I 

113TH CONGRESS 

2D SESSION H. R. 5103 

To impose sanctions on Chinese state-owned enterprises and any person 

who is a member of the board of directors, an executive officer, or 

a senior official of a Chinese state-owned enterprise for benefitting from 

cyber and economic espionage against the United States. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 14, 2014 

Mr. ROHRABACHER (for himself and Mr. RYAN of Ohio) introduced the following bill; which was referred to the Committee on Foreign Affairs, and 

in addition to the Committees on the Judiciary and Financial Services, 

for a period to be subsequently determined by the Speaker, in each case 

for consideration of such provisions as fall within the jurisdiction of the 

committee concerned 

A BILL 

To impose sanctions on Chinese state-owned enterprises and 

any person who is a member of the board of directors, 

an executive officer, or a senior official of a Chinese 

state-owned enterprise for benefitting from cyber and 

economic espionage against the United States. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Chinese Communist 

5 Economic Espionage Sanctions Act’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) The Chinese Communist Party (CCP) has 

4 made it its policy to engage in economic warfare 

5 against the United States. 

6 (2) The CCP uses the resources of the People’s 

7 Liberation Army (PLA) and the Chinese State to 

8 drain the United States of economic might, includ9 ing by means of economic espionage and cyber espio10 nage, unfair trade practices, unfair labor practices, 

11 and currency manipulation. 

12 (3) Chinese state-owned enterprises (SOE) and 

13 the PLA are the main beneficiary of the CCP’s cam14 paign of theft against the United States. 

15 (4) Although many SOEs are listed on stock ex16 changes or officially privatized, the Chinese govern17 ment retains at least one-half of equity in those 

18 companies. 

19 (5) SOEs come under the control of the min20 isterial-level State-owned Assets Supervision and Ad21 ministration Commission. 

22 (6) Members of the boards of directors and sen23 ior management of SOEs are appointed by the 

24 State-owned Assets Supervision and Administration 

25 Commission in consultation with the Communist 

26 Party’s Department of Organization. 


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1 (7) More than two-thirds of board members and 

2 three-quarters of senior executives of SOEs are ei3 ther Communist Party members or officials. 

4 (8) Corruption within the CCP is widespread 

5 and endemic. 

6 (9) CCP officials use their positions of control 

7 and influence within and over SOE’s to enrich them8 selves and their families. 

9 (10) The vast majority of the Chinese people do 

10 not benefit from the corruption of the CCP. 

11 (11) On May 19, 2014, the United States De12 partment of Justice announced charges against five 

13 members of the PLA, accusing them of stealing 

14 trade secrets from United States companies and 

15 marking the first time the United States has 

16 charged foreign government employees with eco17 nomic espionage. 

18 (12) The indictment charged that members of 

19 the PLA worked to ‘‘steal information’’ from United 

20 States companies ‘‘that would be useful to their 

21 competitors in China, including state-owned enter22 prises’’. 

23 (13) Chinese SOEs are reported to have bene24 fitted directly from their actions, including the State 

25 Nuclear Power Technology Corporation, the Baosteel 


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1 Group, and the Aluminum Corporation of China 

2 (Chinalco). 

3 (14) The chairman of the board and the major4 ity of the boards for the State Nuclear Power Tech5 nology Corporation, the Baosteel Group, and the 

6 Aluminum Corporation of China (Chinalco) are 

7 members of the CCP. 

8 (15) On May 21, 2014, Assistant Attorney 

9 General John Carlin said that criminal charges can 

10 justify economic sanctions. 

11 (16) The indictment named members of Unit 

12 61398 which is publicly identified as a Shanghai13 based cyber unit of the PLA also known as APT1. 

14 (17) Unit 61398 is part of the 2nd Bureau of 

15 the PLA, 3rd Department of the General Staff. 

16 (18) Unit 61398 was first publically identified 

17 in 2013 as APT1 by Mandiant, a United States 

18 cyber security firm and leader in cyber incident re19 sponse industry. 

20 (19) Mandiant exposed a timeline of Unit 

21 61398’s economic espionage conducted since 2006 

22 against 141 victims across multiple industries. 

23 (20) Mandiant’s conclusions have been sup24 ported by CrowdStrike, another cyber security com25 pany, which publicly revealed the existence of Unit 


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1 61486, a related PLA unit dedicated to cyber espio2 nage. 

3 (21) George Kurts, the co-founder of 

4 CrowdStrike, stated that ‘‘If you look at all the 

5 groups that we track in China, the indictments are 

6 just the very tip of the iceberg.’’. 

7 (22) Units 61398 and 61486 are only two of at 

8 least 20 cyber threat groups in Communist China 

9 and are considered by multiple experts to have stolen 

10 vast amounts of valuable information from the 

11 United States. 

12 (23) The 2011 annual report to Congress from 

13 the Office of the Secretary of Defense, titled ‘‘Mili14 tary and Security Developments Involving the Peo15 ple’s Republic of China’’, states, ‘‘The PRC also uti16 lizes a large, well-organized network of enterprises, 

17 defense factories, affiliated research institutes, and 

18 computer network operations to facilitate the collec19 tion of sensitive information and export-controlled 

20 technology, as well as basic research and science 

21 that supports U.S. defense system modernization.’’. 

22 (24) A 2011 report by the Office of the Na23 tional Counterintelligence Executive found that 

24 ‘‘Chinese actors are the world’s most active and per25 sistent perpetrators of economic espionage.’’. 


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1 (25) The 2012 annual report to Congress from 

2 the Office of the Secretary of Defense, titled ‘‘Mili3 tary and Security Developments Involving the Peo4 ple’s Republic of China’’, found that ‘‘Chinese at5 tempts to collect U.S. technological and economic in6 formation will continue at a high level and will rep7 resent a growing and persistent threat to U.S. eco8 nomic security.’’. 

9 (26) James Clapper, the Director of National 

10 Intelligence, stated, ‘‘Among significant foreign 

11 threats . . . China remain[s] the most capable and 

12 persistent intelligence threats and are aggressive 

13 practitioners of economic espionage against the 

14 United States.’’. 

15 (27) Retired General Michael Hayden, former 

16 Director of the Central Intelligence Agency and Di17 rector of the National Security Agency, stated, ‘‘The 

18 intensity of Chinese espionage is certainly greater 

19 than that what we saw between the U.S. and the So20 viets during the Cold War. The problem is China’s 

21 view is that industrial espionage by the state against 

22 relatively vulnerable private enterprise is a com23 monly accepted state practice,’’. 

24 (28) The annual report by the congressional 

25 United States–China Economic and Security Review 


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1 Commission stated in 2013, ‘‘strong evidence 

2 emerged that the Chinese government is directing 

3 and executing a large-scale cyber espionage cam4 paign against the United States’’. 

5 (29) Retired Lieutenant General Ronald Bur6 gess, Jr., former Director of the Defense Intelligence 

7 Agency, stated, ‘‘China has used its intelligence 

8 services to gather information via a significant net9 work of agents and contacts using a variety of meth10 ods . . . In recent years, multiple cases of economic 

11 espionage and theft of dual-use and military tech12 nology have uncovered pervasive Chinese collection 

13 efforts,’’. 

14 (30) Congressman Mike Rogers, Chairman of 

15 the Permanent Select Committee on Intelligence of 

16 the House of Representatives, stated, ‘‘China’s eco17 nomic espionage has reached an intolerable level and 

18 I believe that the United States and our allies in Eu19 rope and Asia have an obligation to confront Beijing 

20 and demand that they put a stop to this piracy. Bei21 jing is waging a massive trade war on us all, and we 

22 should band together to pressure them to stop. Com23 bined, the United States and our allies in Europe 

24 and Asia have significant diplomatic and economic 


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1 leverage over China, and we should use this to our 

2 advantage to put an end to this scourge,’’. 

3 (31) The threat of Chinese espionage is so large 

4 that Senator Sheldon Whitehouse, D–Rhode Island, 

5 who chaired the Cyber Task Force of the Select 

6 Committee on Intelligence, proclaimed it to be part 

7 of ‘‘the biggest transfer of wealth through theft and 

8 piracy in the history of mankind’’. 

9 (32) Massive cyber and economic espionage or10 ganized, directed, and carried out by the CCP and 

11 the PLA has contributed to creating a 

12 $318,000,000,000 United States trade deficit with 

13 Communist China in 2013, which equals 1.89 per14 cent of total United States gross domestic product 

15 (GDP). 

16 SEC. 3. SENSE OF CONGRESS. 

17 It is the sense of Congress that the Chinese Com18 munist Party and the Government of the People’s Repub19 lic of China should be condemned for sponsoring, plan20 ning, ordering, conducting, and benefitting from cyber and 

21 economic espionage against the United States. 

22 SEC. 4. FINANCIAL MEASURES. 

23 (a) FREEZING OF ASSETS.—The President shall ex24 ercise all powers granted by the International Emergency 

25 Economic Powers Act (50 U.S.C. 1701 et seq.) (except 


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1 that the requirements of section 202 of such Act (50 

2 U.S.C. 1701) shall not apply) to the extent necessary to 

3 block and prohibit all transactions in all property and in4 terests in property of a covered Chinese state-owned enter5 prise or a person who is a member of the board of direc6 tors, an executive officer, or a senior official of a covered 

7 Chinese state-owned enterprise if such property and inter8 ests in property are in the United States, come within the 

9 United States, or are or come within the possession or 

10 control of a United States person. 

11 (b) ENFORCEMENT.— 

12 (1) PENALTIES.—A covered Chinese state13 owned enterprise or a person who is a member of 

14 the board of directors, an executive officer, or a sen15 ior official of a covered Chinese state-owned enter16 prise shall be subject to the penalties set forth in 

17 subsections (b) and (c) of section 206 of the Inter18 national Emergency Economic Powers Act (50 

19 U.S.C. 1705) to the same extent as a person that 

20 commits an unlawful act described in subsection (a) 

21 of such section. 

22 (2) REQUIREMENTS FOR FINANCIAL INSTITU23 TIONS.—Not later than 120 days after the date of 

24 the enactment of this Act, the Secretary of the 

25 Treasury shall prescribe or amend regulations as 


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1 needed to require each financial institution that is a 

2 United States person and has within its possession 

3 or control assets that are property or interests in 

4 property of a covered Chinese state-owned enterprise 

5 or a person who is a member of the board of direc6 tors, an executive officer, or a senior official of a 

7 covered Chinese state-owned enterprise if such prop8 erty and interests in property are in the United 

9 States to certify to the Secretary that, to the best 

10 of the knowledge of the financial institution, the fi11 nancial institution has frozen all assets within the 

12 possession or control of the financial institution that 

13 are required to be frozen pursuant to subsection (a). 

14 (c) REGULATORY AUTHORITY.—The Secretary of the 

15 Treasury shall issue such regulations, licenses, and orders 

16 as are necessary to carry out this section. 

17 (d) DEFINITIONS.—In this section: 

18 (1) COVERED CHINESE STATE-OWNED ENTER19 PRISE.—The term ‘‘covered Chinese state-owned en20 terprise’’ means an enterprise that— 

21 (A) is organized under the laws of the Peo22 ple’s Republic of China, including a foreign 

23 branch of such enterprise; and 


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1 (B) is owned or controlled by the Govern2 ment of the People’s Republic of China or the 

3 Chinese Communist Party. 

4 (2) UNITED STATES PERSON.—The term 

5 ‘‘United States person’’ means— 

6 (A) a United States citizen or an alien law7 fully admitted for permanent residence to the 

8 United States; or 

9 (B) an entity organized under the laws of 

10 the United States or any jurisdiction within the 

11 United States, including a foreign branch of 

12 such an entity. 

13 SEC. 5. INADMISSIBILITY OF CERTAIN ALIENS. 

14 (a) INELIGIBILITY FOR VISAS.—An alien is ineligible 

15 to receive a visa to enter the United States and ineligible 

16 to be admitted to the United States if the alien is a person 

17 who is a member of the board of directors, an executive 

18 officer, or a senior official of a covered Chinese state19 owned enterprise. 

20 (b) CURRENT VISAS REVOKED.—The Secretary of 

21 State shall revoke, in accordance with section 221(i) of 

22 the Immigration and Nationality Act (8 U.S.C. 1201(i)), 

23 the visa or other documentation of any alien who would 

24 be ineligible to receive such a visa or documentation under 

25 subsection (a) of this section. 


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1 (c) REGULATORY AUTHORITY.—The Secretary of 

2 State shall prescribe such regulations as are necessary to 

3 carry out this section. 

4 SEC. 6. REPORT TO CONGRESS. 

5 (a) IN GENERAL.—Not later than 180 days after the 

6 date of the enactment of this Act, and annually thereafter, 

7 the Secretary of State and the Secretary of the Treasury 

8 shall submit to the appropriate congressional committees 

9 a report on— 

10 (1) the actions taken to carry out this Act, in11 cluding the number of covered Chinese state-owned 

12 enterprises and persons who are members of the 

13 board of directors, executive officers, or senior offi14 cials of covered Chinese state-owned enterprises 

15 sanctioned during the year preceding the report; and 

16 (2) efforts by the executive branch to encourage 

17 the governments of other countries to impose sanc18 tions that are similar to the sanctions imposed under 

19 this Act. 

20 (b) FORM.—The report required by subsection (a) 

21 shall be submitted in unclassified form, but may contain 

22 a classified annex. 

23 (c) DEFINITION.—In this section, the term ‘‘appro24 priate congressional committees’’ means— 


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1 (1) the Committee on Foreign Affairs, the Per2 manent Select Committee on Intelligence, and the 

3 Committee on Ways and Means of the House of 

4 Representatives; and 

5 (2) the Committee on Foreign Relations, the 

6 Select Committee on Intelligence, the Committee on 

7 Finance, and the Committee on Banking, Housing, 

8 and Urban Affairs of the Senate. 

Æ 


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