Former Under Secretary of State, Keith Krach, briefs the Congressional China Task Force on the The National Security Imperative for: Mastering Tech Statecraft and Executing a Clean Capital Markets Strategy on December 8, 2021 Given U/S Krach’s lead role in developing and operationalizing the Global Economic Security Strategy, as well as his transformational leadership in building market leading companies, he is one of the foremost authorities for combating China’s economic aggression. During his tenure, Krach developed the new model of tech statecraft based on trust by integrating high-tech strategy with foreign policy tools to defeat the CCP’s masterplan to control 5G with the Clean Network.  He will address the necessity for mastering tech statecraft and the need to protect American investors from Funding CCP’s Surveillance State and Military Machine. He will share actionable recommendations for Congress to combat economic aggression.

1. The National Security Imperative for: Mastering Tech Statecraft and
Protecting US Investors from Funding CCP’s Surveillance State and Military Machine
• Former Under Secretary of State, Chairman/CEO of DocuSign/Ariba, and Chairman/Founder of the
Center for Tech Diplomacy at Purdue Keith Krach will brief the China Task Force on China's techno-
economic threats to US national security.
• Given U/S Krach’s lead role in developing and operationalizing the Global Economic Security Strategy, as
well as his transformational leadership in building market leading companies, he is one of the foremost
authorities for combating China’s economic aggression.
• During his tenure, Krach developed the new model of tech statecraft based on trust by integrating high-
tech strategy with foreign policy tools to defeat the CCP’s masterplan to control 5G with the Clean
Network.
• He will address the necessity for mastering tech statecraft and the need to protect American investors
from the Chinese Communist Party’s plunder of our capital markets. He will share actionable
recommendations for Congress to combat economic aggression.

2. The Hon. Keith J. Krach
Chairman & Founder, Center for Tech Diplomacy at Purdue
Fmr. Under Secretary of State, Chairman/CEO of DocuSign & Ariba
The National Security Imperative for:
Mastering Tech Statecraft and
Having a Clean Investment Playbook
December 8, 2021
Congressional China Task Force

3. Clean
Investments
Playbook
Congressional
Action
5 Prong Strategy
Capital Markets
Safeguard US
Assets
3 Pillars
GESS
Team

4. Private Sector
Career Team
Senate Confirmed
UNDER
SECRETARY
OF STATE
Keith Krach
EB Assistant
Secretary
Manisha
Singh
ENR
Assistant
Secretary
Francis
Fannon
OES Acting
Assistant
Secretary
Jonathan
Moore
Chief
Economist
Sharon
Brown-
Hruska
Science
Advisor &
CTO
Mung
Chiang
Acting S/R
for Strategic
Partnerships
Thomas
Debass
Chief
Speechwriter
Robert
Noel
Social Media
Specialist
Protected
Staff Assistant
Protected
Staff Assistant
Protected
Chief of Staff
Kent Logsdon
Staff Assistant
Protected
Chief
Econ. Field
Officer
Protected
Chief
Operating
Officer
Zara Larsen
Special
Officer
Protected
Chief
Strategy
Officer
Paul Touw
Special
Officer
Protected
Chief
Banking
Officer
Frank
Dunlevy
Special
Officer
Protected
Chief
Strategic
Planning
Officer
Jim Shinn
Chief
Business
Officer
Hiro
Rodriguez
Special
Officer
Protected
Chief
Finance
Officer
Ed Kinsey
Special
Officer
Protected
Chief
Industry
Officer
Marc
Carlson
Special
Officer
Protected
Chief
Competition
Officer
Protected
Chief
Business
Dev. Officer
David Fogel
Chief
Marketing
Officer
Len
Khodorkovsky
Senior Advisor
John Duncan
Special Assistant
Protected
Senior Advisor
Ambassador Bernicat
Chief
Policy
Officer
James Rockas
Plus The E-Family’s
3,000 Field Officers,
Tech & Econ Specialists
Hi Peform Team = Diversity of Thought

7. Turbo-Charge
Competitiveness
& Innovation
• Supply Chains
• USICA
• Manufacturing
• Hi-Tech
Safeguard
America’s Assets
Technology & IP
Education System
Healthcare
System
Capital Markets
Build Trust
Network
• Clean Network
• TD-12
• Blue Dot - B3W
• Clean Energy
Network
3 PILLARS of
GESS

8. • Hard Currency can flow in but can’t
flow out.
• China Inc. can raise US money, but US
audits are off limits.
• How is China Inc. able to mislead
citizens to fund their malign work?
• The public needs to be educated.
• An integrated Strategy is needed.
China has also built a
Great One-Way Financial Firewall

9. The Clean Investment Playbook
for Alignment, Cascading, Sequencing & Scaling
(Playbook Phase II)
Vision
Mission
Core Principles
Long-Term Goals
Strategy
Short-Term
Objectives
Execution

10. Vision
10
Lead a network of trusted partners
to create a transparent, reciprocal, and
level capital markets playing field that
eliminates China’s unfair and malign practices

11. 1
1
Mission
Develop and operationalize a proactive integrated
capital markets strategy to protect investors from
the risk of financing China’s military machine,
surveillance state and human rights abuses
and creates a level playing field for US companies.

12. 1
2
Respect for:
•Rule of Law
•Property
•Sovereignty of Nations
•Labor
•The Planet
•Human Rights
.
•Accountability
•Integrity
•Transparency
•Reciprocity
+ =
Trust Principles
TRUST

13. 1
3
Objectives
Protect
Protect US
investors from
Unknowing
Funding the
CCP’s Malign
Practices
Boost
Boost the
Competitive
Position of US
Value Creation
Companies
Secure
Secure the
Gold Trusted
Standard of
the American
Financial
System
Inhibit
Inhibit the
Capital Flow to
CCP’s Military
Machine and
Surveillance
State

14. 1
4
#3,4: Network of Trusted Partners
Leverage
Global Strength
Call Out Behavior
Unveil Financial
Ruses
Champion Investors
Take Action
Build A Coalition
Institutionalize
The Clean Investment Strategy
The Clean Investment Tornado

15. Prong 1 – CALL OUT CCP’s EGREGIOUS BEHAVIOR
Human Rights Abuses
On the Fourth of July called out genocide in Xinjian on network television and tied Wall Street
financing of companies to directly enabling punishable genocide
Surveillance State
Laser focused on Huawei as the backbone of the surveillance state with the Clean Network and
expanded the lines of effort with focus on its appendences with Clean Cable, Clean Cloud, Clean
Apps and Clean Carrier.
Military-Civil Fusion
Intellectual property theft & National Intelligence Law
Technological Authoritarianism
Extends China’s Great One-Way Firewall

16. Prong 2 - Unveil China Inc.’s 7 Financial Ruses
● Deceptive Accounting and financial practices
● Opaqueness of financial records and audits
● Averts Sarbanes-Oxley and standard accounting practices
● Duplicitous VIE ploy capital flows
● 7/1/20: Sent a letter to all U.S. CEOs, asserting duty to establish governance principles for
investing in malign Chinese entities and counseled pension funds, mutual funds, insurance
companies, VC firms, institutional investors, and index funds to disclose Chinese
investments.
● Passive investment scheme
● Deceptive subsidiary sham
● Co-opts decision makers
● Co-opts decision makers - PCAOB/Federal Government/Regulators lobbyists
● Conflicts the professionals - Asset Managers/VC’s/ Bankers/Lawyers/Exchanges/Index Funds

17. Prong 3 – CHAMPION THE INVESTORS
Alerting American Citizens
6/1/20: Commenced campaign to protect the average American from unknowingly funding the
CCP malign interests through a web of subsidiaries, index funds, financial products, and lack of
disclosure
Advising U.S. Businesses
7/1/20: Sent a letter to all U.S. CEOs, asserting duty to establish governance principles for
investing in malign Chinese entities and counseled pension funds, mutual funds, insurance
companies, VC firms, institutional investors, and index funds to disclose Chinese investments.
Notifying University Endowments
8/18/20: Sent letter to university endowments and governing boards, alerting to risks Chinese
financial practices, recommended disclosing PRC companies in emerging index funds and advised
divesting is prudent in likelihood of delisting due to enhanced listing standards.
Informing Pension Holders
10/8/20: Publicized malign PRC companies financed by $10.7 trillion in 5,000 pension funds of
emerging market index funds, including all 401k’s of 10 largest companies; top 10
federal contractors; all 20 of largest state pension plans

18. Prong 4 – TAKE ACTION
Trigger a Lead Domino
Used Thrift Savings Plan (TSP) as lead domino to to set a precedent that Chinese stocks were not
off limits by working quietly to put pressure on decision maker to divest from MSCI emerging
index fund or else.
Spearheading Capital Market Sanctions
12/8/20: Issued State Department fact sheet “US Investors Are Funding Malign PRC Companies
on Major Indices” Worked with DOD to get 35 parent-level “Communist Chinese Military
Companies” (CCMCs) to get financially sanctioned and identified 71 Chinese affiliates.
Tracking Index Providers
Listed 13 PRC firms on Entity List for and 35 parent-level CCMCs and 71 affiliates on Pentagon
List on MSCI, FTSE and Bloomberg emerging market index funds.
Cautioning Financial Institutions
1/14/21: Issued State Department fact sheet “Communist Chinese Military Companies Listed
Under E.O. 13959 Have More Than 1,100 Subsidiaries,” stressing ample notice given to
compliance officers/risk managers about material risk to disclosure and warning boards about
full compliance legal duty to take decisive action to minimize negative effects on clients’ holding

19. Prong 5 – BUILD A COALITION
Enlisting the Press
Enlisted journalists to shine light on CCP’s efforts to use American people as fundraising tools
and to tell US investors to call their fund managers to guard against potential losses due to
immanent divestment.
Inspiring Civil Society
Sent a letter to civil society leaders to be an exponential force for good in promoting democratic
principles over rising authoritarianism and genocide by utilizing protest divestment.
Ensuring Consistency of Government Policy
Advocated for continuity of policy by harmonizing the various agencies’ adversaries' lists
asserting if a company is barred sensitive technology, it should not be financed. Example: of the
500 Chinese companies on the Commerce Entity List less than 10 are on the OFAC list.
Enlisting the Allies Leveraging the Clean Network
The Clean Network’s powerful alliance of democracies acts as a security blanket for
governments/CEOs standing up to the CCP and a platform for coordinating investors from
unknowingly financing the biggest threat to democracy.

20. Recommendations – CREATE TRANSPARENCY
Urge Labor Secretary to issue Business Advisory
Business Advisory would warn all pension fund managers about the danger that comes with investing in Chinese stocks, plus involved
reputational/legal risks.
● Secretary of Labor runs The Employee Benefits Security Administration and responsible for administering and enforcing the
provisions of ERISA covering most private sector pension plans. Secretary of Labor also owns Pension Benefit Guaranty
Corporation, which should divest of their significant holdings of the MSCI emerging index fund.
Fix export controls license review process
Currently if the interagency votes are 2 to 2 (Energy, State, DOD and Commerce), Commerce gets an outsized vote and
so its vote swings the outcome. Every agency should have one vote of equal weight. If there's a split vote, it should go
to a special NSC committee to make the final license decision.
Create a searchable export license and deemed exports database for Congress
This already exists at Commerce/BIS through the "Automated Export System"
Declassify info on malign CCP involvement in US companies, universities, think tanks
Shine the light of transparency on IP theft, censorship, accounting fraud, influence peddling.

21. Recommendations– ENFORCE TRANSPARENCY
Eliminate ESG classification from funds that include Chinese stocks
S requires no forced labor, human rights abuses or genocide.
G requires accounting transparency and full financial reporting for good corporate governance.
Require asset managers to align with international human rights frameworks
70% of the world’s largest asset managers, representing $47 trillion in assets, do not have a policy to exclude
companies out of line with guidelines, such as the United Nations Guiding Principles on Business and Human Rights.
Require SEC “material risk” disclosure
Compel the SEC to acknowledge in a rule change, or another official venue, that Chinese corporate national security
and human rights violations – especially those already sanctioned by the U.S. – constitute a "material risk" to
prospective American investors that must be disclosed in prospectuses, bond offering circulars and other SEC filings.
Instruct PCAOB utilize the 30-day cancellation clause to terminate MOU
Left unaddressed, the MOU stands out as a façade that is a shining example of sacrificing our values to the CCP.

22. Recommendations – STRENGTHEN OFAC LIST
Synch Commerce Entity and OFAC Lists
If a company is bad enough to be denied sensitive technology, US investors should not be financing it on US exchanges.
Include in NDAA
Ensure all subsidiaries of Sanctioned Companies are on OFAC List
The bill would prohibit Chinese companies, plus their subsidiaries and/or parent companies included on the Commerce
Entity or OFAC Lists, from accessing the U.S. capital markets and American investor capital worldwide, including index
funds, mutual funds, federal investment funds and retirement funds.
Put companies using slave labor on OFAC List
Biden Administration identified these companies using slave labor:
● Hoshine Silicon Industry Co., Ltd.: FTSE (EM) Index
● Xinjiang Daqo is subsidiary of Daqo New Energy Corp: NYSE: MSCI (EM) Index
● Xinjiang GCL New Energy Material Co sub of GCL New Energy Holdings: S&P BMI Index
Create "Chinese Corporate Human Rights Abusers List"
Create a new official "Chinese Corporate Human Rights Abusers List," administered by the State Department, to
automatically trigger capital markets sanctions on the OFAC List.

23. Recommendations– GAME CHANGERS
Urge Commerce and Treasury to add Baidu, Alibaba, Tencent to the Entity and OFAC
Lists
BAT are the most important companies involved in China's surveillance state and military AI capabilities
Exclude Chinese A-shares from U.S. indices
Close the virtually unguarded "back door" into the U.S. capital markets – and the investment portfolios of scores of
millions of unwitting American retail investors – represented by the inclusion of domestic Chinese A-shares in
American indices.
Eliminate investments in Chinese state-owned enterprises
Rescind and prohibit the so-called "U.S.-China Phase I Agreement" provision that presently permits American financial
firms to invest in the debt of Chinese state-owned enterprises as well as dollar-denominated Chinese sovereign bonds
(aka CCP bonds).
Urge SEC to remove the Regulation S Exemption
This would deregister companies that cannot comply with the U.S. securities laws and SEC rules and regulations
effective as of that date. Canceling the Regulation S Exemption is the simplest way to close the loophole and preserve
our financial markets' gold standard.

25. HBS Case Study:
Building the
Clean Trusted
Network

37. Private Sector
Career Team
Senate Confirmed
UNDER
SECRETARY
OF STATE
Keith Krach
EB Assistant
Secretary
Manisha
Singh
ENR
Assistant
Secretary
Francis
Fannon
OES Acting
Assistant
Secretary
Jonathan
Moore
Chief
Economist
Sharon
Brown-
Hruska
Science
Advisor &
CTO
Mung
Chiang
Acting S/R
for Strategic
Partnerships
Thomas
Debass
Chief
Speechwriter
Robert
Noel
Social Media
Specialist
Protected
Staff Assistant
Protected
Staff Assistant
Protected
Chief of Staff
Kent Logsdon
Staff Assistant
Protected
Chief
Econ. Field
Officer
Protected
Chief
Operating
Officer
Zara Larsen
Special
Officer
Protected
Chief
Strategy
Officer
Paul Touw
Special
Officer
Protected
Chief
Banking
Officer
Frank
Dunlevy
Special
Officer
Protected
Chief
Strategic
Planning
Officer
Jim Shinn
Chief
Business
Officer
Hiro
Rodriguez
Special
Officer
Protected
Chief
Finance
Officer
Ed Kinsey
Special
Officer
Protected
Chief
Industry
Officer
Marc
Carlson
Special
Officer
Protected
Chief
Competition
Officer
Protected
Chief
Business
Dev. Officer
David Fogel
Chief
Marketing
Officer
Len
Khodorkovsky
Senior Advisor
John Duncan
Special Assistant
Protected
Senior Advisor
Ambassador Bernicat
Chief
Policy
Officer
James Rockas
Plus The E-Family’s
3,000 Field Officers,
Tech & Econ Specialists
Diversity of Thought =Genius

50. 5
0
Leverage
Democracies'
Comparative
Advantages
Strengthen Global Security
#2: AMPLIFY TRUST PRINCIPLES
#1: ACCENTUATE TRUST
#3: UNIFY ALLIES & PARTNERS
#4: MOBILIZE PRIVATE SECTOR
#5: COALESCE EXISTING NETWORKS
The Clean Network
TRENGTHEN GLOBAL ECONOMIC SECURITY
ADD FORCE ACCELERATORS
TO COMPARATIVE ADVANTAGES

51. 5
1
Leverage
Comparative
Advantages
Comparative Advantage
Strategic Imperative
Strengthen Global Security
#1: VALUED & TRUSTED ECONOMIC SYSTEM
TRUSTED Economic System
--------------------------------------------------------------------------------
No Integrity & NOT TRUSTED
#1: ACCENTUATE TRUST
with Reciprocity, Transparency, Integrity
Add Force-Accelerators
ACCENTUATE
The Clean Network
Compounded Strategic Advantage
Shine the light on TRUST
-----------------------------------------------
Decision Criteria =
Trustworthiness

52. 5
2
Leverage
Comparative
Advantages
Rules Based Order
Embody Shared Trust Principles
----------------------------------------------------
Authoritarianism Does Not Honor
Trust Principles
Clean Trust Standards
= Trust Principles
Comparative Advantage
Strategic Imperative
Strengthen Global Security
#2: SHARED VALUES AND PRINCIPLES
Add Force-Accelerators
AMPLIFY
#2: AMPLIFY TRUST PRINCIPLES
WITH CLEAN TRUST STANDARDS
The Clean Network

53. 5
3
Leverage
Comparative
Advantages Unity + Solidarity = Power
Comparative Advantage
Strengthen Global Security
#1: VALUED & TRUSTED ECONOMIC SYSTEM
Strong Allies
----------------------------------------------------------------------------------
Bully “Partners”
#3: UNIFY ALLIES & PARTNERS
STRENGTH IN NUMBERS
Compounded Strategic Advantage
The Clean Network
Add Force-Accelerators
Unify

54. 5
4
Leverage
Comparative
Advantages Innovation + Resources
= Clout + Agility
Comparative Advantage
Strengthen Global Security
#1: VALUED & TRUSTED ECONOMIC SYSTEM
Powerful Private Sector
---------------------------------------
Companies CCP Controlled
#4: MOBILIZE PRIVATE SECTOR
LEVERAGE INNOVATION AND RESOURCES
Compounded Strategic Advantage
The Clean Network
Add Force-Accelerators
Mobilize

55. 5
5
Leverage
Comparative
Advantages
Numerous Coalitions
-----------------------------------------------------------------------------
One Belt One-Way Toll Road
To Beijing
Comparative Advantage
Strengthen Global Security
#5: EXISTING NETWORKS & INITIATIVES
#5: COALESCE EXISTING NETWORKS
by Integrating and Branding into Overarching Network
Fastest Way to Build a Network
= Network of Networks
Add Force-Accelerators
COALESCE
The Clean Network

72. China dramatically outpaces the U.S.
in critical high-tech industries

73. 7
3
• Most Americans think of Apple
and Samsung when they think
of smartphones
• But in most of the world,
especially Asia and Africa,
Chinese brands dominate,
helping them secure three of
the top five sales rankings
globally.
Smartphones

74. 7
4
• U.S. companies have retreated
from the telecom equipment
business, discouraged by
heavy capital investment
required, and by a fragmented
market that makes it hard to
scale
• As a result, barely any U.S.
companies sell telecom
network equipment today
Telecom Equipment

75. 7
5
• One Chinese company, DJI, owns
the U.S. market for drones, which
are used for agriculture,
cinematography, public safety and
aerial photography.
• Skydio, an autonomous drone
maker in California holds just under
1% of the commercial drone market
in the U.S.
Drones

76. 7
6
• As a single company, Tesla leads
in global market share among
electric vehicle makers.
• But together, SGMW and BYD
Auto, two Chinese firms, have a
greater share of the total global
market.
Electric Vehicles

77. 7
7
• Most Americans imagine that the
U.S. must be the dominant player
in social media apps
• But TikTok’s rapid rise makes it
the most popular platform
worldwide.
• Mobile gaming is the one
market where the U.S. leads
(48% vs 15% market share).
Social Media

78. 7
8
Lithium-Ion Batteries
• China has been bolstering its
battery and electric-vehicle
companies with tens of billions of
dollars of state support, including
R&D funding, subsidies for
manufacturers and financing for
battery-charging stations.
• China’s lead is projected to widen
over the next 10 years.

79. 7
9
Solar Panels and PV Cells
• Industry experts estimate that
by 2050, 50-70% of the world’s
energy will be solar.
• Inconvenient truth: Vast
majority of solar cells and raw
materials like polysilicon that
are made with slave labor in
Xinjiang using China’s
biggest coal mines and coal-
fired plants.
• This has forced many Western
manufacturers out of business.

80. 8
0
Source: Semiconductor Industry Association THE WASHINGTON POST
China leads the U.S. in
semiconductor manufacturing
Taiwan South Japan China United Other
20% Korea 17 16 States 15
19 13
U.S. companies account for 47% of global chip sales, but many U.S. companies manufacture
overseas. The U.S. manufactures only 13% of the global chip supply, while China manufacturing
accounts for 16%
Semiconductors
• 92% of the world’s most
sophisticated chips are made by
Taiwan. South Korea—the other
8%.
• The U.S. is a big manufacturer of
chips at the next level down of
complexity.
• China manufactures mostly older-
tech chips but leads the U.S. in
total quantity.

81. The Mother of All Onshorings
• TSMC is one of the most vital companies
to U.S. national security.
• In May 2020, we brokered the $12 billion
onshoring of TSMC to Arizona. It became
a catalyst for other semiconductor
companies to invest in the U.S.
• TSMC expansion + Intel expansion +
Samsung expansion + all ecosystems =
$350 billion
• PLUS: Catalyst for the CHIPS for
America and Endless Frontier Acts—now
part of USICA

82. USICA—Our Next Moonshot
• Xi’s biggest fear is for the U.S. to have
another Sputnik moment and commit
to the equivalent of a moonshot.
USICA can do that by taking the
technological advantage away from
China Inc. and returning it to the U.S.
• Securing advanced high tech is not
cheap, but we get a big bang for our
buck. Just look at the Apollo program.
• Original $140 billion investment (today’s
dollars) put a man on the moon. The program
not only led to U.S. leadership in aerospace
but resulted in hundreds of spin-off
products—from kidney dialysis machines to
micro-electronics.
• It’s still paying dividends. In 2018, U.S.
leadership in aerospace and commercial
aviation contributed $2.3 trillion in GDP to the
U.S. economy.
• That initial $140 billion investment continues
to yield $4.1 trillion in annual recurring GDP.

83. USICA: Possible Amendments
Amendment on national security:
• A university that receives USICA funding on a given topic in a given FY cannot receive
funding from China on the same topic in the same FY, whereas “funding from China”
is defined as foreign source of funding that require reporting per existing federal regulation.
Amendment on private sector co-funding:
• In order to meet three goals: (1) maximize leverage of tax dollars with private sector
investment; (2) validate the practical relevance of research supported by USICA;
(3) accelerate the translation of research into commercial impact and economic growth,
there must be:
1. demonstrated matching of private sector funding to all parts of USICA except graduate fellowship. For
example, for any proposal to NSF on innovation centers, 3:1 matching from industry (one or multiple
companies) must be provided.
2. independent evaluation committee be created to provide annual assessment of the impact of USICA-
funded research to economic growth and national security.
3. each multi-year funding is provided in annual tranches, with next tranche of funding conditioned on
successful delivery of stated goals in industry impact of the previous years.

84. USICA Concerns
The bill adds a “Chief Diversity
Officer” at the NSF
• Section 2201 of the bill lines up with
language to establish a “Chief Diversity Officer” at DoD
that was adopted during the Trump Administration by
an overwhelming bipartisan majority in the FY21 NDAA.
The bill includes funding for
“advancing equity” in the National
Science Corps
• Section 2522 of the bill takes a historic step
of establishing the National Science Corps intended
elevate the profession of STEM teaching across the
United States. This would provide funding to recognize
and reward teachers in classrooms across the country
who are excelling in this area and hopefully inspire
others to pursue STEM. Spending time coaching and
developing students from a variety of backgrounds is
part of what would be used in the determination
for awarding these teachers.
USICA forces the NSF “to collect and report
demographic information like gender and race for
patent inventors.”
• Inventors may voluntarily submit this information. The
section also requires that any information provided would
be safeguarded by the NSF.
The bill requires states to implement Critical Race
Theory programs to get money.
• There is nothing in the bill that has anything to do with
critical race theory.
• Section 6112 is focused on improving access to
computer science education in elementary and
secondary schools. The section factually defines those
facing barriers as those from low income families,
students with disabilities, rural students, Black /
Hispanic / Native Hawaiian, students in foster homes,
etc. This is intended to improve access for all students
and provide grant funding to those in need.

85. Capital Markets
• Globalization assumes that everybody
plays fairly and that the benign
economic forces that regulate
international trade obviate the need to
take protective measures. This doesn’t
account for disruptive actors like the
CCP.
• Free trade is good, but
when somebody doesn’t play by the rules,
the market is no longer free.
• If you can steal my IP, use slave labor, engage in bribes,
subsidize your own companies, and never have to
be transparent, the level playing field that the rules-based
international order and globalization depend on is gone.
You have become the law, which means you’re going to win
every time.
• This is what China has been doing for forty years to give
itself a strategic advantage, and put U.S. investors in peril.

86. Fool’s Market
• U.S. investors—including banks, pension funds, foundations, insurance
companies, and university endowments—have for years unknowingly funded
Chinese companies involved in Chinese military buildup and human rights
abuses, such as the Uyghur Genocide in Xinjiang.
• We sent our best investment bankers, lawyers, money managers, private equity
investors, and venture capitalists, and funded “China Inc.” through our pension
funds, university endowments, foundations, mutual funds, and bond portfolios.
• May 7, 2013, MOU on Enforcement Cooperation with China allows Chinese
entities to deny PCAOB requests for information for any number of arbitrary
reasons, including if the requests are deemed to violate PRC laws, go against
“essential national interests,” or are judged, under whatever standard, to simply
not provide enough information on what the PCAOB is looking for.
• Clearly this gives China ample room to avoid U.S. audits and prevents the
PCAOB from fulfilling its duty to protect U.S. investors.

87. Urgent Threat to U.S. Investors
• Chinese stocks directly affect
the pension assets of American workers
and retirees.
• There are more than 5,000 public
pension systems in the U.S.
• $10.7 trillion invested in the private
pension plans is covered by the
Employee Retirement Income Security
Act (ERISA).
• The Thrift Savings Plan’s governing board
study revealed that a majority of pension
funds use the MSCI emerging market index
as their investment guide, including:
• The 401k’s of all 10 largest publicly traded U.S.
companies;
• All 10 of the top federal contractors;
• All 20 of the largest state pension plans;
• All six of the largest target-date mutual-fund providers
with holdings of $2 trillion;
• The Pension Benefit Guaranty Corporation (PBGC), with
$131 billion in pension insurance reserves;
• Numerous Insurance Funds;
• Numerous University and College Endowment Funds.

88. Addressing China’s Threat to U.S.
Capital Markets: So Far
• November 2020: President Trump signed E.O. 13959—Addressing the Threat from
Securities Investments that Finance Communist Chinese Military Companies—
prohibiting investment by U.S. persons in “ostensibly private and civilian” companies that
“directly support China’s military, intelligence, and security apparatuses.”
• January 2021: State Dept. released a Fact Sheet
identifying 44 Communist Chinese Military Companies
(CCMCs) and their opaque network of 1,100+ subsidiaries,
many dozens of which are tracked by MSCI, FTSE, and
other indexes in thousands of financial firms’ products.
• June 2021: President Biden updated E.O. 13959 to include Chinese surveillance
technology companies due to their facilitation of repression or serious human rights
abuses; moved authority from DoD to Treasury/OFAC; and added 15 more
companies.