit.’’

As a result, I traveled to China in October 2010 to continue and 

expand our discussions on potential space cooperation. In response 

to limitations enacted by public law 112–10, NASA immediately 

suspended all activities under NASA’s agreement with the Chinese 

Academy of Sciences. The suspension of this agreement precludes 

NASA from directly receiving a global navigation satellite system, 

satellite laser ranging and very long baseline interferometry data 

from stations in China. 

In addition, NASA cancelled all plans for reciprocal visits and bilateral activities. NASA employees and contractors continue to participate in multi-lateral activities through such multi-national organizations as the U.N. Committee on the Peaceful Uses of Outer 

Space in which representatives of the PRC organizations or companies may also participate. 

In closing, let me assure this subcommittee that any NASA engagement with China entities will be conducted in a manner that 

is consistent with all existing U.S. laws and regulations. I believe, 

however, that some level of engagement with China in space-related areas in the future can form the basis for dialogue and cooperation in a manner that is consistent with the national interest 

of both our countries when based on the principles of transparency, 

reciprocity and mutual benefit. Initial discussions in areas such as 

orbital debris mitigation and disaster management can provide 

benefits to the United States and perhaps eventually form the 

basis for a continued dialogue in other areas of space exploration. 

Mr. Chairman, I thank you very much for your continued support of NASA. I would be pleased to respond to any questions you 

or other members of the committee may have. 

[The prepared statement of Mr. Bolden follows:]

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Mr. ROHRABACHER. Well, thank you both for your testimony. And 

we appreciate you coming here today to have this discussion. Let’s 

get right down to some of the details here. Dr. Holdren, who was 

it who suggested to you that only things like this in terms of your 

interaction with foreign governments is only based on Presidential 

authority and that thus, I say the only word means the legislative 

branch does not have jurisdiction. 

Mr. HOLDREN. Mr. Chairman, I wouldn’t formulate it in that particular way, but I have been advised by the Department of Justice, 

and I have suggested that their written opinion to this effect on 

September 19th be added to the record. And they were very clear 

in their language that section 1340(a) is unconstitutional as applied to certain activities undertaken pursuant to the President’s 

constitutional authority to conduct the foreign relations of the 

United States. That is an exact quote. And they went on to say 

that OSTP’s officers and employees therefore may engage in those 

activities as agents designated by the President for the conduct of 

diplomacy with the People’s Republic of China. 

I am not a lawyer. The White House asked that a Department 

of Justice lawyer be provided here to answer those legal questions. 

I can’t debate the law with you. But our request was unfortunately 

not granted. 

Mr. ROHRABACHER. It wasn’t granted by us or by the Department 

of Justice? 

Mr. HOLDREN. My understanding it was not granted by the committee. That is my understanding. 

Mr. ROHRABACHER. All right. I probably would have granted that 

had I known personally about it because I think that that proposition certainly deserves a great deal of discussion. And you are 

saying that this was the position of the Department of Justice, but 

it is not necessarily your position, is that what we are hearing 

today? 

Mr. HOLDREN. Mr. Chairman, I am not qualified to reach positions on matter of constitutional law. I am advised by the Department of Justice that their opinion is binding on me as an officer 

of the executive branch, even if their opinion is in conflict with that 

of the General Accounting Office. That is what I have been advised 

by the Department of Justice. 

Mr. ROHRABACHER. All right. So let’s just note that when—let me 

ask you this then. This came from the Department of Justice. This 

did not come from your superiors at the White House? 

Mr. HOLDREN. I don’t generally talk about the content of my conversations with the President, who is my superior——

Mr. ROHRABACHER. Well, conversations don’t have to be personal 

conversations. 

Mr. HOLDREN [continuing]. In the White House. But the Department of Justice opinion represents the administration’s view of this 

matter. And as I say, it is binding on me in the judgment of the 

Office of the Legal Counsel in that department. 

Mr. ROHRABACHER. So if indeed Congress was to pass a law that 

said that government employees could not do certain actions as 

long as they were involved with, as long as these government employees were under the command of the executive branch, then 

that would be meaningless, right? 

51

Mr. HOLDREN. I think that is a more general statement than the 

one the Department put out. And I, again, would refer you to the 

statement they put out. I am not going to speculate on a broader 

interpretation. 

Mr. ROHRABACHER. It is an interpretation, but let me note it is 

a principle, and I think that that is—I will tell you that if any of 

the—and let me just acknowledge what both you and General Bolden said. This is not a partisan issue. These discussions about cooperation with China have certainly been Republican and Democratic administrations have both taken the position that you have 

in terms of the cooperation is worth the benefits, it is worth getting 

those benefits. We understand the risks, but it is worth the benefits, obviously which I disagree with, and Congressman Wolf and 

others. And obviously to the point that those who disagree with 

that were able to get that enacted into law. 

The only question now is whether or not the executive branch 

feels compelled to obey that law. And what we are getting now is 

that—which is not bipartisan. If this was a Republican administration, believe me, there would be, and the Democrats were in charge 

of Congress, this would be a holocaust, I mean, it would be an uproar beyond imagination having an administration saying that 

really, Congress doesn’t have the right to say where appropriated 

funds will be spent as long as it deals with foreign policy. 

Let’s go into some of the—before we get more into that, let’s go 

into the benefits and the risks, which is what both of your basic 

testimony is. Do you believe that the cooperation that we had during the Clinton administration bore any similarity to the cooperation that is now being advocated by this administration in terms 

of space and technology cooperation? 

Mr. BOLDEN. Mr. Chairman, I would say that every administration has advocated reasonable cooperation with China. The former 

Soviet Union, now Russia. And you can see where that decision has 

borne the fruits of the decision, though it may have been controversial at the time. And the greatest example I can give you is the 

benefit of the international space station, which orbits today and 

has been for 11 years. And had we followed the philosophy of those 

who believed that engagement is not the proper course of action we 

would not have the international space station today. 

Mr. ROHRABACHER. And at the time of that cooperation, what 

was the level of the Russian space program as compared to the 

MACE space program as compared to back in those days the American space program versus the Chinese space program? 

Mr. BOLDEN. When the cooperation began, which was with the 

Apollo Soyuz test project in 1975, and it was the Soviet Union, we 

had already been to the moon, as you know, we had demonstrated 

that we were better than everybody else in the world, much more 

technically capable. 

So I would say that we were at the same position we are today 

where we are the number one space-faring nation in the world and 

intend to stay that way. 

Mr. ROHRABACHER. Okay. But you don’t recognize that the Chinese missile and rocket capabilities at that time were very limited, 

and in fact, as was the task force reported after this whole crisis 

52

and scandal emerged, that we had dramatically improved a rocketmissile technology? 

Mr. BOLDEN. Mr. Chairman, I think you may misunderstand 

what I said. I was comparing where we are today with China with 

where we were in 1975 with the Soviet Union. 

Mr. ROHRABACHER. Right. 

Mr. BOLDEN. And at that time we were engaged, heavily engaged 

in the Cold War, and both nations had nuclear missiles poised at 

each other. And so I think we were in much more dire stress then 

than we are today. 

Mr. ROHRABACHER. General, let me point this out to you, that the 

Russian rockets that were available then were very capable and at 

the same level as our own rockets now. Whether or not they were 

able to get to the moon is another issue. The Chinese rockets, when 

we began cooperating with them during the 1990s, the Long March 

rocket had a huge failure rate until, of course, Americans cooperated by them and their failure rate was diminished dramatically, 

meaning they became very, going to like nine out of 10 would be, 

couldn’t make it up because they didn’t have the right stage separation or the right bearings, or they could carry one payload. 

Do you think it is a good thing that now that the Chinese were 

able, after our cooperation to carry more than one payload on their 

rockets and that now nine out of 10 of their rockets succeed rather 

than blow up on a launch pad? 

Mr. BOLDEN. Mr. Chairman, I can only speak as the NASA administrator. And my number one job is as to facilitate is to ensure 

the success of our crews as we go to and from space, as we fly 

through the atmosphere in aeronautics and as we conduct the 

international cooperation that we do. And I can only say that from 

the standpoint of NASA, as far as I know, since our engagement 

with China, Russia, any other nation began, there are no documented cases of transfer of technology that gave advantage to any 

other nation. Not from NASA arrangements, NASA agreements. 

We have guarded our technology and kept it from being transferred. 

Mr. ROHRABACHER. Let me just suggest that you have not read 

the task force, the congressional task force on technology transfer 

to China that was done and voted on and unanimously voted in a 

bipartisan fashion that totally contradict your last statement. I am 

not saying you are lying or anything, I am just saying that you 

haven’t read that or you wouldn’t have made that statement. Because there was a major investigation into the transfer of technology because of this cooperation, a bipartisan task force, was the 

Cox report was issued, and it was unanimously accepted by both 

parties, which goes, which concluded that there had been great 

damage to our security based on that cooperation. 

Dr. Holdren, have you read that report, that task force? 

Mr. HOLDREN. I have read a summary of it, I have not read the 

report. And I think the question that is not clear from the summaries so far is whether that was NASA cooperation or the cooperation that went on between a private company and China at 

the time. 

Mr. ROHRABACHER. Correct. And that is a very good distinction. 

And let me note that when NASA cooperates quite usually what 

53

happens and follows is there is cooperation by major high tech corporations in the United States. And that is what usually is the purpose of the NASA cooperation, is to further that direct contact. 

I don’t think that the people that I know would agree with you, 

either one of you, in terms of the benefits outweigh the risks. I am 

not sure what the benefits to the American people are. We know 

that the Chinese have now been producing major consumer items 

in the United States with capabilities that our companies, major 

corporations involved in technology, have been able to ship there. 

I don’t understand how that benefits the American people. 

Maybe it is good for American workers to have those jobs earning 

a little bit more money rather than having the Chinese produce 

these products which they have not developed and that our companies have. And let me just note as far as your last statement, I personally investigated this issue in the 1990s. I was here and I spent 

a considerable amount of time in the field going to the actual companies and seeing exactly how they were cooperating back and 

forth. And one of the things the Chinese did not have was state 

separation at the time. After this cooperation, there was stage separation among their rockets and nine out of 10 worked. Before, 

nine out of 10 didn’t work. That is not good. 

I don’t know if that, in and of itself, says that is—how does that 

stack up to us being able to get certain things manufactured there 

at a cheaper price, especially when the other thing that we gave 

them was the ability to have more than one payload on their rockets, meaning merving in the military sense. We provided that to 

the Chinese. 

Now, providing the world’s worst human rights abuser which is 

now building up its military and making, and being demonstrably 

hostile to the United States in the South China Sea and elsewhere 

and making alliances with every other vicious gangster regime in 

the world, I do not understand what benefit we get by perfecting 

their rockets and giving them the ability to merve and to throw 

three nuclear weapons at us per rocket rather than one. But that 

is what this is all about, that is what this hearing is all about. 

That is why that was written into the law. 

It was written into law because Frank Wolf, who is a Member 

of Congress, who also went through that same investigation and 

Dana Rohrabacher and others who have been watching this issue 

for a long time are aware of the specifics. And we are, we convinced 

our friends in the legislative branch to put that into law. The President then signed it into law without a reservation stating that 

there is a constitutional question here whether or not the legislative branch has a right to limit the expenditure of money that is 

used by the executive branch in determining foreign policy relationships. So this issue seems to be—please feel free to answer those 

points. 

Mr. HOLDREN. Yes, I would, Mr. Chairman, like to respond on a 

couple of points. 

Mr. ROHRABACHER. Yes, sir. 

Mr. HOLDREN. First of all, I certainly don’t dispute that there 

have been instances of technology transfer to China that we did not 

wish and should not have welcomed. That is part of the cost in liability that has to be traded off against the benefits. I think it is 

54

possible to exaggerate the importance of any one technology transfer by assuming the Chinese would never have figured that out on 

their own if they hadn’t gotten it by technology transfer. Usually 

what happens is these technology transfers accelerate by some 

amount but not always a great deal the acquisition of a capability 

that is important to a country. But I don’t dispute there was a loss 

there. But there have been many benefits. 

And I point out on pages 5 and 6 of my written testimony a number of them. I will mention a few more. We have cooperated with 

China in the domain of public health and disease in ways that have 

greatly increased our capacity to respond to epidemics that originate in China, which many influenzas do, and have enhanced our 

capacity to deal in the biological regime with invasive species with 

pests that originate in China. Our cooperation with China on nuclear safety has reduced the chances that a Chinese nuclear reactor 

will suffer an accident. 

If a Chinese nuclear reactor suffers a big accident, as reactors in 

Fukushima, Japan recently did, that puts in jeopardy our own capacity to operate our nuclear reactor system. It puts in jeopardy 

the consent of the public to operate this important component. 

Mr. ROHRABACHER. You have just given us good examples of mutual benefit. 

Mr. HOLDREN. Exactly. 

Mr. ROHRABACHER. But can you give us an example of just benefit? I mean, this is—yeah, I can understand why they would want 

us to come in and help make sure that they don’t have epidemics 

and I can understand why they would be happy to have us perfect 

their nuclear program. 

Mr. HOLDREN. Yes, I would be happy to give you an example of 

a straight benefit. Again, in the dialogue on innovation policy, 

which was a negotiation, the Chinese were persuaded to relinquish 

policies they had put in place which discriminated against American businesses. And I can tell you that the American business 

community that works in China is very grateful for the effort we 

made and for the benefit we got. 

Mr. ROHRABACHER. So the benefit, you are saying now, is we persuaded them, the Communist Chinese Government, to quit restricting our American businessmen who want to put our technology in 

China? That is a benefit to us? 

Mr. HOLDREN. No. Our businessmen who want to sell products 

made in America——

Mr. ROHRABACHER. Okay. Sell products. 

Mr. HOLDREN [continuing]. In the Chinese market. And that is 

a benefit to American workers, it is a benefit to our economy, it is 

a benefit to our balance of payment. 

Mr. ROHRABACHER. Okay. So the benefit is that there were certain things that we were not permitted to sell in China, and you 

weren’t saying that we eliminated their restrictions on actually 

putting things into China, meaning technology that would permit 

them to have greater manufacturing capabilities, things like that? 

Mr. HOLDREN. First of all, Mr. Chairman, I would not guarantee 

that in some of the forms of cooperation, including joint ventures 

between U.S. companies and Chinese companies, there will be 

some transfer of technology. The key issue there is one of intellecVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
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tual property rights and that that transfer of technology be compensated at the satisfaction of the owners of the intellectual property. But I would assert that among the benefits of the agreements 

we secured from the Chinese on their innovation policy was increased access to Chinese markets for American products made in 

America by American workers. 

Mr. ROHRABACHER. Well, we have read it differently because the 

read that I have had of American access to their markets has been 

that they have continued to have major restrictions on our ability 

to sell finished goods, but they are perfectly willing to permit us 

to go to their market and sell them what is necessary to, the technology necessary to build up their own manufacturing capabilities. 

We may be talking about the same thing. 

Mr. HOLDREN. I think we have more to do in these negotiations. 

That is one of the reasons why I am eager to continue them. We 

haven’t gotten everything that we need in terms of access to Chinese markets and nondiscrimination against American firms. But 

we are making progress. We need to make more. It will be to the 

benefit of American firms, American workers and the American 

economy when we do. 

Mr. ROHRABACHER. All right. And we will have a second round, 

but I have been taking up too much time already. Mr. Carnahan, 

would you like to, or Mr. Cicilline? 

Mr. CARNAHAN. Thank you, Mr. Chairman, and to our witnesses 

for being here today. You have given us, I think, a fuller picture 

of this bigger debate. Certainly the give and take tug-of-war between Congress and the administration on foreign affairs is not 

new. That has been going on probably since the very beginning of 

this country. But—and I appreciate Dr. Holdren, you know, you 

very succinctly and simply described the relationship with China as 

complex. That is probably an understatement. 

But, you know, I, too, am of the belief that it is important that 

we look for ways to maximize the benefits of engagement, while at 

the same time minimizing those risks and that certainly engagement outweighs any of those risks. And I appreciate also the fact 

that in the context of the executive branch, that you sought the appropriate legal advice in pursuing this meeting. Folks in Congress 

may disagree with this, and I think this is a legitimate issue for 

us to be talking about here today, but I wanted to really get into 

an area that really gets to the heart of this matter in terms of what 

protections are in place to ensure that as we engage in this dialogue at all levels, that we are maximizing those benefits and minimizing those risk. And let me start with Dr. Holdren. 

Mr. HOLDREN. Sure. There are a wide variety of protections in 

place that apply to these interactions and other interactions. We 

have a variety of restrictions on the kinds of technologies that can 

be transferred to China and appropriately so in our export restrictions. We have a variety of programs in place, including under the 

Committee on Foreign Investment in the United States, CIFIUS, 

that tracks acquisitions by Chinese and other foreign entities of 

businesses in the United States that could have adverse impacts on 

our national security through technology transfer or by other 

means. 

56

OSTP, by the way, is a voting member of the Committee on Foreign Investment in the United States and reviews all of these matters. In the domains of cybersecurity which have been alluded to 

by some of the previous witnesses, we have a very wide and robust 

interagency set of measures that address the cybersecurity threats 

associated with China and other countries. When we travel to 

China, we take extensive precautions in interaction with the appropriate U.S. intelligence agencies to ensure that no sensitive or classified information is compromised. We are very well aware in this 

administration, as previous administrations have been, of the liabilities and the risks associated with these kinds of interactions, 

and we are taking every step that we can think of to minimize 

those risks and liabilities. Some of those measures, of course, fall 

in the classified domain. We would not be able to discuss them 

here. But I would be happy, in a suitable venue, to provide more 

detail. 

Mr. CARNAHAN. Thank you. And General Bolden, the U.S., China 

and Russia are the only three countries with manned space flight 

capability. We recently ceased operating our shuttle fleet. What 

risks are posed to the U.S. space program if we are not cooperating 

with China and Russia and with the broader international coalition 

that we work with in terms of our space program? 

Mr. BOLDEN. Mr. Carnahan, what risk we take is that we lose 

our position of leadership in the world. And it is tenuous even as 

we speak today because we are the only one of the international 

partners involved with the international space station that does not 

have a working relationship with China. But again, I would say in 

my case, I am responsible for the space agency and not science and 

technology advice to the President, as is Dr. Holdren. So my area 

of expertise and my area of responsibility is very limited. When we 

did have bilateral dealings with China, they were in the area of 

geodynamics research, which was essentially talking about how can 

we predict earthquakes and then what do we do after it occurs, 

areas like orbital degree mitigation. And so there is not my concern 

that NASA will be subjected to providing technical information as 

the chairman is concerned. And we limit it that way. 

We have an agency-wide export control board that determines 

what we can do in terms of export control, and we are part of the 

interagency process, as Dr. Holdren described. NASA is very limited in what we do in terms of the concerns that are expressed by 

the committee. 

Mr. CARNAHAN. And finally, I want to get your comment. You describe limitations in suspending or canceling certain bilateral activities with China pursuant to the law, but of course, you are authorized to continue multi-lateral engagement in activities with 

China. Does this make any real practical difference that that engagement has to be done in a multilateral setting that you cannot 

do in a bilateral setting? 

Mr. BOLDEN. Let me make sure I understand your question. Are 

you saying that by not being able to do it in a bilateral setting, 

does it limit my ability to carry out what NASA is supposed to do? 

Mr. CARNAHAN. Right. To really continue the mission of NASA. 

Mr. BOLDEN. To date or right now it does not limit my ability to 

do the three primary things that the Congress of the United States 

57

and the President have designated for us, the three priorities that 

we have right now, which is the formulation of an exploration program consisting of a heavy lift launch vehicle, a crew module, expansion of the utilization of the international space station by 

bringing about the vibrant commercial industry that can provide us 

transportation to and from space so that I can stop having to pay 

our Russian partners to do that as I do right now, and then thirdly 

focusing in the area of science on the James Webb Space Telescope 

as the dominant science project, but also in the area of earth 

science where we did cooperate with the Chinese. But we have 

other entities that provide us that information so it is not critical 

right now. Cessation of multi-lateral participation would put us on 

the outside looking in. 

We would not be able to participate in things like UN–COPUOS. 

I can go on and on with international conferences, congresses, the 

U.N. again. NASA would just be on the outside looking in and we 

would serve no purpose for the Nation. 

Mr. CARNAHAN. Thank you. I am going to wrap up my time because I know we have got a colleague that wants to engage in this 

as well. I am going to yield at this point. 

Mr. ROHRABACHER. Wait a minute now. I want to know specifically how to pronounce your name. 

Mr. CICILLINE. Cicilline.

Mr. ROHRABACHER. Cicilline. Mr. Cicilline, you take as much 

time as you would like. 

Mr. CICILLINE. Thank you, Mr. Chairman. Thank you General 

Bolden and Dr. Holdren for being here. As I reviewed both the testimony that you just provided as well as the written testimony that 

was provided and reviewed by me last evening, certainly the subject of the dangers of engagement with China was the subject of 

a lot of this material. But what struck me in reviewing this is that 

there is another danger, which I would really like to ask Dr. 

Holdren about. And it really stems from an intention by the Chinese to really invest in innovation in a very, very serious way. In 

February 2006 China’s state council issued the national medium 

and long-term program for science and technology development 

which we often refer to as MLP. And in that, they committed to 

changing China within 15 years from a major manufacturing center to a major global source of innovation. 

And by 2050, to make China a global leader in innovation. And 

the plan further says that by 2020 gross expenditures for research 

and development would rise to 2.5 percent of GDP from 1.3 percent 

in 2005, so nearly doubling it. And when you look at sort of that 

kind of a serious investment in innovation and research and development in a time when we are being, when some of my colleagues 

in the Congress of the United States are, in fact, making strong arguments for reducing investments in research and development 

and innovation, and it struck me as I reviewed this that that poses 

a great danger to our innovation economy and to the long-term economic prosperity of our country. 

And I would like to know some of your thoughts generally about 

what sort of policies we should be pursuing so that we remain competitive, particularly when faced with that sort of investment by 

58

the Chinese. And then I have a second part to the question, but 

I would like you to go to that part first. 

Mr. HOLDREN. Well, thank you Congressman for that question. 

Certainly, the Chinese intend to be our competitor in high technology. They are already our economic competitor in a variety of 

regimes. I noted that in my testimony. And they intend to do better. We still have the best colleges and universities in the world, 

we still have the best research laboratories in the world, we still 

out-innovate everybody in the world. In order to maintain that 

lead, we are going to need to continue to make the investments in 

research and development, the investments in our research universities and our national laboratories, and the investments in our 

education system, particularly science, technology, engineering and 

math education, that the President is calling for, and which again, 

have historically been a matter of bipartisan agreement. 

The need to make these investments in the basis of our future 

in science, technology, innovation and their application to the economy, to our security, to the environment, this is something in 

which we have been the best. We need to continue to be the best. 

But the notion that China intends to compete with us does not 

mean the solution is to disengage from them. Germany competes 

with us; England competes with us; Russia competes with us; increasingly, countries in South America want to compete with us. 

We do not generally conclude that the solution to competition is 

disengagement. The solution is intelligent engagement measured, 

focused, appropriately managed so that we get the benefits for our 

own innovation system, that we help other countries get particular 

benefits that are in our interest and that we stay engaged with the 

best minds and the best facilities in the world, wherever they may 

be. The President has said very clearly that to win the future, we 

need to out-educate, out-build, and out-innovate everybody else. We 

plan to continue to do that. But part of doing that is also staying 

engaged with everybody else. 

Mr. CICILLINE. Thank you, Doctor. And the second issue, and I 

apologize if you addressed this, I had to step out for a minute. If 

you did, I apologize. But I wonder if you could just comment on 

how effective the strategic and economic dialogue has been or any 

other dialogues that have been, that have been engaged with between the United States and China over the theft of intellectual 

property and forced technology transfer of policies. Particularly, I 

am interested to know whether China has followed through on its 

commitments to delink indigenous innovation policies from public 

procurement at all levels of government. I represent a State that 

has a long history of manufacturing and have heard from a number 

of manufacturers in my home State about experiences they have 

had with the theft of intellectual property and the challenges they 

face. 

And I think we all agree that in a level playing field, we have 

the greatest innovators, the greatest innovators and the greatest 

workers in the world, but the theft of intellectual property and this 

opportunity for public procurement only to come about as a result 

of the transfer of intellectual property remains an issue. And I just 

wondered what your thoughts are on where we stand and whether 

59

the dialogue has been helpful in protecting American workers and 

American manufacturers in that regard? 

Mr. HOLDREN. First of all, it does remain an issue. We have 

made progress. But as I said a moment ago, we need to make much 

more. One of the interesting things to which the Chinese have 

agreed is the result of our interaction in the dialogue on innovation 

policy and the strategic and economic dialogue, is to have a bilateral team of technology experts set up that actually goes out into 

the field, into the provinces, into the cities to find out whether the 

new instructions from the Central Government about eliminating 

some of these discriminatory policies and being unattentive to the 

theft of intellectual property, to see whether that is really happening. And this is extraordinary. I mean, this is the equivalent of 

accepting on-site verification in arms control, which was always a 

great challenge to achieve. The Chinese have accepted this. The 

President of China in the summit in January announced that 

China was abandoning these particular policies, and they are committed to make stronger efforts to protect intellectual property. I 

might just add that probably no American company has suffered a 

greater loss of intellectual property to China than Microsoft. And 

we have the chief strategy officer of Microsoft as a member of the 

President’s Council of Advisors on Science and Technology, Craig 

Mundie, and he is participating energetically and enthusiastically 

with me as part of the U.S. delegation to the dialogue on innovation policy as a member of PCAST because he believes that we are 

making progress and of course that we need to make more and 

therefore we need to continue it. 

Mr. CICILLINE. Thank you. Thank you, Mr. Chairman. 

Mr. ROHRABACHER. Well, I want to thank the witnesses. I know 

I took a long time, and the chairman’s prerogative. It took me a 

long time for me to be chairman so I could actually take that time. 

But I was hoping that Mr. Carnahan would have another chance 

if he had anything else to ask. Just a couple of thoughts. And that 

is, I think, number one, that we were talking about an issue of legality, the constitutionality which these witnesses have made sure 

that they are—we understand that you are not the definers of what 

is constitutional and what is not, and you are part of an administration and will take direction from your President, which is appropriate. 

I think there is a major constitutional issue here. After hearing 

the testimony, I believe there is a major constitutional issue to be 

determined about whether or not Congress does have the rights to 

limit you and your jobs and what your personnel can do in the 

area, that steps in the foreign policy arena. 

Are we permitted then, as Congress, to say that you cannot expend those funds. Thus, you cannot have your people doing these 

things. And the Department of Justice obviously has said that, no 

foreign policy belongs to the executive branch and that will have 

to be determined. And I appreciate you coming here realizing that 

is the core of the dispute, an issue, I also appreciate both of you 

coming here in order to argue your case for the benefit of the policy 

itself, and not the constitutionality, necessarily, of it. 

And I think on that, we have some major disagreements, and I 

would think that the great investment—the only thing I know perVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
60

sonally is, well, you know, I was working with the Reagan administration for 7 years. And, again, I noted earlier that when Reagan 

increased the level of cooperation with the Chinese, it was predicated in those very agreements and statements that he made that 

this is based on a liberalization continuing in China that has led 

to a very robust democracy movement, which after Tiananmen 

Square was slaughtered and China actually has less democratic 

rights now than they had then, although they have had a lot of economic progress. 

I am not convinced that making a dictatorship more efficient and 

providing more wealth will lead to democratization, but I understand there are people who honestly believe that if we increase the 

level of wealth of a country, you will eventually eliminate the 

ghouls and the goons and the gangsters who run some of these 

countries. 

I did not see that in Russia. Ronald Reagan did agree that there 

was some cooperation going on, would never have agreed to mostfavored nation status, and, in fact, ratcheted up the other types of 

confrontations that we had with Russia which actually bankrupted 

their system. 

It was not benevolent acts that won them over that led to the 

destruction of the Communist Party dictatorship in Russia, it was 

just the opposite. And so with that said—at least that is in the 

chairman’s opinion. 

And I want to thank you again for coming today, and there will 

be, if there is any written questions that we have, we will submit 

them to you and hope that you can get them back to us in a timely 

manner. 

And so this part of the hearing is over and, again, thank you to 

the witnesses. 

Mr. ROHRABACHER. For our final panel, we have Rick Fisher, 

who is a senior fellow at the International Assessment and Strategy Center and an expert on Chinese military development. He has 

previously served as a senior fellow for the Center or Security Policy and editor of the Jamestown Foundation’s China Brief and as 

a senior fellow with the White House Republican Policy Committee. 

Adam Segal is the Ira Lipman Senior fellow at the Counterterrorism and National Security Studies for the Council on Foreign 

Relations. 

Before going to the council on foreign relations Dr. Segal was an 

arms control analyst for the China Project at the Union of Concerned Scientists and has recently written a book entitled, ‘‘Advantage: How American Innovation Can Overcome the Asian Challenge.’’

We appreciate both of you being here, and you may proceed with 

your testimony. Mr. Fisher. 

STATEMENT OF MR. RICK FISHER, SENIOR FELLOW, 

INTERNATIONAL ASSESSMENT AND STRATEGY CENTER 

Mr. FISHER. Thank you, Mr. Chairman. It is an honor to appear 

before this committee to assist your deliberations on this very important issue. 

Mr. Chairman, I very much appreciate your leadership in working tirelessly to alert the country to the dangers emerging from the 

61

People’s Republic of China and the need to protect ourselves, defend ourselves. I am also very grateful for the leadership of Congressman Wolf. I am grateful for his testimony today. 

I am also grateful for your mentioning of the Cox report. As you 

mentioned, I had the opportunity briefly to work for Chris Cox just 

after his report was released. And at that time, I remember the crisis in our relationship with the PRC. We were discovering the espionage, the military potential was very great. 

One of my favorite stories that emerged from that period was 

about the Martin, former Martin Marietta Corporation and how a 

Chinese engineer explained to me one evening how solid fuel rocket 

technology from a kick motor that Martin Marietta had sold or had 

used on a U.S. satellite revealed to the Chinese how to perfect their 

own solid fuel rocket motors. 

Well, that rocket motor became the basis for the DF–21 medium 

range ballistic missile. The DF–21 became the basis for the antisatellite system used successfully in 2007, and is also the basis for 

the new anti-ship ballistic missile, the DF–21(D) that is a revolutionary weapon targeting our aircraft carriers and other large ships 

in Asia. 

So what I stressed in my written testimony was the real dangers 

that can emerge from uncontrolled and unmonitored cooperation 

with China in space. I have been studying the People’s Liberation 

Army, writing about its modernization for about 15 years. A large 

part of that time, I have spent focused on monitoring China’s space 

program. 

And there are two fundamental observations that one must 

make. The first is that the Chinese space program is controlled by 

the People’s Liberation Army. They are the ones that set the priorities, they control the programs. 

The second, an obvious conclusion that I have drawn, is that China’s space program is nearly entirely dual use. 

Everything that the Chinese put into space, including their 

manned space program, is designed to produce military benefit for 

the People’s Liberation Army and the conduct of military operations on Earth. 

All of the first seven Shenzhou missions, their first manned 

space capsule, conducted some form of military mission and I have 

listed those in my testimony. 

Shenzhou 7 in 2008, September 2008 did something completely 

different, though, it flew to a point about 27 miles from the International Space Station. Just before it reached that point, though, 

it launched a micro satellite so you essentially had this body moving 17,000 miles an hour with a projectile out in front of it and 

there was two Russians and an American on the International 

Space Station. 

I have written that this raised the possibility of real danger to 

those on board the ISS. But, Mr. Chairman, I cannot find a single 

statement by a U.S. Government official questioning this incident 

or reacting to it. 

And so this will continue. The space lab that was launched on 

September 29 has surveillance capabilities. The future space station that will be launched in about the 2020 timeframe will be easily configured for military missions. Space claim, the same thing. 

62

In my opinion this dual-use character will continue with the PLA’s 

space program to the moon and beyond. 

So to help illuminate these dangers, I have suggested in my testimony three questions that the administration should answer to 

try to satisfy the many concerns that have been expressed today 

and for many years by the Congress. 

The first question is does the vast difference in PRC and U.S. 

space transparency mean that any level of contact between official, 

corporate or university sectors could pose a disproportionate threat 

to the United States? 

All individuals that we could possibly invite to the United States 

from China to cooperate in space programs, how do we know who 

they really worked for? 

A second question, does the clear dual-use nature of the PLA, 

Chinese space program, mean that potential Chinese space cooperation will never produce the same mutual benefit for the 

United States? 

Whatever China learns from our space program will be applied 

to assist military goals. Our space program is civilian. It is not producing military benefit, at least directly for the U.S. military. 

Third, does the PRC’s aggressive pursuit of pervasive espionage 

also dictate that the benefits of U.S.-PRC space cooperation will 

never be mutual? 

And, finally, I ask, does the proposition that U.S.-PRC cooperation in space can improve their relations on Earth really stand up 

to historical examination? We have heard in the testimony today 

reference to the 1975 U.S.-Russia Soyuz mission. Well, that was all 

fine and good after, but after 1975, China—Russia, the Soviet 

Union, proceeded to build a lot greater and more dangerous weapons to put into space. And they would have done so had the Soviet 

Union survived past 1990. 

I think the proposition is simply not backed up by history and 

those who feel that we can advance terrestrial relations with China 

by cooperating in space have really got it backwards, and I will 

stop there. 

Mr. ROHRABACHER. Thank you, Mr. Fisher. 

[The prepared statement of Mr. Fisher follows:]

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Mr. ROHRABACHER. Dr. Segal. 

STATEMENT OF ADAM SEGAL, PH.D., SENIOR FELLOW, 

COUNCIL ON FOREIGN RELATIONS 

Mr. SEGAL. I want to thank the chair and the other distinguished 

members of the committee for the invitation to speak here today. 

It is a real honor. 

While I share many of the committee’s concerns about China’s 

rise as a scientific technology power, I respectfully differ on the 

means for addressing that challenge. 

One of China’s great strengths has been a laser-like focus on 

shaping foreign interactions to serve its national innovation goals. 

By comparison, the United States is greatly handicapped as it lacks 

the ability to gather a comprehensive picture of science and technology exchanges with China and to coordinate its response to 

some of the most malevolent aspects of China’s rise. 

The solution is not to cut off all exchanges with China. What is 

needed is a more comprehensive approach. And so instead of limiting funding for the Office of Science and Technology Policy, the 

more strategic response would be to actually expand support for 

the OSTP. To be sure, there are challenges in how China is pursuing its objectives in scientific technology and how it might use 

the results for economic and military power. 

It is clear that China’s goals are ambitious. As the 2006 MediumLong-term Plan states, China’s goal is to become an innovation nation by 2020 and a global scientific power by 2050. Investment in 

R&D has grown by 20 percent a year since 1999, and it is expected 

to top $153 billion by this year. 

China, as is well-known to this committee, has adopted mercantilist policies to foster indigenous innovation. Procurement 

strategies, competing technologies, standards and the failure to 

protect IPR have all been adopted in order to create new barriers 

and force technology transfer. 

U.S. intellectual property is now widely targeted by cyber hackers and industrial spies. Since 2010, Google NASDAQ, DuPont, 

Johnson & Johnson and General Electric, RSA and at least a dozen 

others have had proprietary information stolen. And on Monday, 

Symantec released a new report tracing attacks on 48 chemical and 

defense industries back to China. 

China has also leveraged the globalization of scientific technology 

to improve the technological capabilities of its defense sectors. 

Shifting research centers to China and developing collaborative 

business relations with Chinese companies inadvertently involves 

American institutions in the diffusion process, speeding Beijing’s 

military modernization. 

The shipping and telecommunications industries, for example, 

have made steady improvements in R&D through their engagement with the international economy, and this has resulted in 

quieter subs and more advanced C4ISR capabilities. 

But the rise of new science powers China, but also India and 

Brazil, presents an extremely viable opportunity for the United 

States. For the last 50 years, we have assumed that the scientific 

dominance of the United States will continue. This assumption is 

76

now in question as scientific capabilities will be more widely distributed in the future. 

From 2002 to 2007, for example, developing countries, including 

China, India and Brazil, more than doubled their expenditures on 

R&D, increasing their contributions to world R&D spending from 

17 to 24 percent. 

The United States has been one of the major beneficiaries of 

globalization and science and technology. An American society is 

probably better positioned than any other to tap into these new 

sources of discovery. 

The dominance of the American computer industry was built on 

the ability to develop global design and manufacturing networks. 

Immigrant scientists and entrepreneurs have been a major source 

of dynamism in our universities and our start-up culture. 

The globalization of science and technology has also played a role 

in American military dominance. American universities and private 

companies, not Federal labs, provide much of the technology required for the U.S. military to keep its qualitative lead over potential challenges. 

These same universities and private companies need access to 

talented markets and developing economies, especially China, to remain competitive. Abandoning S&T exchanges is not a strategy. 

The United States needs a strategy that is not just whole of government that entails the numerous views of department and agencies, but a whole of society strategy that includes the companies, 

entrepreneurs, scientists and universities that drive the 

globalization and scientific technology. 

While parts of that strategy are clear, and I include reinvigorating the U.S. innovation system and pressing China broadly on 

indigenous innovation and other predatory policies, much of it remains uncertain because China is opaque in the bilateral relations 

that are so complicated. 

The OSTP should be well positioned to help develop that strategy 

to provide insight into Chinese motivations and plans and into a 

larger context of how global science and technology is evolving. 

For most of the last 36 years, the bilateral science and technology relationship was basically an afterthought in U.S.-China relations. Though it was often a source of stability in a relationship 

that has often seen its ups and downs over Taiwan, trade and 

human rights. 

Today, science and technology plays an increasingly central role 

in economic and national security interests and relations with 

China. These interests are better served by a more capable OSTP, 

one that has access to more information and is better able to coordinate a U.S. response than one that is severely limited. 

Thank you very much, and I will take any questions. 

[The prepared statement of Mr. Segal follows:]

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Mr. ROHRABACHER. Thank you both, and just a couple of questions here. 

So, Mr. Fisher, you, when people talk about cooperating with or 

actual investment by American companies that was described by 

Dr. Holdren there, that technology, that investment that we have, 

you know, when we are going over there selling those products, you 

are suggesting that there is almost always a dual use to those 

products? 

Mr. FISHER. Well, in many cases, yes, Mr. Chairman. When we, 

when General Electric proposes to help develop a new turbo fan engine with China, that definitely has a dual use. The engine that 

will emerge from that cooperation will inform, significantly, an indigenous Chinese engine that will power transport aircraft, that 

will power bombers, that will be taking troops around the world. 

Mr. ROHRABACHER. Okay, so let me be real clear here about what 

we are talking about because when we were discussing the benefit 

that all this China trade had had to the United States, we were 

saying that we would had some great progress and that we have 

convinced the Chinese to permit us to sell some of our technology 

products over there. 

General Electric might be one of those examples that where they 

now—they are permitting us to sell our technology over there, 

which will then permit them to have an aerospace industry that 

will put our people out of work. Is that the sort of——

Mr. FISHER. It is a painful character, Mr. Chairman. For decades, we have been complaining about the trade imbalance with 

China. The Chinese invariably always respond, well, you could sell 

us some more of your technology. We will buy that and, of course, 

they want that technology because of the dual-use implication. 

Mr. ROHRABACHER. Right. So we end up creating their manufacturing base by selling them things that, technology, what a great 

victory it is. They have agreed to buy our technology that will 

make them better at producing things that eventually can be sold 

here but also can be used to upgrade their military capabilities like 

jet engines and things such as that. 

And the PLO—or, excuse me, the PLA, owns many of these companies that are partnering with these American companies, isn’t 

that right? 

Mr. FISHER. Well, the companies are controlled by government. 

The PLA exercises control. I wouldn’t so much call it ownership but 

control. The PLA controls the money that funds them, funds their 

programs. The PLA sets the priorities that then are carried out in 

terms of research, development and production. 

Mr. ROHRABACHER. Dr. Segal, you mention in your testimony 

that tens of thousands of Chinese students have come to the 

United States to learn, and you see, and have returned home. And 

you see this as a good thing, that we have now taken Chinese students, Ph.D level, which we have spent millions if not billions of 

dollars developing the technology and the science that we now are 

imparting to them and then they go home and use it to develop 

their country to be more competitive? 

Mr. SEGAL. Actually, my preference would be that they would 

stay here quite honestly, that we encourage Chinese PhDs, engineers, other graduates with scientific and engineering degrees to 

84

stay here, to start companies and be involved in the U.S. innovative capabilities. And that, I think, is what we should be trying to 

do. 

We should be trying to promote them. That is what traditionally 

has happened. In fact, we have only started seeing an early phase 

of some scientists going back. 

Mr. ROHRABACHER. Of course, your preference is they stay here, 

but how many do, and you want to say something to that, Mr. 

Fisher? 

Mr. FISHER. When you are finished. 

Mr. ROHRABACHER. Okay. I was just going to suggest that, number one, we have a limited number of Ph.D. Programs. We have a 

limited number of students that we are going to permit into our 

major universities at this high level, we are now talking about tens 

of thousands a year, I think we are probably talking a couple thousand a year. 

For us to try to suggest that we should fill those ranks with as 

many Chinese students as we can, as compared to filling the ranks 

with, say, American students that were A-minus students rather 

than A-plus students, I think it might be more beneficial to our 

country to have those Americans—by the way, those Americans 

might be Chinese Americans too, and they might be, you know, 

Afro Americans or Irish Americans, but they are Americans, as 

compared to Chinese nationalists. 

Mr. SEGAL. I think the problem has been, is, as you have said, 

over the last two decades that American universities at the Ph.D. 

Level have been very dependent on overseas students to fill Ph.D. 

and master’s programs. 

That has been because American-born students, no matter what 

their ethnic or other heritage, have chosen not to go into the 

sciences, mainly for economic incentive reasons, right. If you are a 

smart young American, you are going to look at what the financial 

sector was making versus what it was going to be for a Ph.D. for 

10 years. 

Mr. ROHRABACHER. Well, the Chinese actually said we are going 

to pay all of your experience if you go over and to that university 

and get that Ph.D. And come back. And the Americans have been 

told, if you get this Ph.D. You are going to be able to graduate and 

have a $200,000 debt to pay back the rest of your life. 

Mr. SEGAL. Well, that is why I think, you know, the answer to 

that solution is to make science and engineering degrees more attractive to American University students. 

In fact, you know, the widespread assumption is that Americans 

aren’t interested in science and math. But if you do most surveys 

of freshman classes, about a third of them in fact say, yes, I am 

interested in science and math. 

Mr. ROHRABACHER. Well, I think that is true that we should be 

encouraging our students, our schools to be taking American students and we should be making it easier for them. But that still 

doesn’t really get to the point where you have—we are now bolstering China’s capabilities and bolstering China’s capabilities, this 

is the debate. 

I mean, people, some people, and I think the title of your book 

does suggest that innovation in itself is a good thing, but maybe 

85

you are just suggesting—the innovation on the American side 

would be what would make this a better world, not necessarily a 

general innovation that encompasses the dictatorships of the world 

as well. 

Mr. SEGAL. The book is focused on how to improve American innovation capabilities. But historically those students that you are 

talking about have stayed, right. We look at Chinese and Indians 

in Silicon Valley and Route 128 and all those others places that 

have stayed. We are now starting to see people going back. 

But, again, most of those people are maintaining connections to 

the United States, right. They are in the language of Anneliese 

Aksidian from Berkeley, argonauts, right, travelling in space all of 

the time back and forth between the U.S. and China. That, I think, 

is a better outcome, right, than them just going back to China. 

Mr. ROHRABACHER. I would think that anything is a better outcome when after a 10-year period you can show that the standard 

of living that the American people has been increased and improved because of that and the safety of our people has been improved and the prosperity of our country has been improved, as 

compared to what I see, which is our relationship with China has 

led to an improvement in their situation but not ours. 

It seems to me that there is wealth being transferred here via 

the knowledge that goes into producing wealth that we have taken, 

the intellectual property that we have invested, hundreds of billions of dollars in, and it now is working for the benefit of other 

people, and worst of all, the other people happen to be run by a 

government that is the most vicious anti-human rights government 

in the world. 

Mr. SEGAL. But, again, I think if you just look at the numbers 

again on immigrant entrepreneurship, right, those people are starting companies in the United States. They are hiring locally, they 

are developing locally and they are innovating locally. So that is, 

I think——

Mr. ROHRABACHER. I am not against legal immigration in the 

United States and making it targeted toward people who want to 

invest from there. 

But when they send people over here so that they can be educated and then they go home with billions of dollars worth of information in their head that the American people have paid for, that 

is not in our benefit. 

Mr. Fisher, and then we will go on to our colleagues. 

Mr. FISHER. Mr. Chairman, I just wanted to comment that for 

many years, I have been hearing from colleagues that the counterintelligence challenge of monitoring Chinese students, graduate 

students that come to the United States to learn very specific technical skills, which they take back to China, is one of the most, one 

of the greatest unaddressed counterintelligence challenges that we 

face. 

In my testimony on page 11, I describe an example of how a Chinese student actually gained a visiting fellowship in a laboratory 

connected to the former Lewis but now John Glenn Research Center of NASA in Cleveland, Ohio, and got a head start in creating 

China’s competency in ceramic matrix composite materials, which 

86

are used for re-entry and for other things like missile warheads, 

nose cones. 

Professor Zhoan Latong was able to come to Cleveland in—I believe it was April 1989. Despite the Tiananmen embargo she was 

able to remain at these NASA laboratories until 1991 and her biographies, her Chinese biographies are all glowing about how she 

took her foreign research back home to China to create China’s 

competency in ceramic matrix composites. 

Just this last January, she was featured on a Chinese television 

show that was about how her laboratory was contributing to China’s first small experimental space plane. 

Mr. ROHRABACHER. I think that speaks for itself. 

Thank you. Mr. Cicilline. 

Mr. CICILLINE. Cicilline. 

Mr. ROHRABACHER. Cicilline, I am going to get that right, yes, 

sir. 

Mr. CICILLINE. Thank you, Mr. Fisher and Dr. Segal for your 

thoughtful and informative testimony. 

I want to just pick up on, first on this issue of innovation and 

entrepreneurship and the great universities of America, because 

one of the things that was interesting during our orientation for 

new Members of Congress at the Kennedy School at Harvard University, the President of Harvard University spoke to us and actually challenged us to focus on what she saw as one of the biggest 

challenges facing our country, and that was the loss of this great 

intellectual capacity that is graduating out of the world’s best universities here in America, and that the challenge is that it is not 

that they come here to study at the great universities—the greatest 

universities in the world like Brown University in my district—and 

then they choose to leave, but we actually kick them out. They are 

not free to stay. 

So I think one of the challenges we have to look at is how do we 

encourage people from all over the world to continue to see America as a great beacon of intellectual development and innovation so 

that they not only come to study at our great universities, but they 

remain here to start companies, hire Americans, locally, innovate 

and build companies, and rather than lose that capacity, go back 

and do the same thing in another country. 

And so I think we lose that. 

The second part is that I think we lose the opportunity to show 

people all over the world the power of democracy, to be a student 

here and study and see how America functions as the world’s best 

and strongest, the most productive democracy, has huge value. It 

changes students forever and they become very often ambassadors 

to democracy back in their own home. 

So I just wanted to—I think you, Dr. Segal, have made that 

point, and I think it is an important one. 

What I would like you to address, as I reviewed your testimony 

today, in your written testimony what really struck me was that 

you—I would just like to point out a couple things that you mentioned, and that is first the importance of the United States maintaining its scientific strength here at home, that the United States 

remains the world leader in science and technology, but that there 

are some developing nations like China and India and Brazil who 

87

have more than doubled their expenditures on research and development in 2002 to 2007. 

And China, in particular, has grown its investment by 20 percent a year since 1999 and is expected to exceed $153 billion of investment this year alone. 

And what I think is really alarming is China is producing an 

enormous number of scientists and engineers from their graduate 

schools in excess of 2 million in 2009 alone. 

And so I think when we look at what do we do, what are the policies we should put into place as a country, they obviously include 

investments in science and research and particularly focusing on 

STEM education, to ensure that we have the workforce and the 

ability to compete successfully. 

But one of the challenges we face is even if we make all the right 

investments, the science and research and innovation and higher 

education, we end up with an uneven playing field because of the 

theft of intellectual property and because of Chinese practices of requiring the transfer of intellectual property. 

So while I am going to keep advocating for what we need to do 

to compete successfully and win. If at the end of the process, the 

Chinese or others simply get to steal what we, you know, the results of that investment, you know, from pre-K–12, to Head Start, 

to Pell Grants, and all of the infrastructure that is necessary, I am 

going to continue to advocate for that. But at the end of it, if we 

haven’t protected our investment by successfully protecting American intellectual property, then it is hard to kind of keep advocating for it. 

And so what I would like to know is what do you think we 

should be doing, why aren’t we doing more enforcement at the 

WTO? 

What tools could we make better use of to protect this huge investment we are making in order to be sure at the end of this process we are competing successfully and winning? 

Mr. SEGAL. Thank you very much for your question. I totally 

agree that there is no way we can continue innovating and have 

the Chinese completely tip the table toward them, right. The free 

trade system is based on comparative advantage. Our comparative 

advantage is innovation. And if they are going to undermine that, 

then you can’t have that system continue to work. 

So besides doing things at home, I think we have to keep pressuring China on indigenous innovation and intellectual property 

rights. The fact that it was now at the top of the list for this strategic and economic dialogue I think was an important step—it’s 

only the first step, right. What we have to see, as your earlier question to Dr. Holdren suggested, we have to see how they are going 

to follow it through. 

But we know what works, right. There have been specific instances with either IPR or with indigenous innovation where the 

Chinese have backed away. That has primarily happened when 

both U.S. companies and foreign countries all push in the same position, right. What has typically happened in other cases is you get 

a lot of detection, right. 

U.S. companies don’t want to be seen as the one who publicly 

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ment is going to punish them sometime in the future with safety 

inspection or other types of interference with their business. 

And the Chinese are often very good at splitting countries, right. 

The EU may have this position, we may, and the Japanese may be 

somewhere else. So in those instances where everyone is in a row, 

the Chinese have backed down. We saw this with the WAPI standard for WiFi. Everybody stayed together and didn’t back down. 

So I think in those kinds of instances where you can get that 

type of thing, that is what we should be working for, then we can 

push the Chinese. 

The other thing to do, of course, is that R&D is mobile. And so 

what you see is that if a U.S. company takes the benefits from a 

grant from the NSF or something at a U.S. university and then 

scales it up in China, that doesn’t serve our purpose, right? So we 

have to think about how do we tie that scaling up side to local, 

right? How do we improve manufacturing jobs, how do we get those 

people? 

And I think part of the way to do that is to make those grants 

collaborative, right, to insist that companies work with other U.S. 

companies, that they work with U.S. universities and tie them locally. Those are the two ideas. 

Mr. CICILLINE. And it would seem to me another approach would 

be to repeal existing tax incentives and tax breaks to give to American companies who do that kind of scaling up in China rather 

than here in the U.S. 

Mr. SEGAL. Yeah, that would also be one. 

Mr. CICILLINE. Thank you, Mr. Chairman. 

Mr. ROHRABACHER. I want to thank the witnesses. Mr. Fisher, 

did you have a final comment that you would like to make and Mr. 

Segal, did you have a final comment? 

Let me then close this hearing by saying and emphasizing something that was said by Mr. Wolf, Congressman Wolf when he was 

here at the beginning of the hearing, and that is don’t mistake any 

of the criticism that we have made of China with a criticism of the 

Chinese people. China is a dictatorship in which the people do not 

choose their own leaders. The political leadership in China suppresses the people. It is—the relationship is different than here. 

Our Government reflects the will of the people, at least it should, 

and, there, that is just not the case. 

So, who are our greatest allies in correcting a bad situation that 

is developing between China and the United States? Our greatest 

ally are those people in China who want to live in freedom and in 

peace and want prosperity for their families as we do. 

And so nothing in this hearing should be interpreted as being 

anti-Chinese. This is anti the Beijing dictatorship. This is all these 

things that we are talking are based on the fact that you have a 

militaristic human rights abusing government in Beijing that is oppressing their own people as much as they are threatening the stability of the rest of the world. We have seen, with that regime a 

transfer, a major transfer of wealth, perhaps the most historic 

transfer, voluntary transfer of wealth from one country to another 

in the history of the world. We have seen money and wealth that 

would be in the United States transferred to uplift the people of 

China. 

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Now I happened to have been there in the beginning when 

Reagan made this, and again, let me assert when people are talking about Ronald Reagan, he was very clear the reason why he was 

agreeing, and the American establishment agreed to permit this 

type of policy establishing itself, everything was established during 

that time period, was that there was a liberalization going on in 

China that would have resulted in a more democratic country that 

was at peace with its own people and at peace with the world. 

At that moment, that is what was evolving into place. Had Ronald Reagan been the President at Tiananmen Square, I have no 

doubt that he would have sent a telegram to the leadership of the 

Communist Party and said if you unleash the party on the army 

on the democratic movement in Tiananmen Square, the deal is off. 

No more technology transfers, no more investment, no more of the 

United States turning around and letting this theft of our technology and investment go there. It is all over. All of our credits, it 

is done, the economic deal—that is what he would have said in this 

telegram. I would have written it for him. 

And, guess what. He wasn’t President. Herbert Walker Bush was 

President. And do you know what the telegram that Herbert Walker Bush said that he sent to the Communist Party leadership? 

That is it, nothing. 

And when they slaughtered those people and they turned China 

back on course to dictatorship and they kept China on a course of 

belligerency toward the western world and toward massive repression of their own people, they didn’t pay any economic price whatsoever. They benefited from it and our witnesses were correct. 

This is not a partisan issue. It was bipartisan governments here 

in the United States, both Republican and Democrat, have permitted this transfer of wealth and power to go on to this vicious 

dictatorship which rivals, certainly rivals the monstrous behavior 

of the Hitler regime who, of course, we shouldn’t forget that IBM 

and a lot of American companies did business with Hitler too, 

didn’t they? Did that make that any more peaceful in the world? 

No. 

And Germany, let us remember, was a very advanced economic 

country. So it is not out of poverty you have this dictatorship, no. 

What you have got is evil forces in this world. And then you have 

a lot of wonderful people who populate this planet, where wonderful people should work together and side with each other when 

they see someone being oppressed and someone—and we have a 

government in China that takes people in the Falun Gong, and 

their crime is that they believe in meditation and yoga, and that 

is, in a religious way, and that is appealing to the Chinese and the 

Communist Party is arresting them by the thousands, murdering 

them and selling their organs. 

I don’t even think that we can get past the corporate people who 

are backing China here. I don’t think we can get a law passed that 

even says that you can’t buy organs from China as long as they 

keep taking them from prisoners who they have executed because 

a lot of their prisoners are political prisoners and religious prisoners. 

When we lose sight of the moral underpinnings of our policy, our 

country will go down and is going down in relationship to its influVerDate 0ct 09 2002 16:35 Dec 12, 2011 Jkt 000000 PO 00000 Frm 00093 Fmt 6633 Sfmt 6633 F:\WORK\OI\110211\71037 HFA PsN: SHIRL
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ence and power to a vicious dictatorship by a dictatorship that does 

those sort of heinous deeds to their own people and bolsters the 

strength of gangster regimes around the world. 

I hope that this has been interesting to those people who are 

reading the Record and who are watching on C–SPAN. And I want 

to thank my fellow colleagues here, especially on the Democratic 

side of the aisle, because they showed up, and I hope that I have 

given, I know I have spoken longer than others, but I wanted my 

colleagues to know that they have just as much time as I would 

ever use, and I usually try to be fair about that. 

Mr. CICILLINE. I thank the chairman for his accommodation. 

Mr. ROHRABACHER. So with that said, thank you to the witnesses, and this hearing is adjourned. 

[Whereupon, at 5:47 p.m., the subcommittee was adjourned.] 

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