McCaul Discusses Importance of Keeping American AI Out of the CCP's Hands at HFAC Hearing

WASHINGTON - Today, U.S. Congressman Michael McCaul (R-Texas) - chairman emeritus of the House Foreign Affairs Committee - spoke at a full committee hearing titled, "Winning the AI Arms Race Against the Chinese Communist Party."

McCaul discussed the importance of keeping American AI tech out of the CCP's hands with former Deputy U.S. National Security Advisor Matt Pottinger.

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Full Transcript of McCaul's Exchange:

MCCAUL: Thank you, Mr. Chairman. Thanks for bringing this issue to the forefront. I think it's one of the most important issues facing this committee. The great power competition with China rivals, when I was growing up, the Cold War against Russia and the space race. And for years we thought we could work with China as business partners, as you, Mr. Pottinger and Mr. Finer, were covering China. At that time, I was a young federal prosecutor in the Justice Department investigating the case of the re-election of Bill Clinton and campaign dollars flowing from China into the campaign coffers of the DNC. Why? Because they wanted the competitive advantage of our technology. What I found were deposit slips in Johnny Chung's bank account from China Aerospace and a meeting with the director of military intelligence, where they talked about this very issue. They wanted our technology back then in 1997, and they want it today. It's even worse - far worse today than it was in 1997, and I think y'all have laid the case out very clearly in terms of what the threat is today.

You know, they steal so much intellectual property from this country, but we don't have to sell it to them. And that's the axiom that led me to introduce the ENFORCE Act. [It says] very simply, you cannot sell military-grade AI technology to China. I marked it up out of this committee ... and then it was blocked from a floor vote because of outside special interest groups at play in this debate. And let's be honest, there are outside special interest groups trying to block this, what we were talking about today and that kind of legislation. I commend the chairman for his bill, and I support it.

My U.S. attorney in Texas, as these H200 chips were smuggled into China, said, "These chips form the building blocks of AI superiority and [are] integral to modern military applications." So [on] this agreement with NVIDIA, we met the CEO, and I asked him, "You sold them the very chips that they used to create DeepSeek AI." AI opens the windows, the chairman said, to military-grade applications. [NVIDIA] sold them the technology that now has given them DeepSeek AI. Granted, it was legal until we caught up with it with export controls, but it demonstrates why those controls are so important.

I want to ask Mr. Pottinger this question. You said the vice chairman - and I always love using the enemy's words against them, right - that the vice chairman of the China Semiconductor Industry Association said that he believes that they need NVIDIA chips to "catch up." Or in other words, Beijing needs NVIDIA chips to take the lead in this great power competition. Is than an accurate statement and can you expand on that?

POTTINGER: Very good to see you, sir, thank you. That's right, I have a fuller quote in my submitted testimony, but Wei Shaojun is the vice chairman of the China Semiconductor Industry Association. So in China, industry associations aren't like they are here in the United States; the founding charter of the China Semiconductor Industry Association says that their purpose is to uphold Marxism, Leninism, Mao Zedong thought, and Xi Jinping thought on socialism with Chinese characteristics for a new era, so it's basically an appendage of the party state. What he was saying just last week is that we're going to use NVIDIA chips to leapfrog NVIDIA over time, we're going to use NVIDIA chips to leapfrog the United States in AI. That is the policy; it's very explicit.

MCCAUL: And it's essentially saying we're going to use NVIDIA chips to defeat the United States in the great power competition. Those are my words, but I think it's very clear, the intention behind his statement. Now [NVIDIA's] argument is this, when you talk to them: you know, we just need to get [China] hooked on our chips. These are second-generation chips. We need to hook them on our chips, so they don't manufacture them themselves. And by the way, we need to compete with Huawei in their own market, so we have market share against Huawei. Do you buy that statement, Mr. Pottinger? ... Do you buy that statement, that we need to hook them on our technology and sell them our technology and compete with them in their own market?

POTTINGER: China's leaders, in their own words, utterly reject the premise that they will allow their country to become addicted. And by the way, Chinese companies have, from what I've been reading, have ordered two million of these chips. The Chinese government may not actually let them import all of those chips because they want to mandate that Chinese companies continue to buy inferior Huawei chips at the same until Huawei, they hope, can catch up. ...The more advanced AI that they're getting from the American chips, they'll use to compete with American companies and also to advance Huawei's planning and designs to catch up. So NVIDIA may actually be sort of seeding its own demise.

MCCAUL: Any time we compete with China in their own market, we lose market share. I yield back.

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