This afternoon on Fox Business’ Kudlow with Larry Kudlow, Senator Portman, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, highlighted his new report and expressed hope that it will serve as a wake-up call to the Federal Reserve and other agencies to China’s malign efforts to target, influence, and undermine the U.S. Federal Reserve. Based on a Federal Reserve counterintelligence analysis and unheeded FBI recommendations to change the Federal Reserve’s policies and procedures, this report finds the Federal Reserve has been the target of an extended and effective Chinese malign influence and information theft campaign.
The report, titled China’s Threat to the Fed: Chinese Influence and Information Theft at U.S. Federal Reserve Banks, reveals that China has targeted the U.S. Federal Reserve System to undermine American economic and monetary policy since at least 2013. Portman, as then Chairman of the Permanent Subcommittee on Investigations, documented in a 2019 bipartisan report how China utilizes talent recruitment programs, like the Thousand Talents Plan, to target science and technology sectors. This investigation of the U.S. Federal Reserve shows how China has used a variety of tactics to recruit U.S.-based economists to provide them with knowledge and intellectual capital in exchange for monetary gain and other benefits.
A transcript can be found below and a video can be found here.
PORTMAN ON CHINA’S DELIBERATE EFFORTS TO TARGET AND UNDERMINE EVERY SECTOR OF U.S. ECONOMY AND RESEARCH ENTERPRISE
“Well, it sounds like a novel, but unfortunately, it’s reality. And by the way, every sector of our economy and every sector of the research enterprise has been subject to this over the past two decades. And as you know, I’ve been working on this for a number of years. We did an in-depth investigation. We did a report. We have legislation to try to address it. But the Fed is just the latest of institutions that have been targeted by the Chinese. And it’s not the Chinese people. It is, as you said, the Chinese Communist Party. It is a deliberate effort to find information that they want that’s valuable. And certainly, the Fed has valuable information. But also with regard to our research, a lot of it is taxpayer paid. In other words, the taxpayers put money into research, as we just did with regard to the CHIPS legislation. And then China through some of these programs, like the Talents program, comes in, gets the research, gets the researcher, brings that research or intellectual property back to China, and leapfrogs the United States of America. It’s helped with the rise of their military and their economy and it’s hurt ours. So it’s across the board. It’s health care, it’s financial services, it’s the manufacturing economy. It’s certainly our military. So this is where the Fed needs to be given a wake-up call. And I think they do have a wake-up call now. They’ve already made some changes. They’re trying to tighten it up and I think they’ll do more.
PORTMAN ON REPORT DETAILING CHINA’S EFFORTS TO TARGET U.S. FEDERAL RESERVE
“The report is based on actually a Fed study itself and the FBI. And what that report shows is that there have been a number of instances, we talk about some of them, not all of them. We do it on an anonymous basis, but we think it’s important to get that word out there. And I do believe that this is going to result in the Fed tightening up their procedures, which is appropriate. It’s the world within which we live, Larry. This is the 21st Century where we’re constantly being bombarded by probes from various governments, but particularly from the Chinese Communist Party, as you said, to try to get information. We’ve seen the hacking. We’ve seen what’s happened in corporate America. The same thing happens on the governmental side, and the Fed is not immune from this…Thanks for raising the issue, Larry. And, look, we need to face it. This is a wake-up call, I hope for all of us, that this is a real problem, and we’ve got to tighten up our security procedures to be able to protect information.