AG Barr Highlights Greatest Threat To U.S.: ‘Should Vastly Outweigh All Other’ Priorities
Ryan Saavedra
Attorney General William Barr sounded the alarm to the greatest threat facing the United States on Thursday during a speech at the Center for Strategic and International Studies, saying that few are aware of the repercussions of China’s rapid advance in trying to dominate the 5G market and control the next generation of internet, the “Industrial Internet.
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Barr noted that 5 years ago China launched its “Made in China 2025” plan — a long term strategic plan to replace the United States as the dominant technological superpower, which has hundreds of billions of dollars in backing from the communist Chinese government.
“The stakes for the United States could not be higher. Since the 19th century, the United States has been the world’s leader in innovation and technology,” Barr said. “In the past, prior administrations and many in the private sector have too often been willing to countenance China’s hardball tactics. It has been this administration that has finally moved to confront and counteract China’s playbook.”
Barr noted that the Chinese are using corruption and outright intellectual property theft in their aggressive attempts to corner the 5G market and that communist China’s economic aggression and theft of intellectual property costs the U.
S. economy up to $600 billion per year.
“5G technology lies at the center of the technological and industrial world that is taking shape.
In essence, communications networks are not just for communications anymore,” Barr said. “They are evolving into the central nervous system of the next generation of internet, called the ‘Industrial Internet,’ and the next generation of industrial systems that will depend on that infrastructure. China has built up a lead in 5G, capturing 40 percent of the global 5G infrastructure market. For the first time in history, the United States is not leading the next technology era.”
“Much of the discussion on the dangers of allowing China to establish dominance in 5G has been focused on the immediate security concern of using communications networks that China can monitor and surveil,” Barr continued.
“That is, in fact, a monumental danger. For that reason alone, we should mobilize to surmount China’s drive to dominate 5G. But the stakes are far higher than this.”
“It has been estimated that the Industrial Internet powered by 5G could generate new economic opportunities of $23 trillion by 2025,” Barr continued. “If China establishes sole dominance over 5G, it will be able to dominate the opportunities arising from a stunning range of emerging technologies that will be dependent on, and interwoven with the 5G platform.”
“From a national security standpoint, if the Industrial Internet becomes dependent on Chinese technology, China would have the ability to shut countries off from technology and equipment upon which their consumers and industry depend,” Barr continued. “The power the United States has today to use economic sanctions would pale by comparison to the unprecedented economic leverage we would be surrendering into the hands of China.”
“It is important to understand how 5G will enable a revolution in industrial processes,” Barr continued as he noted that it was not the same thing as moving from 3G to 4G.
“We are now talking about multi-Gigabits per second peak rates for both download and upload,” Barr continued.
“These fiber-like speeds, coupled with placing “Edge Computing” facilities closer to the users, means 5G is capable of extremely low latency – under 10 milliseconds. With this capacity, the tiniest devices can have virtually instantaneous interconnectivity, and access infinite computing power. With these characteristics, 5G becomes a real time, precise command and control system.”
“As the world of 5G unfolds, we will be seeing not just smart homes, but smart farms, smart factories, smart heavy construction, smart transportation systems, and so forth,” Barr continued.
“And a host of new emerging technologies, in addition to AI, will become interwoven with and dependent upon 5G and the Industrial Internet, including for example: robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.”
Barr importantly noted that 5G is an infrastructure business because it relies on a Radio Access Network (RAN), in which China currently dominates the market.
“Within the next five years, 5G global territory and application dominance will be determined,” Barr later added.
“The question is whether, within this window, the United States and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to the Chinese.”
“The time is very short.
We and our allies have to act quickly. While much has to be done, it is imperative to make two decisions right away,” Barr continued. “Throughout history, free societies have faced regimented adversaries. At critical junctures, they have achieved the unity and purpose necessary to prevail, not because they have been compelled to do so, but because they freely chose to do so. We must make that choice today.”
The following is the full transcript of Attorney General William P. Barr Delivers the Keynote Address at the Department of Justice’s China Initiative Conference:
Thank you, Jim Lewis, for that kind introduction, and thank you for hosting this event.
My original career goal was to go into the CIA as a China expert, and so I focused on Chinese studies for my BA and MA at Columbia University.
I remember in one of my Government classes, we were having a debate as to which foreign adversary posed the greatest long-term threat – Russia or China.
I recall the observation of one of my classmates in arguing that it was China that posed the greatest threat. He said, “Russia wants to conquer the world. We can deal with that. China wants to own the world. That is going to be more challenging to deal with.” There was a certain truth in that.
In 1972, our hope was that integrating China into the international economic system would encourage the People’s Republic of China (PRC) to liberalize its economy, and that a free market and economic growth would gradually lead to greater political freedom for its citizens.
Unfortunately, economic liberalization has only gone so far. While individuals have been permitted some degree of economic freedom, the Communist Party remains in firm control of the economy. It is an architecture of state power, whose principal features are central planning, state-owned enterprises, and government subsidies.
Politically, the PRC remains a dictatorship under which the Communist Party elite jealously guards its monopoly on power.
Marxism-Leninism and Maoism linger on as justification for Communist rule, which is authoritarian through and through.
The Communist party is willing to resort to harsh measures to repress any challenge to its one-party rule, whether it be suppressing religious organizations, rounding up and “re-educating” Uighurs, resisting efforts of self-determination in Hong Kong, or using the Great Firewall to limit access to ideas and penalize their expression.
For a brief time after the Cold War, we had indulged the illusion of democratic capitalism as triumphant, unchallenged by any competing ideology.
That was nice while it lasted. But we are now in a new era of global tension and competition. China has emerged as the United States’ top geopolitical adversary, based on competing political and economic philosophies.
Centuries before Communism, China regarded itself as the Central Kingdom –the center of the world. Its ambition today is not to be a regional power, but a global one.
For China, success is a zero-sum game.
In the words of then-General Secretary Xi, Communist Party members should “concentrate [their] efforts on . . . building a socialism that is superior to capitalism.” Such efforts, Xi claimed, would require Party members to “consecrate [their] entire spirit, [their] entire life,” for socialist ideals. The reward for this sacrifice, Xi promised, is “the eventual demise of capitalism.”
I mentioned my classmate’s comment about China wanting to own the world because, today, I’d like to focus on the challenge of China’s drive for economic and technological supremacy.
But I am not suggesting that China’s ambitions are merely economic, or that our competition with China is, at bottom, merely an economic rivalry.
The Chinese have long been a commercial people, but for China, purely economic success is not an end in itself. It is a means to wider political and strategic objectives. Throughout its long history, China has always used its economic strength as a tool to achieve its political and strategic objectives.
In 2015, the Chinese leadership launched its “Made in China 2025” plan — a sustained, highly-coordinated campaign to replace the United States as the dominant technological superpower.
The dictatorship has mobilized all elements of Chinese society – all government, all corporations, all academia, and all of its industrious people – to execute seamlessly an ambitious plan to dominate the core technologies of the future.
This drive is backed by industrial policy involving huge investments in key technologies, massive financing, and subsidies in the hundreds of billions of U.S. dollars.
Unfortunately, it also involves industrial espionage and theft of technology and intellectual property, as well as forced technology transfers, predatory pricing, leveraging China’s foreign direct investment, and strong-arm sales tactics in target markets, including the use of corruption.
Make no mistake about it – China’s current technological thrusts pose an unprecedented challenge to the United States.
The stakes for the United States could not be higher.
Since the 19th century, the United States has been the world’s leader in innovation and technology. It has been America’s technological prowess that has made us prosperous and secure. Our standard of living, our expanding economic opportunities for our young people and coming generations, and our national security all depend on our continued technological leadership.
In the past, prior administrations and many in the private sector have too often been willing to countenance China’s hardball tactics. It has been this administration that has finally moved to confront and counteract China’s playbook.
Today, I want to focus on two aspects of the challenge we face.
The first is how China jumpstarts its technology initiatives by stealing our technology. Second, I want to explain why China’s current focus on dominating 5G technology is of central concern.
The ability of totalitarian countries to engage in central economic planning can, at times, appear to be an advantage, especially when mobilizing the kind of technological blitzkrieg we see unfolding today.
The downside is that central planning suppresses technological innovation. Breakthrough ideas arise in free societies like ours, which have long led the way in cutting-edge technological development
The Chinese are trying to have it both ways.
While orchestrating a centrally-planned campaign to dominate key technologies, they are attempting to capture the benefits of our free society by outright stealing our technology. The stealing of technology is not a sideshow. It undergirds and propels their efforts.
As John Demers, our Assistant Attorney General for the National Security Division observed, “China wants the fruits of America’s brainpower to harvest the seeds of its planned economic dominance.”
In 2018, the Department of Justice launched its China Initiative to confront China’s malign behaviors and protect U.S. technology.
As the presentations earlier this morning demonstrated, investigations during the department’s China Initiative have repeatedly shown how the PRC is using intelligence services and tradecraft to target valuable scientific and technical information held by the private sector and the academy.
These cover a wide range of technologies, from those applicable to commercial airplane engines to renewable energy to new materials to high-tech agriculture. Since the announcement of the Made in China 2025 plan, for example, the department has brought trade-secret theft cases in eight of the 10 technology sectors China is aspiring to dominate.
In targeting these sectors, the PRC employs a multipronged approach: engaging in cyber intrusions, co-opting private sector insiders through its intelligence services, and using non-traditional collectors, such as graduate students participating in university research projects.
With respect to remote computer intrusions, for example, the department’s indictment of APT 10 hackers in December 2018 outlined a global campaign, associated with the Chinese Ministry of State Security, targeting intellectual property and confidential business and technology information belonging to hundreds of clients of managed service providers worldwide.
Chinese theft by hacking has continued, and you should expect more indictments and prosecutions in the future.
Outside cyberspace, defendants pose as U.S. customers to avoid export controls, and recruit U.S. employees or co-opt insiders to steal trade secrets.
At academic and other research institutions, China uses “talent programs” to encourage the theft of intellectual property.
Finally, China complements its plainly illicit activity with facially legal, but predatory behavior: the acquisitions of U.S. companies and other investments in the U.S.
The department confronts these threats through the Committee on Foreign Investment in the United States and Team Telecom.
As one example, earlier this year, based on a recommendation from Justice and other agencies, the Federal Communications Commission denied a license to China Mobile on national security grounds.
The PRC’s economic aggression and theft of intellectual property comes with immense costs. It has been estimated that the annual cost to the U.S. economy could be as high as $600 billion.
The department will continue to use our full suite of national security tools to combat the threat posed by theft directed and encouraged by the PRC.
But, as the Director stressed, our ability to protect American technology will ultimately depend on a partnership with industry and the academy.
Now let me turn to a very concrete problem that confronts us today. It is the pivotal nature of 5G technology and the threat arising from the Chinese drive to dominate this field.
5G technology lies at the center of the technological and industrial world that is taking shape.
In essence, communications networks are not just for communications anymore. They are evolving into the central nervous system of the next generation of internet, called the “Industrial Internet,” and the next generation of industrial systems that will depend on that infrastructure. China has built up a lead in 5G, capturing 40 percent of the global 5G infrastructure market. For the first time in history, the United States is not leading the next technology era.