Affirming that all Chinese companies, private and state-owned, are under the effective control of the Chinese Communist Party.

IV 116TH CONGRESS 2D SESSION H. RES. 827 Affirming that all Chinese companies, private and state-owned, are under the effective control of the Chinese Communist Party. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 3, 2020 Mr. MCCAUL (for himself, Ms. CHENEY, Mr. TURNER, Mr. GALLAGHER, and Mr. YOHO) submitted the following resolution; which was referred to the Committee on Foreign Affairs RESOLUTION Affirming that all Chinese companies, private and state- owned, are under the effective control of the Chinese Communist Party. Whereas the United States and the United Kingdom have a special relationship and shared history of fighting totali- tarianism and communism regardless of cost; Whereas the decision by the British National Security Coun- cil to allow Huawei into its fifth-generation (5G) tele- communication network is deeply concerning to the United States; Whereas banning Huawei from ‘‘sensitive parts’’ of the net- work, known as the core, and capping Huawei’s market share at 35 percent is not enough to ensure the security and fidelity of the United Kingdom’s 5G network; VerDate Sep 11 2014 21:56 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6300 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 2 •HRES 827 IH Whereas in order to realize the full potential of 5G, there will be no means to isolate one part of the network from other components; therefore, granting an untrusted pro- vider access to any portion of the network inevitably risks opening access to the entire network, including the ability to take the entire network offline and deny the United Kingdom strategically important services; Whereas the United Kingdom’s Telecom Supply Chain Re- view requires the United Kingdom to consider, with re- spect to a high-risk vendor such as Huawei, the ‘‘domes- tic security laws in the jurisdiction where the vendor is based. . . .’’; Whereas the political economy and laws and regulations of the People’s Republic of China (PRC) are an affront to the democratic values shared by the United States and the United Kingdom; Whereas under the leadership of General Secretary Xi Jinping, the unelected Chinese Communist Party (CCP) leads everything; Whereas, according to the Fourth Plenum Decision Docu- ment, the CCP aims to ‘‘perfect the Party leadership over the National People’s Congress, government, supervision organs, trial organs, inspection organs, armed forces, people groups, companies and institutions, grass roots or- ganizations, and social groups.’’; Whereas the CCP oversees the economic and technology poli- cies of the People’s Republic of China, directs all legal and regulatory authorities, and exerts direct and indirect influence over all companies in the PRC—state-owned and private; VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6300 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 3 •HRES 827 IH Whereas the CCP has codified into law its authority to inter- fere in and influence the operations of companies oper- ating within and outside of the PRC and demand access to any data stored in or transiting through its network equipment; Whereas Article 30 of the CCP Constitution requires a CCP cell to be formed in any company where there are three of more CCP members; Whereas Article 15 of Regulations of the CCP on the Work of Grassroots Organizations in State Owned Enterprise requires all important operating and management issues to be discussed by the Party Committee, and only after be decided on by the board of directors or management; Whereas Article 19 of China’s Company Law requires every company to establish a CCP cell and carry out CCP ac- tivities and to provide necessary conditions for CCP cell activities; Whereas Article 26 of the Guideline on Improving Business Conditions for Private Enterprises calls on private busi- nesses to support Party construction; Whereas, in addition to inserting itself directly into company operations through CCP cells and ownership stakes, the CCP is erecting a legal and regulatory system that in ef- fect gives it direct influence over a company’s operations and access to all its personal and business information, thereby turning nominally private companies into re- sources for and tools of the CCP; Whereas the PRC’s National Security Law declares nearly any issue—from the economy to technology and informa- tion to ideology—a matter of national security and intel- ligence work; VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6300 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 4 •HRES 827 IH Whereas the PRC’s Cybersecurity Law gives the CCP expan- sive powers over how information technology products are approved and where data and information are stored, in- cluding— (1) Articles 22 and 23 which require network prod- ucts and services to adhere to mandatory national stand- ards and obtain certain certifications, many of which re- quire the disclosure of proprietary information, such as source code, and the use of indigenously innovated Chi- nese intellectual property; (2) Article 28 which mandates any network operator to provide technical support and assistance to public se- curity and national security organs; and (3) Article 37 which sets forth broad requirements for data and information to be stored within the bound- aries of the PRC; Whereas the National Intelligence Law gives Chinese intel- ligence agencies authority to compel private companies to support intelligence operations, including Article 7, which requires an organization or citizen to support, assist, and cooperate with state intelligence work, and Article 14, which demands that organizations provide support, as- sistance, and cooperation to intelligence organs; Whereas Article 22 of China’s Counterespionage Law states that when agencies are investigating espionage activities and collecting evidence, organizations and individuals must not refuse to provide it information; Whereas Article 18 of the Anti-Terrorism Law states that telecommunications business operators and internet serv- ice providers shall provide technical interfaces, decryp- tion, and other technical support and assistance for pub- lic security organs and state security organs to prevent VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6300 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 5 •HRES 827 IH and investigate terrorist activities in accordance with the law; Whereas Article 31 of the Encryption Law provides for gov- ernment inspections of commercial encryption that, when used in concert with other laws and regulations, could re- sult in full access of encrypted servers and decryption keys by the CCP; Whereas several provisions in the Ministry of Public Security Regulation on Internet Security Supervision and Inspec- tion give security organs the right to conduct onsite and remote inspections of company networks—including tech- nical aspects of its operations and the data and informa- tion stored on its servers—and allows authorities to copy any information on corporate servers; Whereas these and other laws, regulations, and standards combined with the Internet+ initiative, the social credit system for individuals and companies, and other indus- trial and sector-specific plans form the foundation for the PRC’s authoritarian digital governance model that it is aggressively exporting around the world; Whereas the PRC’s authoritarian model puts absolute control of the digital economy, including its hardware, software, algorithms, encryption, data, and other proprietary infor- mation, into the hands of the CCP, removing any sem- blance of privacy; and Whereas General Secretary Xi Jinping has said ‘‘high-end technology is the weapon of a modern country’’ and the CCP has clearly demonstrated its ambition to attack global markets with its products and services to make the world safe for its authoritarian model and dependent on its technologies: Now, therefore, be it VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6300 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 6 •HRES 827 IH Resolved, That it is the sense of the House of Rep- 1 resentatives that— 2 (1) the Parliament of the United Kingdom of 3 Great Britain and Northern Ireland is encouraged to 4 reject or amend the National Security Council’s deci- 5 sion on telecommunications security in a manner 6 that excludes high-risk vendors, such as Huawei, 7 from the country’s 5G infrastructure; 8 (2) Huawei’s track-record of illegal and corrupt 9 behavior is endemic to their operations; 10 (3) whether state-owned or nominally private, 11 all Chinese companies, including Huawei, operate 12 within a political and regulatory environment that 13 removes their ability to act independently from or to 14 refuse requests by the CCP; 15 (4) this distinct state-led economy and com- 16 munist political system removes independent cor- 17 porate governance and obscures the true nature of 18 Chinese corporate entities, harming the transparency 19 needed to maintain the international rules-based sys- 20 tem; 21 (5) fifth-generation telecommunications net- 22 works that incorporate products and services devel- 23 oped by Chinese companies face significant techno- 24 logical, political, ethical, and geopolitical risk; and 25 VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS 7 •HRES 827 IH (6) the United States Government and its allies 1 and partners must work expeditiously to develop and 2 implement a concerted strategy, using all tools avail- 3 able, to combat what amounts to legal warfare by 4 the Chinese government to weaponize its companies 5 when needed. 6 Æ VerDate Sep 11 2014 20:20 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\HR827.IH HR827 lotter on DSKBCFDHB2PROD with BILLS