SECRETARY POMPEO: Well, good afternoon, everyone.
Thank you, Carl, for that kind introduction.
And thanks, too, to Dr. Duffy and for allowing me to be here at the Commonwealth Club today
and hosting me.
I’ve now had a chance to read a little bit about the Silicon Valley Leadership Group
and its founding in the ‘70s to solve one of the era’s biggest problems: rolling energy
blackouts.
Sounds like you’re right back at it again.
(Laughter.)
I think I can do that joke.
I’m from California.
(Laughter.)
I think it’s okay.
More seriously, it’s really an honor for me to be here.
The work that’s been done here in the valley is unfathomable.
The works of genius, the contribution to the world has brought prosperity to millions of
people in California and across the world.
Alongside American ideals of freedom and democracy, it has improved humanity.
And what you’ve done – I can say this as having been in the private sector myself
– is truly an act of service of the first order, an act of service in its own kind.
And I know today, too, that I speak to a special group in particular as your founder, David
Packard, exemplified what’s truly special about our great nation.
He realized that the American dream was real.
He lived it.
He was a patriot.
He knew that American economic security was a part of corporate citizenship.
He’d served as the secretary – a deputy secretary of defense in the Nixon administration.
I was just a captain in the Army—that’s not bad for Mr. Packard.
I’ll try to match him one fine day.
He said that “management has a responsibility to its employees, to its customers, to the
community at large.”
I think he was in that vein encouraging us all to “think bigger.”
And I want to talk to you about one specific topic today, the challenges and opportunities
that the United States has with China.
We need to think bigger, perhaps, and better as well.
Because I am convinced that we can cooperate with China, as this administration has shown
with what I hope will be in the next several hours the signing of a phase one trade deal.
That’s a fantastic thing, I believe, for the United States.
We’d welcome more of it.
But we also have to honestly confront tough questions about the national security consequences
of doing business in a country controlled by the Chinese Communist Party.
That especially goes for companies that develop some of our most sensitive technology, as
many do here in this region.
I want to make some brief remarks and then we’ll take questions that Carl presents.
We’ll – I’m happy to talk about almost anything with you.
And you will see that I will speak very directly.
So much of America’s prosperity is generated here – here now and in the future.
It’s astonishing to think of the earth-shaking innovations like Twitter.
I know I watch one Twitter account in particular each and every day.
(Laughter.)
You should all know that freedom underpins every bit of this great work: the freedom
to think and communicate what each of us wants; the freedom to innovate and protect your own
property, your inventions; the freedom to compete; the freedom from cross-border sales
taxes – until just a few years ago.
Even if you fail, as many of us have, our system is geared to help you to get up and
get after it again.
And I know so many in this room, so many entrepreneurs, wear failure as a badge of honor, because
you learned and you improved and you continued to compete.
It’s how we all learn to execute our ideas and get them right the second time.
And this system, our idea of capitalism with free markets, has produced the greatest wealth
and prosperity that the world has ever seen, and technology has played a huge role in that,
and we all know it will continue to do so.
It is, when I travel the world, very clear that only in America could the titans of tech
have risen from the garages and dorms of Palo Alto and Mountain View, and made and continue
to make American freedoms possible.
Yet our companies do business in many parts of the world that don’t enjoy these very
freedoms.
China – specifically the Chinese Communist Party – presents unique challenges, especially
to your industry.
You all know these problems first-hand.
I’ll recount them, but I mostly want to ask for your thoughts.
Look, I’ve heard business leaders share with me – frankly, mostly in private – their
concerns: fears of getting hacked; fears of a Chinese state-backed company undercutting
your margins; fears that a Chinese company will steal your idea, manufacture it in China,
and then sue you out of business for patent infringement.
And the fact that I’m mostly told that in private, I think, is very telling as well.
It gets to a big point: that China’s rampant theft of intellectual property is real, and
that it’s not just a problem for the particular company affected.
Because that capacity to invest and create and protect those property rights underpins
the entire innovation economy that we have here in the United States.
As we stand here today, there are about a thousand open intellectual property cases
with the FBI, nearly all of them somehow connected to China.
But it’s – as you know, it’s the application of that property that is just as troubling.
There’s a reason so many hackers and thieves – like the A.P.T. 10 group ‒ are connected
to the Chinese Ministry of State Security.
Under Xi Jinping, the CCP has prioritized something called “military-civil fusion.”
Many of you will know this.
It’s a technical term but a very simple idea.
Under Chinese law, Chinese companies and researchers must – I repeat, must – under penalty
of law, share technology with the Chinese military.
The goal is to ensure that the People’s Liberation Army has military dominance.
And the PLA’s core mission is to sustain the Chinese Communist Party’s grip on power
– that same Chinese Communist Party that has led China in an increasingly authoritarian
direction and one that is increasingly repressive as well.
It runs completely at odds with the tolerant views that are held here in this area and
all across America.
So, so even if the Chinese Communist Party gives assurances about your technology being
confined to peaceful uses, you should know there is enormous risk, risk to America’s
national security as well.
This is a real problem, given that many of our most innovative companies have formed
partnerships with the Chinese Government and companies that are linked to it.
Last year, a friend, the former Chairman of the Joint Chiefs of Staff, General Dunford,
said as following in testimony before the United States Senate.
He said, “The work that Google is doing in China is indirectly benefiting the Chinese
military.”
Look, the commercial decisions are yours to make.
You’ve got shareholders for which you hold – which hold you accountable, and boards
of directors to which you have fiduciary obligations.
And I know.
I know your job is to make money for your shareholders.
The Trump administration is all for it.
Invent new things.
Change the world.
I get that.
The small company I ran, we tried to do precisely that each and every day.
But I also want to remind each of you as Americans, as citizens of a free nation, that it is increasingly
at risk from Chinese actions that may undermine the very freedom that you have to build your
business and create.
This is not to be alarmist.
It’s not to be threatening.
It is for all of us to be aware of.
Look, that’s already happened in Washington, D.C.
We now see China for what it is, not what we wish it would be.
It’s happened on both sides of the political aisle, and American companies have also rallied
to patriotic causes.
It’s a long history of that here in the United States.
Any of you who have read history would remember that the so-called “Arsenal of Democracy,”
also known as American manufacturing, was essential for our victory back in World War
II.
Sausalito, just across the bridge, was home to an astounding operation that built one
merchant ship a week during the entire war.
Only American ingenuity could have done that.
And in the wake of September 11th when 3,000 lives were lost, financial institutions in
New York volunteered pages upon pages of records which helped the FBI identify the hijackers
that had committed this horrific terror.
So we’ll talk about this today.
How can your company extend this good legacy?
How can we create unity to defend our companies and America’s values?
I’m convinced that we can do both.
I’m not here to demand that you get out of China.
In fact, it’s just the opposite.
We want American companies to get rich doing business there.
We want you to grow jobs here in America and build your companies successfully.
We want to create conditions so that you can do so on a level playing field, in the spirit
of respect between our two nations.
Indeed, that’s the whole point of President Trump’s trade talks.
At the same time, we need to make sure that our companies don’t do deals that strengthen
a competitor’s military or tighten the regime’s grip of repression in parts of that country.
We need to make sure American technology doesn’t power a truly Orwellian surveillance state.
We need to make sure American principles aren’t sacrificed for prosperity.
So ask yourselves just a few questions: Who am I dealing with?
What’s the true risk-return calculus to doing business in China?
Am I educating the senior leaders in my organization – my board, my employees, the C-suite executives
– about the choices our company faces and what impact that will have, not only on our
company but our community more broadly?
President Trump has taken action to confront China’s theft and predatory economic practices.
He’s demanding respect and reciprocity.
It’s happening this very week when we sign the first part of a trade deal.
He knows that economic security is, in fact, at the core of my mission set: to provide
national security, to protect each and every one of you.
And we’ve put export controls on parts that go into the CCP’s nationwide surveillance
machine.
We’ve applied much greater scrutiny to technology exports that could have military use.
We’ve dramatically reduced the nuclear technology we share with China, even for nominally peaceful
purposes.
Our government agencies are cooperating in new ways to stop the Chinese military from
using our own innovation against us.
And we’re putting our allies and partners on notice about the massive security and privacy
risks connected to letting Huawei construct their 5G networks inside of their countries.
And too, protecting America’s innovating – innovative capacity is at the center of
what we’re trying to do in these talks.
We’ll do our part in the government and we’ll keep ramping up our enforcement.
You should know that we’re on your side.
But defending freedom and national security isn’t just the government’s job; it’s
one for each and every and citizen.
I know you’ll all be part of that.
You’re a natural fit.
There’s hardly a community in the world that prioritizes environmental, social, and
governance principles more than does Silicon Valley.
Look, the hard questions that I posed earlier don’t have easy answers, and I am certainly
not here today to tell you what the answers are.
Every company is different.
I know you all will figure it out.
I know that because you are visionaries who have transformed the world.
Your companies are built on the ethos of bringing good things to your fellow man, and I know
you’ll get it right.
As America’s Secretary of State, I’m hoping you’ll do that soon.
America is facing a challenge from China that demands every fiber of your innovative skill
and your innovative spirit.
Thank you for your time today.
I look forward to taking questions about almost anything.
(Laughter.)
Thank you all.
(Applause.)