the qc satisfy public opinion. so why not give an undertaking held a public inquiry with power to summon people and hear evidence under oath? >> as i said earlier i will absolutely -- we got to get to the bottom of this but to be fair this is not the metropolitan police investigate the metropolitan police. it to inquiry underway, one is mark allison qc who played a very major role in prosecuting some of those responsible who met with the home secretary day, and the second is the chief constable. we need to make sure that all the powers and everything they need. but as i said very clear, if we need to go further to get to the truth, we will. >> mr. markey spencer. >> thank you, mr. speaker. as it's been run is published with the prime minister usher the house that will be given the resources to clamp down on tax was like 700,000 pounds avoid by the party opposite and?

>> i think i will bring mexican appointed as a symbol to mention this in every prime minister's questions. i've managed to get in was and is a great pleasure, mr. speaker, to get in a game. they '07 hundred thousand pounds of tax that could be going into schools confident going into hospitals and it's about time they realize what hypocrites they are and paid up the money. >> thank you, mr. speaker. with over 400,000 housebuilding plots with -- remaining and build on in this country does the prime minister agree with me that we should note that pressure on companies to start building and creating jobs rather than to simply waiting for the profits to increase? >> i agree with you on believe that we need to do more to encourage businesses to build of the plots that they already have. that's why we've taken unprecedented steps with schemes like the health device scheme that a making of able mortgages and people. all those initiatives are asked to make a difference and housing start are radically up compared

with two years ago but i don't rule out taking further steps as well. >> mr. john baron spent the government deserves credit for having introduced the cancer drugs fund which is held over 30,000 cancer patients. since 2010 but can i share with the premise of there's growing concern about the lack of clarity regarding its replacement at the beginning of the year? we look at this as a matter of urgency? >> i am looking at this as a matter of urgency. i'm proud of the cancer drugs fund as my friend says, it is saved many lives but it is made of able drugs to over 30,000 people. it's been expanded to include some treatments as well as drugs and they certainly want to see this record that we build on and in the way put at risk. >> thank you, mr. speaker. last week the prime minister said the people on this bench effort and about the contact and i can assure my constituents certainly have not. in my city, in my city last week only 23, one bedroom homes were

unavailable for rent. of those, four of them had over 200 applicants. when is the prime minister going to admit that this is not the best way of reducing the housing benefit bill? >> the point i would make to the honorable lady, we are removing the spam subsidy because it's right to be there between people and private rented accommodation and people in socially rented accommodation. but this in a way is the perfect prelude to the spending review we're about to hear about. labour have told us they are not going be responsible about spending. are going to accept the cuts that have been made, and we here week after week backbencher after backbench, front bench after front bench accompanied by the difficult decisions that we've had to take and promising to reverse them. that is why did absolutely no credibility whatsoever. >> order. statements, the chancellor -- >> we believe the british house

of commons now as they move on to other legislative business. you have been watching prime minister's question time aired live wednesdays at seven in eastern apartment is in session. you can see this weeks question time and again sunday night at 9 p.m. asian and pacific on c-span. for more information go to c-span.org and click on c-span cities for prime minister's questions. plus links international news media and legislatures around the world. you can also recent review concluding programs dealing with other international issues. >> you are watching c-span2 with politics and public affairs. weekdays future life coverage of the u.s. senate on weeknights watch key public policies and. every week in delays non-fiction authors and books on 80. you to pass programs and get our schedules at our websites and you can join in the conversation on social media sites. >> the supreme court will announce its ruling on same-sex

marriage at california proposition eight same-sex marriage ban this morning. we will have live coverage of the news and reaction beginning at around 10 a.m. eastern on c-span3. then the ceo of twitter will be speaking at the annual convention of the american society of newspaper editors. live coverage begins at 12:18 eastern on c-span3 and c-span.org. >> army chief of staff ray odierno briefed reporters yesterday on the state of the u.s. army. he announced common and civilian personnel cuts and said the budget sequestered could force more cuts of the future. general odierno also comments on afghanistan and nsa surveillance programs. this is a half hour. >> [inaudible] we will have

opening comments and then we'll take questions and answers. >> thanks. again, thanks everybody for being here. it's been a while since i've been down here. today, i want to announce the results of the department of the army force structure decisions. i think as all of you know the army is in the process of undergoing one of the largest organizational changes probably since world war ii. as we transition from a force at war, our decisions are in line with the fiscal year '13 budget submission, which implements a $487 billion reduction in the uv funding based on the budget control act of 2011. it began fiscal year 2013 and extends over 10 years. the army's share of this reduction is approximate $170 billion. as result of budget cuts the drawdown of forces in afghanistan and iraq and the

2012 defense strategic guidance come the army has reducing the authorized end strength of the active army from the wartime of 570,000, the 490,000. the army national guard will go from 358,000, 350,000. a reduction of a thousand soldiers from the army national guard but this would be achieved without any force structure changes in the national guard. the army reservist is going a plan 1000 soldier growth and will remain at 205,000. the reduction of the 80,000 soldiers out of the act of component is a 14% reduction. this reduction will be completed by the end of fiscal year 2017, and i want to be clear that we are taking these actions as result of the budget control act of 2011. this in strength of force structure reduction predates sequestration. so i sequestration moves on to will be a requirement potential to take a more force structure

out of the army. if sequestered continues in the fiscal year 2014, army reduction to end strength force structure and pacing announce today will be only the first step. our decision over would make these reduction is based on number of criteria, which include the ability to train our forces, our ability to check power, provide for soldiers and families well being, the ability to expand and region resources and a appropriate geographic just a vision to also include environmental and socioeconomic impacts, costs, and the institutional climate with the 2012 strategic defense guidance come including the rebounds in the pacific. based on extensive analysis, the lessons of 12 years of war and the need to increase the army's operational capability and flexibility, the army is also reorganizing our brigade combat

teams which will reduce the overall number of headquarters while sustained as much combat capabilities as possible. in other words, we are increasing our racial. as part of the reorganization of each brigade combat team we'll will add a third maneuver battalion, an additional engine and fires capability to each of our armor and infantry brigade combat team to go to make them more lives, more flex will, more agile. in order to do this while keeping our force structure in line with her in strength reductions, we will reorganize our 40 brigade combat teams in 233 brigade combat teams. as we and educate the brigade combat teams will reinvest some of the soldiers, equipment and support personnel into the remaining brigade combat teams. we conduct an extensive analysis that included 6500 hours of simulated combat and 34 separate scenarios, and extensive interviews with their commande

commanders. we also conducted a programmatic environmental assessment to look at both the environmental and socioeconomic impacts of these reductions. additionally we conducted listening sessions at 30 installation with soldiers, families, local leaders and the basis committees to better understand the impacts of all of our potential decisions. we also took steps to ensure we were being prudent this going in this decision. for example, as part of our cost calculations the army had the first $788 million in military construction projects until decision on force structure reductions were made. as we organize our brigade combat we expect to cancel almost $400 million of these projects permanently. the army will inactivate a total of 12 brigade combat teams, to overseas, stations in germany will complete their inactivation in fiscal year 2013.

leaving to brigade combat teams in europe to fulfill strategic commitments. the remaining 10 will come out of each of the following 10 u.s. installations between now and the end of fiscal year 2017. fort bragg, north carolina, fort campbell, kentucky, fort carson, colorado, fort drum, new york, fort hood, texas, fort knox, kentucky, fort riley, kansas, for stewart georgia and joint base lewis-mcchord in washington state. in the future will announce an additional bct to be inactivated which would bring the number of bcts to 32. but that decision is yet to be made. as we work through this drawdown and inactivation gins will maintain documentation with our congressional officials and local communities to ensure a smooth delivered and transparent process.

again i want to emphasize that these reductions do not reflect deductions due to sequestration the full sequestered could could require another nift mr. reductn and active guard and reserve force structure as much as 100,000 combined. at this time i'll be happy to take your questions. >> general, a couple things. is there a total cost you have, or even some kind of approximate cost for how much this is going to take? and you said over time that you thought you would be able to do most of this through voluntary reductions. was your current assessment on that? and particularly as you look at to sequestered, how much can you said sort of 100,000, does that engaged to the point where you probably wouldn't be able to do that all voluntary? >> thanks. first, on the costs, as i mentioned on the milk on cost and with about 7 million milk on costs that were out there for

the whole army over the next four, five, 60. renault been able to reduce debt by 400 million based on these decisions. so in my mind it's an overall reduction in costs. we will still have some milcon projects but those are things that already plan inside of them as we go through our continued modernization of facilities. in terms of bringing the forced them. so far we've been able during this reduction of 80,000 to almost all of it through natural attrition. however, we will announce my think of our in house or will announce this year that we're going to selectively some colonels and lieutenant colonels and the next year for certain number of your growth will select to choose to release some captains. on your groups that are unrestricted officers are managed by year. with some years better over strength and we will reduce those and will have to divorce and what to do that. that will happen next year, but

a large majority would able to be done by natural attrition. >> do you know about how many that would have to be released? >> i don't. i don't. for the colonels it's around two to 300. for captains is maybe around 500, but don't, we will get to the nose but if we go to full sequestration, we will have to do more forced reductions out of personnel. >> general, let me ask, you know, this has come basically almost entirely on the active component, and you say eventually the rc's time to make them. what are the factors that are? we look political and practical in terms of why you hit the ac so hard, and what happens when you go to the rc? >> so, remember, history here, as we had to increase the size of the army, when we're involved in iraq and afghanistan, the

large majority of increased happen in the act of poker for accept 482500 in 2001. we grew to 570,000. so as we reviewed the new defense strategy, we believe that is more pro-business were out of iraq and we were reducing our commitment to afghanistan that we, in fact, can reduce the active component to 490. so we think basin strategy that's appropriate. as we move forward, we have to do more of a balance because, in my mind, there's a role that we have national guard, army reserve play an active component of we have to make sure we keep those roles in line with each other. we will still reduce quite a bit out of the active if we have to do more, but to also be some out of the guard and reserve. it will maintain that balance that they think we need in no to maintain an army that can respond quickly but also have the depth of response is necessary from the guard and reserve. >> next question. >> general, seems like this is

fairly divided between light and heavy brigades. can you talk a little bit about how the strategy influenced what brigades you chose to produce? and how that may change in the future under -- >> so, although i've mentioned the number of brigades that would be reduced, their stable copy be some minor adjustments to the type of brigades. so i think what you're seeing of the right now is 12 armor, 1400, seven stryker brigade's. my guesses of the next couple of years that were just a little bit. and my guess is we'll go to something like 10 armor, 14 abcs and eight in the end. but that will be an adjustment that comes later as an equipment around. we've done that based on analysis of what we will need in a contingency operation plans of how we see our rotation requirements that could come up in the future, whether it be to

the middle east or the pacific. these are the amount we need in order to meet those commitments. >> a little bit more reduction on the armor side speaks that's right. >> general, to what extent will the redesign impact this data acquisition objective for things like the ground combat vehicle, the joint light tactical vehicle? do you need less no? >> we do. so for all of our systems it will be less systems that when he. so it will reduce them to the cost of fielding and to our armor brigade under infantry brigades. >> you know because i don't. we're still working through the. as we said in our budget for next year, the 15-19 budget, you'll start to see some of those things. >> has the army been any assessment of sort of the impact this could and will have on local communities? like how many potential civilian jobs will be lost at the basis and surrounding them and local

impacts? >> we have. that was part of this. we did a soldier economic impact study. as you notice we spread it out quite could be one of the reasons we did that was first, it allows us to have diversity across the united states. so we maintain that we have forces on the west coast, forces in the midwest, forces on east coast. and with the way we took the brigades out, limits the amount of impact to the only outlier is fort knox because there's only one brigade there. we're taking a brigade out of fort knox and a decision was made because of its core close in terms of military value on the analysis of training and other things. so that's why we decided to dig that one up. >> any numbers, estimates of how me civilian jobs could be lost, whether it's on the basis or -- >> civilians can what happens is where the baseline civilian jobs that really is required no matter what, how many you have

because it's basic foundational requirements that we have, family programs, soldier programs. so the increase for numbers is a little bit but not a lot, so there will be some that come them with us and will be commensurate civilian drawdown with the military. we are working our way through that. >> general, my question from this announcement is concerned have relations with effect with other countries in asia especially with india because of which is going on now between u.s. and india. and also at the same time taliban are still not begin acting and against the. >> first, i believe my assessment is with the forces with left over from we have more than enough to meet the requirement that we need to respond. if i could just comment on, this one is attacked in afghanistan, i will go off a little bit of a

tangent. i will tell you is another example of great success. actually the afghan security forces did an incredible job retelling that attack and killing the attackers. is another great example of the progress i think the afghan security force made. although there's some concern that taliban is still able to do those types of attacks. >> because u.s. has announced u.s. will leave afghanistan in 2014 and there is in some kind of messages speak with we've said we will remain committed to afghanistan through 2024. we still have made a decision yet on how many troops we left after 2014. >> to add a battalion to each existing comp each succeeding brigade, i assume you will take the two battalions from the fourth at fort hood, move them over?

>> [inaudible] >> what happens is you lose the support battalion and there's another mix of engines and other battalions go away. but those combat capability increased a little bit spent how many soldiers will have to -- >> for example, example, 3500 in this brigade, 2100 will be reinvested. the 1400 will be reassigned to they can still be reassigned on to fort bragg and other places, depending on our manning. >> if sequestration -- was sort of further reductions are you looking at? >> we looked at, we are going through a process with the secretary of defense but we looked at several different ways

to do this. you know, it's always about capacity versus capability. and so we are on course of action we keep more capacity. we wanted those they keep more options. so that depends on what wiki. so we're still working our way through that, and in the end the bottom line is we want to make sure we sustain enough capability to deter. we want to make sure we sustain enough capability to be able to conduct our contingency operations and were still working through those. >> possible for the reduction of brigade combat speak with yesterday if we go through, it's going to be another reduction. there's no way around it. they will be reductions in addition, reductions in other capabilities as well. spent that was my question. these cuts that on the table now, does the army still need a 13 aviation brigades or will changes be needed to? >> with this structure now, we are sustaining 13 aviation groups. if full sequestration continues we will have to take a look at

the number of aviation. it will probably reduce your we have a formula that goes with the number of battalions, how much aviation we need to support those battalion. and in that formula we need 13. >> general, will these reductions have any affect on overseas quick reaction readiness with reductions in germany and italy, in europe and africa, for example? >> so, the brigades remaining, wilthough be a brigade left in italy, one brigade in germany. we have aligned the brigades in africa. [inaudible] they have soldiers in africa now. so that's how we were. we aligned forces from the states to the combatant commands to make of this but we're also aligning our brigades with the nato response force which will do training with our nato partners to continue to train them and keep interoperability

and that will happen as well as we do this. you have units from the states to assist in germany, assist in africom and the there will be aligned and they work very closely and carefully with the combatant commanders. >> are you concerned them not being there physically in the region hurts the readiness of? >> if you look in hawaii and if you look in the pacific, we still have quite a bit of forces and alaska, hawaii, fort lewis and they're all focused towards the pacific region. so we will maintain -- my issue is with the budget issue, continue resolution and the budget, it's eroding our readiness. that's a different question that what we're talking about here. that's why we need a budget, because we don't get a budget it's going to of the readiness of all of our units as we move forward. >> follow-up on the taliban. given the response of armed forces on the attack of kabul

today, are you more confident that -- [inaudible] >> i am. i see it as a positive sign as we continue to train and turn more responsibly over to them. i'm very encouraged. we still have some work to do i think by the end of 2014, they are going to be ready to protect the people of afghanistan. secondly, what impact -- [inaudible] i think you said that reno change a number of forces? >> that's right. spent and finally -- can you give us a sense of what you intend -- >> i'm going in july. i'm going to visit the army. as you know is a very important relationship for us. so i will travel there and i will meet with the head of the army and other defense officials. i will have a chance to go around and visit the indian army and we will continue to work and

build where we have common interests and we will discuss many issues that we have in common to help each other grow as army. i'm looking forward to that very much. >> thank you. >> hi, joe. john harper. will these reductions affect the army rebalance to the pacific at all in terms of engagement activities, as well as in any other we? >> no. as i said, sustain all of our commitment. the problem we've had over the past four or five years is all of these unit your are in iraq and afghanistan are now back. we kept initially intending to be engagement that we want to do so seriously in the asia-pacif asia-pacific. >> just to follow-up with the answer you just gave and what you been saying about this plan and you can semi-the armies can under these plans but what happens to the army's engagement plans under sequestration? >> let me talk about it in terms

of defense strategic guidance of 2012. this force structure can meet the guidance that was outlined last week to when we could sequestration we have to do another analysis of whether we can meet in a strategy or not. and that's what we have to work through. we've been talking about, working through that. and keeping on where it ends up, whether we can still meet strategy or not. >> i have one follow-up question if you don't mind in wake of the edward snowden surveillance leaks. are you at all concerned about how terrorists, brought terrorist groups might be changing their tactics in terms of to mutations? and are using that already? are you seeing any changes in the way they communicate now that they have this broader scope, understanding of how we watched in? >> i can't say whether i seen any changes but obviously there's always concern that when information like this is late, what's the impact it has? what's the impact it has on the

operational forces deployed forward? was the impact it has on our ability to continue to conduct operations around the world? and always were about the protection of our soldiers who were in 150 countries around the world. so i'm very concerned about this leak. it's not just about leaking information, from my viewpoint. it's much greater than that. it puts american people, americans soldiers at risk. actually soldiers, sailors, airmen and marines at risk. who are overseas conducting operations. spent one more question. general odierno, how far into 2014 does sequestration have to go before you have to start slicing? >> well, i think, so in 2014, i think it has to do with the impact on our 15-19 budget. that's when we're going to start making more change.

assuming full sequestration -- >> so you can get through 2014 with full sequestration? >> the problem we have is, is going to be harder for teams going to be very difficult with sequestration. i can't go any faster than going so i can't impacted. i can really impact 15-19 budget. if we believe full sequestration is going to happen, we will probably speed up some of these reductions. >> when do you expect this to be completely? >> right now, the end of fiscal year, september of 17. >> so the end of the dog in? >> if we think sequestration will go throughout the entire period, you have to do a course of action that may speed this up and had fast. more savings by doing it fast. that would be disease we might have to make. >> quick clarification.

what happens to fort knox? is this a brac candidate? >> no. we just invested our human resource commander with 4000 additional civilians. so we need for an ox and the recruiting command there spent so it's just not a training ground? >> it's not an optimal place. spent closing comments? >> thanks. .. >> we've tried to make it as small impact as possible, as many communities as we've could. the thing i'll just say as we go

forward is i'm still incredibly proud of the great soldiers we have and leaders that do great things every day. i'm going to leave here, head out to fort lewis and then to fort carson over three days as i continue to talk to our soldiers and community leaders about the changes we're seeing in our army. but the response so far has been very, very good from everyone. so thanks so much, i appreciate you being here. thanks. >> in some ways had there not been a sherman, lincoln would maybe have been nominated, but he surely wouldn't have won the election. he went on to defeat, he won 56% of the popular vote. george mcclelland had a lot of momentum in september. he was writing letters to sherman and others as if he expected to become the president of the united states, and suddenly sherman took atlanta, and for one week he didn't say a

word. lincoln didn't shay much, just smiled, and as he would often say of sherman, he went in one hole, but he came up in another hole. william tecumseh sherman saved the union effort. >> on "after words," military historian victor davis hanson talks about five generals that he says single handledly -- single-handedly reversed the war in their country's favor. >> michigan senator carl levin outlined new legislation aimed as cracking down on intellectual property theft by china. the bill would require the president to block center imports. witnesses discuss the impact of chinese cyber attacks on u.s. businesses and human rights groups.

>> committee will come to order. thank you very much, senator gorton, for joining us, co-chair congressman smith and senator levin. i appreciate your being here and especially your work on these issues and your legislation which i know you will be talking about to hold china accountable for cyber theft. i thank the staff for its tireless efforts for the work they do on human rights and rule of law, and congressman smith and i have co-chaired this commission and appreciate the good working relationship there and with staff. we know, and senator gorton and i just spoke about this, how the public's not paying a lot of attention, and we here are not paying enough attention either with the exception of senator levin and a few others to the serious threat that china poses in terms of cyber attacks and how that threatens u.s./china relations in some ways, so much so that the president obama raised the issue in his recent

summit with chinese president sue jinping. today's hearing will focus on the aspects of cyber that fall within the commission's mandate, notably the impact of rule of law and on human rights. recent headlines have revived the debate over the appropriate balance between security and freedom, but we can't overlook the enormous impact that cyber attacks from china have had and continue to have on american jobs and american companies. they seriously call into question the commitment of chinese -- china's economy. s to the rule of law. we're talking about massive theft of technology, commercial secrets from american companies, what general alexander, director of the nsa, calls the greatest transfer of wealth in history. the scale and scope are staggering. the commission on the theft of american intellectual property which is represented here today by former colleague senator gorton released a comprehensive

report identifying the public's republic of china as the world's biggest violater of the world's inte intellectual property rights. it found that ip theft including from china costs the economy hundreds of billions of dollars a year and literally millions of jobs, dragging down our gdp and undermining our ability to innovate and to prosper. the ip commission noted that a 2011 study by the u.s. international trade commission estimated if china's ip protection improved to a level comparable to ours, it would add 2.1 million jobs to our economy. yet the ip commission acknowledged this figure underestimated the real cost to jobs in this country. the victims of ip theft include companies in my home state of ohio and in michigan and in new jersey. those affected are hard working americans trying to make an honest living and trying to spur innovation only to see their products and their services and their technology stolen and handed over to state-owned

enterprises and orr businesses in china. -- other businesses in china. with the growing prevalence of computer networks, cyber attacks represent an increasingly growing threat alongside more traditional forms of intellectual property theft. china simply doesn't play by the same rules we do. chinese governments deny these attacks even though there is mounting ed of chinese -- evidence of chinese state involvement. evidence includes a 2013 report that linked attacks on 115 companies based in the u.s. to a unit of the people's liberation army working in a building in shanghai. the increase in attacks has coincided with the chinese government's push for development of key industries creating an environment where it's perfectly acceptable to cheat and steal your way to the top. as we've seen in the last few years, it's not only american companies that are the targets, it's media and human rights organizations, something particularly important to

congressman smith and me. journalists writing about corruption in china find their computer systems hacked and their passwords stolen. for human rights organizations and activists dealing with hacking attacks from china is almost a daily fact of life. we can't sit idly by, that's why i support a common sense bipartisan approach to hold china accountable. i urge congress and this administration to do everything it can to combat unfair trading practices including another topic, the important currency exchange rate reform act of 2013 which passed the senate two years ago and has not yet gone to the house. and i commend senator levin for his recent proposed legislation to hold china accountable for cyber theft. i will turn it over to co-chair smith. i have a vote at 2:45, as does cal, but i think -- carl, but i think we'll be able to keep this going. >> thank you very much, chairman brown. in december of 2006 and then again in march of 2007 my human

rights subcommittee computers -- the committee that i chaired as well as the personal computers of my office, that of my chief of staff and myself -- were attacked by a virus that in the u.s. house information resource offices were intended to take control of our computers. at that time the i.t. professionals cleaned the computers and informed my staff that the attacks seemed to come from the people's republic of china. they said it came through or from a chinese ip address. the attacks hacked into files related to china, directly to beijing including a major bill that i was in the process of authoring called the global op line freedom -- online freedom act. also hacked was information on hearings that i intended to chair on china and the names of chinese dissidents. while this absolutely doesn't prove that beijing was behind the attack, it raises very serious concerns that it was. certainly, chinese agents have

not only attempted to target me or my offices, many, many other members of the house and senate are also been the victim of that kind of attack. cyber attacks on congress are only a small but not insignificant part of a much larger pattern of attacks that have targeted the executive branch, the pentagon and american businesses. how do we know this? in recent months we have seen in-depth reports come out detailing this massive intrusion into our cyber space and massive theft of our cyber data. chinese agents have stolen our designs for helicopters, ships, fighter jets and several missile defense systems. they have stolen our innovative technologies from solar panel designs to biotech research. these thefts appear to have paid off for china. in recent years the chinese government has made tremendous jumps in its military capabilities while boosting the competitiveness of, quote, china's national champions. increasingly, we can prove that

many of these outrageous thefts deemed, quote, the greatest transfer of wealth in history, originate in the people's republic of china. and these attacks are not random. we now know with some certainty that some thefts are being organized by the chinese government agencies. as we learn about the sources of these attacks and we are learning about their motivations. talented chinese internet users are working day and night to infiltrate our networks and to steal secrets. chinese actions are part of a larger coordinated, state-sanctioned effort to improve china's competitiveness. today we will hear about how the commercial rule of law system in china allows these types of attacks to occur and how these attacks disadvantage american businesses, innovators, contractors and government agencies. we'll hear about the size and scope of the attacks, and we will hear how the u.s. government remains largely unprepared for many of these

challenges. we will also, however, hear about another side of this important topic, one that is often overlooked or in recent discussions about china's cyber attacks. the chinese government is not only targeting american businesses and military organizations, but it's also targeting ordinary chinese citizens, seeking to advance their most fundamental freedoms. chinese hackers do not simply look beyond their borders to steal relate secrets as we will hear today, chinese citizens -- including those advocating for human rights, free speech and food safety -- are also targeted by hackers. these courageous citizens are also monitored, their private information stolen. the brave pastor seeking to organize a service, the father seeking to raise awareness about toxic food, the wife of an imprisoned activist, the mother who is made to undergo a forced abortion. all of these citizens realize that in any instant the government may and probably is watching. china, of course, also targets

those outside of china who similarly wish to promote human rights and political reform. today we know the system of surveillance and theft occurs. we know that china is organizing these cyber attacks or at the very least is complicit in their existence. the question we must ask ourselves is, why? clearly, china's rise as a military economy will benefit from the latest innovations from abroad. but why is china so obsessed with those who ad slow candidate for political reforms? why is china so worried about ngos who seek to highlight wrongful imprisonments? why is china so reluctant to provide a fair regulatory environment in china where commercial laws and regulations will eventually protect all businesses, domestic and foreign, seeking to provide the best services for these chinese consumers?

these may be difficult questions. thankfully, today we are fortunate to have four guests, four witnesses who are well versed on these issues. they're expert on how china's monitoring our cyber actions and how china is attacking targets globally. i do want to point out that i do have the leave, but i will read their testimonies. i am chairing a hearing at 3:00 on the attack and the slaughter of christians in syria. it begins at 3:00, so i will have to leave, but i want to know and convey to our witnesses my sincere gratitude for your testimonies, look forward to reading them and for the insight you provide. i yield back and yield to senator levin. >> thank you very much, congressman smith. first of all, i want to thank you and senator brown for organizing this very, very important be hearing on chinese hacking and its impact on human rights and on commercial rule of law. the hearing is timely, it's timely for many reasons, but

there's been many, many recent reports and indisputable evidence of large scale cyber intrusions by the government of china in the vast numbers of private, government and nonprofit entities for the purpose of stealing valuable intellectual property or proprietary information. this is in addition to what is also well known that china hacks the accounts of human rights activists in order to suppress be human rights in china. american companies invest hundreds of billions of dollars every year in research and development. that innovation results from those investments, and it -- the innovation drives investments and drives in turn the growth of american companies and the u.s. economy. unfortunately, our companies are having their intellectual property stolen, and it's stolen right out from underneath them through cyberspace. such theft threatens to undermine america's global

competitiveness. u.s. government reports, private reports point that china is by far the worst offender. as far back as 2011, the national counterintelligence executive said in its annual report to congress that, quote: chinese actors are the world's most active and persistent perpetrators of economic espionage. this may the u.s. trade representative stated in its special 301 report that, quote: obtaining effective enforcement of ipr in china remains a central challenge as it has been for many years. the report continued to quote: this situation has been made worse by cyber theft as information suggests that actors located in china have been engaged in sophisticated, targeted efforts to steal intellectual property from u.s. corporate systems. and today we'll be hearing from senator slade gorton, an old friend of mine, who is on the ip

commission, the commission on the theft of american intellectual property, and that report is just further powerful evidence of what the problem is. so it's hong overdue that we quip -- long overdue that we equip the american government with the tools it needs to fight back. i recently introduced the tech cyber theft act with senates mccain, rockefeller and coburn. s. 884 required the director of national intelligence to produce a report that includes a watch list and a priority watch list of foreign countries that engage in economic or industrial espionage against the united states in cyberspace. the bill also requires the president -- and this is the action forcing mechanism and the remedy -- this bill requires the president if he determines that such action is warranted for the enforcement of intellectual property rights or to protect the department of defense supply

chain, then the president is told that he should block imports of goods in three categories. first, goods made with u.s. technology or proprietary information stolen in cyberspace. second, goods made by companies that engage in this or benefit from such theft. and, third, goods produced by state-owned enterprises in countries designated as the worst cyber thieves. this is a powerful remedy. it's hitting countries that engage in cyber theft in the pocketbook, and it's time that we fight back to protect american businesses and american innovation. we have to call out those who are responsible for cyber theft and empower the president to hit the thieves where it hurts most. in their wallets.

dennis blair, former director of national intelligence and co-chair of the ip commission report said recently, quote: job owning alone won't work. something has to change china's calculus, closed quote. well, we think our bill will do exactly that. blocking imports of products that either incorporate intellectual property stolen from from u.s. companies or are from companies otherwise that benefit from cyber theft will send the message that we've had enough. if foreign governments like the chinese government want to continue to deny their involvement in cyber theft despite the overwhelming proof, that's one thing. we can't stop chinese denials. but we're not without remedies. we can prevent the companies that benefit from the theft, including state-owned companies, from getting away with it. maybe once they understand that complicity will cost them access to the u.s. market, they're going to press their governments

to end it. we've sent our bill to the administration. we await word from the white house and from the administration. hopefully, the word will be one of support. we've stood by for far too long while our intellectual property and proprietary information is plundered in cyberspace and used to undercut the very companies that develop it. in other words, it's time to act, and i want to thank everybody who are part of the effort to stop cyber theft for their efforts, many of whom are going to be testifying here today. and, again, i want to thank our commission and our staff for all the great work that they're doing on this subject. thank you, and i have to leave for a vote, too, so i will yield to whoever's next in line. >> thank you, senator levin. it's a privilege to serve with you on this important commission. i'm congressman robert pittinger, i'm a new commissioner on this important effort. i do want to thank chairman

brown and co-chairman smith for leading this commission. the issue of human rights and the rule of law in china have been of great importance to me, my entire adult life. these are issues i have been dedicated to since i graduated from college and spent ten years with the service of campus crusade for christ. chinese hacking is hurting the attempts by the people of china to advance their own human rights. dedicated heroes are being subjected to relentless cyber attacks as they try to use the internet to break the silence on continued persecutions of chinese citizens, allowing for freedom of expression via the internet will be critical to advancing human rights in china. but this will only happen if the cyber attacks cease to exist. ironically, in light of the reported issues related to corruption within china, individuals who are people of

faith provide the best resource and assets for the continuation and the strength of the chinese economy. cyber attacks by the chinese government have a significant impact both here at home as well as the citizens of china. american businesses have been affected by these cyber attacks to the tune of hundreds of billions of dollars. as the chinese government is propping up national companies, it is doing so on the backs of american companies playing by the rules. the chinese government is responsible for 50-80% of global theft of intellectual property, hurting american businesses and costing american jobs. the united states must remain committed to monitoring the continued violation of the rule of law by the chinese government not just to protect american jobs, but to help stand with those committed to ending the persecution of chinese citizens for practicing their religious beliefs. i yield to my fellow

congressman. >> thank you, mr. pittinger. thank you both for coming today and for your willingness to testify, and i'll keep this real brief so you can go ahead and share what you have for us. most of what i have come to know has already been mentioned a number of times. but, obviously, in a global economy what we have to look at is the rule of law, and the impacts that it has either the respect for that or the lack of respect and what it does. and so i've been fortunate enough to meet with a number of different people both from the chinese government and also those that trade with our largest trading partner. and in doing that, i think coming to real grips with a substantive way to address this problem is what we're all looking for. we can't tolerate what we wouldn't stand in our own backyard, and we've got to make sure that we address that both

from a policy standpoint, from a legislative standpoint. so with that i will yield to you, mr. gorton, and let you start off. thank you. >> chairman brown not only summarized the report, but he summarized my opening statement. [laughter] which simply adds to the fact that when i was on your side of the bench, i always wondered about people reading written statements that i already had, whether they were implying that i was illiterate. [laughter] i will not insult you by any means in that fashion. i want to make only two or three of the major points of this commission report which we have given copies to your staff and have more if you wish. the first is we found ourselves sailing in uncharted seas.

there weren't other former commissions that had looked into this problem in the past, and we did a good deal of fairly original research to try to bring together both the scope and the breadth of intellectual property theft around the world. i think our conclusions are pretty cautious. we use a figure of over $300 billion a year. personally, i think it's higher than that. that's what we could absolutely all be totally comfortable with. 50-80% of it coming out of china is also a statement. we're quite confident. but we hope this will lead to more study, particularly on your part of an important way in which our economy is being, is being armed. one example is on page 12. a software company that we won't

name sold a single program in china for say roughly $100. when there was an update on it, it got 30 million calls. one to 30 million. this is, this may be the single most dramatic example we have, but it's far from the only one. so what we've done is to try to gather together the nature of the problem of where it, you know, where it comes from and set up policy responses that the congress and the administration can come up with that to a certain extent cures it. senator levin's bill is totally consistent with the relations that we make here because he gets to the central point. we will not really get command over this kind of intellectual theft in china until we have

created internal incentives within china for abiding by rules with respect to intellectual property. at this point it's free theft. there are, there are no consequences of doing so. and the way to create those, that internal deis sire to do something -- desire to do something better is to punish chinese businesses and a government which are making money out of doing it today. we have a large number of recommendations, some for congress and some for the administration itself. bluntly, i would say that if you did every one of them, we would have started down the road, but we would not have gotten all the way down the road to an honest and straightforward relationship. and so on the very last page of the commission report there are three subjects that came up during our deliberations which are not our formal recommendations but which are,

nevertheless, ideas that we think you ought to consider. each one of them, i can say, is more radical than the formal recommendations of the commission itself. but one is to allow cyber counterattacks on the part of american interests that have been hit by cyber attacks, something prohibited by the law at the presence time. a second one has to do with requiring the united nations world health organization to certify that when we give them things, they aren't going to be immediately stolen from them. those two came from outside the commission. the third was one on which i testified before a different commission sometime ago, and that is simply to say that every year the secretary of commerce will determine the losses we've talked about in here from all forms of intellectual property theft and that we for the next year impose a tariff on all

goods coming from china designed to produce 150% of that figure. i don't think we'd get very much money from that, but i think we'd get action for the protection of our intellectual properties. in fact, it would violate the wto rules, but china can't win a trade war against the united states because of the huge amount of its trade surplus with us. it will also create within china itself a view that they ought to abide by the same rules that the rest of the world abides by. i'd make only one final content. when i look back on 18 years in this body, i think the single vote i most regret is permanent finishing fn for china -- ffn for china. we gave up an ability to affect their policies by doing so, and i wish i had that vote back again. >> thank you, senate gorton,

very much. thank you for being here. i know i was in the house working with the north carolina delegation especially. let me just properly introduce both, and then, dr. mulvenon, we'll come to you. senator gorton -- [inaudible] and he was on the 9/11 commission after leaving the senate. he's here representing the commission on theft of american intellectual property and has been a real leader in the bipartisan initiative chaired by governor huntsman and admiral blair. so thank you for your testimony. dr. mull venn nonis director of dgi center for intelligence research and analysis. he runs teams of nearly 40 cleared chinese, russian, arabic,er due and farsi linguists in analysis performing open source research for the u.s. government.

thank you for joining us. and he's also the author of chinese industrial espionage, knows this issue very, veryvel, doctor, thank you. >> i'd like to thank the commission and its excellent staff with whom i've worked for many years, particularly on this issue. i bring a lot of perspectives to this issue, one being a chinese linguist. as you said, 20 years of building teams of cleared linguist analysts doing open source research for the be u.s. government particularly on cyber issues as early as the late '90s working on chinese internet censorship issues with this commission. and then finally, the perspective of being a victim of these attacks given my own profile and my own writings and trying to expel chinese attackers from the ramparts of my own corporate networks on a daily basis. we talked a lot in the last six or nine months about chinese espionage. i would say it's a multifaceted

issue, and i'd just like to highlight quickly five different areas of the cyber espionage which are different in form and require slightly different strategies. and i think it's important for us to not treat it as a monolith, but to break it down into pieces. the fist set of category, frankly, is the traditional government military classified defense contractor espionage. we have very few options in this case. countries will always spy on one another. we can't legislate against espionage, we can't impose be treaties against espionage, but it's important to note that at least since 1996 i personally have watched chinese intelligence preparation of the battlefield with regard to a taiwan contingency monitoring u.s. military asset movements, getting into unclassified pentagon networks to be able to get into logistics databases, providing now strategic near-realtime intelligence to chinese leaders about our dialogues with them, stealing the talking points of our various meetings and, frankly,

getting into a lot of classified defense contractor companies stealing critical classified technology about our newest weapons systems and then using that information to fine tune their own defensive systems and their offensive systems. in each of those three cases, almost immediate benefit from stealing that information, being able to immediately operationalize it. on the commercial espionage side, it's a little bit more complicated. on the one hand, we have what we call sensitive business information, so you break into the c suite of a major western oil company, you steal the dollar number of what they're going to bid on a tract in the south china sea, you hand it to your national offshore oil company, they bid $100 underneath that, and they win the bid. but the one that's been thorpeny to us has been this issue of intellectual property rights. because, one, a lot of companies do not self-report the intrusions, so we don't really have as much data as we would like, particularly day that that

shows us property that's been exfiltrated back to china who then is successfully able to reverse engineer it who can then productize it, markettize it and show a demonstrable, quantifiable loss of u.s. company market share in china and then when they compete with them globally. there are few cases where we have enough data to make that chain, and it's primarily because there are not really the guidelines for many of those companies to self-report those problems. the sec has tightened up some of their guidelines about reporting loss of shareholder value. but many of the companies i deal with feel that they're not properly indemnified from reporting that. so in many ways, many of them are looking to congress for legislation that will provide them with the indemnification that they need to share information with the government without antitrust problems or even collude with one another and share intrusion data with one another so they can engage

in collective defense without legal jeopardy. now, we have begun the talk to the chinese in a much more serious fashion about these issues, particularly in the last six months. and i think the president struck the right top-level tone be with president xi by pointing out the following fact: not to educate them about whether this is happening, but to point out that the real strong pillar in favor of cooperative relations particularly past the nptr era has been the business and trade community. and yet that is the community you hear now the most complaining about how they can't make money in china, how the chinese thumb is on the regulatory scale and how the rampant cyber espionage is reducing their competitiveness and stealing their core technologies. and so to emphasize to president xi as we are to chinese leaders that this fundamentally threatens the bilaterally trade relationship which fundamentally threatens china's overall

economic development which, therefore, threatens their social stability which is the number one priority of the chinese government. and that is the message that is getting through to the top leadership and, hopefully, will incentivize them along with a whole range of other measures that we're cop templating, naming and shaming, denied entities lists and all sorts of our other measures we have, that i think together could possibly stem the tide on this behavior which is, frankly, draining the american innovation economy. >> with thank you very much, dr. mulvenon. those companies you mentioned that are now complaining are the same companies that really did the heavy lifting to push the npr through the united states senate and house of representatives. more on that later perhaps. let me ask, start with dr. mulvenon on this question. i spent a lot of my time, my state makes more than any other, makes more things, more products in terms of net worth than any

state but california and texas, states much larger from aerospace to autos to food processing to chemicals to all kinds of things, wind turbines, solar panels. i spend a lot of time on shop floors, and what you notice is in terms of innovation, they so often take place on the shop floor. so u.s. companies when we do the innovation in california's as apple brags about or ohio or anywhere else or north carolina and then the production is done overseas, automatically that innovation is happening on those shop floors in terms of process and product both. how does, how does this, how did this theft work beyond that? i mean, talk that through, how that sort of exacerbates the or enhances the opportunities these companies have for that kind of intellectual property theft when they do it for cyber attacks here when they do it our companies are actually overseas

producing overseas. if you would discuss that. >> i think, first, it's important to note why this is happening. for the first 25 years of chinese economic modernization, in my view, china was content, and we've all seen the dramatic numbers, the covers of the magazines, everything that emphasizes the tremendous gains that they've made. but it was a very shallow modernization because there were enclaves in china. we would send our components over there, they would get reassembled and reexported out. and in roughly the 2000s the chinese government said this is not the kind of deep economic modernization we want. we don't really feel it's developing the national champions, we're not innovating within china, we're simply assembling other people's stuff and exporting it. so roughly 2005-2006 they came up with this idea of indigenous innovation that was mentioned earlier, and they put out a large number of state policies. the 2006 to 2020 medium to long-range s&t plan, and they

tried to emphasize that this was going to be a large scale effort what they discovered, however, was state-driven r&d is an oxymoron akin to jumbo shrimp and military intelligence. that's not how intelligence happens. so they were failing to do that. and the only place they could turn if they couldn't squeeze it out of the multi-nationals by forcing them to build r&d labs in china, if they couldn't squeeze the tech transfer out of the companies that were competing for market share and being increasingly forced by regulatory ministries who were partnered with those national champion companies to squeeze that technology transfer out, the remaining option that they had, frankly, was to steal it. and unlike 20 years earlier where you, you know, you would have had to physically steal it from a plant, you would have had to smuggle the blue prints out of a shop, you would have had to take the part and run out the door with it, unfortunately, our move towards connectivity and putting all this information online allowed them to steal

that at great distances. and so that wouldn't have been true in a preinternet era. but unfortunately now a lot of companies have been putting all that information online and, unfortunately, that made it all that much easier for people to steal it from them, particularly china. >> thank you. that was very helpful. senator gorton, talk about your experience and your report, and give us thoughts on what -- including senator levin's legislation, what you think we should do in this body and in the house of representatives. >> well, dr. mulvenon put it quite correctly when he said we're half blind at least in determining how much it really is and what's going on. because lots of companies either see no point in saying that they've been stolen from or think that it would make it worse or that they'd lose what markets they have in china. so i would say one of the first things that you want to do is to

see to it that there's one department, one office in the united states that's in charge of finding out the total scope of the problem. all of the various elements that the doctor has spoken about. so that you as the policymakers know how big the problem is. we've given you a conservative estimate. i think that estimate is low. but to a certain extent, i'm just guessing on that. we need to know what's going on, and no one is really in charge of this at the present time. but from the point of view of the cure, the cure is, again, as i think senator levin has at the heart of his bill, the cure is in creating internal lobbyists in china for obeying the law. there has got to be a group there that say we will be better

off if we follow, you know, a fair set of rules than we are now. there's no one there who says that now because it simply isn't true. stealing our intellectual property is very largely risk-free. but tying up the u.s. market which is so important to them in one respect or another will be very, very important in creating a group in china that will say yes rather than simply smile and nod their heads and go ahead down the same road. this is not a new problem. you know, we were concerned about this a decade ago and even more than a decade ago. but the chinese economy has changed, its desires have changed, and it's becoming worse not better. >> senator gorton, is chinese cyber theft a greater threat to our national security or to our economic security? >> you know, i really will defer

to dr. mulvenon on that. it is a major threat to our national security. and even the solutions that i've suggested and that senator levin has suggested only indirectly get at that. how you value in dollars the loss of intellectual property that's important to our national defense is not easy to determine. and the degree to which you can punish them directly for that is hard to determine. but at one level at least that's the most important challenge, the challenge to our national security. but the challenge that may have cost us two million jobs or more is a major, major challenge and something that we should attempt, be attempting to cure right now. >> thank you. dr. mulvenon, would you like to comment on that? >> i don't think you can, i don't think you can disassemble the two. they're inextricably linked. the chinese see them as

inextricably linked, and we should as well. in other words, any decline in our economic security or technological competitiveness has an automatic inically nation for decline in national security. similarly, a decline in national security with respect to the chinese impacts our ability to enforce fairness on the chinese side with regard to economic competitiveness. so for me they're pieces of a part. and the chinese themselves write about their own comprehensive national power in a way that doesn't even make the distinction between the two. so again, talking to senior chinese leaders about their impact on economic development, they'll automatically see the connection to their own national security and the defense of their own country as we should as well. so i don't think anything is to be gained by separating the issues. in fact, i think we have a greater power to influence them by connecting them together and not allowing them to be treated separately. >> congressman pittinger. >> thank you, mr. chairman. dr. mulvenon, as we look at the collaborative efforts among government agencies to address

cyber, how are we doing? the dhs and fbi and u.s. trade representatives and others, are we working well together? is there anything we can do to improve that? >> well, we have some very important and difficult seams, if you will, in the system that continue to bedevil the way we do things. and other countries that don't have our particular legal and bureaucratic system, frankly, have us at an advantage. but the struggle between, for instance, nest ec cybersecurity -- domestic cybersecurity under dhs and where that boundary line is between that and foreign cybersecurity with respect to cyber common nsa continues to be a point of friction. and i will tell you, i have read multiple internal military chinese sources in which they talk about exploiting those seams, exploiting those jurisdictional issues for their own advantage, and i'll give you an example. as early as 1996, internal chinese military sources were talking about how they wanted to

delay or disrupt our logistics deployment to a taiwan contingency. but they said quite pointedly that they would initiate that attack from within the continental united states knowing that that would activate a different bureaucracy, namely the fbi, and not the nsa and other people who would see it as a foreign intelligence operation and that in that window of us, frankly, being screwed up and not knowing what was going on, they would be able to seize that strategic advantage. and so i don't think we're doing well on that front in particular. and i think that even our adversaries are well aware of it. >> given that understanding, i'm not trying to get you out of your box in terms of your focus be, but how would you remedy that? >> well, to be honest, there's many, at many levels it's an indemnification issue because we have to, you know, a lot of countries around the world that believe that there is

sovereignty in cyberspace. in other words, that nations have boundaries and that those boundaries can be protected. and we alone have been arguing for sort of an internet freedom model that is sort of boundlyless. but the -- boundaryless. they're, frankly, more westphalian than we are with regard to cyberspace. and at the end of the day, we have to recognize that, in fact, our best assets for defending the country on the cyber side are the ones that are precluded from operating within the domestic united states. and i realize that this may not be the best time -- [laughter] to raise that issue given the news of the day. but ultimately, we want to have our best capabilities in terms of defending the nation, and those capabilities often reside with organizations within the u.s. system that are not currently authorized to fully exercise those within the united states. and so the only way that's going to get solved is to give people top cover at the title 10, title 50 level that doesn't currently

exist. >> many thank you. senate gorton, thank you again for your tremendous perception on this issue. you believe, as i do, in free and fair markets. are there realistic market leverages that we have remaining today to try to stop the chinese from the continued, what we believe is cheating and continued theft of intellectual property? >> the leverage we have is our market. the fact that we purchase far more from chinese sources than they purchase from us. that is a tremendous leverage, and in my view, it's the highest leverage we have. and by threatening that market in a straightforward fashion, we will at least get them to begin to hear about what our concerns are and have to respond to them. >> given you said that american companies don't want to be public as much in coming out if

they've been the recipient of cyber, what roles still do they have in protecting themselves? >> well, they have a tremendous role in protecting themselves. but i think one of the reasons that many of them are reluctant to talk publicly about it or to come to government about it is they don't think anything is going to get done in any event. if we show the government that we're serious about the question, i think we'll get more cooperation from the private sector. >> do you see a public/private partnership then? >> of course it is. the fundamental defense of the united states is a public responsibility. >> with yep, sure. >> but, obviously, every company wants to protect its own intellectual property and its markets. >> sure. thank you. >> mr. meadows. thank you, mr. pittinger. >> thank you, mr. chairman. and i can see, doctor, you wanted to go ahead and make a comment on that last question, so go ahead. >> well, i think, frankly, this body has an important role to play because in the absence of strong government intervention on this issue, i'm sure many of

you have seen the rise of certain companies that are now advertising as part of their services that they themselves will engage in aggressive defensive measures, shall we say, or even hackback on behalf of companies in the absence of the perception that the u.s. government isn't going to do anything to help them. when i testified before the huntsman/blair commission, we had a lengthy discussion about some of the outdated features of the 1986 computer fraud and abuse act and the fact that, frankly, many companies right now are looking to congress for clarification on just exactly -- and, frankly, the department of justice, as to where the legal boundaries are on this issue about hackback and being able to aggressively go after your own intellectual property. that act is 27 years old. >> right. >> i believe that many features of it are outdated and have been overdone by technology, and i think it really needs to be revisited. and that was certainly one of the most interesting debates we had in the commission hearing that i testified at.

>> so as we look at the commission, i think, senator, your comments were that this will get us down the road, but it won't get request us all the way -- it won't get us all the way. i may be paraphrasing there, but how far down the road does it get us? i mean, is this a marathon of which we've gone one mile? is this -- are we doing a half marathon? i need to realize how far down the road we're going. >> i think it's a marathon in which we're still at the starting line. >> but you were talking about if all of your recommendations are implemented. >> i don't think i can quantify that, except that i think it would be significant. but it will be significant to exactly the extent that we have begun to create within china itself an interest group that is in favor of the protection of intellectual -- >> so how do we do that? how do we create within china this interest or this respect for the rule of law? because we see that in so many

areas where there's not that -- >> by threatening the profitability of those chinese companies both public and private that sell large amounts of their goods and products in the united states. >> so you used the word "threaten." so let me -- i don't ever bluff, and so let me ask you this. when does threaten and when does consequences to actions, because too many times we threaten without resolve. and i guess what i'm asking -- >> i don't congressman, i agreeh you. don't threaten unless you're willing -- >> exactly. so what you're saying is to have real consequences that we're committed to regardless of the circumstances of implementing them. >> yep. >> okay. would you yee with that, doctor? >> well, first of all, i would say as a matter of principle china and the chinese economy and the chinese government will respect intellectual property when they have their own intellectual property to defend. >> i agree. >> one of the real dilemmas i have is i know talking about

patent controlling is popular these days. i see a tremendous upswing of that in china. in other words, chinese making, doing patents of things that are registered with their own pto and then attempting to sue or coerce mesh companies that are in china by claiming that they have the chinese patent for something that clearly is one of our patents. now, the trends are going in the right direction, they're just not going there quickly enough in terms of china's own intellectual property development and, therefore, its own desire for protections. and in my view on the cyber side in particular, what i've been pushing for internally is a focus on identifying a specific number of companies and, frankly, a number of civilian universities, very large universities in china that are known to have been engaged in this activity, have been supplying tools, have been supplying personnel, been engaged in this activity and putting them on the denied entities list from the commerce department. that will deny them visas to the united states, professors won't get fellowships, graduate

studentsing won't be able to get -- students won't be able to get fellowships over here. there will be a constituency that will be feeling the pain of actions they're not profiting from and it will create a constituency in china that will begin to say, okay, this is no longer a consequence-free activity for us anymore. >> i would just go on to say that i agree almost totally. what bothers me about at least part of that statement is that when the chinese have so much intellectual property that they have more to defend than they have to attack, we will have already lost the struggle. >> it'd be too late. yeah. when they become the consumer of their own products, it is, it is game over. and so when we look at this, and let's go a little bit further. if the chairman will indulge, it used to be that investing in china, american companies or foreign companies got a better deal from a regulatory standpoint, from an incentive

standpoint, and my understanding is, is that that is no longer the case. that those regulations are being beefed up. and so the regulations that companies fleeing from america to produce in a foreign country are not as, i guess, lucrative anymore. would you concur with that, agree with that or disagree? >> i think maybe it's a slightly too broad a statement because i don't think every kind of company, every kind of investment in china is exactly the same. some may not have way in the way of intellectual property. some, obviously, still find it profitable to do business there. many others have found it's cost far more than it's worth. >> doctor? >> um, i would probably disagree with the characterization that there was some sepia-toned better past where we actually were successful making money in china. my father did business in china for 20 years selling nuclear radiation detectors and always felt the deck was stacked

against him. and we used to watch people who came to china believing in the whole if everyone bought one shoe, we'd sell half a billion shoes kind of philosophy repeatedly getting used. but i think the hope was always that the chinese economy would mature to the point where it became a more level playing field and that there was more, there was more predictability in the regulatory system and, in fact, what we're finding now is that the regulatory system is becoming even more predator and more capricious as they're trying to force this indigenous innovation. they're no longer content to allow western multi-nationals to have pride of place but instead trying to replace them with these national champions, and that has created a very uneven playing field and a lot of, frankly, unfair activity that is in violation of their wto commitments. >> and my last question is, is how big does the problem need to get before there is a demand from the american people to deal with it?

we're estimating today a low estimate of 300 billion. that could be 4 or 500 billion in terms of economic impact. how big does can it have to get before you see a concerted effort on all parts to come together and address it? >> it's big enough right now, and the fact of this hearing an illustration of that fact. >> thank you. i yield back. thank you, mr. chairman. >> thanks, mr. meadows. and i would even argue that a decade and a half ago if, when some of these issues are decideed in the house and senate that the public was kind of always a bit ahead of these two institutions perhaps. i wanted to just, and then i'll close for the next panel, but i appreciate very much mr. pittinger's and mr. meadows' comments. i've watched this over from my house days during pntr and just watched the way american corporations and the relationships in china, and at the time of pntr vote in the house of representatives, i remember the friend of mine that worked in the international airport told me there were more

corporate jets leading up to the vote than anytime in his memory. and at that point i'm not sure that our companies, our large companies' interests in china matched up with our national interests as a nation. and i think perhaps it's more that way. but just a note of caution that as increasing number of american companies come to the government and say we need help here because of cyber attacks, that we keep in mind and we should be there for them. but we keep in mind that it's important that our national interests match these companies' interests there because i remember being lobbied by one company in particular in my district who said this makes so much sense to pass pntr and then two years later he moved a lot of his production to china and he said i had to move because of these new set of rules for pntr. and that song was sung too many times in north carolina and ohio and across the country. so thanks very much,

dr. mulvenon, for your work and, senator gorton, for your lifetime and continued work and service for our country. call up the next panel gunning with chao who has launched a series of online campaigns in support of human rights against internet censorship. he's awarded the human rights prize 2010 by the french national con full thattive -- consul thattive commission in promoting china's human rights movement. he's a graduate of the institute of technology and is currently visiting scholar at columbia's institute for the study of human rights in new york city. louisa grieve is vice president for asia, middle east and north africa and global programs at the national endowment for democracy where she served as director for east asia. she studied since 1980, she's a member of aei, taiwan policy working group, the council on foreign relations,. [inaudible] new threats in a changing world.

she served as a member of the board of directors of amnesty international for five years, was a volunteer china and mongolian specialist from '90-'99. she served two terms in the virginia commission on civil rights. if the two of you would join us and thank you very, very much. and cao yaxue will translate for mr. work en. -- mr. wen. please proceed. [speaking chinese] >> translator: thank you, mr. senator. thank you, dear mr. senator

brown and congress pittinger and the congressman meadows. my name is work en chao, i'm here to testify about the cyber attacks against me that occurred over the last few years. [speaking chinese] >> translator: in september 2009 i discovered that my gmail account was set up for forwarding and that it would forward all my e-mails i received to another e-mail account not under my control. this was the first time i realized that my e-mail was attacked. [speaking chinese]