▶ 0:06:53The Committee on Homeland Security Subcommittee on Transportation and Maritime Security will come to order. Without objection, the chair may declare the subcommittee in recess at any point. Today's hearings will examine the People's Republic of China's strategic investments in ports across the Western Hemisphere, including the United States and near the Panama Canal and their broader implications for Homeland Without objection, the gentleman from Iowa, Mr. Zach Nunn, and the gentleman from Puerto Rico, Mr.
▶ 0:07:19Pablo Jose Hernandez, are permitted to sit with the subcommittee and ask questions of the I now recognize myself for an opening Good morning. I want to welcome everyone for the to the first hearing of the Subcommittee on Transportation and Maritime Security in the 119th Congress.
▶ 0:07:38As we begin this new Congress, it is only fitting that we turn our attention to one of the most pressing national security threats facing the United States today, the People's Republic of China's growing presence in the Western Hemisphere. In recent years, the PRC has steadily increased its footprints in key maritime infrastructure across Latin America and the Caribbean, gaining leverage over trade routes and extending its economic, political, and military influence in our Today's hearing marks the beginning of a serious effort by the subcommittee
▶ 0:08:09to assess the scope of Beijing's ambitions and determine what steps must be taken to safeguard the homeland. President Trump and senior officials in his his administration have rightly warned about the security risks posed by Beijing's malign investments, particularly in ports near the Panama Canal, which has long served uh as an essential artery for global commerce and US naval operations.
▶ 0:08:33Last week, in his first foreign trip as Secretary of State, Marco Rubio reinforced that warning during a visit to Panama, where he made clear that the PRC's presence near the canal poses an unacceptable risk. These concerns are well-founded.
▶ 0:08:48Through state-owned enterprises such as China Merchants Port Holdings, Hutchison Port Holdings, and China Ocean Shipping Company, COSCO Shipping, the Chinese Communist Party, the CCP, has secured access to some of the most strategically significant ports in our region.
▶ 0:09:05Nowhere is this more concerning than in Approximately 14% of all US seaborne trade moves through the Panama Canal, with an even more significant 40% of US container traffic transiting transiting it annually. Hutchison Ports, a subsidiary of Hutchison Port Holdings Limited, a Hong Kong-headquartered company with close ties to the CCP, manages container terminals at two of the largest ports adjacent to the canal.
▶ 0:09:33These container terminals are located at the Port of Balboa on the Pacific side and the port of Cristóbal on the Atlantic side. This gives Beijing a strategic position over one of the world's most important waterways and provides the CCP with an opportunity to exert influence over commercial shipping, gather intelligence on American and Allied vessel traffic, and potentially restrict the mobility of our navy in a time of crisis. And while Panama has recently announced an audit of Hutchinson Ports, that's simply not enough.
▶ 0:10:04We do We don't need an audit. We need The United States cannot and will not accept a scenario where a foreign adversary, one that openly seeks to undermine our global standing, controls infrastructure critical to US homeland security, military readiness, and economic stability. For more than two centuries under the principles of the Monroe Doctrine, the United States has been the primary guarantor of stability and security in the Western Hemisphere, ensuring that trade routes vital to our economic security remain free from foreign adversarial dominance.
▶ 0:10:35Yet today, the CCP is aggressively working to change that reality. However, Panama is only part of the larger picture. Across the hemisphere, the PRC is securing port investment and critical infrastructure agreements in countries such as Cuba, Peru, Brazil, and Ecuador, among others. In communist Cuba, just 90 miles from my home district in South Florida, the PRC has expanded its economic and signals intelligence capabilities through facility development agreements and telecommunications investments.
▶ 0:11:06This raises serious serious concerns about Beijing's ability to conduct surveillance against the United States from inside our own backyard. In Peru, the PRC's transforming the board port of Chancay into a major trade trade hub for its exports to South America. This is more than an economic project. It strengthens the PRC's malign economic influence and grip over regional trade and could allow for dual-use capabilities to support future People's Liberation Army's Navy operations in the Pacific.
▶ 0:11:36The implications of these investments for US homeland security cannot be The PRC's expanding presence in Latin America has also exacerbated the illicit flow of goods, including precursor chemicals used to manufacture These chemicals fuel drug production and trafficking networks run by the cartels that send deadly narcotics into American The CCP is complicit in this crisis, which has taken the lives of thousands.
▶ 0:12:02No, not just thousands, hundreds of thousands of Americans and overwhelmed law enforcement at our Southwest border. Alarmingly, these same PRC state-owned enterprises also continue to operate in US ports today, which poses grave intelligence and security risk. A prime prime example is COSCO Shipping, which the Department of Defense recently placed on its Section 1260H list of Chinese military companies, due to its ties to the PRC's military, intelligence, and security apparatus.
▶ 0:12:33Less than a month ago, federal authorities arrested nine individuals for their role in a massive smuggling operation that allegedly funneled nearly $200 million of counterfeit and illicit goods from the PRC into the United States through the ports of Los Angeles and Long Beach. This is the kind of illicit activity that takes place when we allow foreign adversaries, including those operating under the direction of the CCP, to gain access to our nation's critical The message to our partners in the Western Hemisphere must be clear.
▶ 0:13:01If you want to benefit from security cooperation and economic partnership with the United States, you must distance yourself from PRC state-owned enterprises. The CCP has no rightful place in shaping the economic and security landscape of our region. I want to thank our witnesses for appearing before the subcommittee today. I look forward to a productive discussion on how we can enhance American security in response to the PRC's increasing presence and influence in the Western Hemisphere. I now recognize the ranking member, the gentlewoman from New Jersey, Ms.
▶ 0:13:31Mace for her opening statements. Good morning. Thank you to our witnesses for joining us today. And thank you to our chairman Mace for holding today's I'm glad to serve as ranking member of this subcommittee this Congress and I look forward to working with all of my colleagues to advance the security of our transportation and maritime systems.
▶ 0:13:55Before I begin, I want to offer my condolences to the friends and families of those recently recent to those to excuse me, to the friends and families of those lost in recent aviation accidents here in Washington, D.C. as well as Philadelphia and Alaska. We must ensure travelers everywhere can board planes and get to their destination safely and securely. Now to the topic at hand.
▶ 0:14:21The People's Republic of China has aggressively pursued investments in ports throughout Americas and across the PRC aggression requires a robust coordinated response by the United States and our allies.
▶ 0:14:35Investments by Chinese state-owned companies in terminal leases at US ports must continue to be reviewed carefully by the Committee on Foreign Investments in the United States as they have been to date and PRC investments in ports abroad must be countered by US foreign However, scrutinizing PRC investments in our ports only goes so far if we are at the same time opening the front gates of our government to Chinese influence.
▶ 0:15:04The PRC poses a threat to US national security through investments not just in ports, but in all manner of foreign assets including their top puppet Elon Since being installed as the de facto president of the United States, Musk has acted at every turn in the interest of China and himself at the expense of American people. Musk has deep ties to China.
▶ 0:15:29We do not know the full extent of those ties because he refuses to file a public financial disclosure, but we do know that Musk has received hundreds of millions of dollars in loans from PRC controlled banks to build factories in Shanghai, which are central to his business and wealth.
▶ 0:15:46And we know that Musk has repeatedly met with senior Chinese officials and failed to disclose those meetings despite being required to do so as a US defense Musk owned Doge co-chair Vivek Ramaswamy has said of Musk, quote, "I have no reason to think Elon won't jump like a circus monkey when she when Xi Jinping calls in the hour of need." Unquote.
▶ 0:16:12Since inauguration day, Musk and his affiliates have inserted themselves at multiple government agencies and gained access to government systems containing America's most sensitive personal data. Musk has also exported Americans personal data onto unsecure personal servers for unknown reasons.
▶ 0:16:31One government contractor responsible for contributing to intelligence briefings for this Treasury Department called Doge's access to the department's payment system, quote, "an unprecedented insider threat risk." Unquote.
▶ 0:16:46If my colleagues were as concerned as they profess to be about the PRC's access to sensitive US critical infrastructure and data, they would not be okay with handing their constituents information over to an unelected billionaire whose true intentions are In addition to Musk Trump administrate to In addition, the Musk Trump administration has attempted to freeze grant spending including disbursements for the port security grant program, which US ports rely on to fund critical
▶ 0:17:16security projects. To make matters worse, Musk and his underlings are killing are trying to kill USAID, the agency responsible for providing foreign USAID's foreign investments are vital to advancing US interests abroad. In fact, USAID's investments are the best tool the United States has to counter the PRC's influence on the global stage in general and the PRC's foreign port investments in particular.
▶ 0:17:47USAID provides these investments for less than 1% of the federal budget. Elon Musk's net worth has increased by far more than the entire USAID budget just since election day, which just goes to show that he cares about his own personal enrichment, not making the and not making the government more Dismantling USAID is illegal. I'm going to say that again. Dismantling USAID is illegal.
▶ 0:18:15As Congress has authorized, funded, and mandated its mandated its foreign aid programs. But beyond that, dismantling USAID is just plain dumb. At least it is dumb if your goal is to advance US interests, which may not be Musk's goal. Removing US foreign aid will create a soft power vacuum that the PRC will happily fill.
▶ 0:18:39As one former USAID official has put it, and I quote, "Halting foreign aid, even just temporarily, will have obvious, predictable results. Children will die. Our national security will erode. America's alliances will suffer. US partners will be at risk. And America's enemies will rejoice.
▶ 0:19:01The Trump administration has just put America last while handing a gift to our biggest adversaries, notably China." Unquote. I agree with my colleagues across the aisle that our ports need to be secure and that we need to encounter the PRC's influence in the US and across the globe. I hope my colleagues would open their eyes and see that this administration's actions fly directly in the face of those goals. I thank the witnesses again for joining us and I yield back.
▶ 0:19:32Thank you to the ranking member. Other members of the committee are reminded that opening statements may be submitted for the record. I am pleased to have a distinguished panel of witnesses before us today on this critical topic. I ask that our witnesses please rise and raise the right hand. Do you solemnly swear that the testimony you will give before the Committee on Homeland Security of the United States House of Representatives will be the truth, the whole truth and nothing but the truth, so help you God?
▶ 0:20:01Let the record reflect that the witnesses have answered in the affirmative. Thank you and please please have a seat. I would now like to formally introduce our witnesses. Dr. Isaac Kardon is a senior fellow for China studies at Carnegie Endowment for International Peace and an adjunct professor at Johns Hopkins School of Advanced International Studies. Previously, he was an assistant professor at the US Naval War College's China Maritime Studies Institute. Dr.
▶ 0:20:27Kardon specializes in China's maritime power including its global port development, overseas military basing, and the international law of the sea. He holds a PhD in government from Cornell University and an MPhil in modern Chinese studies from Oxford and a BA in history from Dartmouth. Dr. Matthew Kroenig is vice president and senior director of the Scowcroft Center for for strategy and security at the Atlantic Council.
▶ 0:20:53He specializes in US national security strategy, strategic competition with China and Russia, and nuclear deterrence. Dr. Kroenig currently serves as tenured professor at Georgetown University and he's also a commissioner on the Congressional Commission on the Strategic Posture of the United States. Previously, he served in the Department of Defense and the Intelligence Community under the Bush, Obama, and Trump administrations.
▶ 0:21:17He holds a PhD and MA in political science from the University of California, Berkeley, and is a life member of the Council on Foreign Relations. Dr. Ryan Berg is director of the Americas Program and head of the Future of Venezuela's Initiative at the Center for Strategic International Studies. Dr. Berg specializes in US-Latin American relations, strategic competition, defense policy, and transnational organized crime.
▶ 0:21:44Previously, he was a research uh fellow at the American Enterprise Institute and a visiting fellow at Oxford's Changing Character of War Program. He holds a PhD and MPhil in political science and an MSc in global governance from Oxford, as well as a BA in government and theology from Georgetown. Dr. Cary Davis is the president and chief executive officer the American Association of Port Authorities, where he also serves as general counsel. Prior to the AAPA, Mr.
▶ 0:22:12Davis served in the federal government as a presidential and congressional appointee for international trade and security. He holds a JD and a master's degree from the University of Pennsylvania and a BS from the University of Pittsburgh. I thank each of our distinguished witnesses for being here today. And I recognize Dr. Carden for 5 minutes to summarize his opening statement.
▶ 0:22:36Chairman Gimenez, Ranking Member McHenry, and members of the subcommittee, thank you for this opportunity to testify on Chinese firms' strategic port investments in the Western Hemisphere and their implications for Homeland Security. Chinese companies have invested in port terminals in seven countries in our hemisphere, to include five terminals in US ports. Two Chinese state-owned enterprises, COSCO and China Merchants, along with the private conglomerate Hong Kong-based CK Hutchison Holdings, are the lead Chinese partner in each of these investments.
▶ 0:23:06Compared to other regions, Chinese firms maintain a relatively modest presence in the Americas with investments in 15 ports of 95 total to represent 16% of their overall global port investments. In the US, Chinese firms hold minority stakes in terminals at the ports of Los Angeles, Seattle, Houston, and Miami. At Long Beach, Cosco holds a 51% stake at Pier J. These positions are generally structured as joint ventures with American firms, which are generally the lead operators.
▶ 0:23:33Beyond our borders, Chinese companies have made particularly strategic investments in Panama, Peru, and Brazil. Turning to Homeland Security implications, I assess two primary areas of valid concern. First, the potential for Chinese military use of these facilities to project power in the hemisphere. And second, the exposure of critical maritime infrastructure to certain physical and digital vulnerabilities. On the military front, Chinese naval presence in our hemisphere uh is relatively modest.
▶ 0:24:00The People's Liberation Army Navy has conducted only 39 port calls in the Americas over the past 27 years. That's out of a total of 413, so about 9%. With no reported calls since the year While Chinese operated ports can and do support limited military operations, observed especially in their regular missions in the Indian Ocean region, the correlation of forces in this hemisphere overwhelmingly favors the US.
▶ 0:24:27For the PLA to mount a direct challenge to America's exclusive role in hemispheric security would be a risky and counterproductive deviation from Beijing's clear strategic imperatives. These will remain anchored in the Western Pacific and focused on controlling Taiwan for the foreseeable The more pressing concerns involve vulnerabilities introduced by Chinese-made equipment and software embedded in port systems.
▶ 0:24:50Even facilities not owned or operated by Chinese firms often rely on PRC-made technologies, for example, ship-to-shore Under Beijing's highly acquisitive data governance regime and comparatively high levels of control over PRC firms, these systems enable intelligence collection and surveillance and may cause delay or disruption to the critical operations of US maritime transport systems.
▶ 0:25:14Four recommendations follow from these First, while the presence of Chinese investments and equipment in US ports present some material risks, indiscriminate forced divestiture would do more harm than good. The focus should be on implementing stringent and mandatory cybersecurity and other security screening and developing viable domestic alternatives to technologies and services currently dominated by PRC firms.
▶ 0:25:39US terminal concessions are less problematic from a national security standpoint, but should also be scrutinized rigorously. the US must work closely with the government of Panama to protect our vital nat- national security interests that are concentrated at the Panama This should include helping attract private capital to take over any rescinded concessions and to expand and upgrade existing facilities.
▶ 0:26:05rather than trying to symmetrically match China's port investments, we should leverage our extensive network of capable maritime partners in Asia and Europe in particular to compete Finally, Congress should prioritize legislation like the Ships for America bill proposed in the last Congress to coordinate our national maritime strategy, including creating a maritime security advisor position to improve strategic planning and decision-making that integrates economic and national security concerns.
▶ 0:26:35Challenges posed by China's port investments in the hemisphere are real, but manageable with proper attention and coordinated response. Thank you for the opportunity to testify and I'll look forward to your questions. Thank you, Dr. Carden. Um, and I recognize Dr.
▶ 0:26:49Cronin for 5 minutes to summarize his opening Chairman Jimenez, Ranking Member McIver, distinguished members of the committee, thank you for the opportunity to testify on the important topic of Chinese strategic port investments in the Western Hemisphere and the implications for US homeland security.
▶ 0:27:06I'm I want to assist your work by sharing insights gleaned from my more than two decades of experience working on US national security at the Central Intelligence Agency, Department of Defense, the Congressional Commission on the Strategic Posture of the United States, and now as a scholar at Georgetown University and a vice president at the Atlantic Council. My message today is simple. China's port investments in the Western Hemisphere pose a serious national security threat to the United States and its allies.
▶ 0:27:32Washington and regional states should work together to decouple from Chinese investments in ports and other areas critical to national security. China poses the greatest contemporary threat to US national security. It's a comprehensive challenge with economic, technological, diplomatic, ideological, and military dimensions. Ultimately, the rivalry concerns the future of global order. China employs overseas infrastructure investments, including in the Western Hemisphere, as part of its grand strategy.
▶ 0:27:59Countries in the Western Hemisphere are often attracted to China's infrastructure investments, but they come at a cost. Through its investments, China cements access to resources, captures elites, gains leverage over governments, shifts national policies in its favor, and undermines democratic norms and transparency and environmental China's investments in ports, including in Peru and Panama, pose a number of threats to US homeland security. Chinese-operated ports are used to facilitate the shipment of fentanyl precursors to the United States.
▶ 0:28:28China exploits the presence of technology and access to data for an intelligence advantage. China could restrict or block access to ports, threatening American trade and economic well-being. In the event of a crisis or war, China could hinder the passage of American naval vessels, undermining American war China could also use deepwater ports to host naval vessels, enabling the projection of military power into the Western Hemisphere. As Secretary of State Marco Rubio recently and correctly stated, the status quo is unacceptable.
▶ 0:28:56There are a number of steps the United States should take to counter Chinese port investments in the Western Hemisphere to protect US and allied The United States should encourage countries in the Western Hemisphere to adopt a de-risking approach to China. Regional governments do not need to choose between the United States and China.
▶ 0:29:13They can continue trade with China in non-sensitive areas such as but US allies and partners should pursue a hard decoupling with China in areas of sensitive national security concern, such as telecommunications, advanced technology, ground satellite stations, surveillance systems, critical minerals, and critical infrastructure including Donald uh Trump, President Trump has said of the Panama Canal, "We gave it to Panama and we're taking it back." I applaud the Panamanian government's subsequent decision to forego
▶ 0:29:43renewal of their participation in China's Belt and Road Initiative, and Panama should use its current audit of operators in the Panama Canal area as an opportunity to sever the contracts with Chinese companies and to rebid the contract to US or allied companies that will better ensure American and Panamanian interest. Encouraging regional countries to de-risk from China will often be doing these countries a favor. Many Latin American countries entered into agreements with China years ago under previous governments and different geopolitical conditions.
▶ 0:30:13Today, these same countries understand that undue Chinese influence in sensitive sectors is not in their interest, but they do not have the ability to stand up to China on their own. Pointing to the United States as the bad cop can help these countries take necessary steps that would be difficult to take on their own. Washington cannot, however, expect regional countries to trade something for nothing. The United States must provide credible and affordable alternatives to Chinese infrastructure investments, and to do this the United States has a number of advantage advantages.
▶ 0:30:43We have a number of ways to incentivize our vibrant private sector to invest in the region. The United States has a robust network of allies and partners. We can coordinate European, Japanese, Australian, South Korean efforts to provide aid and and alternatives in the region.
▶ 0:30:59And third, the United States and its allies can compete on quality when it comes to environmental standards, labor standards, technical know-how, and so Finally, as the Trump administration looks to increase defense spending and debates regional priorities, it should boost the budget of US Southern Command and increase SOUTHCOM training and exercises with regional partners.
▶ 0:31:19Appended to this statement is a copy of a strategy to counter malign Chinese and Russian influence in Latin America and the Caribbean, an Atlantic Council report I co-authored last year that explores these issues in greater detail and provides actionable recommendations. I'm honored that the Committee on Homeland Security has invited me to share my views on these challenges, and I look forward to taking your questions. Thank you, Dr. Cronin. I now recognize Dr. Byrd for 5 minutes to summarize his opening statements.
▶ 0:31:48Chairman Jimenez, ranking member McGiver, and distinguished members of the subcommittee, I'm honored to share my views with you this morning on this critical topic. Concern about the People's Republic of China advancing in the construction, operation, and even the ownership of ports is nothing new. What has changed is the geopolitical and economic contexts. The United States has shaken its post post-Cold War stupor. The US is no longer asleep at the switch as strategic rivals set down roots in our shared neighborhood.
▶ 0:32:16The United States is once again exercising its competitive muscles in geographies unaccustomed to this level of US attention. According to a recent analysis by the Council on Foreign Relations, as well as a China Activities Dashboard maintained by the Florida International University, almost 130 ports globally have some degree of PRC ownership or operation. One distinctive feature stands out.
▶ 0:32:40More than half of China's ports sit on major shipping lanes and strategic choke In the Western Hemisphere, this has meant port terminals in at least three locations in Mexico, the Hutchinson ports at the strategic approaches of the Panama Canal, a recently opened mega port in Chancay, plans for a deepwater port in St.
▶ 0:32:57John's Harbor in Antigua, a 90% stake in the Port of Paranagua for China Merchants Port Holding Company in Brazil, a 100% stake in the Kingston Freeport Terminal for the same company, and designs on a port near Punta Arenas in Chile and near the Drake Passage in The PRC's military-civil fusion strategy creates risks for both soft commercial espionage and hard security risks in a potential conflict situation.
▶ 0:33:23Beijing's National Security Law amounts to a state-mandated espionage, while SOUTHCOM has highlighted several hard security risks and posture statements to this very Congress. Radar and GPS jamming, physical blockades, and even containerized weapon Given the importance of ports in general to the activities and global reach of transnational criminal organizations, there is also emerging evidence that Chinese-operated and owned ports could also be catalyzers of TCO group activities in illicit markets, given the PRC's reliance
▶ 0:33:53on opacity as a key operating principle. However, not all Chinese ports are the China has hundreds of thousands of state-owned enterprises, and the ones that collaborate with the PLA are mostly well-known, and many are in fact blacklisted by our government. Those SOEs should be the subject of extra focus and scrutiny. Mr.
▶ 0:34:13Chairman, in my remaining time, I'd like to move to some policy First, I think we need to create a methodology for a spectrum of concern regarding Chinese-owned and operated Four criteria would be basic starting points for me. First, the location of the port, both in terms of the proximity to the US homeland and its position vis-a-vis key maritime trade routes. Second, the mode of cooperation between China and Latin American host country. Third, the relationship between the host government and Beijing.
▶ 0:34:43And fourth, the criticality of a particular port to global trade. Second recommendation. I think we need to consider leveraging the DFC and other multilateral financial institutions to launch a port buyback program in cases where the PRC is the owner.
▶ 0:34:58In the cases where the PRC is the port operator, these institutions may consider supporting a program to help countries terminate agreements early and entice more transparent operators to bid on concessions that become United States should also stand up a program to reduce Chinese equipment, both software and hardware, at Western Hemisphere ports. As I understand it, current US law does not permit assistance to foreign ports to extricate Huawei equipment, for example, or ZPMC cranes.
▶ 0:35:26the US must find a way to make a better offer in these select and critical areas. Simply put, we need to up our game in commercial diplomacy. We should grow our commercial service by two to three times by recruiting people with a decade or more of private sector experience, including with cross-cultural skills in the regions where they'd be working. We should bring these individuals in to embassies via direct, non-foreign service officer test, and hiring We can use IEPA, I believe, to create the recruiting and onboarding process.
▶ 0:35:56We should also establish a global Belt and Road Task Force as part of the State Department's China House to identify where the PRC is bidding on infrastructure projects, critical minerals projects, ICT networks, and so And we must make commercial diplomacy a metric for success in every Global South Ambassador's routine evaluations. And fourth, I think we need to maintain overhead imagery collection programs on select PRC ports.
▶ 0:36:23United States should maintain strong overhead imagery collection on Chinese-owned and operated ports in LAC to ensure they do not expand or quietly but fundamentally alter their nature. This happened in the United Arab Emirates when we caught the Chinese expanding to accommodate military vessels and the PRC was forced to cease I think with enthusiasm for China's BRI waning in recent years following Panama's courageous decision to end its participation in the BRI, the United States has opportunities to advance port infrastructure security. With that, Mr.
▶ 0:36:53Chairman, I yield and look forward to the committee's questions. Thank you, Dr. Burgan, and I recognize Mr. Davis for 5 minutes to summarize his opening statements. Good morning, Chairman Gimenez, Ranking Member McIver, and distinguished members of the subcommittee. Thank you for the opportunity to testify today on critical issues for United States ports and our national security. Let me just thank you for your bipartisan efforts to counter fentanyl. My best friend, Sam, died from an accidental overdose about 5 years ago and I think of him every single day.
▶ 0:37:29As the president and CEO of the American Association of Port Authorities, the unified voice of the US port industry for the last 113 years, I'm honored to testify here. According to a recently released economic contribution report from former CBO economists, our ports are responsible for $2.9 trillion in economic activity and 22 million American jobs or more than a more than one out of every eight jobs in our nation's workforce.
▶ 0:37:58China is investing in global port infrastructure exactly because it recognizes the profound economic and geopolitical advantages that critical trade gateways provide. There's been concern about Chinese companies at five terminals. As this committee's majority report highlights, we are talking about minority stakes in a handful of leased terminals and all tenants at US ports must comply with laws, regulations, and oversight from all levels of government.
▶ 0:38:26Everyone knows we want the highest standard of security at our critical The funding enacted through the bipartisan infrastructure law was historic, designating $450 million annually from fiscal years '22 to '26 for the Port Infrastructure Development Program or PIDP. This critical funding is over subscribed by 4x.
▶ 0:38:47Unfortunately, even at the height of port funding here in the US, we lag in comparison to China, which spends well over double the US in port investment. We also need to increase direct investments such as the Port Security Grant Program, which is authorized by this committee. However, it has unfortunately not been fully appropriated to its authorized level of $400 million in over a decade. Another way to secure American ports is to manufacture cargo handling equipment, which China heavily subsidizes.
▶ 0:39:18While it would take years to stand up production lines, near term, Congress can permit friend shoring with trusted allies to ensure US ports have access to secure, reliable, and modern equipment while reducing reliance on China. AAPA recently brought American ports, terminal operators, equipment manufacturers, government officials, and other stakeholders literally to the same table to discuss how to make American-made cargo handling equipment a reality.
▶ 0:39:44And AAPA is going to continue leading this discussion when we host another meeting here in March in Washington, D.C. And we invite members of this committee to join us. To incentivize procurement from our allies, we can streamline the waiver process for Build America, Buy America provisions. And last year, members of this subcommittee recommended these waivers as well as incentives for domestic manufacturing. Bravo Zulu, as we say in the uh maritime industry.
▶ 0:40:10A major hindrance to growth, resilience, and modernization of ports is tariffs. Tariffs are a tax on American businesses and households. AAPA believes that expanding our nation's presence in ports of allied countries is also critical to revitalize America's strategic maritime posture.
▶ 0:40:30AAPA has collaborated with the US State Department to set up sister port partnerships in the Middle East North Africa and Latin America, and we facilitate other work between US government and LATAM and Caribbean The bottom line today is that the United States continually regulates Chinese investment in ports.
▶ 0:40:51CFIUS is the primary mechanism for reviewing and mitigating any risks from foreign ownership or investment on top of our industry's work with many other federal agencies. Our port industry believes the best counter to Chinese influence, especially at ports in our hemisphere, is strong leadership by the United States through strategic port investment.
▶ 0:41:12We must strive to keep our port infrastructure modern and globally Chairman Menendez, ranking member McIver, and members of the subcommittee, thank you for your time, attention, and leadership when it comes to US ports, and I'm looking forward to your questions. Thank you very much. Thank you, Mr. Davis, and and I'm sorry for your loss.
▶ 0:41:32And and by the way, for those who don't know, um if you die of overdose of fentanyl, 97% of the precursor chemicals that create fentanyl are manufactured in China. Um and even worse than that, those precursor chemicals are actually illegal to sell in China. And yet the Chinese Communist Party actually incentivizes companies to produce them for export. And they have no other use, by the way. It's just for fentanyl.
▶ 0:42:01So it was it was something done by the by the Chinese Communist Party on purpose to kill, basically, American lives. And and that's why, you know, uh when they ask why why I am so, you know, so hawkish on on China and and um you know, I didn't think they're they're our greatest threat, this is an example of why I think that they're our greatest threat. They did on purpose and for no other reason for, I guess, to harm us and also to make money.
▶ 0:42:31Um I now recognize myself for for 5 minutes for for opening statements for opening questions. Mr. Cronin, you mentioned um the presence of China and the Chinese controlled ports on both sides of the Panama Canal. How does that pose a to the United States? Well, I think it poses a a number of challenges.
▶ 0:42:54One to the topic we just discussed, China is shipping fentanyl precursors through the Panama Canal. Um second, by operating the ports there and including with the surveillance technology, Chinese surveillance technology, they're using that to collect information that's going back to Beijing. May not be classified information, but it's sensitive that China could use to exploit for an intelligence advantage.
▶ 0:43:19Uh China could seek to hinder trade through the canal, which would have economic negative economic consequences for America's And then How could How could they do that? How could they hinder trade? How can they stop it? I mean the port operators on both sides, do they determine who goes first, who goes second, etc. or how does that work in the Panama Canal?
▶ 0:43:42Well, in terms of the specific operations, some of my colleagues may be better able to speak to that, but halting disrupting trade in a place like that would not be very difficult. I think we've seen in other cases where ships get stuck in say the Suez Canal, global trade uh really takes a hit. And so, I think there are a number of things they could do to hinder trade such as putting a ship in the canal and not letting other ships go through.
▶ 0:44:10Um and so there's the economic dimension and then there's the military dimension in the event of a crisis or war hindering US naval vessels that could make it more difficult for the United States to project military power power where it needs to go. Fair enough. Dr. Berg, in terms of the presence of China, the ever-increasing presence of China in infrastructure, especially in ports, um my first question is where were we?
▶ 0:44:38Cuz I I when I visited Peru, and I know they have a huge port and they just constructed a port there. Actually, putting out an RFP for the second port down in South Peru and they want us to participate. They really want us to Where has the United States been for the last, I guess, two to three decades down in South America? Chairman, I I agree wholeheartedly with your concern.
▶ 0:45:00I think we were looking in other theaters of the world and we had forgotten, frankly, that security, prosperity, economic integration, the ability to deter illegal immigration, and so on, it starts right here at home and in in our own hemisphere. So, I welcome this administration's focus on the Western Hemisphere. What seems to me a very intense focus on the Western Hemisphere. I think it's proper and it's about time we spend more time looking into not just our security, but also our commercial diplomacy in this hemisphere. Problem is, Mr.
▶ 0:45:27Chairman, is that we're playing from behind now because we've focused on other theaters of the world for 40 or so years, at least. Uh especially with ports, Mr. Chairman, it's far easier to play offense than just play defense, to get the US private sector interested, for example, in the port you've just in Peru, than it is to try to get the Peruvians to wiggle out of this new megaport, for example, at Chancay. Yeah, look, one of the things that I found when I was down in South America is that we were we were more interested in ideological diplomacy than in commercial diplomacy.
▶ 0:45:58Okay, focus on stuff that really did not advance American interests at all. Um and so um Dr. Cardin, when you when you talk about military use of of of these facilities and you haven't seen much. Maybe my premise is that they're going to build all the infrastructure and then they're going to appear. Because if they don't if they start to appear now, then then it kind of you know, kind of shakes us and wakes us up.
▶ 0:46:27Um but they are building that infrastructure, right? The ability to somehow then project power into our own hemisphere. They have the largest navy in the world right now. They're building more and more ships, completely outpacing the United States in terms of other ship production. Their large blue navy ship production completely outpaces us here in the United States. And so is there a threat to that? They're building the facilities.
▶ 0:46:52Will one day all of a sudden see we'll see a bunch of uh of uh you know, People's Liberation Army Navy in our in our own in our own hemisphere in our own backyards. Chairman Gimenez you're absolutely correct that pretty much any commercial port is intrinsically dual-use, particularly the modern facilities that Chinese firms are constructing, owning, and operating in the hemisphere.
▶ 0:47:19But as you also note, there's been relatively minimal PLA operational activity in this hemisphere. And while I agree that it's possible for them to do it on relatively short notice sailing across the Pacific, I think from a strategic standpoint it's unlikely that Beijing chooses to make this hemisphere the area where they're trying to uh match up militarily against the United States at in at least the near-term.
▶ 0:47:47And the the main reason for that is their overwhelming strategic focus remains in the western Pacific. Of course, Taiwan contingencies, but also the South China Sea and East China Sea. So, while I think it's a reasonable concern and one that ought to be monitored, I think it's somewhat unlikely that they attempt to project large amounts of power into this I I agree with you on short term.
▶ 0:48:10My time is up and I'll just make one final statement is that the the Chinese have a very long-range point of view and that they look at things 100 years ahead, not like us. We look at things 2 years ahead. And so, with that, I will uh I'll yield and I I recognize ranking member uh from uh You're from? New Jersey. From New Jersey. Okay. The Garden gentlewoman from New Jersey, Ms. Sherrill McIver. Thank you, uh Mr. Chairman.
▶ 0:48:40Um on Sunday, Vice President Pence tweeted that judges judges aren't allowed to control the executive's legitimate Then yesterday, a federal judge said the White House had disobeyed the plain text of his direction to release billions of dollars in federal grants, which Congress appropriated, but the administration has tried to freeze.
▶ 0:49:02Now, I'm not sure what they teach at Yale Law School, but I am an educator myself and in New Jersey's 10th, we teach students in elementary school that the legislative branch writes the law, the ju- the ju- the judiciary branch interprets the law, and the executive branch enforces the This isn't hard.
▶ 0:49:24If this administration refuses to comply with the court orders, we will be in a scary situation in this country, not just because we will face a constitutional crisis, but also because federal grants are critical to our safety and security, including at our nation's port. DHS administers the Port Security Grant Program, which was funded at $90 million in 2024 for critical security projects.
▶ 0:49:51The Port of Newark has relied on that funding, as well as funding from the bipartisan infrastructure law. Mr. Davis, how important are federal grants to US port security and infrastructure? Would any freeze on these grants, like those attempted by this administration, have any impacts? Thanks for the question, Congresswoman.
▶ 0:50:11The federal funding for port infrastructure is critical, and I give all legislators across the spectrum a huge bravo for infrastructure funding and supply chain resilience through all the various programs at USDOT, Department of Homeland Security, etc., etc. Um the funding increase has been amazing for recapitalizing a lot of aging infrastructure at our ports.
▶ 0:50:38Specific to your question, we're monitoring very closely what's happening with the administration. Uh in the with the caveat that the president has the prerogative to impose his policy preferences as he sees fit and within law, we're, of course, watching a very closely to make sure that any monies that were appropriated or, even more importantly, obligated, monies that have been obligated already, they have to flow. There's a contractual right in the recipients of these grants that they get their funding. So, this is something we're watching very closely. Thank you.
▶ 0:51:08In your opening statement, you talked about how, you know, this port security grant program was originally um authorized for 400 million in funding, but since has been underfunded underfunded. Can you talk a little bit more or elaborate on what kinds of projects and security upgrades would ports be able to make with more Thanks for the question, Congresswoman. They The types of projects run a gamut.
▶ 0:51:33You can imagine everything from physical fencing, bollards, uh camera systems that protect the gate, as we usually call it around the port, to um much more cutting-edge machine learning AI defensive measures to predict, preempt, and respond to cyber threats.
▶ 0:51:55It's well known that many of our largest gateway ports receive tens of millions of attempted cyber per day, per month. I'm not sure exactly, but it's tens of millions per month at least. So, the the types of projects that this critical grant program funds cross the gamut all really important, all really good for responding to the changing nature of a lot of threats that the ports are seeing. Thank you, Mr. Davis, and I too want to offer my condolences for the loss of your friend.
▶ 0:52:26Thank you for sharing that story with us and those who are watching and those here. With that, Mr. Chairman, I yield Thank you to the ranking member, and I recognize the gentleman from New York, Mr. Garbarino. Thank you, Chairman. You're from the sixth borough, right? Florida of New York. That's Yes, I actually am. Thank you, Chairman. Mr.
▶ 0:52:53Davis, modern port operations rely heavily on digital logistics, AI-driven cargo tracking, and automated systems, making them highly dependent on cyber networks and interconnected If the People's Republic of China controlled ports in Latin America or even PRC-affiliated terminals within US ports were compromised, it could provide the Chinese Communist Party with the capability to conduct espionage, manipulate global supply chains, or even sabotage critical logistics operations in a crisis scenario.
▶ 0:53:23In your assessment, how susceptible are Western Hemisphere ports to cyber intrusions or sabotage by PRC-affiliated affiliated entities? Thanks for the question, Congressman. It's a good one. It especially kind of segues nicely to changing nature of threats to ports, especially as Internet of Things, IoT, more connected equipment at the ports, right? I don't want to opine too much on what's happening at Latin American facilities cuz I think my fellow panelists probably have a little bit better view. But in the United States, we of course take this super seriously.
▶ 0:53:54Whether it's daily interface with federal agencies, CISA, US Coast Guard, which is the lead agency for cybersecurity at seaports. CISA, US Coast Guard, I personally sit on a DHS Maritime Sector Coordinating Council where we share threat information across the maritime supply chain, not even just ports, but tug and barge, carriers, marine terminals.
▶ 0:54:20So, we have fora, including the ISAC, Information Security Analysis Center, where we share information about threats across all the players in the chain. Ultimately, I point to the Logink example. This was a a Chinese-developed software.
▶ 0:54:36I'm not sure of its status in use at ports around the world, but this is a great success story of US government in partnership with industry identifying something that carried too much risk that we didn't want to upload or use in our IT and OT at ports. And so, we stiff-armed it and said we we're not going to use this in US ports.
▶ 0:54:56So, I see that as a great success story in terms of the collaboration with industry and So, do you think government's doing a good enough job right now to keep to reduce this US maritime sector reliance on PRC manufactured port equipment, or do you think there's more that we can do, and does Congress need to act?
▶ 0:55:13I think our ongoing partnership is strong and satisfactory, but if we do want to take a further steps to to regain further control over our supply chains and where our equipment's manufactured, we do support a reshoring program for large-scale cargo handling equipment such as cranes and other cargo handling equipment at ports. You talk about the ISAC and sharing. Is it pretty free-flowing between private sector partners as well as government?
▶ 0:55:42Are you Are you getting good information, timely information shared by US Coast Guard and CISA, or could that be better? It's pretty good. I'd love to work with you and your staff to improve it. I've I've seen how ISACs work in other critical infrastructure sectors like banking, health care, etc. And we probably have a bit to go to get to that And it's certainly not government's issue either. We could share information just simply among industry, and that's what trade association is for as well. So, I'd love to work to strengthen it.
▶ 0:56:13All right. Thank you, Mr. Davis. Dr. Croning, despite the well-documented security risks associated with the PRC's manufactured surveillance systems, including cameras from Hikvision and network security systems from Huawei, they remain prevalent in Latin American ports and logistic hubs. These facilities are critical to US trade and often handle shipments bound for American ports.
▶ 0:56:32Presence of PRC-controlled surveillance systems raises concerns over whether China's Communist Party could use could use this infrastructure to track US-bound cargo, collect intelligence on US business operations, or gain insight into regional military activities. Do you believe the continued expansion of PRC-affiliated affiliated surveillance technology in Latin American ports presents a security risk? Yes, it does present a security risk for all the reasons that you mentioned.
▶ 0:56:57And I'd say even more broadly, if China comes to control the digital infrastructure of the 21st century in Latin America and the global south, what does that mean for the future of democracy and human rights in those regions? What does it mean for their global alliances? So, I think this is a threat to the United States and that we should encourage regional allies to de-risk from China and to end cooperation with China and with Huawei. And then also to work to provide them How do we encourage them to de-risk? What can Congress do?
▶ 0:57:28Well, I I think one is making the case and making clear that we're not asking them to choose between the United States and China. There are areas where they can continue to have productive relations with China, but there are areas like this where it's in their national security interest and in our national security interest that they end the program. And then the second thing that Congress can do is is work to find alternatives. So and help the administration to develop a coordinated plan with allies.
▶ 0:57:57If the United States is doing it on its own, that's one thing. If we can do it in partnership with the Europeans, the Japanese, and others, that's much more powerful. Provide incentives for the private sector through DFC and some of the other mechanisms that have been And and so again, encourage them to de-risk and then provide alternatives. Thank you. I yield back. Thank you, gentleman from New York. And yes, I do represent the sixth borough and your future home, Miami.
▶ 0:58:29And I recognize and welcome the the gentleman from Texas, Mr. Turner. Thank you, Chairman Meeks and Ranking Member McCaul. I represent a large portion of Port of Houston, the ship channel, generating millions of jobs, nearly a trillion dollars in economic activity. Um one of the issues that we've been facing are these ship-to-shore cranes used in many US ports.
▶ 0:58:58Um the Biden administration announced a $20 billion deal to develop domestic manufacturing of these cranes. I fully support that. Uh and it's important that that money continues to But let me ask Mr. Davis, how long do you foresee before we have enough of these cranes made in the United States to meet the demands of our seaports in a reliable way? Thanks for the question, Congressman.
▶ 0:59:25It's a great one and and speaks to the thinking several steps ahead, right? I don't have a great sense the manufacturers of these equipment would have a better sense of how long they could stand up production lines, but my best most aggressive estimate is about 2 years hence. And And that's not from right now, that's from when, you know, the funding's in place, the purchase orders are are put down. So, um give or take we're talking a 2-year timeline.
▶ 0:59:53That, of course, even if we were able to create a domestic manufacturing program would take years and years and years to replace all of these key equipment at the ports. Um so, they could start rolling off the line within a couple years, but to replace the hundreds of cranes that are across the country would take many years, which is why we stand by the fact that in the in the near term using the equipment that we have that we're using now is uh the right way to go while also pursuing reshoring.
▶ 1:00:22Because most of these type of cranes that are needed at the Houston Ship Channel, as we widen and deepen the port, are made in China. Will you all agree that we need to make significant investments here to reduce our national security risk? Either one of you. Agree completely, uh Congressman.
▶ 1:00:43We support uh the ability of any of the ports to get the best equipment that's on the market right now, including Port Houston's uh ongoing crane uh purchases and Let me follow up on this Port Security Grant Program, which we received. Is there anyone who disagrees of uh with the importance of that Security Grant Anyone disagrees with that? Okay.
▶ 1:01:06I want to shift to something else, uh because all of you have indicated uh the need for the United States to make significant investments in this And the USA, about 40 4 billion dollars in investments are made. Of that amount, about 1.8 billion is made to the Western Hemisphere in terms of investments.
▶ 1:01:32Um I would think that by cutting off those investments of which helps to counter the PRC's Belt and Road Initiative in Latin America, that we are enhancing our national security risk. And we are opening the door for the PRC to step in when we are stepping out.
▶ 1:01:57And especially when we are stepping out without any real notice being given to Latin America, uh Panama, you name it, across the board. In fact, across the world. Do you all see the significance? Anyone um would question the significance of under the USAID program that 1.8 billion being given to the Western Anyone would question that? And in fact, Mr.
▶ 1:02:25And I see no one is uh challenging that. Uh Dr. Burge, you indicated that we should our game. Uh can you elaborate a little bit more on that? What do you mean? More investments being made in the United States, more investments being made in the Western Hemisphere? Thanks for the question, Congressman. I think it's a question occasionally of investments, but it's also a question to the chairman's point of commercial diplomacy.
▶ 1:02:54I think we need to flip the mindset of some of our diplomats in the region, and I mentioned a couple ideas where I think we could recruit more people who have private sector backgrounds, bring them into embassies in a fast-track way, and also to make it part of an ambassador's performance evaluation. With respect to USAID, sir, um I think there are ways in which we can make USAID, and I certainly hope uh that in the next iteration of USAID, it is more strategic.
▶ 1:03:18So, for example, this hearing is focused quite a bit on We closed our USAID office in the Obama in Panama. but I need to cut you off, Dr. Baird. But, when we are making those investments to the Western Hemisphere, if we cut them, I think we're sending the wrong signal to the PRC. They then step in even more. Thank you, Mr. Thank you, gentleman from uh Texas. Now, I'll recognize the gentleman from Arizona, Mr. Crane. Thank you, Mr. Chairman, for holding this uh hearing today.
▶ 1:03:49Um I want to take a minute to uh talk really quickly about something that uh Ms. McGyver brought up. Um she was talking about the the influence that China had on Elon Musk. Um you know, it's interesting I didn't hear Ms. McGyver or any of her Democrat colleagues um raising these same concerns when we uncovered that the Biden family received 28 million 27 million dollars from foreign countries.
▶ 1:04:19And it they they tried the exact same thing with President Trump in the last Congress. And the reason I think it's important to point this out is the interesting thing between um you know, Elon Musk and President Biden is Elon Musk actually owns multinational um SpaceX, Tesla, Neuralink, just to name a few. So, I think it's important that we make that distinction. I do think this hearing's important today.
▶ 1:04:45You know, when I look at what Sir Walter Raleigh famously said, he said, "For whoever commands the sea commands the trade. Whoever commands the trade of the world commands the riches of the world and consequently the world itself." So, I am concerned about what I see China doing in the Western Hemisphere. Uh I want to start with uh Mr. Davis real quick.
▶ 1:05:07You spoke of the need for domestic manufacturing or acquiring infrastructure used in our ports to avoid a reliance on the CCP's equipment which is used for espionage. Um, can you go into uh what countries uh you're you're speaking of are some of our our allies that can you know, provide some of this equipment for us, sir? Tha- Thanks for the question, Congressman.
▶ 1:05:32Uh China is currently not the only place where these ship-to-shore cranes are are sourced or manufactured, although they have a dominant position in the market. Uh some of the uh other companies are either who make these equipment are either headquartered or have manufacturing facilities in Germany, Austria, Ireland, uh uh I believe some of the componentry might come from Mexico. So, uh th- that's the state of play in this market.
▶ 1:06:01And and just for the record, we uh the industry does not see uh a current situation or risk where where there's any compromise of the equipment. But, if the United States does want to shift towards a situation where it uh is making or friend-shoring these equipment, uh certainly uh appear at home. There are lots of uh o- uh manufacturers uh here in the United States that are penciling out what this would look like, especially if they had uh financial support from US government.
▶ 1:06:30And it could also be from any of the country any of the other countries that I mentioned. Thank you. In regards to uh fiscal um I'm sure many of you guys know that we're approaching $37 trillion in debt. We're spending about $2 trillion annually uh that we don't have, adding to that every single year. Um I'm looking and and the information that I was able to pull is it Let's just take the Port of LA for example.
▶ 1:07:00In 2024, the Port of Los Angeles generated $684.7 million dollars operating revenues. The Port of Seattle in 2024, the Port of Seattle generated 1.2 billion in operating revenues. Now, I realize that these are private these are privately owned companies, correct? Um why aren't these private companies investing a lot of their resources so that the federal government and the taxpayer doesn't come out and have to subsidize them? Mr. Dr.
▶ 1:07:30Cronin, I'm going to give that one to you. Oh, I'd say um uh a few things. I completely agree that the uh debt and the deficit are are major um issues. And so, uh coming back to our um uh colleague Elon Musk, I I think his efforts to look for uh waste, fraud, and abuse and and find savings make sense. And even when it comes to uh US aid, US aid was uh set up for strategic competition during the Cold War to advance American interest.
▶ 1:07:58And then, um I think it did lose its way over time. And so, I think trying to restructure uh US foreign aid uh to prioritize uh concrete US interest in strategic competition uh makes a lot of sense. And in terms of uh the the decisions made by the companies operating the ports on the Western Hemisphere, that's probably I'm probably not the best to speak to that. Maybe I'd defer to Mr. Davis or to I'll I'll let either of you guys take that if you want. If I may, Congressman. Yes, sir. all of the port authorities in the United States are public entities.
▶ 1:08:28They're chartered by cities, counties, states. And uh many of those revenues go actually to to public coffers. They go they go into the treasury to pay for other services for uh for the for the local urban area or county or whatever it may be. So, uh I'd love to work with you and your staff on some of the specifics of those ports. But, they're they're public entities that are often paying back um profits into public What percentage uh Mr. Davis are most of them paying back?
▶ 1:08:57Let me get you that number, Congressman. Thank you. I yield back. Thank you, the gentleman from Arizona. I now uh recognize the gentlewoman from South Carolina, Ms. Biggs. Thank you, Mr. Chairman. And I want to sincerely thank our witnesses for their valuable contributions to this important hearing today. So, the United States Coast Guard is essential to securing maritime trade and enforcing laws that protect our national They safeguard our borders.
▶ 1:09:28They ensure the security of global trade. And they combat illicit activities at sea. The People's Republic of China's growing control over strategic maritime choke points, its engagement in illegal fishing, and the suspected use of commercial shipping for surveillance and illicit trafficking all directly threaten US homeland security.
▶ 1:09:54Because the Coast Guard patrols these critical waterways, we must evaluate whether they have the resources and the authority needed to effectively address these threats. So, for Dr.
▶ 1:10:07Carden, how does the PRC's expanding influence over global shipping routes and strategic ports, including in Latin America and the Caribbean, impact US homeland security and the Coast Guard's ability to police illicit trade and Thank you, Congresswoman Biggs.
▶ 1:10:34I believe that the extraordinary market share of Chinese firms in global shipping and actually across all the verticals, you know, I'd I'd include shipbuilding prominently, port investments, of course, shipping itself, containers, leasing, etc., gives China a strategic advantage in the economic system. We heard the the Sir Walter Raleigh quote.
▶ 1:11:00I think that resonates with leaders in Beijing. I for one have studied a lot of Chinese strategist writings about the famous American naval strategist Alfred Thayer Mahan, also a leading influence in understanding sea power is something much broader than just naval capability.
▶ 1:11:20The naval capability is actually subordinate to the access to markets and the freedom of maneuver around the world's oceans and the PRC has systematically invested in those capabilities. When we think about Chinese maritime power, I would urge us to think of course of their growing blue water navy, but not exclusively. And in fact, if we look at where they're really really differentiated, it's areas like shipbuilding and an overall trade volumes and in its position in global supply chains and value chains.
▶ 1:11:50So, I do think that this poses a broad strategic threat to the United States. As I noted in my testimony, I think the acute military threats from it are somewhat overstated, but that's not to say that it's not a major strategic risk. I think what I'm urging from the standpoint of legislation and policy is to really focus on rejuvenating American maritime power.
▶ 1:12:14Over the past 25 years, China systematically invested in its maritime power, and one could make the argument that the US has systematically divested or sort of accidentally divested from it. And so, I think that's really the the center of gravity in our strategic competition and warrants close Thank you so much. My second question is for Dr. Cronin.
▶ 1:12:38So, given reports of PRC-affiliated vessels engaging in espionage, illegal fishing, and smuggling, is the US Coast Guard adequately resourced and authorized to confront these threats and adding on to that what additional capabilities or legislative measures might be necessary that we can help I think the US Coast Guard and and the US military more broadly is is not adequately resourced
▶ 1:13:08to deal with the China challenge. Now, if we look during the the Cold War, the United States spent an average of 7% of GDP on defense. Now, we're spending something like 3 and 1/2% of GDP on defense. So, uh historic lows. Uh and so, I think Senator Wicker and some others who have called for 5% uh defense spending um makes a lot of uh sense. And uh so, that should be investments in in the Coast Guard, also investments in in our naval power um more broadly.
▶ 1:13:35Uh uh the United States has really fallen behind here, and it has been US dominance on the high seas that has enabled um really the US-led order since um 1945. So, I think this is a major problem, and major investments are are Thank you so much for your comments, and I yield back. Thank you, gentleman from uh South Carolina. I now recognize the gentleman from the Puerto Ric- from Puerto Rico, Mr. Hernández. Thank you, Chairman.
▶ 1:14:01Uh I support efforts to counter Chinese influence in Latin America and the Caribbean. Uh to do that, we need to strengthen our own ports in Latin America and the Caribbean uh both for economic development and for public safety reasons. Ports like the one we have in San Juan are important for the island's economic development and emergency response Federal investments in infrastructure are critical for threa- for strengthening US port infrastructure.
▶ 1:14:29That itself is essential for maintaining our global competitiveness, particularly with China. However, infrastructure projects take time, and many funded by the Bipartisan Infrastructure Law and other legislation are still on their way. These projects are now threatened by the federal funding freeze, putting our islands economic growth and emergency response preparedness at risk. In the long run, this could benefit our global competitors like China. Mr.
▶ 1:14:59Davis, in your written testimony, you note that US ports are already subject to federal oversight mechanisms designed to ensure that foreign investments in critical infrastructure do not threaten national security. How would a federal directive that freezes funding and hinders these agencies from carrying out their responsibilities compromise our national security and reduce our competitiveness on the global stage? Thanks a lot for the question, Congressman.
▶ 1:15:28I think you hit the nail on the head by saying infrastructure projects take time. From the time that the potential grant is noticed by the government to the time it's awarded to the time it's permitted to the time a shovel hits the ground, you can see how it adds up a lot, which is why the industry and I know many industries are very hopeful for a bipartisan move forward on permitting reform for for infrastructure projects at ports and other critical infrastructure and energy utilities and the like. So, that's something we're looking forward to this Congress.
▶ 1:15:58But to answer your question directly, where the president has his prerogative for his policy priorities that he wants for his administration, no doubt about that. But we come back to if moneys have been obligated, it's very clear that the law says they must flow to the recipients of those of those grant awards. So, at the point that the grant is awarded to a recipient, the money has to flow eventually and that's something we're monitoring closely. Great.
▶ 1:16:26And I want to switch gears quickly to emergency preparedness. So, on Saturday evening, a 7.6 magnitude earthquake hit the Caribbean and there was a tsunami advisory for Puerto Rico and the US Virgin Islands. I think this tsunami advisory underscores how vulnerable regions like Puerto Rico and the USVI in the how we depend on strong modern ports for emergency response and recovery should a disaster strike.
▶ 1:16:57What could be the specific economic and public safety impact of the federal funding freeze on infrastructure projects, particularly in regions vulnerable to natural disasters? Uh Congressman, I'd answer the question by saying uh unfortunately, natural disasters are becoming larger, more frequent, and costly, and ports are literally on the front lines of many of these coastal areas that are susceptible to them, and we estimate that the closure of a port has uh on the order of $5 million
▶ 1:17:27economic impact per day. So, that really, you know, multiply that by 1 week, and you you start to see the uh overall toll of a disaster like that. So, would you say that in essence, these federal funding projects to strengthen our ports infrastructure could be seen as a long-term investment rather than a loss that would represent, you know, having these weak ports that would have to close in the case of a natural I agree completely, Congressman.
▶ 1:17:54The return on investment is a 3, 4, 5x, and I would point folks to the Association of uh uh the uh Society of Civil Engineers for some of their work uh on this on these figures. And this is a return on investment that will not only benefit places like Puerto Rico, but would also benefit the United States and its broader ambitions to combat Chinese influence in the region. No doubt about it.
▶ 1:18:17We'll be looking at a comparative study in coming months about how uh our trading competitors spend on their port infrastructure, and I think it'll open some eyes. So, would you agree that this should be approached in a bipartisan manner, uh not viewing this just through the lens of traditional liberal conservative uh spending versus government cuts angle. It should be seen as something that concerns our national security, our economic competitiveness, and it should transcend political partisanship.
▶ 1:18:47Congressman, forgive the corniness. The containers can be blue, the containers can be red, but shipping infrastructure is bipartisan. Thank you. I yield back the remainder of my time. Gentleman from Puerto Rico yields back his time. We're expecting one other individual, one other member to come. Supposed to be at 11:20, so I will keep the hearing open until 11:20. Hopefully he'll he'll show up. If not, then we're closed.
▶ 1:19:16So, we're in recess for a couple minutes.
▶ 1:27:45The subcommittee come back to order. I now recognize gentleman from Iowa, Mr. I want to begin by thanking the chairman, Chairman Rounds, by starting off on such an important topic today and allowing me to join your subcommittee. As we all know, the CCP's global ambitions are not limited by hemisphere or geopolitical boundaries. They are masters of anti-access area denial across all domains, including that in space, and have serving a threat across not just the Pacific but around our world.
▶ 1:28:16Look, as a 20-year intelligence officer, including on airborne operations, I flown reconnaissance missions along the PRC's periphery, and I've witnessed firsthand how Beijing operates. The PRC's investments are more than just about economics. They're tools for power projection, influence, and strategic positioning. Right now in Argentina, the Chinese are developing a deep space station, according to CSIS.
▶ 1:28:40BYD's monopoly of critical batteries, Cosco's or the COSCO's deep-water port in Peru, and increased arms and weapons sales across China and throughout South and Central These are only a handful of the projects that they've undertaken as has been highlighted today. In Latin America specifically, Beijing has employed debt diplomacy, state-controlled enterprises, and political pressure to expand its foothold.
▶ 1:29:04And I believe that if the US gives our command and control of SOUTHCOM over to the PRC, my farmers in Iowa, manufacturers across the country, and folks just here in the United States will not only lack for the ability to operate there, but will be boxed out completely around the world. This region contains operations critical to international trade, shipping, agriculture, and strategic military positions.
▶ 1:29:25So, with that, I want to begin by thanking our new Secretary of State Marco Rubio for his recent visit to the region, along with his commitment to halt the CCP's investment in the region, and offer our friends in the Latin American community an opportunity to work with the United States for long-term security throughout the globe. Today's hearing is a necessary step forward, and thank you, Mr. Chair, for leading the charge on this. So, I'll first speak to Dr. Ryan Berg. Dr. Berg, uh you are a director at CSIS.
▶ 1:29:50You have been making a massive uh investigation into China's foothold in Latin America. Many of the host nations view these investments as beneficial to themselves, either due to economic desperation or a lack of viable alternatives from the How effectively are the Latin American governments assessing the long-term threat that China poses to their local Thanks for the question, Congressman. And it's wonderful to hear that you're consuming our products.
▶ 1:30:18We always love hearing members reading CSIS. Look, I think there's a fundamental problem with some of the democracies in the hemisphere. If you sign a deal to get shovels in the ground during your mandate, you might see shovels get in the ground during your mandate. You may even win re-election based on the feeling that the country is doing major infrastructure things with the PRC, but the price to be paid is later.
▶ 1:30:40And so we need to get better with our messaging game, whether it's debt trap diplomacy or whether it's opportunity costs associated with some of these deals to have leaders understand that there are costs to be paid and they often come two or three mandates later. That's the fundamental problem here, Congressman. And too often the best offer has been the Chinese offer because it's been the only offer.
▶ 1:30:59So before you entered the the hearing, I spoke to to the a couple of the chairman's questions as well as my opening statement about how we need to increase and improve our commercial diplomacy and I'd be happy to talk to you offline about that as well. Thanks. Mr. Chairman, you know, we have seen this tragically throughout history. The Soviets doing it in Cuba and Latin America. The Chinese are much more insidious in their ability both through Wolf Warrior diplomacy but the long-term tethers that they hold over these countries who candidly are looking for alternative partners to not be trapped in this situation. Thank you, Dr. Berg. Dr.
▶ 1:31:29Cornell, you're the vice president and senior director at Scowcroft. Also incredible work you guys have going on there. I want to talk about the PRC's growing growing control over port infrastructure. Obviously, the president has made this a top priority in Panama, but the deep water port investment in this area has an outsized influence. President Trump and Secretary Rubio have both emphasized the seriousness.
▶ 1:31:50What specifically, both diplomatically, hopefully not militarily, but we did get the right to sail through, steps can the United States be taking to deter China's influence and reestablish America's presence in these regions. Yes, well, thank you, Congressman, and thank you also for the nice work word words about our work at the Scowcroft Center.
▶ 1:32:11Uh so, I think there there are a number of things the United States can do, and I think President Trump has been right to see this as as a major priority and to put pressure on the Panamanian government. Uh and um you know, many of the governments, including the government of Panama, I don't think want this Chinese influence now. These are agreements that were entered to under uh previous governments, and so the US pressure is in a way doing them a favor. And so, as you know, right now they're reviewing um some of these investments and audit of these contracts.
▶ 1:32:41They probably will find Chinese corruption, because that's what China does. And I think that'll provide a great opportunity for them to end that contract and then rebid, and American or other Western companies can win those concessions.
▶ 1:32:54And I think that would advance American security and Panamanian And I think it's fantastic that not only have the administration been able to redirect it so that US naval war vessels, who help protect the Western Hemisphere, now can sail through that without paying a massive fee, often times which goes to subsidize the We should also recognize the Chinese are doing more than just the hard infrastructure projects. They're deeply embedded into every software, hardware technology, the actual skating control systems for these. So, I want to talk to Mr. Davis here.
▶ 1:33:24You also, the president CEO of the American Association of the Port Authorities, the Chinese Communist Party has embedded itself within our actual US port systems here. The supply chain, the critical infrastructure, the software. This includes through port equipment like ship-to-shore cranes, which the US exploited which could be exploited for cyber espionage, logistical disruptions, or just good old-fashioned spying. How do we get around this?
▶ 1:33:48We've seen things like Salt Typhoon and a series of MSS, the State Security out of China, threatening the United States and very little happening to hold these bad actors accountable, whether in Latin America or right in Beijing. Thanks for the question, Congressman. I think there are three answers to it. First, it's the port industry's partnership with government and all the agencies that lead on cybersecurity or otherwise security measures at the ports, including US Coast Guard, CISA, and the like.
▶ 1:34:16Similarly, within industry, we share threat. Ports share Ports, terminals, and other maritime players all share threats amongst each other so that they can identify malicious code, spear spear fishing techniques, etc. so that everyone's kind of on guard and seeing the same thing.
▶ 1:34:34And the third is a lot of the much more sophisticated and technical defensive measures that ports, operators, and manufacturers take, including replacing some of the electrical componentry and software of some of the equipment with those known by with those by known parties, some of some of which are United States companies. There are other sorts of measures like that, which I'd love to tell you and your staff about. We look forward to that. I want to highlight that the scope just The uh the gentleman's time has expired. That's right.
▶ 1:35:04I yield back to the chair. Thank you. Uh I want to thank the witnesses for their valuable testimony and the members for their questions. The members of the subcommittee may have some additional questions for the witnesses, and we would ask the witnesses to respond to these in Pursuant to committee rule 7D, the hearing record will be open for 10 days. Without objection, this subcommittee stands adjourned.