Senator Warner discusses China’s strategy to control technologies of the future, including 5G and artificial intelligence, and what steps the United States can take to protect its own technological advantages, reduce cyber vulnerabilities, and counter China’s tactics.
The Kenneth A. Moskow Memorial Lecture on Homeland Security and Counterterrorism honors the memory of longtime Council member Kenneth A. Moskow, who made this event possible through a generous bequest. His intent was to establish an annual event to bring together the leaders of the intelligence community and promote discussion on critical issues in counterterrorism.
For further reading, please visit the CFR Cyber Operations Tracker, the CFR blog Net Politics, and the Foreign Affairs article “How Artificial Intelligence Will Reshape the Global Order” by Nicholas Wright.
WOODRUFF: Good afternoon, everyone. What a cheerful-looking group! (Laughter.)
I am Judy Woodruff with the PBS NewsHour, and I’m delighted to be here with all of you at this Council on Foreign Relations meeting with Senator Mark Warner, who truly needs no introduction. As you know, he’s vice chairman of the Senate Select Committee on Intelligence.
I’m going to be presiding over this discussion. The meeting is the annual Kenneth A. Moskow Lecture on Homeland Security and Counterterrorism. This is an annual lectureship that honors the memory of Kenneth A. Moskow, who was a longtime member of the Council with a distinguished career in the intelligence community. Further details on his life and his many professional accomplishments can be found in the booklet that you have at your seat.
I do want to extend a special welcome to the members and guests of the Moskow family who are here with us today, seated at the center table. Welcome to you.
So without further ado, I’ll just say—I will invite Senator Warner. He will speak for about ten minutes, then I’ll have the opportunity to ask him questions for about twenty minutes. And then at 1:00 we will open it up for questions from members. So without further ado, Senator Mark Warner. (Applause.)
WARNER: Well, thank you, Judy. Thank you for that introduction. I’m looking forward to our discussion. Now, that is a—about ten minutes for Senate time about ten minutes, right? (Laughter.) But it is a—look forward to our conversation.
I’d also say it’s a great honor for me to be here at the Council on Foreign Relations and with the Moskow family, and got a chance to meet the kids. This is a great tribute to Mr. Moskow and his service to the Council—his service to our country. (Applause.)
What I want to talk about today—and this, obviously, deals with homeland security. I want to take a slightly different bent, though, and talk about China. This is a subject of which for, you know, probably 2008 going forward, I guess for a long time I had what I would view as pretty traditional conventional views about China from both—that I think were shared by a lot of members in our policy committee, a lot of folks from the business community. As a former venture capitalist, I looked at China as a rapidly modernizing country with 1.3 billion people, with rising incomes and expectations, and mostly saw opportunity. I think I saw what a lot of folks saw, that a rising China—a China that had been brought into the WTO, a China that was part of the world order—would be good for the overall world order; that there would be places where we would be competitors, but more likely partners.
But I have to say a few years, particularly the last three years or four years, and many, many classified briefings later, I have fundamentally shifted my viewpoint. I believe that President Xi, starting with his major consolidation of power in 2015 and 2016, reasserted the Communist Party’s dominance in China across all fields of business, society, the military. And he is now using that consolidated power to bring about both state and civil society to actually propose a role and view of China that would dominate the world, and that domination would lead to a diminishment of U.S. power and influence.
The Chinese government uses all the traditional tools of the state to exert influence: an expanded military presence—and we’ve seen that and I’m sure we’ll talk about it—in the South China Seas; an aggressive deployment of espionage to steal secrets, and we saw some of that decline after his meeting with President Obama back in that 2015 timeframe, we’ve unfortunately seen a dramatic increase since that. But what we’ve also seen come out of China is more creative mechanisms that take advantage of the authoritarian model to force Chinese companies, researchers, and others to act on behalf of the Communist Party. All this has set the stage for the Chinese government to aggressively display every lever of power to service the state, and at the same time exploit the openness of our society to take advantage and to take economic advantage. I believe this is in many ways the challenge of our time.
I may also put a caveat here that I think is extraordinarily important. My challenge, and I believe our beef, is with the Communist Party of China and the President Xi regime. China is a great nation and a great people. And as we see right now the pushback in parts of China—when we see the pushback going on right now in Hong Kong against some of the forces in Beijing; when we see the concerns raised by many Chinese about the incarceration and imprisonment of at least a million, if not two to three million Uighurs—the concerns about the Chinese government are felt all across the region. But I think it is terribly important as I go through this—the rest of this presentation are questions that we—continue to reaffirm the concern I have is with the Communist Party and the government. And I am deeply concerned that we don’t allow this to turn into, in our country, a diminishment of the contributions made by Chinese Americans, made by Chinese nationals, and others. We do not need in any form a repeat of the Vincent Chin place that took place in the early ’80s in Detroit.
So with that caveat, I’d like to think about, again, where we go from here.
First, again with a focus on technology, we’ve lived in a world—and many of us in this world, or in this room, have lived in a world—that still can remember Sputnik. I would argue that Sputnik was the last moment when America’s technological supremacy was really questioned. And Sputnik kind of jolted America into action. President Kennedy charged us to put a—put a man on the Moon. And we changed our academic institutions, we changed our research areas, we changed our military-industrial complex, and we were successful in that contest over space. And I would argue since that moment in time virtually every major technological advancement—whether it was the transistor, whether it was computing, whether it was in telecommunications—my field—in wireless, whether it was around the internet, whether it was around social media, all of these innovations have either been American or Western-led. And even if they weren’t American, we ended up setting the standards. And by setting the standards, by having the world’s largest economic power, that ability for us to set the standards—and while the rest of the world sometimes would complain about us setting the standards—by us setting the standards, that meant the rest of the world had a default position. We were the largest economy, so we had a single governance rule around a lot of this technology.
I don’t think in many ways that we as a nation have fully appreciated all of the economic, political, and candidly just kind of social benefits that our country enjoyed by being the technology setter and the standard setter. In many ways that is all up for grabs right now. I see this firsthand in the—in the competition for 5G. And for those of you who are not technology nerds in the room, 5G is the equivalent of, in the wireless next iteration, of moving from radio to television, an enormous, enormous opportunity. And China is basically employing the tactics that we used to employ. China is doing—providing equipment vendors with 120 percent and more financing. They are flooding the zone with engineers in terms of the standards-setting bodies. And in many ways what is happening in 5G could very well happen in artificial intelligence and quantum computing and a host of other areas if America doesn’t try to reassert its both investments in technology and its willingness to set the standards.
I also believe that what we’re seeing, as well, is not only China make these moves, but they’re coupling that with a(n) ability to actually manipulate and use Western companies in ways that are, frankly, fairly confounding. We’ve seen Western companies, in an effort to try to get access to the Chinese market, make sacrifices on intellectual property, make sacrifices on business practices that they would make to get—to get into no other market in the world. And we’re starting to see now companies who made that entrance into China two decades ago start to rethink as they see Chinese state-owned enterprises pop up next to their facilities, or where we see a forcing of sharing of intellectual property. Obviously, the People’s Republic of China is trying to use this new enhanced power as a way to build economic dominance I believe not only in China, but around the region.
What we’ve also seen is China’s been able, in the technology field, to do something that, quite honestly, I don’t think most of us in the West thought was possible, and that was to use and regulate the internet. I remember famously Bill Clinton in the late ’90s said any government that would try to regulate the internet, that would be like nailing Jell-O to the wall. Well, the truth is China has shown to be able to use the powers of the internet, to be able to use the powers of tools like WeChat, facial recognition, the collaboration between the Chinese tech companies and the Chinese government, to build a surveillance state that would make George Orwell blanch. And I think—I think we are still trying to grapple with that.
And what we have right now is the Chinese government basically trying to now take their successes and export and basically offer them to other regimes around the world. They offer a three-part plan: one, they offer an authoritarian form of government to other repressive regimes; two, they offer a Belt and Road Initiative that offers traditional twentieth-century economic financing for countries who are open; and three, increasingly they are offering this technology-driven repressive-state model to actually regimes like in Pakistan, Ethiopia, Venezuela, and elsewhere.
And quite honestly, one of the things that is of great concern to me as we go through this recognition of what China’s been able to do and the Chinese government’s been able to do, it bothers me a great deal when we sometimes see American technology companies who can’t—who have no problem working with China on development of their social credit system or surveillance-state tactics, and some of those same companies then having challenges working with the American defense establishment. That is something that I think we need to examine and, frankly, have some honest heart-to-heart conversations with some of those companies.
So where do we go from here? Three areas that I would leave you with before we get into our conversation.
First, we need to sound the alarm. And over the last year, because I’ve had so many of these briefs and the evidence, I think, has become so overwhelming, I’ve gone to the intelligence community and said, you know, simply terrifying or scaring, you know, members of the Intelligence Committee, to give us this information in classified briefings, you are not—we are not doing our job if we don’t find ways to declassify more of this information and get it out to American business, American policymakers, American academia. So I’ve started a series of roadshows. We’ve done now eleven of them where I always take a Republican Senate partner, usually Senator Rubio or Senator Burr, and—along with either director or the deputy director of national intelligence, senior levels from DHS, FBI, and our counterintelligence center—and bring in groups of business leaders, venture capitalists, academics, to really kind of share in a one-day classified read-in some of the challenges that China presents and some of the tactics they use to try to advance their government’s interest. So we need to set warnings out in a better way.
Second, we need a short-term strategy, and for that short-term strategy I would argue over the next couple years. And here I think we need a lot of work. And frankly, I have seen very little articulate development from the administration on that short-term strategy. I would acknowledge that the Trump administration has done the right thing vis-à-vis China in saying the status quo was not working. But if the status quo’s not working, he’s got to offer an alternative. And I would argue that the challenges of an emerging China have been not only counter to the United States, but frankly, have been counter all of the West. As a matter of fact, in many ways the countries that first raised the challenges around China before, I think, they were fully recognized here in this country were Japan, Korea, and Australia. So there was a moment in time when I think we could have built a grand international coalition, again, to have gone to China and say: China, you’re a great nation. You’ve been one of the most powerful countries in the twenty-first century. But you got to play by the rules. And instead of building that grand coalition, the administration has called Canada a national security threat—not, I believe, the kind of plan that we ought to have.
So the third thing I think we need is the need to make sure that as—particularly as the administration moves forward that we don’t confuse trade issues with national security issues. The president, I think, has launched this trade war without building the international alliances that I think were needed; without, I think, articulating clearly what his goals are. But what particularly concerns me is recent comments where he’s indicated that the administration’s appropriate action, I would argue, around Huawei might be a trading chip in our trade dispute with China. That would be a disaster. We are finally starting to make some progress with our allies in terms of raising the very legitimate concerns about Huawei and other Chinese telecom providers in the 5G area. If that were to be traded away as a trading chip, the ability for our intelligence community, the ability for our technology community to have any credibility on a going-forward basis would be extraordinarily diminished. So we have to be concerned about that.
Two areas on the legislative front short term that I think we need to continue to explore.
One, I’ve been a strong supporter of the CFIUS reform called FIRRMA. I think we may even need to take a broader look there because there are certain tactics that Chinese entities are now using in terms of venture capital investment, non-control sectors that disproportionately are falling into areas of great technological advancement that we need review on, that the FIRRMA practice and the CFIUS practice does not really protect. I think that needs to be reexamined.
And I have also just recently put forward legislation around both AML and beneficial ownership. The beneficial ownership legislation would be very geared at trying to discover who the true owners are behind shell companies. And this has—this has an opportunity beyond, frankly, just the China threat, but it does involve a tactic that China constantly uses, and that is the use of shell companies.
Finally here, in terms of overall where we go with this strategy, I think there’s a lot more work that needs to be done. I don’t think we’ve articulated, once we set the warning, really what are the interim, short-term steps we need to take.
Finally, we do need a long-term strategy, and that long-term strategy really goes back to what kind of investment we are prepared to make in this country in research and development. I often like to point out that America has a defense budget last year at $716 billion. China’s defense budget is roughly 250 billion (dollars). That $500 billion delta, China is investing in 5G, artificial intelligence, quantum computing, and a host of other areas where, again, under President Xi’s vision, China will not only lead but will dominate. I worry at times that our defense budget, we may be buying the world’s best twentieth-century military in a twenty-first-century context when most of conflict will be in the cybersecurity domain, in the misinformation/disinformation domain, and increasingly space, and those are areas where we are not—we are not doing as much as we need to do.
So we need to make those research investments. We’ve seen—if you go back from a historical basis, at the end of World War II the United States accounted for 69 percent of annual global R&D. We’re now down to 29 percent. China’s on a dramatic upward trend. As a matter of fact, China will pass the United States, in all expectations, by 2020 in the number of patents issued.
And again, in a world where this is all worked on on a collaborative basis, I think we can get this right. In a world where the Chinese government under President Xi has—looking for economic and strategic dominance, this ought to be a concern for us. And what I hope that we can go through in our discussion here, Judy, is how we get this right, how we set policies on a going-forward basis. We do not want to default into the old bipolar world that we lived in post-World War II. We do not want to have these concerns about the Chinese government’s actions, again, wipe off on the greatness of the Chinese nation or the Chinese people, or—and particularly the Chinese Americans. But we do need to come to an agreement that—or come to an understanding that the kind of best notion business case of five or six years ago is not coming to pass. And how we get our act together on a going-forward basis I, again, would—I will argue will be the question of our time.
So with that, Judy, let me bring you forward and let’s go forward into our conversation. Thank you. (Applause.)
WOODRUFF: Thank you, Senator Warner. Thank you.
You went over just a few minutes, so I’m going to go over into the members’ time just a few minutes. What is the main worry that you have about China? I mean, what is the worst-case scenario? Do you think—I hear you saying you don’t think China’s going to come across the ocean with weapons, but what are you worried about?
WARNER: I would say there are two things I worry the most about. One is there’s been no economic success story greater than China’s in the last twenty-five to thirty years. And if we go back to a pre-’89 world, where the—America and the West versus the Soviets, there was this ideological conflict. I think we’re defaulting not necessarily into a pure ideological conflict with China, but we—China is on the move, on the go, and they are—they are offering a theory of the case that to a lot of countries around the world looks pretty—looks pretty good. If you can somehow obtain China’s growth rates—and they’re saying, here, don’t look at democracy. Look at our authoritarian form of government. That will give you the kind of control you need to move your country forward.
Second, they’re coupling that with the same kind of tool that we maybe used in the past in terms of economic incentives with their Belt and Road Initiative. And third, I am very troubled with what China’s been able to do in terms of its creation of a surveillance state, again, that I think would make George Orwell, 1984 pale in comparison. When China is literally creating this social credit system whereby which it will know not on a financial credit basis but a social credit basis how loyal each of its citizens are to the regime, based upon their daily movements, because of the presence of facial recognition, because of the presence of the willingness of the Chinese tech companies to share that information with the government. That authoritarian monitoring surveillance state concerns me greatly. So that vision that they’re offering around the world, number one.
And number two what concerns me is I think we sometimes have underestimated the economic and other benefits that have accrued to our country from being the technological leader of the last sixty years, being the leader in setting the standards, and a host of these technological innovation really has brought us a lot. I think it will be a very different world if in these areas, like AI, facial recognition, 5G, quantum—if China is the leader and China ends up setting the standards.
WOODRUFF: Some of the European governments, you know this very well, are questioning the administration’s effective ban. You have British diplomats, for example, saying that they can allow Huawei into their commercial networks without threatening—they say—without threatening their intelligence and their military networks. How do you see that?
WARNER: You hear British politicians say that. You don’t hear the British intelligence services say that. And let’s be clear, we’re not—we’re not coming to this with clean hands as well. We have Huawei equipment in many of our—I see my good friend David Graham (sp)—you know, we have Huawei equipment in many of our rural and smaller telcos cellular systems around the country. Huawei’s pretty darn good equipment. It’s about 30 to 40 percent cheaper. What—where we made a mistake, and we should have raised this issue much earlier, it’s not—and I think the intelligence community needs to be more forthcoming. It’s not the fact that the Huawei equipment has backdoor in it right now. But when you buy a whole, in a sense, full kit from Huawei, soup to nuts, and the notion of a 5G network, which is not a central switch but a much more distributed system, software based, all of the upgrades that are sent are sent via software, you know, on future downstream.
So you cannot know—no matter what you do in terms of defense today, you cannot prevent. And the Chinese law—the Chinese Communist Party has put laws in place that says every corporation’s first obligation is to the Communist Party, not to its shareholders. Let me just—this is an important point to finish. Is that you cannot prevent the government from telling Huawei to send that malware downstream once the equipment’s installed.
WOODRUFF: So what do you say? I mean, you raised the rural U.S. telecom. What do you say to them right now? They’re invested in this. They bought it. What—
WARNER: There are—there are—again, I think there are a couple of areas here. Number one, in terms of our rural carriers, I have legislation now with Roger Wicker that would at least take the first steps towards creating a fund that would help potentially change out of some of this equipment. And, again, I don’t want to go off on the geek side. There are some of the issues on earlier versions of the network that won’t be as compromised. But there are—we are putting forward legislation that would have about $700 million funding to, in a sense, rip out and replace.
And at the same time, on the foreign governments, you are starting to see some countries reconsider. They’re not all doing it publicly yet. But one of the challenges we have is that because there’s not an American-based or large Western-country based equipment provider as an alternative, we don’t have a particular horse. We’re basically betting on Ericsson, Nokia, and Samsung. All great companies, but they don’t have—their respective governments don’t have the heft that the Chinese can bring to support their player, Huawei and ZTE.
WOODRUFF: So, in a nutshell, you’re saying that U.S., late to the party on Huawei, should have been raising these alarms sooner, and—
WARNER: Late to the party, late to setting standards. In the past, we would have had a whole of government effort around setting standards. It should have started under Obama. It didn’t. I was—didn’t—has been really very rudimentary until just very recently. In a normal White House you would have had somebody in charge of this, but we don’t know how to operate with a normal White House.
WOODRUFF: In general right now, is the administration on the right track with regard to Huawei?
WARNER: Yes, the administration has gotten the folks within the appropriate agencies. The FCC, NTIA, DOD, State Department has an important role, and others have come together. Matter of fact, Senator Burr and I have convened that group to make sure that they’re working on a regular basis. I just wish they would have been convened two years ago.
WOODRUFF: Asking you to look in the crystal ball right now, but what’s going on in Hong Kong. Does that—how does that affect what you’re thinking, what your assessment is of Xi—President Xi?
WARNER: Well, I think what it says to me is that the concerns that I and others are raising about the—President Xi’s model of governing—you know, don’t take my word that this is something we should be concerned about. Take the people of Hong Kong, who yesterday out of seven million people who were reported, two million showed up on the streets. That—we’ve never—I don’t think I can ever think of any time in modern history where that great a percentage of a population showed up in a protest. I think there is huge concerns about President Xi’s kind of style of governing.
WOODRUFF: Two other things I want to raise with you, and then I do want to turn it over to the members. But one is a story in the New York Times over the weekend about U.S. newly revealed capabilities to get inside the grid, the power grid, in Russia. And within the story, there was interesting information about whether or not the president was told about this, and so forth. But overall, is it a good thing that the U.S.—first of all, is the U.S. doing this? The president came out and said it’s not true. Is the U.S. doing this? And if the U.S. is, is it a good thing or not?
WARNER: I’m not going to comment on what our government is doing or not doing in the cybersecurity arena, number one. I would say—let me add two other things, though. One, I do think the overall willingness of the Trump administration to allow us to use offensive cyber capabilities within reason is appropriate. I think for a long period of time we’ve not had an articulated cyber doctrine. I would say even back, you know, to post-9/11, under Presidents Bush and Presidents Obama.
And our particularly near-peer adversaries, Russia and China, could, frankly, steal from us or hit us with impunity because I think there was a reluctance on our government’s side and almost a concern of a cyber escalation, the notion being, you know, in the extreme, if you shutdown Moscow no power for twenty-four hours, you have a problem. You shut down New York for now power for twenty-four hours, you got a crisis. And so we were concerned about cyber escalation in many ways. Our over technology-based leads made us in certain ways more vulnerable to cyber escalation, and one of the reasons why it’s absolutely crazy that we’ve not, for example, put in place things like minimum cybersecurity on Internet of Things connected devices.
But the second part of the cyber story that I think is worthy of commenting—and I don’t know whether it’s accurate or not—but if it is accurate it’s a pretty stunning statement. And that statement being if intelligence officials were afraid to brief the president because he might tell someone, and candidly that coming on top of the president’s utterly outrageous comments last week—you know, coming out of a White House to a national media correspondent that, in a sense, he would welcome assistance from Russia or China in election interference, and didn’t have enough of a moral compass to know that there is a moral and legal obligation to report that, you take that story and you take his comments last week, and if you’re not concerned, you should be.
WOODRUFF: And you took steps—I mean, you jumped over to the next thing I was going to ask about, but just quickly on the cyber capabilities—offensive cyber capacities. It’s fair to say that those have increased in recent years on the part of the United States.
WARNER: Again, the Trump administration put out an executive order that I think, appropriately, took some of the constraints on the process off for us to use cyber.
WOODRUFF: So—but to move to the other story, which—what the president said in an interview last week, that he would listen, and then he back-walked it a little bit in another – in another interview. You introduced a resolution that would have—that would basically make it a violation—you would require anybody receiving information that amounted to an interference with U.S. election to—
WARNER: And I introduced—I introduced this legislation a month ago. So this did not come—
WOODRUFF: It was already there. It was—
WARNER: It was already there, because—again, we’re talking now in—you mentioned more on the cyber front, but, you know, clearly the president mentioned last week in his statement—his words not mine—you know, he’d take something from Russia or China. It’s stunning to me that you’ve got the president’s own director of the FBI, the president’s own director of national intelligence, saying: Russia or others will be back in 2020, because it’s cheap and it’s effective. I don’t think we’re fully prepared. I think it’s amazing that when the president’s own secretary of homeland security wanted to hold a Cabinet meeting on election security she was told not to, because it might offend the sensibilities of Donald Trump. To me, that’s outrageous.
So I put forward three pieces of legislation that I would hope Congress in a bipartisan way could pass if we’re really serious about protecting the integrity of our elections. First, if there’s any ambiguity about taking foreign assistance in a presidential campaign, my legislation would make it clear that if you have an offer of a prohibited item—and that’s already defined in law elsewhere—your obligation is not to say thank you. Your obligation is to report it to the FBI. I think—I don’t know how anyone could be against that. Second is, we need to pass—and there’s bipartisan legislation on this—election security legislation to make sure that there is a paper ballot after every one of our voting—out of all our voting machines, and that there’s an ability to have some audit after the fact to make sure that there is appropriate security provisions in place.
And third, I’ve got a series of legislation on some basic rules of the road around social media, so we don’t have the kind of manipulation that the Russians used last time, that increasingly the Chinese are using on WeChat in a variety of other countries in Asia right now. And again, that’s a whole different subject area, but I think all three of these areas, if we really care about making sure that our election in 2020 is fair, we need these provisions.
WOODRUFF: Yeah. And just one more minute. In brief, why are those being held up? And can that turn around?
WARNER: Well, I think the good news is—
WOODRUFF: I mean, the Republicans have the majority in the Senate.
WARNER: The good news is if the election security legislation got to the floor, it would get 85 votes. On my—I’ve got a series of bills in social media. Every one of them, I’ve got a Republican partner. In terms of the reporting, a number of Republican colleagues have indicated that they thought that would make common sense, to say if a foreign government intervenes let’s make clear you got to tell the FBI. What’s stopping this is the White House.
WOODRUFF: And can that be turned around?
WARNER: Well, it can only be turned around if Americans of goodwill of both political parties say: Our democracy and the integrity of that democracy is more important than the feelings and sensibilities of the current occupant of the White House.
WOODRUFF: All right. There’s a lot more to ask you. You are the vice chairman of the committee that oversaw a lot of the work running parallel with the Mueller investigation. But it is the turn—and it is the turn of the members to ask questions. So I do want to invite you to raise your hand. I’m reminding you again that everything’s on the record. They’re going to bring you a microphone. And we ask you to stand, state your name and your affiliation, and limit yourself to one question. All right, lots of hands are up. So right here in front.
Q: I’m Ricardo Tavares from California, from San Diego. I run a technology policy company there.
You mentioned a fund that is in a bill right now to support the transition of rural operators in American from Huawei to other suppliers. So we’re in a major change in wireless, which is the phone hardware to software. So software-run. And interestingly, American companies is now—medium and large—have an advantage, in the area of software. So China has had a long run benefitting from the manufacturing side, where you use metal and other parts—electronic parts. So I think the shift to software should help us. But who can compete with 120 percent financing? So I would like to see if you could offer a little bit more detail about that bill that you mentioned.
WARNER: Well, the irony is that the 120 percent financing model was started by the American providers back in the ’80s as they built up the first generation of wireless networks, as I’m sure you’re aware.
You know, it is—it’s a challenge. There’s no a short answer. One of the things—I believe the legislation we put forward is a good first step. It probably doesn’t go as far, or doesn’t have enough funding as needed, if you were going to really rip and replace across all the domestic carriers that have gotten Huawei. I think this begs a bigger question, which is: What China has defined, the Chinese government has defined—and they spelled it out in China 2025, specifically areas where they hope to be dominant. They have, in a sense, modern industrial policy where they bring the power of the state and its financing tools, their banks and its financing tools, their equipment vendors, and their research to bear. We have not done that in America or the West. But if we’re thinking about areas, particularly where he who has the most data, who has the most information may win in many of these areas, we may need to rethink some of that if we’re going to be—if we’re going to be able to stay competitive.
WOODRUFF: Let’s see, somebody in the back. The gentleman with the hand up, right there. Blue shirt.
Q: Jamie Rubin, Ballard Partners. Thank you for your comments.
Senator, can you address the South China Sea, and whether you think the Chinese government has violated its promises to not militarize those areas? And further, if we stay on the path we’re on, do you see a time when China will be a greater military power in Asia than the United States? In Asia?
WARNER: China has very aggressive plans for Asia. And we in a sense have chosen to bear the responsibility for the whole world. China is more focused on its neighborhood—although, I would point out that China also has a military base on Djibouti. So it’s not just a—it’s not just Asia. I do believe that China’s efforts in the South China Seas go beyond what they promised they were going to do in terms of constraints.
You know, I think some of my concerns have been—this is, again, where if we had our—the countries who are most affected are Vietnam and the Philippines. I wish we had a foreign policy that would leverage those ties so, again, that we’re—it inures to China’s benefit if China—the Chinese government can make this a China-the U.S. potential conflict or adversarial relationship as opposed to the region and the world saying: China, you’re a great nation, but you got to play by the rules, and you can’t continue to flaunt international agreements on—whether it’s the islands in the South China Seas, whether it’s around technology transfer, whether it’s around surveillance states in your own country. And we don’t have that kind of foreign policy coming out of this administration.
So I do know this, there are—there are grave, grave concerns from our military about China’s rise. Whether they will surpass us, I’m not going to comment on. But it has clearly got the attention of our American military establishment.
WOODRUFF: All right. This gentleman all the way over here.
Q: Senator, Kevin Sheehan from Multiplier Capital, a private investment fund.
You’ve called for greater regulation of social media firms. And I’m wondering if you could speak a bit where—how that regulation should be enhanced with regard to content. And I’m not talking about violence or hate speech, but rather deep fakes and other content that really can have a disruptive effect, even if it’s removed quickly once posted.
WARNER: Well, again, let me try to do this—I got a long, long spiel on this. I’ll try to give you the shorty version. But this is one more example of where I would say—where American has been giving up its leadership role. You know, we started—our companies started the social media. We should have set the—you know, I think it would have been fine if we would have actually set the ground rules for social media. Our failure to act has made—you know, the Europeans have set the rules on privacy, now the Europeans and the Californians. You know, you’ve got the U.K. and Australia moving on content. You know, this is one more example—not unlike our failure to set the full standards on 5G—where up until very recently we would have been setting all these standards. And even though other countries might have complained to a certain degree, by us having one standard we were generally in the right direction, and countries could default to our standard. And it overall worked all around.
On social media, there are really four areas that I think need examination. The first is privacy. And there’s already some well thought out ideas around privacy, as I mentioned, from the Europeans, Californians, and a number of states. And there’s bipartisan efforts going on on privacy legislation on the Hill.
Second I think is around the questions of identity validation. You know, one of the areas around hate speech—I think it would diminish hate speech a great deal if you had to validate your identity. Now, I’m also concerned about—what about the female journalist in Egypt who needs to be anonymous? But there are a number or people in our national security community that think we’re either going to move to identity validation or we’re going to default into a—one internet for commerce and a dark web where you’re anonymous. The internet based on commerce is going to be with identity validation. And you have countries like Estonia who have already had so much outside interference that they’ve gone to an identity validation model. I’m not sure where I fully come out on that. I do think short of full identity validation we ought to at least know whether we are being communicated with by human beings or bots as a kind of low-hanging fruit. And there’s—I’ll have some legislation on that. So the identity validation is the second area.
Third area does go to content, but identity validation and content are interrelated, I would argue. And the content restrictions are, what’s called, Section 230. In the late ’90s, when we made the rules for these companies, we considered themselves, in a sense, telephone companies, common carriers with no responsibility for content. In 2019, when 65 percent of Americans get their news from Facebook and Google, maybe it’s time to think of them as—not as common carriers. So we have already taken some bites around content. We’ve taken prohibitions on sex trafficking, child pornography. We’ve taken some bites on bomb making. But I think we ought to have a debate in this area around content. I’m not, again, sure where I’m going to come out, but I do think we ought to have—because the deep fake technology, you alluded to, if you have—cause as much consternation with simply slowing a video of Nancy Pelosi, deep fakes is 10X more challenging. And some of us are working on some legislation. Ben Sasse has already got some in that area.
A final area that I think—so, if we go privacy, identity, content, the fourth is just more transparency. And this is where I think we may move first. For example, we ought to have a right to know how much data is being collected on each of us, and what that data is. And I think we ought to know how much it’s worth. If your data is worth fifteen bucks a month to Facebook, and mine’s worth twelve (dollars), we ought to have that knowledgeable. I think we ought to put in place, and I’ve got legislation with Deb Fischer on this, that would stop the manipulative behavior where you indirectly give up a lot of information about yourself that you don’t know—seven flashing arrows clicking “I agree,” and never being able to find unsubscribe. It’s called dark patterns in the technology business. I think we ought to have more transparency there. And, candidly. I think we ought to have the ability to have data portability.
One of the things that drove competition in the telephony markets was when we made it very easy for you to move your phone number from one company to another. We need that same kind of portability and interoperability with data. So if I’m tired of how I’m treated on Facebook, I can pick up and move all my data, with my cat videos, easily to a new site. So there will be a series of ways that I think we can get at some of these issues that will indirectly deal with the content, and directly deal with content, and the deep fakes, short of maybe full breakup, the way some of my colleagues are proposing at this point in time.
WOODRUFF: Just, in a sentence. You said the U.S. has given up its leadership role in all this. Why? How? When did this happen?
WARNER: I think it has been—and I’m not—this is not something I lie all at the feet of the Trump administration. I think this is something that has been happening over a period of years. I think it is something that’s happened because, you know, Congress has not been willing to legislate. You know, some of these are legislative actions. Some of these are actions that could be done administratively. I think our failure to kind of think about a cyber—articulated cyber strategy that also said on an international basis what kind of cyber tactics will not be allowed on our international order would have been enormously powerful. We wouldn’t have some of the ransomware and some of the other activities going on now, I think, if we’d set some of those standards. But this has been a process that—you know, it didn’t start with Donald Trump, but it has gotten, I would argue, worse because Congress has become, one, even more inefficient and, two, the ability of this administration to kind of build international coalitions has been greatly diminished.
WOODRUFF: We’ll take a question. Let’s see, this woman right here.
Q: Beverly Lindsay, University of California.
As you know, in many of our major research universities we have large numbers of international students, particularly China. And they are involved in some of this cutting-edge research that gets transferred. What do you think should be our perspectives or how should we think about this continued interaction at our very best research universities, and the students go back home?
WARNER: This is a(n) extraordinarily important question. There are 360,000 Chinese students studying in American—literally, one out of every three. That’s almost double the second nation, is I think India at about 186,000.
WOODRUFF: One of every three, what do you mean?
WARNER: Are Chinese students—of foreign-based—foreign students.
WARNER: And all those students are paying a hundred cents on the dollar tuition. So in many of these universities, this is a revenue source that the university has become addicted to. Two things that the intelligence community was willing to—has declassified recently. We are currently losing $400-500 billion worth of intellectual property each year. That sucking sound, to China. That’s an enormous, enormous loss. The—and I’m not sure—I don’t want to give the specifics, because I’m not sure it’s been fully-fully declassified. But it is the overwhelming majority of counterintelligence cases in our country right now involve Chinese nationals. So how we think about this in a way that doesn’t impugn the integrity of all these Chinese students but recognizes the factual basis of what is happening real-time on our college campuses right now is a hard issue.
Three things have changed in the last five years around Chinese students. One, I would argue that, you know, five years ago, eight years ago, 10 years ago most Chinese students, same as the Indian students, and the Brazilian students, and the Ethiopian students, they wanted to come here and study. And the vast majority wanted to then stay. Three things have changed since then. One, I would argue that American in 2019 under this administration is not as immigrant friendly. You may contest that, but I think that is a feeling that is—most people have. Second, China’s economy is roaring and is a lot more attractive to go back to. But the third factor that is taking place, that is different, is that the Chinese spy services are literally threatening Chinese families to say: If your son or daughter does not come back, and come back with intellectual property, you, family, will be put in jeopardy.
So how we sort this through, one of the things most colleges and universities have started to do, is they’ve started to remove some of the Confucius Institutes that are nothing but agents of Chinese services to spy on your Chinese students and hold them accountable. But I think this is something we’re going to have to keep working on, because if we don’t what I’m afraid of is that you may have some kind of draconian across-the-board cut that may not be good for our universities or the state of our research and, candidly, we don’t want – getting this down—our squabble is with Xi and the Communist Party of China and not the Chinese people, is something we have to be always sensitive to.
WOODRUFF: Are you saying universities are now aware of this, and they’re acting on it, or?
WARNER: They are—they are—we have had—we have met with presidents and chancellors of virtually every major university in America. And this is much more on their radar screens today than it was 18 months ago.
WOODRUFF: Because there are universities that have—I mean, that have branches over in China.
WARNER: And if you simply look—you know, and again, I don’t want—we’re changing we’re the rules of the game midstream. I remember when I went to China a governor of Virginia and celebrated a partnership between Fudan University and VCU. So I’m not being—you know, but if the facts have changed, some of our policies have to change. And figuring that out is something that I think we’re all trying to sort through.
WOODRUFF: Yes. I’ll take this woman right here.
Q: Louise Shelley, professor at Shar School of Public Policy at George Mason and director of the Terrorism, Transnational Crime, and Corruption Center.
One of the issues on China that you didn’t mention is its enormous role in what might be called environmental devastation around the world. The elephants have gotten a lot of visibility, but their role in depleting fish stocks off west coast of Africa, off the west coast of Mexico, how they’re fueling conflicts, and migration, and deforestation that contributes to ecological damage. Is there a way we can deal with some of these problems that are undermining the sustainability of all of us?
WARNER: Great question. And you know and I know, the challenge is that the countries that sometimes are being exploited are saying, well, we—you know, you, America, the West, you did that for hundreds of years, in terms of exploitation, and now we simply want our piece of the pie. And the Chinese are saying: We’re simply doing what the Western companies did eighty years ago. But—and they may have some valid truth in those comments, but your point is exactly right. Climate change, global warming, are—affect us all. And I don’t think I have seen a(n) articulated strategy on how we convince those nations or push China into a more responsible ecological environmental role. I’ll tell you this much, we didn’t help matters when we got out of the Paris accord.
WOODRUFF: Yes, let’s see. Right there. This gentleman, then I’ll come over here for the next one.
Q: Thank you. Nelson Cunningham at McLarty Associates.
Ms. Woodruff, you mentioned the counterintelligence aspect of the Mueller report. And people remember that it began as a counterintelligence investigation. I think many of us were surprised when we finally read the Mueller report when he said that, no, no, he had hived off the counterintelligence investigation and simply provided information to the FBI for them to do their own investigation. Now, on the intelligence committees, you are entitled by statute to receive briefings from the administration on major intelligence and counterintelligence operations. Have you received briefings on the counterintelligence side of what Mueller had been investigating? Or do you anticipate getting such briefings?
WARNER: It’s—we have made very public that we hope and intend to get the underlying evidence that Mueller looked at or considered in terms of our counterintelligence responsibility. And I’m, you know, very proud of the fact that we’re the last remaining bipartisan investigation. We—maybe the last remaining bipartisan committee in the Senate. But we’re still doing our job. And we are very conscious of what Mueller said and didn’t say.
WOODRUFF: Do you—is it clear there can be a bipartisan agreement?
WARNER: Well, we have—our investigation has five components. The first was, was the intelligence community’s assessment of January 17 accurate, that the Russians massively intervened and they did so to help Trump and hurt Clinton. We confirmed that unanimously. We came out with our report on election security. Well, we’ve got it written. It’s going through declassification right now. And that was unanimous and bipartisan. We are drafting the component parts of social media. Again, we’ve had no disagreements to date. We will have—we will point out some of the areas where the Obama administration got it right and some of the areas where they, candidly, got it wrong. And again, we’ve had no disagreement.
On the issue of conspiracy—I mean, collusion was a term that we shouldn’t have used from day one—you know, we’re still—it’s been reported, at least, that we saw witnesses last week.
WOODRUFF: It has been reported, hasn’t it? (Laughter.)
Let’s see, this gentleman right here.
Q: Hi. I’m Eric Hyer. I’m a Council on Foreign International Affairs Fellow.
From our discussion today it’s clear that China’s challenging the United States everywhere, all the time, around the world. But it seems like our response is too little and too late. Things like the BUILD Act, the Development Finance Corporation are minimum budgets. What is the will of the Congress or this government to stand up and really take on the Chinese challenge, put their money where their mouth is?
WARNER: Well, again, great question. And Chris Coons, who was the author of BUILD Act, and it is an important tool, but he would be the first to acknowledge it’s not near enough when we’re looking at the BUILD Act versus Belt and Road. I would argue that—and this is kind of my macro point—that we need to make this not U.S. versus China, that it needs to be more democracies, you know, calling on China to be more engaged. And I think we need to do a better job of leveraging on the foreign assistance and economic development standpoint our partnership with our other allies around the world. And, again, that’s not been a strong suit of the current administration.
But I—and that’s why I go—when I left my conclusion was, one, we’ve got to put people on notice. And I do think making people more aware and trying to get more of this information declassified so that academia, business. And, I would point out, most everyone has been receptive to hearing this message, with the exception of private equity who are, surprise, surprise, hugely invested in a lot of these Chinese tech companies that are being used by the Chinese government. So we’ve got to put people on notice. And stage three, which is we’ve got to invest more in STEM, and do more economic development, the kind of long-term, broader investments that we need to make, rethink, whether we call it industrial policy or not, where we ought to be, which technologies we ought to be really investing in. That’s what the race to the moon was. That was industrial policy by simply a different name. But that short-term interim, what do we do over the next couple of years, I gave out some ideas, but I think we’re still pretty thin.
WOODRUFF: One last question we have time for. Let’s see, somebody way in the back—all the way in the back.
Q: Thank you, Senator. I’m Katie Wong with NTDTV.
I have a question about Huawei. Because we know that it has been on the entity list, so many American firms and other companies have cut off their supply to Huawei. But still, we know that some chip makers in the United States, they were bit, like, hit by this export control. So they want to persuade the government to maybe loose the control on that, so they can still continue their supply of some, like, non-sensitive parts, or some regular parts to Huawei. So I’m just wondering, what’s your point of view on that?
WARNER: That—you raise a very, very important question. And this is where I think, even though this designation letter was a long time in coming, I think the fact that it—I think it had not been fully thought through. And it shows that this was an issue that should have been—received higher attention earlier, because your point, particularly when we’re thinking about the network versus the handsets, do we really want to restrict American and other chip manufacturers from selling semiconductor chips into the chip handset? That—I think there does need to be some exemptions granted to that designation letter. I think we should have thought that through on the front end. But I would be supportive of recognizing there is a—there is a difference between selling component parts to Huawei versus purchasing Huawei. And there’s a different between the network and the handsets. So your basic point is I agree with your question.
WOODRUFF: Thank you, Senator Mark Warner, vice chairman of the Intelligence—Select Committee on Intelligence. Thank you to all of you. The meeting is concluded.
WARNER: Thank you, Judy. (Applause.)