S153-118

2. Sense of Congress It is the sense of Congress that— since joining the World Trade Organization in 2001, the People's Republic of China has offered the United States a contradictory bargain, which promised openness in the global trade order, but through state mercantilism delivered a severely imbalanced trading relationship; it was erroneous for the United States Government to have ignored the contradictions and risks of free trade with the People's Republic of China on the assumption that the People's Republic of China would liberalize economically and politically; benefiting enormously from a more open global economy to drive its own industries, the Government of the People's Republic of China and the Communist Party of the People's Republic of China have only tightened their grip on power, brutally suppressing dissent at home and pursuing policies abroad that are a far cry from being a responsible global stakeholder; malevolent economic behavior by persons in the People's Republic of China is made clear by the theft of intellectual property from the United States, as Chinese theft of United States intellectual property alone costs the United States nearly $600,000,000,000 annually, according to the United States Trade Representative; stealing United States intellectual property advances the Made in China 2025 initiative of the Government of the People's Republic of China to eventually dominate global exports in 10 critical sectors, namely artificial intelligence and next-generation information technology, robotics, new-energy vehicles, biotechnology, energy and power generation, aerospace, high-tech shipping, advanced railway, new materials, and agricultural machinery, among others; the targets of the Made in China 2025 initiative reveal the goal of the People's Republic of China for the near-total displacement of advanced manufacturing in the United States; and the United States Government should act to strengthen the position of the United States in its policy toward the People's Republic of China in order to create a more balanced economic relationship by safeguarding strategic assets from Chinese influence, reducing Chinese involvement in the United States economy, and encouraging United States companies to produce domestically, instead of in the People's Republic of China.

104. Prohibition on use of certain telecommunications services or equipment Congress makes the following findings: In its 2011 Annual Report to Congress on Military and Security Developments Involving the People’s Republic of China, the Department of Defense stated, China’s defense industry has benefited from integration with a rapidly expanding civilian economy and science and technology sector, particularly elements that have access to foreign technology. Progress within individual defense sectors appears linked to the relative integration of each, through China’s civilian economy, into the global production and R&D chain … Information technology companies in particular, including Huawei, Datang, and Zhongxing, maintain close ties to the PLA.. In a 2011 report titled The National Security Implications of Investments and Products from the People’s Republic of China in the Telecommunications Sector, the United States China Economic and Security Review Commission stated that [n]ational security concerns have accompanied the dramatic growth of China’s telecom sector. … Additionally, large Chinese companies—particularly those national champions prominent in China’s going out strategy of overseas expansion—are directly subject to direction by the Chinese Communist Party, to include support for PRC state policies and goals.. The Commission further stated in its report that [f]rom this point of view, the clear economic benefits of foreign investment in the U.S. must be weighed against the potential security concerns related to infrastructure components coming under the control of foreign entities. This seems particularly applicable in the telecommunications industry, as Chinese companies continue systematically to acquire significant holdings in prominent global and U.S. telecommunications and information technology companies.. In its 2011 Annual Report to Congress, the United States China Economic and Security Review Commission stated that [t]he extent of the state’s control of the Chinese economy is difficult to quantify. … There is also a category of companies that, though claiming to be private, are subject to state influence. Such companies are often in new markets with no established SOE leaders and enjoy favorable government policies that support their development while posing obstacles to foreign competition. Examples include Chinese telecoms giant Huawei and such automotive companies as battery maker BYD and vehicle manufacturers Geely and Chery.. In the bipartisan Investigative Report on the United States National Security Issues Posed by Chinese Telecommunication Companies Huawei and ZTE released in 2012 by the Permanent Select Committee on Intelligence of the House of Representatives, it was recommended that U.S. government systems, particularly sensitive systems, should not include Huawei or ZTE equipment, including in component parts. Similarly, government contractors—particularly those working on contracts for sensitive U.S. programs—should exclude ZTE or Huawei equipment in their systems.. General Michael Hayden, who served as Director of the Central Intelligence Agency and Director of the National Security Agency, stated in July 2013 that Huawei had shared with the Chinese state intimate and extensive knowledge of foreign telecommunications systems it is involved with. The Federal Bureau of Investigation, in a February 2015 Counterintelligence Strategy Partnership Intelligence Note, stated that, [w]ith the expanded use of Huawei Technologies Inc. equipment and services in U.S. telecommunications service provider networks, the Chinese Government’s potential access to U.S. business communications is dramatically increasing. Chinese Government-supported telecommunications equipment on U.S. networks may be exploited through Chinese cyber activity, with China’s intelligence services operating as an advanced persistent threat to U.S. networks.. The Federal Bureau of Investigation further stated in its February 2015 counterintelligence note that China makes no secret that its cyber warfare strategy is predicated on controlling global communications network infrastructure. At a hearing before the Committee on Armed Services of the House of Representatives on September 30, 2015, Deputy Secretary of Defense Robert Work, responding to a question about the use of Huawei telecommunications equipment, stated, In the Office of the Secretary of Defense, absolutely not. And I know of no other—I don't believe we operate in the Pentagon, any [Huawei] systems in the Pentagon.. At that hearing, the Commander of the United States Cyber Command, Admiral Mike Rogers, responding to a question about why such Huawei telecommunications equipment is not used, stated, As we look at supply chain and we look at potential vulnerabilities within the system, that it is a risk we felt was unacceptable.. In March 2017, ZTE Corporation pled guilty to conspiring to violate the International Emergency Economic Powers Act by illegally shipping United States-origin items to Iran, paying the United States Government a penalty of $892,360,064 for activity between January 2010 and January 2016. The Office of Foreign Assets Control of the Department of the Treasury issued a subpoena to Huawei as part of a Federal investigation of alleged violations of trade restrictions on Cuba, Iran, and Sudan. The head of an agency may not procure or obtain, may not extend or renew a contract to procure or obtain, and may not enter into a contract (or extend or renew a contract) with an entity that uses, or contracts with any other entity that uses, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. Not later than one year after the date of the enactment of this Act, and annually thereafter, the Secretary of Commerce, in consultation with the Secretary of Defense and the United States Trade Representative, shall submit to Congress a report on sales by the Government of the People’s Republic of China of covered telecommunications equipment or services through partial ownership or any other methods. In this section: The term agency has the meaning given that term in section 551 of title 5, United States Code. The term covered telecommunications equipment or services means any of the following: Telecommunications equipment produced by Huawei Technologies Company, ZTE Corporation, or any other Chinese telecom entity identified by the Director of National Intelligence, the Secretary of Defense, or the Director of the Federal Bureau of Investigation as a security concern (or any subsidiary or affiliate of any such entity). Telecommunications services provided by such entities or using such equipment. Telecommunications equipment or services produced or provided by an entity that the head of the relevant agency reasonably believes to be an entity owned or controlled by, or otherwise connected to, the Government of the People’s Republic of China.