China

Floor Speech

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Mr. CORNYN. Mr. President, we have a little over 2 weeks before the Christmas recess, and we still have a lot of work to do here in the U.S. Senate, including passing a fully conferenced National Defense Authorization Act bill--by that, I mean reconcile the differences between the House version and the Senate version and get it to the President for his signature. There are many different players across both the House and the Senate, and they have to come together to make this happen.

Of course, we all have different priorities, but our main priority ought to be the welfare and the training and the equipment of our men and women in the military and their ability to protect all of us. But we can't forget about the real-world consequences of the policies we are legislating. It matters, what ends up in and what ends up out of this bill at the end of the day. With something like the annual Defense bill, these decisions can have life-or-death consequences.

So as the National Defense Authorization Act comes to a close, I have been pushing to ensure that several provisions, including addressing outbound investment transparency, are included in the final legislation.

It is no secret to any of us that China is our near-peer competitor, and they don't have benign intentions with regard to the United States. They want to dominate the United States economically and militarily.

President Xi, the head of the People's Republic of China, and the Chinese Communist Party have threatened time after time after time to forcibly attack Taiwan and to consolidate Taiwan with mainland China.

We also know that the battle for the future of the world will literally be determined by who wins the race for artificial intelligence, which is heavily reliant on the production of advanced semiconductors and other advanced microelectronics.

These technologies--and this is really important--have both commercial and military applications, but in China, anything that is developed or possessed by a commercial entity has to be shared with the Chinese Communist Party and the People's Liberation Army. They call that military-civil fusion. So it means that any progress that they make, including on something as sophisticated and cutting edge as artificial intelligence, has to be shared and will be shared with their military.

On Tuesday, the Senate Foreign Relations Committee Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy held a hearing on China's challenge to America's leadership when it comes to artificial intelligence. We heard expert testimony from four witnesses on the challenges that the United States faces in staying ahead of China in this critical sector.

Each of these witnesses emphasized the importance of export controls, controlling what technology goes from the United States into China, where they can then use that to compete with us and potentially even beat us in the AI race.

One quoted a senior executive at a Chinese AI firm, who said that Chinese companies have to use two to four times the computing power to achieve the same results for large model training because of U.S. restrictions on AI chips. Now, this is a good thing; however, export controls, while an effective tool, are not simple or straightforward, and the Chinese Government is really good--like the Russians--at circumventing sanctions and different restrictions--in this case, on cutting-edge technology.

The United States must take care to ensure that our export controls are properly enforced as PRC shell companies have ways of working around these trade controls in order to acquire American semiconductors and other controlled products. Unfortunately, sometimes it seems like a game of Whac-A-Mole because one company will pop its head up, and we will deal with that, but then they change the name, and it is the same thing under a different name.

It is not just the chips themselves that we have to keep a tight grip on but the machinery we use to make them. Many of the intermediary parts, such as lithography machines, are produced by our allies, like the Dutch ASML, which makes the leading-edge, advanced, ultraviolet lithography that is necessary to produce the most advanced semiconductor chips, but other countries, like South Korea, Japan, and Germany, are also part of that supply chain of critical equipment and machinery. Working and winning the AI race means we have to work hand in glove with our allies to ensure that these technologies are not acquired by the PRC, and we know the stakes if we don't accomplish that job.

In the same way that China has captured the supply chain for the production of processing critical minerals, they have designs to capture the manufacturing capacity for advanced semiconductors. Then they will do what they have always done, which is undercut worldwide competitors with government subsidies and then corner the market so that they become the only supplier, holding the rest of the world hostage.

Of course, there is the fact that China has never seen a piece of intellectual property that they aren't willing to steal, so by hook or crook, they are going to try to outcompete us, and we need to maintain our diligence and be vigilant when it comes to this threat.

China is aggressively investing resources towards winning this race for artificial intelligence, and we cannot aid them in winning the race through U.S. investments in China. That is where this piece of legislation called outbound investment transparency comes in.

One of the ways that China has built its mammoth manufacturing capacity is when American companies go into China and massively invest in manufacturing capabilities there. There is plenty that has been written on this topic. Apple, Tesla, and other major companies have gone into China because of the lower cost of manufacturing, and the Chinese, unsurprisingly, have learned these manufacturing processes to now where they have become some of the very best in the world. But we have to make sure at minimum that we aren't blindly watching American investments into China in technology that could later be used to kill American marines or American soldiers in a future conflict in the Indo- Pacific.

Some estimates show that as of 2020, a total of U.S. investments in Chinese companies totaled $2.3 trillion. Now, that is a lot of money, and if it wasn't available to the Chinese economy and Chinese manufacturing, it would make it harder for them to compete against us. This $2.3 trillion in market value includes $21 billion in semiconductor investment, $54 billion in military companies--U.S. companies investing in Chinese military companies to the tune of $54 billion--and $221 billion in artificial intelligence.

Again, because of China's military-civil fusion policy, we are not just investing in commercial applications of these technologies; every American dollar that is invested in these critical sectors in China is directly fueling the arsenal of our greatest strategic adversary.

Let me say that again. Every dollar that Americans invest in China in these critical sectors is directly fueling the arsenal of our greatest strategic adversary.

It is suicidal for the United States to see American dollars flow to China for the development of military technologies that very well could be used one day to kill American soldiers.

This is not a priority we can afford to kick down the road. Anyone who dismisses the threat of outbound investment is blind--blind--to the threat of the Chinese Communist Party and, I would argue, is working against the best interests of this country.

I have been working for years to try to make sure that we have this provision in the Defense authorization bill. We had one vote I think 3 years ago on a defense authorization bill; it was 92 to 6. So this is a bipartisan concern, as it should be, but for one reason or another, every time a bill comes across from the House through a conference, this provision seems to drop out, and that is because, frankly, of some of the people who financially benefit from the status quo and who do not want us to have, as policymakers, any transparency into Americans who invest in China to help them defeat us, whether militarily or in the race for AI.

(Mr. MORENO assumed the Chair.)

So I am glad that, at this point in the negotiations, the House and the Senate are prioritizing this provision in the final version of this year's NDAA. If we do not address outbound investment transparency, then we are playing to lose the AI race and risk the lives of American servicemembers and a potential conflict in the Indo-Pacific.

The time to act was yesterday, but the next best time to act is today. This fight to address outbound investment transparency has been going on for many years, but I look forward to finally declaring victory when President Trump signs the National Defense Authorization Act into law, which I hope is very soon.

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