▶ 0:14:04Chair Scott: The U.S. senate special committee on aging will come to order. This is a challenge to be met with the right mix of engagement and pressure. The government has made a strategic goal of weakening the united states, deciding that senior citizens are a legitimate target.
▶ 0:14:28Chair Scott: This hearing will calculate the measurable harms being done to seniors by a government invasion led by the communist party to reduce economic opportunity. The list of dangers china presents is growing as they become more aggressive. This impacts every square inch of american life. Let's start with fentanyl and other illicit drugs. America has lost hundreds of thousands of people to deadly drugs.
▶ 0:14:54Chair Scott: Since 2013, china has been the primary source of fentanyl and the precursor chemical the drug cartels used to manufacture it and kill american citizens. Thanks to communist china, we are seeing seniors as a growing share of the victims. We see veterans managing injuries and parent -- and patients seeking sources of medications because communist china profits from their death and the ccp has chosen again and again to look the other way.
▶ 0:15:24Chair Scott: China has made some announcements about controlling exports. We have heard that before. They never hold up their end of the bargain. Let's talk about the pills themselves. Legal ones that seniors depend on. Over 90% of the prescriptions filled at american pharmacies are generic drugs. The active pharmaceutical ingredients in most of those drugs come from china and india. For many medicines, china is not just a major supplier.
▶ 0:15:54Chair Scott: They are the only supplier. There is no domestic alternative standing by. If china follows its threats in ccp state media, american seniors will feel it. Communist china supplies 87% of the U.S. antibiotic imports, and 90% of the available collection. We saw china withheld ppe during covid.
▶ 0:16:24Chair Scott: China has leverage. Communist china knows it has leverage. Our investigative report is made it clear they are not shy about reminding us. That is why the clear labels act is important. It is time americans truly know where their drugs come from. We would have never let the soviets have this kind of leverage over us and the cold war. We should be taking this issue just as seriously now. No sane country would act like this when their opponent wants to destroy them. We have to wake up.
▶ 0:16:53Chair Scott: That is why we are pushing the federal government every day to support domestic manufacturing and leverage the full buying power of the government to support domestic drugmakers. I want to thank the ranking member for her actions. Here is another way communist china hurts our seniors -- with scams. In 2024, americans over 60 lost over $5 billion to financial scams.
▶ 0:17:17Chair Scott: That is a coordinated campaign on an industrial scale by organized criminals with direct ties to and at the direction of the chinese communist party. We held a hearing earlier this year on physical facilities in southeast asia where trafficked workers are forced to run operations targeting americans. I'm sure you have gotten a scam call before. Who hasn't?
▶ 0:17:44Chair Scott: These ai-generated voice clones, deepfake video calls, romance, and investment swindles all sound genuine until all of a sudden the money is gone. These sophisticated and well-funded criminals have focused on seniors because they have retirement savings and are less likely to report what happened to them. Congress needs to act now and pass legislation targeting these bad actors before even more americans lose their life savings.
▶ 0:18:14Chair Scott: The scam act passed in the senate. The stop scammers act is waiting. We need the rest of congress to act with the same urgency that our seniors deserve. Everything else becomes more dangerous when china's communist party knows your medical history, your financial accounts, your daily routine, and the names of your grandchildren. Communist china is systemically acquiring the personal financial data of older americans through connected devices, digital health platforms, and cyber attacks.
▶ 0:18:47Chair Scott: We saw this with the beijing genomics institute potentially acquiring genomic data from U.S. patients. The bio secure act prohibited federal agencies and federally funded groups from using biotechnology equipment and services from biotechnology companies. For too long, washington has treated all these issues as individual problems. I believe it is time to take a comprehensive approach to fighting communist china' is growing threat.
▶ 0:19:15Chair Scott: This legislation today is just the beginning. But the breath of that work cannot be captured. Today, I have posted bills I have sponsored or cosponsored. There is a plain english summary of what each one does. I know the ranking member is all over this. You deserve to know where a senator stands. I ask my colleagues on both sides of the aisle to look at this and ask themselves the same question I ask every day. What are we waiting for?
▶ 0:19:44Chair Scott: America has enemies, whether we like it or not, and we need to act like it. Communist china wants to destroy our way of life. 50 years ago, we would never have given the soviets the leeway we give china. The access they have to our economy and information, the things they enjoy from her supply chain. We need to get serious about this before it is too late. I would like to recognize ranking member gillibrand for her opening statement.
▶ 0:20:08Sen. Gillibrand: Today's hearing gives the committee the unique opportunity to study several issues that impact the lives of older americans through the same lens. How are the actions from china influencing these outcomes?
▶ 0:20:23Sen. Gillibrand: We will discuss how the chinese government turns a blind eye to scam compounds that target americans, leading to financial losses to the tune of billions of dollars for our citizens hard earned money, not to mention the emotional people on victims that they face after falling prey to a scam. To address this crisis, I have introduced bipartisan legislation with chairman scott called the national strategy for combating scams act.
▶ 0:20:50Sen. Gillibrand: That would require the fbi to create a unified government-wide strategy to tackle surging scam operations. This bill is a first step to combat scams domestically, and complements the work of our colleagues on the senate foreign relations committee to crack down on foreign scam centers, including by pushing to pass the bipartisan scam compound act.
▶ 0:21:19Sen. Gillibrand: I am also eager to continue our discussion on chinese dominance of the global supply chain for pharmaceuticals and the economic national and health security implications of this dominance. This is a refrain that chairman scott and I continue to repeat throughout this entire congress, to help americans understand. Our health care system is at grave risk, in no small part due to the exposure to china for key starting materials and active pharmaceutical ingredients for our generic pharmaceuticals.
▶ 0:21:50Sen. Gillibrand: This is not just a health security issue, but a national security issue. In the case of a crisis or conflict between us and china, our country cannot be reliant on china for the bulk of our essential medicines, like antibiotics or the ingredients we need to make them. I am proud of the work of this committee that we have done to shed light on the issue.
▶ 0:22:16Sen. Gillibrand: We have introduced bipartisan legislation called the clear labels act, and have dedicated our time to shining a light on this problem that has for too long been pushed aside by congress. China has weaponized the supply chain, established chokepoints in medicine, foundational semiconductors, and printed circuit boards that are critical to all types of electronics.
▶ 0:22:41Sen. Gillibrand: One of the things that should worry us most and should immediately spark congressional action is china's top to bottom efforts to dominate the next generation of biotechnology. It should be a wake-up call to all of our members that china may surpass us in a few years, not decades, and the critical technology area. Biotech is not a future inflection point, but a present one.
▶ 0:23:09Sen. Gillibrand: I look forward to collaborating with the commissioners as well as my colleagues across the aisle as we work together to understand china's influence in all these spheres.
▶ 0:23:20Chair Scott: I want to thank all the witnesses for what you do every day. It is bipartisan and you do a great job. Our first witness is joshua hodges, a commissioner on the U.S.-china economic and security review commission formed by mike johnson. It brings nearly two decades of foreign policy across the white house, congress, the executive branch. He served as senior director of the national security council, with U.S.
▶ 0:23:48Chair Scott: Efforts to expose and counter chinese malign activity, serving as the U.S. government lead on regional economic strategies designed to reduce dependency on china-backed financing. Most recently, he served as national security advisor to mike johnson for the 108 think -- 100 18th congress, the most senior position in the house, and helped shape congressional responses to israel, russian aggression, and security threats at the southern border.
▶ 0:24:20Chair Scott: Thank you for being here. Please begin your testimony. >> I am grateful for this committee's recognition that the threat posed by the chinese communist party is not only a geopolitical one, but a direct threat at home. Today's hearing on the impact on seniors health, and financial security, could not be more timely. The legislation mentioned is absolutely vital.
▶ 0:24:45Chair Scott: 25 years ago, congress established the review commission with a mandate to examine, investigate, and report to congress in an integrated way how china's actions affect economic and national security. As you can imagine, in that time, our mandate has stayed constant, but our work has increased dramatically. Our independent bipartisan commissions represent a wide-ranging of views, with each of the leaders of the house and senate appointing.
▶ 0:25:16Chair Scott: We provide congress with an annual report and other research and analysis with policy recommendations for legislative and administrative actions, much of which is aligned with the legislation you mentioned earlier. The chinese communist party is engaged in a systematic campaign to create new chokepoints across multiple domains from raw material influence to industrial processes, downstream applications, and more, and will define the next generation of
▶ 0:25:46Chair Scott: Economic power. The ccp also seeks to eliminate american production capability across sectors that americans depend on for their health, financial security, and daily lives. Our annual report documented this playbook in detail. The pattern is straightforward. China identifies a critical input, and uses below cost pricing to drive western and allied producers out of the market, and then holds the supply chain permanently.
▶ 0:26:15Chair Scott: The commission has examine several facets of this strategy, from the commodity derivatives market, data protection, scam networks targeting older americans, and supply chains eroding america's security. Each hearing has revealed different instruments. Beijing has focused aggressively on establishing firm leverage over the technologies that will dominate the future, as you referenced earlier, including biotechnology and artificial intelligence.
▶ 0:26:45Chair Scott: It is worth flagging concerns raised by the american industry that I believe or in this committee's attention. In line with its leverage, china appears to be targeting specialty chemical supply chains that most americans have never heard of but that flow directly into the products keeping older americans alive.
▶ 0:27:04Chair Scott: These chemical compounds are used to produce iv treatments, surgical implants, and other household products increasingly dominated by chinese producers, who offer below cost pricing to drive western manufacturers out of the market. The defense department has confirmed that for some of these materials, we have no functional substitute within a 10 year to 15 year horizon. Combined with our reliance on pharmaceuticals, we are dangerously close to a possible supply disruption.
▶ 0:27:34Chair Scott: Washington has not yet connected those dots. We appreciate legislation to address this. As part of commission efforts to look over the horizon, we held a series of hearings to highlight the aggressive activity not just to catch up with the U.S., but to overtake us. The commission on emerging biotechnology concluded last year the U.S. has a three year window to retain and in some cases regain biotechnology leadership, or we are ceding advantages to china.
▶ 0:28:04Chair Scott: The consensus from the business community about this has a two year time period. In certain domains, biopharmaceutical innovation, china is now in the lead. Why is this relevant? Older americans of the population most exposed to every sector. They are the heaviest users of generic drugs, which china controls. They are the patients with pacemakers and surgical implants.
▶ 0:28:34Chair Scott: They increasingly depend on china. Separately, the energy and infrastructure is relevant to the constituents and has not received adequate attention. Chinese manufacturing components in the american grid may contain remote monitoring capabilities and remote access pathways.
▶ 0:28:55Chair Scott: A deliberate power disruption would fall hardest on older americans depending on home medical equipment including cardiac devices, dialysis machines, and so on. For this population, power failure is a medical emergency. Washington treats this as separate issues across different jurisdictions, addressing each in isolation.
▶ 0:29:20Chair Scott: I am very pleased to hear you are working across jurisdictions to move forward and address it in a holistic way. Thank you for your time today. I recommend the annual report and findings if you have not had a chance to look. Thank you.
▶ 0:29:38Chair Scott: Our next witness is leland miller, on the security review commission. He is the cofounder and ceo where for more than 15 years he has run the world's largest private microeconomic survey of china's economy and financial system. He is one of the most widely cited independent authority on china's economy and U.S. technology competition in the country.
▶ 0:30:07Chair Scott: Before founding china beige book, he was a capital markets trader out of new york and hong kong. Thank you. >> chairman scott, ranking member gillibrand, and members of the committee, thank you for the opportunity to testify. On april 30, I cochaired a hearing entitled taking a bigger bite -- china's expanding strategy for data dominance.
▶ 0:30:32Chair Scott: What are witnesses described in what I want to convey today is that beijing has stopped treating data as a commercial byproduct and now treats it as an instrument of state power. Ordinary americans, including our oldest and most vulnerable citizens, are increasingly the raw material. The starting pool is new architecture.
▶ 0:30:52Chair Scott: China's national intelligence law and data security law compel any chinese company to hand it stated to the state on demand, in secret, with no independent court and no transparency. The obligations run one way. As one witness put it, beijing's operating principle is to control the data for china while expanding the inflow from everywhere else. A data set does not have to hold national security value when it is collected.
▶ 0:31:21Chair Scott: The value can emerge once the state fuses it with other data in its possession. Three mechanisms make this concrete for americans. First, our networks. Chinese state-sponsored actors who have -- with a campaign known as assault typhoon penetrated american telecommunications and reached call records data -- who was calling home and where and when for vast numbers of americans. China's hacking program is larger than that of every other major nation. Second, our commercial data.
▶ 0:31:53Chair Scott: Sensitive information about americans -- precise location, financial stress, health indicators, and family and professional networks -- is openly bought and sold through the eta breaker -- data broker market and absorbed through apps, payment systems, and connected devices. None of it requires a hack. It can be purchased. Increasingly, these data streams come from products americans carry, where or drive every day.
▶ 0:32:20Chair Scott: Smart phones, vehicles, fitness trackers, smartphone devices and other connected products continuously generate detailed records of where people travel, who they meet, what they buy, how they communicate, and patterns in their physical activity and health. In many cases, supposedly anonymous data sets can be re-identified and linked across multiple sources, allowing disparate pieces of information to be fused into highly detailed portraits of individual lives.
▶ 0:32:47Chair Scott: What appears commercially monday and in isolation becomes valuable when aggregated at scale and combined with other sources of data. Third, our health and our biology. Witnesses were direct that beijing regards genomic and critical data as a strategic natural resource and is investing heavily to acquire it. Not only genetic sequences, but treatment histories and health records. Artificial intelligence is a force multiplier. It ties all of this together.
▶ 0:33:14Chair Scott: Bulk data that was once too voluminous for any human analyst to use can now be fused into detailed profiles of individuals, but one witness called the move from observation to prediction. This is where the risks to older americans becomes acute. Older americans hold a disproportionate share of the nation's wealth, carry the longest medical histories, and are the heaviest users of the health system, which means financial, genomic, and critical data beijing prizes is in large part there is.
▶ 0:33:45Chair Scott: This lets an adversary build a targeted profile of a government official, and lowers the cost of social engineering. Tailored, convincing, and delivered at scale. The records most exposed to this harvest strategy may be used tomorrow to break into quantum computers. Our long-lived medical and financial records could follow an older american for the rest of their life.
▶ 0:34:11Chair Scott: The central lesson of our hearing is that washington still treats privacy, telecommunications security, critical infrastructure resilience, and artificial intelligence as separate problems. Beijing does not. It is assembling a single decision advantage architecture and is doing so faster than our policy is adapting. The commission has not yet developed its recommendations in the space. That will not happen until a report comes out in november.
▶ 0:34:38Chair Scott: Speaking in my personal capacity, I would respectfully urge this committee to place eight national security data regime covering geolocation, health, genomic, financial, and tele-commissions data on durable statutory footing to put in the telecommunications and data broker infrastructure, and to treat the protection of older americans financial and medical data as the homeland security matter it has become. Thank you for the opportunity to share these observations.
▶ 0:35:07Chair Scott: I look forward to your questions.
▶ 0:35:12Sen. Gillibrand: I want to introduce our next witness. Ms. price is a commissioner for the china economic security commission, reappointed by hakeem jeffries. Her term expired december 30 1, 20 26. Previously, Ms. price was the director of outreach and senior advisor to nancy pelosi, and has spent over 20 years working for nonprofit organizations in washington, D.C., engaged with domestic and international affairs. You may begin.
▶ 0:35:43Ms. Price: Thank you for the opportunity to testify on the evolving threat of chinese scam centers. My remarks draw on the U.S.-china economic security and review commission's recent work, including two reports, travel to southeast east asia, and recommendations for congress to protect the U.S. national interest. I hope this testimony provides additional information to the important hearing and discussion this committee held on this topic earlier this year.
▶ 0:36:15Ms. Price: The fbi's internet crimes complaint center documents that americans reported losing $17.7 billion into online scams in 2025, a 29% increase from 2024. This figure is striking, yet likely captures only a fraction of the total amount lost, due to underreporting.
▶ 0:36:37Ms. Price: Let me know, chairman scott, that your report scans.gov act introduced this week would go a long way toward getting a more accurate number. It is important to note that nearly a quarter of these funds were stolen from citizens over age 60. As you are aware, these online scams often take the form of investment or confident schemes that can be traced to chinese criminal syndicates overseas.
▶ 0:37:04Ms. Price: Chinese criminal networks operate industrial scale scam centers that steal tens of billions of dollars annually. This is a massive criminal enterprise rivaling the global drug trade in scale and sophistication. For example, while estimates vary, scam centers in verma, cambodia, and laos alone generated approximately 44 billion, about 44% of those countries combined gdp.
▶ 0:37:32Ms. Price: Many of these chinese criminal syndicates have spread throughout south, with at least implicit backing from elements of the chinese government. In some cases, known criminal groups have invested in projects linked to china's belt and road initiatives alongside state owned enterprises. We also have seen criminal leaders who appear to of gotten a pass by promoting messaging and other activities lined with chinese communist party priorities.
▶ 0:38:01Ms. Price: At the same time, beijing has used the scam crisis to expand its regional influence. Under the guise of cracking down on scams, china has pressured countries to agree to a greater role for chinese security forces, and has had success in laos, cambodia, and even U.S.-allied thailand. This strategy gives china greater leverage over the internal security apparatus of other countries.
▶ 0:38:28Ms. Price: Chinese security forces have confiscated electronic devices with americans personal data from raids on scam compounds. Initially, many scams targeted chinese citizens in so-called pig butchering scams, the local colloquialism for winning a victim's trust to ultimately convince them to hand over a large sum of money. To its credit, china has cracked down on these operations.
▶ 0:38:54Ms. Price: But it has done so selectively, largely turning a blind eye to scam centers victimizing foreigners. As a result, the chinese criminal syndicates have been incentivized to shift toward targeting americans and foreign butchering scams. To illustrate this point, in 2024, losses from online scams in china declined by about 30%, while losses in the united states increased by roughly 40%. The problem is also evolving rapidly.
▶ 0:39:24Ms. Price: Scam operations are now being turbocharged by artificial intelligence. Ai allows criminals to create more convincing personas, taylor content, and operate across languages, at scale. At the same time, cryptocurrency is increasingly used to defraud victims and to launder illicit proceeds. Scam centers are spreading beyond south east asia, including to the pacific islands and parts of africa.
▶ 0:39:51Ms. Price: Congress and the administration have taken initial steps to combat these scams, but the problem continues to grow and we need to do much more. The commission has proposed 11 recommendations and considerations for congress to help combat these threats. I will refer the committee to my written testimony, which lists them all in some detail. Hopefully, we will have time during the conversation today to discuss more.
▶ 0:40:15Ms. Price: In conclusion, scam centers run by chinese criminal organizations threaten both the financial well-being of all americans, seniors in particular, as well as growing threats to national security. As long as these networks can earn higher profits with lower risks by targeting americans, they will continue to do so. Thank you. >> Sen.
▶ 0:40:37Ms. Price: Gillibrand: our next witness is chris slavin -- slevin, who became a commissioner after his appointment by hakeem jeffries. Previously, he was chief of staff to the former secretary of commerce, jean raimondo, where he led the agency' is expanded role in technology and national security. You may begin.
▶ 0:41:05Mr. Slevin: Thank you, members of the committee. I will focus my remarks on the pharmaceutical supply chain. First, the commission applauds the work this committee is doing to call attention to the vulnerable situation the country faces when the building blocks of our medicines are in china. As this committee has outlined, we have an uncomfortable reliance on china for pharmaceutical ingredients and key starting materials.
▶ 0:41:31Mr. Slevin: China's strategy is an integrated state-directed effort to become indispensable at every stage -- raw materials, apis, contractors, early clinical trials, and biologics. This strategy parallels china's playbook with ev's and batteries. China's weaponization of supply chains is not theoretical. China has made controlling global supply chains and explicit strategic goal.
▶ 0:41:59Mr. Slevin: The drug supply chain is a prime example of that strategy succeeding. China has used export controls on critical minerals -- gallium, geranium, rare earth magnets. In 2025, china expanded that toolkit with new rounds of heavy earth elements, triggering price spikes, temporary factory closures. Medicines have a human health dimension that minerals do not. The message from what we have seen on rare earths is clear.
▶ 0:42:30Mr. Slevin: China is building the legal and institutional architecture to restrict access to whatever it chooses whenever it chooses. China is not just him and in the U.S. supply chains. It is embedding itself into drug manufacturing across china, latin america, and southeast asia. It is positioning itself as an indispensable supplier to every country the U.S. might turn to congress knows this scenario from telecom. This is the playbook for pharmaceuticals.
▶ 0:43:03Mr. Slevin: India supplies roughly half of all U.S. generic drugs, but relies on china for most of the building blocks. The commission visited india earlier this year. Among our findings, the indian government has had some success in reducing reliance on chinese apis using its production-linked incentive program to help reassure manufacturing. China has been targeting these incentive programs and those manufacturers with below cost predatory pricing.
▶ 0:43:33Mr. Slevin: It is the same playbook we have seen it use on solar. And it has restricted exports on certain farm up manufacturing equipment. Again, the commission will further explore these issues and provide recommendations to congress this fall. In the meantime, I would like to direct committee attention to three specific recommendations the commission made. One, fix the data problem first. The fda has acknowledged that the U.S.
▶ 0:44:00Mr. Slevin: Government does not have reliable data on actual volume of api imports from china or the full proportion of U.S. drug consumption dependent on chinese imports. We cannot use trade tools without data. You cannot file a case you cannot measure. The carriage act requiring manufacturers to report drug volumes, which is a good start, but not where the ingredients come from. We need to close that gap.
▶ 0:44:30Mr. Slevin: Greater transparency in labeling is also a critical step. Two, use the government buying power. Durable demand turns the ship and begins to rebuild a viable U.S. drug manufacturing sector. Congress could explore procurement and reimbursement authorities for medicines built on non-china starting materials, including price form commitments that protect domestic producers against low-cost chinese competition.
▶ 0:44:56Mr. Slevin: Your committee report outlining the need for a federal market is strong and consistent with commission recommendations. Finally, treat this as industrial policy, not just drug policy. Consider chips act style financing, support for domestic api and generics manufacturing, and manufacturing incentives. 40 years of off shoring will not be reversed by guidance documents and study requirements.
▶ 0:45:25Mr. Slevin: This requires the scale of commitment that congress brought to semiconductors. We thank you for the attention you are giving to these issues. Please understand these critical vulnerabilities, how they can be weaponized, and what we can do to reverse them. Thank you and I look forward to your questions.
▶ 0:45:42Chair Scott: Think of it -- thank each of you for being here. >> Mr. slevin, let's start where you just finished. How safe do we feel about the ingredients of pharmaceuticals from china, and how can we depend on them?
▶ 0:46:01Mr. Slevin: It is hard to know without the data, which is I think the primary recommendation this commission has made thus far. It is hard to know what to correct for if we don't have the data and if we don't have the visibility into the supply chains and into inspections. The fda has authority to inspect overseas. It is hard to execute on that, where unannounced visits to factories are hard to execute on.
▶ 0:46:32Mr. Slevin: So there is reason to be concerned.
▶ 0:46:36Sen. Tuberville: We pretty much taken for granted they are going to do the right thing, right?
▶ 0:46:45Mr. Slevin: That is right. We have seen the production increasingly offshore, so the proximity that our agencies have to inspect unannounced is more difficult to execute when the vast majority of facilities are overseas.
▶ 0:47:05Sen. Tuberville: China is known for its scam centers. What do these criminal enterprises look like? Is the chinese communist party approving these?
▶ 0:47:21Mr. Miller: I will give a bit of an overview and bulk my colleague who is an expert on scam centers to add on. During our trip to southeast asia, we were blown away by the scope of the centers. They take up not just floors of buildings, but sometimes entire city blocks. They are very mobile. Sometimes, when something is shut down, they can locate down the block to the other side of the city.
▶ 0:47:46Mr. Miller: And they are done with the implicit, at least, approval of the governing authorities in the south asian countries, and often the chinese communist party. These entities are becoming more and more sophisticated. They are integrating ai.
▶ 0:48:03Mr. Miller: The things they were doing five years ago does not touch the approaches they are using now in terms of voice alterations and other intricate ways of getting at people's personal histories, bringing them aboard, and the paper trail my colleague is talking about.
▶ 0:48:24Sen. Gillibrand: I think we have not found evidence that the chinese government role in -- the direct role of the government's involvement. But there are links, as I mentioned in my testimony. There are indications of them looking the other way. There are people in these syndicates who do other work with the chinese government. There is a wink and a nod, so to speak. But direct government involvement, the fbi has not seen that yet or reported that.
▶ 0:48:58Sen. Tuberville: It seems like every time I call for customer service, it comes from india. Are they as much complicit?
▶ 0:49:04Ms. Price: We did not see any connection with those in india and the scam centers. But there are scam centers all over the globe. >> to add to that, one other thing we have witnessed is that there is a sort of surprising ability to target, so it is not a direct linkage of evidence, but it is associated.
▶ 0:49:36Sen. Tuberville: It seems like we are either denying or agreeing with that that china is ahead of us in crypto. What is the consequences of that if we don't adjust one way or the other?
▶ 0:49:48Mr. Hodges: China has an interesting mentality toward crypto and the broader crypto universe. Technically, crypto is banned in the mainland, but hong kong, which is china as well at this point, is a hotbed of crypto innovation. I think it is the mindset of the policymakers in beijing that they can keep the dirtier side of crypto ring fenced away from mainland china but send the more innovative side in hong kong.
▶ 0:50:17Mr. Hodges: I think we need to be keeping a close watch on this. This is something our hong kong chapter has put particular focus on in the last two years.
▶ 0:50:27Sen. Tuberville: Are we ahead or behind? >> we have not issued this as a former reckoned -- formal recommendation. One of the areas is their efforts to use crypto overseas as a method of data collection. It is very well known that the chinese apps soak up data. One thing we are starting to dig into is are there chinese apps using crypto in third-party countries?
▶ 0:50:57Sen. Tuberville: That is going to give them access to those individuals data and make it harder for the U.S. government.
▶ 0:51:04Sen. Sheehy: Stood -- -- Sen.
▶ 0:51:13Husted: There is one report and one of you may have alluded to the fact that there are nearly 700 pharmaceuticals today in america that we could not make without china's acquiescence to send us at least some part of the supply chain for the production of those pharmaceuticals. I guess I will start with Mr. slevin. What would happen if they completely cut us off?
▶ 0:51:38Mr. Slevin: It would be alarming. To say the least. You know, that is the dire scenario that one can imagine. There is also the more subtle moves of restricting licensing, slowing the export, that would -- it speaks to the leverage.
▶ 0:52:03Sen. Husted: Speaking of the human consequence -- this is the aging committee, but these are drugs that people rely on for their lives on a daily basis, right?
▶ 0:52:14Mr. Slevin: It would be an extremely dire situation I think that would rock it up to number one for the congress to address. >> if I could add to that, I cochaired the commission hearing on beijing's weaponization of supply back in 2024.
▶ 0:52:32Mr. Slevin: One of the big frustrations we had in the build up to that hearing is that we had our staff, for months and months, trying to get all the information they could -- classified, unclassified -- on key starting materials, so we could put in our report and prepare our witnesses for what the actual exposure was, so we could ask them about it. And we found out that we do not have that information. It is not just we don't. Nobody has that information. This is something we have seen constantly over the last couple of years.
▶ 0:53:02Mr. Slevin: We have traveled to india and ask for their data on this, and they don't know. We have worked with the administration. Agencies and administration do not know. No one in the administration has what our vulnerabilities are. When we were working on our hearing and drafting our chapter, we were putting in wide ranges, and I think this goes back to the problem that we do not have transparency into where china's position is in terms of the pharmaceutical universe.
▶ 0:53:34Mr. Slevin: We know that the vast majority of active pharmaceutical ingredients are produced by china and india. But when you peel back that onion and look at what vulnerability india's apis have to chinese starting materials, the answer is a lot, but we could not get an answer. They are concentrated in antibiotics, heparin, insulin, oncology medicine. We know the problem is huge.
▶ 0:53:59Mr. Slevin: The frustration we have had, and others in congress as well, is that we cannot get to the bottom of what the supply chains actually look like, which has made it difficult intern for congress to make good policy.
▶ 0:54:11Sen. Husted: So we know it would be alarming but don't have a full understanding of what the scope of the problem would be.
▶ 0:54:21Mr. Hodges: We do not. There is no good data on this at all. I think this is a big problem. You cannot scope out a solution to a problem when you don't have visibility into it.
▶ 0:54:34Sen. Husted: This is happening in a nation where pharmaceuticals were invented. We started the whole process of researching and developing medicines that would improve people's lives, save people's lives. America dominated this.
▶ 0:54:51Sen. Husted: But then somehow when we decided that getting things cheaper from anybody that would sell them to us cheaper, and letting china into the wto, that we were going to throw out all of those, all of the things that made us secure, and just say we will let you do it.
▶ 0:55:11Sen. Husted: And so now we find ourselves in a position on pharmaceuticals, on rare earth, on telecom supply chain, on ships, where literally we have no leverage against china, and our economic and national security and the lives of our citizens are threatened, because we were asleep at the wheel as a nation and did nothing to track and prepare for this. Is that a fair conclusion?
▶ 0:55:38Sen. Husted: >> I think it is and I'm glad you brought up the words national security. The major misstep we have made for decades now is seeing pharmaceuticals and other critical inputs in our economy as economic matters. Where can we get the cheapest prices? That is all we cared about. There is a recognition now -- a big issue when we interact with congress -- that some things are so important that they need to be put in a separate bucket. Not the economics bucket. The national security bucket.
▶ 0:56:07Sen. Husted: When they are in the national security bucket, they have a different profile. Instead of trying to find the lowest cost producers, we need secure supply chains. I think that mentality has started to permeate. We just started it with critical minerals. We just started to touch this issue with pharmaceuticals.
▶ 0:56:28Sen. Houston -- Husted: Thank you for the opportunity. >> part of the structural constraints on this -- the U.S. has looked at the commercial viability instead of the strategic value. That is something we started to raise with the executive branch overall. The strategic value and the dynamic and paradigm shift.
▶ 0:56:57Sen. Husted: Thanks for the witnesses. It is clear this is a problem. We got here with bad trade deals, too much regulation, taking our eye off the ball. Hopefully, this will serve as a wake-up call that we reverse these failed strategies. Thank you.
▶ 0:57:18Sen. Gillibrand: In the 2025 annual report to congress, the commission wrote extensively on china's willingness to weaponize critical supply chain as a way to leverage their global power. While instances of these chokepoints being purposely squeezed are not uncommon, they shed light on the world's dependence on china's supply chain.
▶ 0:57:40Sen. Gillibrand: While china dominates in upstream materials such as active pharmaceutical ingredients, printed circuit boards, and foundational semiconductors, they do not yet dominate in the frontier of technology -- pharmaceuticals. For all the witnesses, which supply chains should be prioritized to strengthen in the short and long-term? Are there differences in how we should approach supply chain for current technologies and emerging technologies that will become more important for american power in the future?
▶ 0:58:08Sen. Gillibrand: What trade-offs should we consider?
▶ 0:58:12Mr. Slevin: I would say generic antibiotics. We make zero right now in this country. It is imperative that we quickly look at some of the work this committee has taken on, particularly as it relates to purchasing power. How do we make the economics work? And do that thinking about the government as a major purchaser and a long-term purchaser.
▶ 0:58:41Ms. Price: I would also answer pharmaceuticals as a starting point. But in addition, other areas or other components that allow for remote access into critical infrastructure would be another place.
▶ 0:59:00Sen. Gillibrand: What do you mean?
▶ 0:59:04Ms. Price: If our energy infrastructure relied on component parts that could be accessed remotely from other places, that would raise serious concerns to me.
▶ 0:59:25Mr. Miller: I am a little biased because we spend a lot of time trying to figure out whether -- what are top five priorities would be, and they are some of the ones you mentioned earlier. Critical minerals and rare earth magnets are a today issue. Pharmaceuticals are very top of the list after that. Semiconductors, circuit boards, and I would add batteries.
▶ 0:59:46Mr. Hodges: I would second everything that was already mentioned. In addition, as I mentioned earlier, part of the issue is not just looking at individual products we need to be making, but structurally, the capacity in the near term and long term. I mentioned earlier chemical precursors. There are everyday household products that if the trajectory continues to move forward -- this is my opinion, not a commission opinion.
▶ 1:00:16Mr. Hodges: If the trajectory continues to go in that direction, in two years, we will not be able to make today's products at all. Everything that was outlined. In addition, I would say chemical precursor -- chemical precursors and the ability to actually produce things in the united states.
▶ 1:00:31Sen. Gillibrand: What are areas in industries where china is especially relying on the united states? And what are some of the regional and global consequences if we start -- if we taught to -- if we sought to tighten our own supply chains to exert pressure on china. >> advanced semiconductors come to mind. It is well-known that this congress has taken a great interest in monitoring what we have two restrict and to track.
▶ 1:01:02Sen. Gillibrand: I think that leads that we have on ai are frankly attributable to the advanced semiconductors that we designed and make here. I would suggest that at the outset.
▶ 1:01:22Ms. Price: I don't think I have anything else to add to what was just said.
▶ 1:01:27Mr. Miller: I would love to talk all day about advanced semiconductors, but since chris already did, I will add passenger jets.
▶ 1:01:42Mr. Slevin: I sure the sentiment. In addition, I would say quantum computing. I will stop there.
▶ 1:01:58Sen. Gillibrand: How should congress direct U.S. financing entities to prioritize funding for critical industries including pharmaceuticals that everyday americans rely on? >> this is an area where in my private capacity I have engaged with businesses overseas. Part of the issue we have is an unintended problem.
▶ 1:02:21Sen. Gillibrand: When the chinese role in and try to work with the south african countries, the latin american countries -- they show up with the whole package. To pull them away from the united states. That is what we are up against when we talk about leveraging U.S. financing opportunities.
▶ 1:02:41Sen. Gillibrand: What we have got to get better at here in the united states -- the congress just passed in december the expanded dse modernization reauthorization act, which I think has strength in dsc, but those tools need to continue to be sharpened. They need to continue to work better. One of the recommendations we had last year was for an economic effort across the U.S. government to make it more competitive.
▶ 1:03:10Sen. Gillibrand: >> I would urge congress to look at this is not just an issue of what china has leverage over, but what are the national security interests we care about the most to prioritize. We were we went through our exercise trying to figure out which of her supply chains were most vulnerable, we worked through worst-case scenarios. For pharmaceuticals, the idea that we would be in a potential situation in the taiwan strait, in the south china sea, and the chinese government could say we are not going to allow troops are american citizens to have antibiotics or cancer drugs or insulin.
▶ 1:03:41Sen. Gillibrand: When we moved down to foundational semiconductors, we looked at china's trajectory on that. China has been building up more capacity expansion than all the other countries in the world combined. So we are looking at a 2030 where china could control and then under price and hollow out the world's foundational semiconductor industry, which would put us in a bind.
▶ 1:04:06Sen. Gillibrand: The exercise is partly looking at what beijing has leverage over, but in large part figuring out what are our national security priorities in the worst-case scenarios we need to eliminate. I think that is where to start on the list.
▶ 1:04:21Sen. Gillibrand: Mr. chairman and ranking member, when I saw that you were calling a hearing on counting the costs, I immediately thought of the evolution of technology and the mass increase we are seeing in cyber targeting scams, schemes against our seniors.
▶ 1:04:48Sen. Gillibrand: It is just unbelievable, the explosion, not only in the number of incidents we are seeing, the types of scams we are seeing and the technology, how it is enabling more sophisticated, realistic scams. So many people are falling for them, from every socioeconomic level, every educational level.
▶ 1:05:10Sen. Gillibrand: If I told you some of the stories where people have lost their life savings -- accomplished, smart people lost their life savings. It would leave you wondering what we are going to do about this issue. I really think we need to start paying attention. If anything, those types of things affect health, finance, and security. All three of those things are affected when that happens.
▶ 1:05:36Sen. Gillibrand: So I was very excited about this hearing today because I think so many older americans are paying the price for china's predatory actions. As florida's attorney general -- the scams that use technology. Some involved crypto. We would often have to go overseas to shut down websites and other types of things.
▶ 1:06:06Sen. Gillibrand: It really became obvious quickly that we did not have, within the local governments or police agencies or sheriff's departments, the sophistication to really bring the large cases, and we had to do something on a statewide basis. So when I was attorney general, I created a cyber fraud task force on a statewide level.
▶ 1:06:28Sen. Gillibrand: We had to train not just lawyers to understand what they were dealing with and the laws they could use to go after these people -- and sometimes we had arguments with the feds on what laws we could use. But we had to train our investigators. And then keeping those people once we got them to the proficiency level to make a difference -- that was a challenge as well. We were the first in the nation to do that on a statewide level. It was so effective all the other states would ask us, how did you do this? How are you training?
▶ 1:06:58Sen. Gillibrand: But it was absolutely necessary because when you looked at the numbers, the fbi's internet crime report showed that cyber enabled crimes defrauded americans of nearly $21 billion, with the most lost to cryptocurrency and artificial intelligence scams.
▶ 1:07:16Sen. Gillibrand: And then when you looked at how much it was increasing, year over year, no matter how much we were becoming aware of it and focusing on it, the complaints that the fbi's icy three received in 2024 compared to 2025 -- it increased nearly 150,000 more people reaching out for help. That is to the federal government. Online scammers from china are not loan actors.
▶ 1:07:43Sen. Gillibrand: They are usually syndicates and they orchestrate billions of dollars, and usually it is thousands of victims, and the target citizens from other countries like the united states. When I saw as attorney general that these were evolving and that many of the seniors felt like they were not going to stand a chance, we created the state cyber fraud unit.
▶ 1:08:10Sen. Gillibrand: It was so helpful because some of the monetary losses we started to see did not trigger federal jurisdiction where they would start prioritizing it. But once we started aggregating them and digging in, we realized it was so much larger than originally thought. But right now, I don't believe we have the manpower in the federal government to even chip away at the number of scams we are seeing against older americans.
▶ 1:08:38Sen. Gillibrand: And I know this because we were trying to deal with the overflow. So I think it is incredibly important to build teams like we did in the state of florida and other states, so they can work in tandem with the federal government, especially when the scams are coming from overseas, like in china. That is the only way we are going to get enough.
▶ 1:09:01Sen. Gillibrand: Do you believe right now currently we have enough manpower in traditional law enforcement agencies in the federal government to make a dent on the number of scams we are seeing against our seniors?
▶ 1:09:11Ms. Price: Thank you, senator, for your leadership on this issue. No, is the short answer. One of the recommendations that the commission made last fall was that we needed a better national public awareness campaign, but we also needed to enhance law enforcement training on scams.
▶ 1:09:31Ms. Price: As you stated, state and local law enforcement agencies are often the first point of contact between those who have had fun that stolen, but those local law enforcement agencies don't have the knowledge, the background, or the training on these particular areas. >> Mr. chairman, may I have another minute?
▶ 1:09:58Ms. Price: In your testimony, you are explaining how china uses an inside out strategy when it comes to its scam centers, many china selectively -- select of the cracks down on scam senators targeting chinese citizens. So it blatantly incentivizes chinese nationals to target other people outside their own country. We saw that because you noted in 2020 four china reported a 30% decrease in money lost due to scams while the U.S.
▶ 1:10:28Ms. Price: Saw a 40% increase in that same year. Is that what you are getting at when you were talking about how china incentivizes people to scam others?
▶ 1:10:36Ms. Price: The criminal elements just moved to an easier target, because once china clamped down on their ability to defraud their citizens, it was easier for them to go overseas. >> so to try to bolster our manpower -- you can't just have anybody that day one takes an oath to wear a badge and go against the bad guys. They are not going to know how to go after these complex cases.
▶ 1:11:07Ms. Price: It takes significant training. Today, I introduced the stop scams against seniors act, which will help support similar efforts like in florida -- the elder justice task force. We called ours a cyber fraud enforcement unit.
▶ 1:11:24Ms. Price: They will be specifically aimed to combat scams against seniors at that level and include locals as well if we can to complement what is already being done at a federal level. Is that legislation -- the coordination between states and the federal government is absolutely essential to increase demand power.
▶ 1:11:47Ms. Price: That was our recommendation, that we needed that. And the administration has taken some very important steps in the last few months. Specifically the task force on scam centers, the strike force scam centers. We actually believe that needs to be codified.
▶ 1:12:11Ms. Price: We have to make sure that they have the resources and the funding that is necessary to do all of this work on the local level and the national level.
▶ 1:12:21Sen. Moody: Thank you, Mr. chairman.
▶ 1:12:24Chair Scott: Commissioner hodges, fentanyl has been a plague on the american people. It knows no socioeconomic, gender, or age boundaries. Can you detail china's connection to the criminal supply chain?
▶ 1:12:38Mr. Hodges: This is obviously a very important issue, one that has affected the lives of many families through the loss of life as well as devastation on a wide scale. The connection we have seen here is that we have different routes into the united states. It is publicly available. The chinese are actively involved in this.
▶ 1:13:10Mr. Hodges: This is at various different levels. I don't believe the president of china is ordering this. It is something they are aware is happening. It is definitely the cartels. That is my personal opinion and it has had a devastating effect on the united states in -- on a daily basis.
▶ 1:13:35Chair Scott: Commissioner miller, you have tracked china's economic coercion toolkit for years. Beijing has especially threatened to cut off pharmaceutical exports to the united states. How credible was that threat? Under what geopolitical conditions would china pull that trigger?
▶ 1:13:52Mr. Miller: I believe the threat is credible but I also believe -- I don't think the threat has to be something that china would actually follow through on. As long as china is able to weaponize supply chains that are important to americans, they're going to haveif united states a, considering involvement in the asian theater, the question does not have to be whether china
▶ 1:14:23Mr. Miller: Will pull the plug. When we were making our decisions back at home, the united states government will have to factor in the possibility that china has a lever to pull that could be catastrophic to americans and our military. I will answer your question by saying I think the threat is credible but it does not have to be followed through on. It just has to be out there.
▶ 1:14:41Chair Scott: Commissioner price, a -- ccp scam compounds across southeast asia, to run fraud operations. In your assessment, does the chinese government have the ability to shut these operations down, and what is the most accurate characterization of their willingness to do so?
▶ 1:15:05Ms. Price: We've seen them shut down some of these. Especially against their own people. That is step number one. By trying to make arrangements and agreements with some of these countries, to help them with their policing. They are basically saying we can do this, let us in and we will help you close these down.
▶ 1:15:33Ms. Price: That would be my second response.
▶ 1:15:35Chair Scott: Commissioner slevin, the ccp's acquisition of americans' health data is not a far off threat. What do we do right now and what is the danger to americans?
▶ 1:15:52Mr. Slevin: We held a hearing on this a couple months ago. One of the takeaways was a coordinated data collection, that is integrated into the ai and innovation flywheel that china is making rapid progress on.
▶ 1:16:15Mr. Slevin: When it comes to robotics, there is the integration of data from its own citizens, certainly. Certainly work is being collected on U.S. citizens, going into the flywheel of further innovation.
▶ 1:16:34Chair Scott: Did you see that article about the fly and the robot? It's about the size of the fly.
▶ 1:16:42Ranking Member Gillibrand: What does it do?
▶ 1:16:45Chair Scott: I think so far, it has a camera. But it's the size of a fly. That's so hollywood.
▶ 1:16:54Chair Scott: For any of you, the department of war recently added a chinese company to the 1268 list, companies identified as chinese military companies. Are you familiar with them? What do they do?
▶ 1:17:15Mr. Miller: I can start. It is not a company per say an outsourcing platform for pharmaceutical r&d, drug manufacturing, discovery, etc. I think it has become more integrated into the way our pharmaceutical companies do -- build their supply chains and do research, and we don't have a good idea of how deep this is or how deep the reliance is, although their presence is everywhere.
▶ 1:17:45Mr. Miller: The larger issue to deal with, looking at something like china's role in biotech and pharmaceuticals, is that china is beating the hell out of us. What we saw in 2020 was the share of pharmaceutical licensing deals going to china were very small, 3% to 5%. Every year, 5%, 15%, 25%, 40%.
▶ 1:18:12Mr. Miller: We are on track for over 40%, possibly much more of pharmaceutical deals taken by western pharmaceutical giants, brought to china, transferring know-how, expertise, capital, building up china as an innovation hub, for its attempts to become a biotech power.
▶ 1:18:37Mr. Miller: The reason this is so worrisome is that as china's share of licensing deals increased, the refrain was this is good, it is good for patients, it lowers costs, it gives pharmaceutical giants some ability to move faster. All of these things are true.
▶ 1:18:57Mr. Miller: But I think it starts to become an issue that congress needs to look at, because when you are talking 40% of pharmaceutical licensing deals going to china, with a trajectory that this could go farther up, this could become a reasonable national security issue. While some would argue 40% is not that much, in two or three years, at 70%, I don't think there are -- there would be few people who think this is not worthy of congress's attention.
▶ 1:19:29Chair Scott: Should they be added to the companies of concern?
▶ 1:19:33Mr. Miller: I do. This is something our commission has not weighed in on collectively but personally, one of the issues was would there be named entities or would there be a designation by the executive as to which companies should be deemed working with the chinese military.
▶ 1:19:57Mr. Miller: This has happened recently, so when you have a situation where you have a pharmaceutical giant labeled by the united states government as being part of the military ecosystem, I think that is the case, that they should be included on that list.
▶ 1:20:16Chair Scott: Older americans are engaging with digital health tools, telehealth platforms, biomonitoring devices, at an accelerating rate. Are you concerned data from medical devices such as cgms, ecg monitors are stored in china servers rather than domestic servers? Is there a danger in that?
▶ 1:20:42Mr. Miller: I will continue. The danger from data is something we are just starting to get our arms around. Traditionally, we knew about the threats from chinese cyber. They would hack our systems in steel our data. In an era of big data and artificial intelligence, the utility of data that seems very mundane -- we were talking about tire pressure on a car in our hearing, not just where the car was going or a gas meter.
▶ 1:21:13Mr. Miller: Even the smallest details could be things that build a composite picture of where people are going. Medical histories, wearables, people's health condition, build a composite picture of a person and a network. We are just starting to understand the degree to which this is vulnerable, to china's approach. As I said in my testimony, china is not looking at this the way the united states is. The united states still sees these discrete issues as consumer or privacy issues.
▶ 1:21:45Mr. Miller: For china, it is national security, related around data as a strategic resource. As quantum computers eventually come into the picture and are able to take some of these enormous databases that we save now and decrypt later. The ability for the chinese to build pictures or patterns of life is going to become enormous and we should get our heads around it.
▶ 1:22:09Chair Scott: Does hippa help? The fact that we do not share health data? Does that help stop this?
▶ 1:22:18Mr. Miller: That is a good question.
▶ 1:22:21Chair Scott: I doubt it.
▶ 1:22:22Mr. Hodges: I'm not aware of it.
▶ 1:22:25Chair Scott: Medicare, tricare, should that data be overseas in china?
▶ 1:22:30Mr. Miller: I think we've come to the conclusion, bit by bit that we need to keep control of our data, because all of it is important. Something like your fitbit or something that measures your heart rate while you are sleeping seems irrelevant to what the chinese would want.
▶ 1:22:52Mr. Hodges: From a national security perspective, across the united states and geopolitically, every data point becomes a new tool that they can use, to create a psychological operation.
▶ 1:23:14Mr. Hodges: With the expansive nature of the different robust tools they have inside the united states, they have access to cell phone data, credit card data, sheer health data -- your health data. Each of these data points provide targets of opportunity on how to get involved with people and mess with people on a daily basis or an individual basis, including a societal basis.
▶ 1:23:38Chair Scott: You guys are down a couple of commissioners. When is that going to change?
▶ 1:23:45Ms. Price: We are down two commissioners. We are waiting for an appointment by senator thune and senator schumer. We had hoped it would happen last january.
▶ 1:24:00Chair Scott: Ranking member tillis brand.
▶ 1:24:02Ranking Member Gillibrand: Thank you Mr. chairman. I want your thoughts on ai, whether ai can be useful in targeting these scams, finding, decoding, identifying or blocking. I would like to understand what opportunities you see in ai, and obviously there are going to be challenges. You can start with either one.
▶ 1:24:26Ms. Price: I'm not going to pretend to be an expert on how the engineers make ai work. But we know that scam centers as an example, last fall there were numerous reports of how much social media in the U.S. was providing advertising or space for advertising for these scam centers.
▶ 1:24:56Ms. Price: In the last few months, the technology companies have sort of seen the light. They created an industry accord against online scams and fraud in march. Meta, microsoft and others assigned on. A recently spoke with the strike force, and talked about how much they've been able to crack down on their own platforms.
▶ 1:25:21Ms. Price: The fact that they can crack down on their own platforms, that they know how to identify it and that they have actually said in their industry accord, that they are going to work on new ways to do so gets me to the answer of yes. They can go a very long way.
▶ 1:25:45Ms. Price: We also know that there is a framework for identifying some of these scams in ai. U.k., australia and taiwan have each put some sort of verification to prevent false content. It leads me to believe the technology is there. I will let someone who understands how the technology is made take it from there.
▶ 1:26:15Mr. Hodges: To expand a little bit, and I think reva but up the issue -- brought up the issue of the energy grid. This is an area where ai can be put to good use.
▶ 1:26:35Mr. Hodges: It's an area where artificial intelligence right now, if you get the right model and training it to identify vulnerabilities, the components of concern, in some cases the ai is sophisticated enough where it can go in and rewrite the malware so it is no longer harm fill -- no longer harmful. See you don't have to go and rip things out -- so you don't have to go and rip things up.
▶ 1:27:05Mr. Hodges: That is an area where I think there is ton of value. Going back to scam centers, I think there are tools that can be leveraged to utilize ai, on an offense of basis and bring down -- offensive basis and bring down some of those centers. There are opportunities there.
▶ 1:27:32Mr. Miller: We know what xi jinping is concerned about and focused on, because he gave us his playbook in 2015 called made in china 2025. Ai was first among many of the technologies that he believes will allow china to win the fourth industrial revolution. Ai is even more important than that because ai is an enabler technology. It will make quantum better, it will make biotech better, it will make robotics automation better.
▶ 1:28:03Mr. Miller: The focus on ai, there is a lot of focus back home. There is just as much focus in china right now.
▶ 1:28:13Mr. Slevin: I would add to that, the way we define the competition is still evolving. As a country with the premier frontier models, we focus on agi and this congress talks a lot about agi. In china we are seeing a focus on adoption as vital, among its public and its companies and other users.
▶ 1:28:41Mr. Slevin: I think it is an important factor for policymakers to consider is how to promote adoption, safe adoption.
▶ 1:28:50Chair Scott: You talked about these scam centers. Is china making money? Are they getting kickbacks?
▶ 1:28:58Ms. Price: I don't have evidence that shows that, but we do know that they have worked with crime syndicates, and that crime syndicates have been involved in efforts like belt and road and others.
▶ 1:29:18Chair Scott: A lot of seniors have money in 401k's. 25% of that money is invested in chinese companies. Is investing a chinese company the same as investing in a south korean company?
▶ 1:29:36Mr. Hodges: I'm going to jump ahead, absolutely not. It is my opinion and the commission has previously had recommendations on this, but investments into china, especially with dual use technology as we saw from the recent listing, you are essentially helping fuel the advance of the chinese military. So absolutely it is not the same.
▶ 1:30:04Chair Scott: So what are we not talking about enough?
▶ 1:30:12Mr. Miller: When we are talking about investment into china, we've been focusing almost entirely on active investment. Our venture capital firms, private equity firms. Usually in very narrow buckets. Ai, quantum, semiconductors. The other part of this, the commission had a hearing on this in 2024, is taking a closer look at portfolio investment, passive investment.
▶ 1:30:40Mr. Miller: The problem with all of these billions of dollars of capital going to china, is as you said, there are no private companies, truly private companies in china. If the government want something, the government will take it. We have an inability to know what percentage, what share of this capital, from what companies is going to help the party or the military.
▶ 1:31:02Mr. Miller: One of the issues that we have is that retirees are often invested in funds, unknowingly with a large share of their capital parked in chinese companies that may or may not be funding a military operation that we may one day be fighting against. They are -- there are obviously major financial issues to deal with, macroeconomic issues to deal with.
▶ 1:31:28Mr. Miller: I would suggest one thing that is a major problem is that retirees and other investors have no transparency whatsoever, that their money is actually part in these funds that invest in chinese companies, and they are often sanctioned companies that are still in mutual funds.
▶ 1:31:48Mr. Miller: I would suggest that the idea of having some sort of transparency around it, perhaps with a label on a fund saying this fund invests in chinese sanctioned companies, to the extent that congress or the administration is not able to move quickly, there are ways of getting greater transparency around this issue and give the ability of people having their money sent over there to say maybe I don't want to park my money with that company or that fund because I know it is doing something I'm not -- I might not like.
▶ 1:32:18Chair Scott: I want to thank you all. Thank you for what you are doing, thank you for what the commission is doing. I want to thank the ranking member for being a great partner on this issue. The threats we talked about today does not have a partisan focus and our solutions shouldn't either. It's an aging committee operates a hotline for anyone who believes they have been targeted or victimized. 1-855-343-9470.
▶ 1:32:50Chair Scott: Anyone who has questions for the witnesses, the record will be open until next wednesday at 5:00 p.m. Thank you.