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WASHINGTON, D.C. – Congressman Rob Wittman (VA-01) today participated in the House Select Committee on the Chinese Communist Party (CCP)’s hearing titled "Commanding Heights: Ensuring U.S. Leadership in the Critical and Emerging Technologies of the 21st Century.” He stressed the need to protect America’s position as a global technological leader by leveraging public and private research and development (R&D) spending and countering the CCP’s theft of trade secrets and industrial espionage.

According to the National Science Foundation, China drastically increased its growth rate for domestic R&D expenditures over the past two decades, significantly boosting the CCP’s technological advancements at a pace that the People’s Republic of China (PRC) hopes will surpass the United States in the near future.

To help combat this threat to economic and national security, Rep. Wittman advocated for incentives for U.S. venture capital and private equity firms to consider America’s national security interests when conducting business in China. 

Rep. Wittman also highlighted legislation he introduced earlier today to authorize the Office of Strategic Capital (OSC) at the U.S. Department of Defense. This office will foster partnerships with private capital providers to support the advancement of critical technologies in the U.S. military, an example of how the United States can leverage private capital to counter the Chinese Community Party’s economic aggression.

Rep. Wittman: 

“We know that America leads the way for innovation, but this is changing. Just look at the following graph: we see that China is exponentially increasing their R&D investments, and this effect is multiplied by what they steal from us. So not only are they advancing that but they are stealing an amazing amount from us and from others around the world.

“In order to maintain this edge over the Chinese, the U.S. has to leverage both public and private investment. We cannot do this by a single source by itself, and I'm very honored today I introduced a bill with my colleague Congressman Khanna to authorize the Office of Strategic Capital within the Department of Defense, to help the U.S. military do just that – to use every resource across the enterprise, to have an all-hands-on-deck mentality with this. 

“Mr. Wolfe, we know that the U.S. has to better leverage private capital for national security purposes. And as you said, we need to say no to U.S. investment in Chinese companies. ... 

“So the question is: how do we do that? And considering U.S. national security interests, do we do that through a command and control approach? Do we say we're going to put regulations in place to say no, [venture capital and private equity firms must move investment away from China], or do we put in incentives or disincentives within a free market to [accomplish the same goal]? 

… I'd love to get your perspective, from the general statement that you made to the specifics of how do we accomplish that [mission]?”

Josh Wolfe, co-founder and managing partner of Lux Capital:

“Well, I’d say two ways: from the investment community, it really starts with a sense of moral admonishment, and I think that's something that the committee's doing that’s important, which basically decouples the idea of profit over principle, and so you can make business decisions if there isn't a moral component to that, and I think that is just good for business. …

“People looking and saying what are the implications of what we develop, are we reducing human suffering? Are we developing a technology that we’re going to put in an adversary’s hands that’s going to come back and cause us harm?  

“The chart that you show, I think is a really important chart because what it tells me is we have to do more, we have to invest more in R&D, more in long-term science.

“What I see China doing is exactly what we did for many decades, which was have superior advantaged science and scientists here who are developing the foundational base upon which private market and investors like us can come in and commercialize those technologies.”

Rep. Wittman: 

“So if we stop that [U.S.] investment into China, make sure it's not going to support Chinese technology and innovation, on the other side, though, in order to multiply that effect, we have to do everything we can to encourage not just public investment, but private investment and do that at the pace of relevance.

“Give me your perspective on what we can do not only to stop the investment … in China, what do we do more to encourage through our mechanisms and free market private investments, venture capital, private equity to invest in U.S. innovation and technology?”

Wolfe:

“So, if you think of the flow of capital as growing these technologies on the defensive side, I think anything we can do to slow or thwart. We won’t be able to completely eradicate China's ability to get many of these technologies, but we’ll be able in the time dimension to slow it. On the offensive side, it is much more of us continuing to grow that base of [U.S. investment in] science, so that those critical technologies and that list continues to grow very aggressively.

“On the private side, appeal to human interest. The private markets respond when there is great opportunity. We are patriots and we want this country to be the very best country that it can be. We also want to make great profits for our investors. And so we're drawn towards investing in cutting-edge technology and emerging technologies and defense technologies because we think it's a great business.

“More and more investors will follow and see that. More and more large companies will see that, and I think the government supports that as well. You mentioned the Office of Strategic Capital – I’ve spent time with them. I know that they're just getting up and there are probably a lot of lessons that they're going to figure out along the way. We're really supportive of participating and getting involved in that. The idea [of OSC is that] a nominally unattractive investment might become more attractive because there might be leverage that's available from the government. The government wins in advancing a domestic technology, and an investor wins because they’re getting better returns, the company wins because they're getting capital that they might not be, and the nation wins because we're getting an advantage that the CCP won’t have.

Rep. Wittman:

“Mr. Evanina, you’ve talked a lot about how do we protect from a national security, even a homeland security standpoint, critical technologies. Give me your perspective on what we do to protect where we need to be as a nation in artificial intelligence and quantum computing because much of what's happening right there is technology that is spawned here that we have to protect against Chinese theft and exploitation.”

William Evanina, former director of the National Counterintelligence and Security Center and CEO of The Evanina Group:

“I think it’s a combination of awareness of that. And as my colleagues have both mentioned, Ms. Gorman talked about the top 35 companies’ technologies. First of all, we have to be aware of those and there has to be direct conversation with the CEOs and boards of directors of those companies so they're aware that China's coming for their technology. And then we should hold them accountable to protect those technologies. There should be some due diligence on the reference in the supply chain, also some due diligence on the perspective of what they're doing to secure from the cyber perspective, insider threat, and hybrid technologies to prevent the Chinese from coming in.”

Watch the full hearing here.