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March 28, 2025 - Epoch Times
22:48
How the Chinese Regime Has Infiltrated Critical Infrastructure in America: Michael Lucci
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They're trying to invade our homeland, and they're trying to develop the capacity, and they likely have developed the capacity, to make life very difficult, to create crises within the United States, whether it's power, whether it's wastewater treatment, whether it's telecommunications.
Michael Lucci is the founder and CEO of State Armor.
He helps states enact policies to protect themselves from communist China.
They have laws that require those companies to engage in espionage, so why are we letting them sell connected devices of any type into the United States?
In this episode, we dive deep into how the Chinese Communist Party has compromised our critical infrastructure and communication systems at the local, state, and federal levels.
It's the largest military build-up since World War II, is what China is doing right now.
This is American Thought Leaders, and I'm Jan Jekielek.
Michael Lucci, such a pleasure to have you on American Thought Leaders.
Wonderful to be on.
Great to meet you.
You recently issued a comprehensive threat assessment of Communist China.
Give me a rundown of what you found.
What we found is that the state governments, state and local governments, face unique threats from Communist China.
And that was our target.
I mean, I run an organization, State Armor.
We're working with state lawmakers, some local lawmakers.
On countering communist China.
And so the rundown looks at first the risk of war.
So this is kind of the existential threat, not just what happens in the first island chain.
You know, if they go to take Taiwan, maybe it's something with the Philippines.
It's not just what happens there.
It's then what happens here.
So the risk of war over there is also very much a right here problem because of China's infiltration of, say, critical infrastructure.
They've been developing the capacity to turn off critical infrastructure.
We've heard this on and off from the federal government, related to water, related to power, related to things that we depend on every day, related to our communications system.
When we talk about this, we say, imagine COVID disruptions times 10, times 20. That's the type of threat we're talking about.
But then breaking that down, what is China getting into?
What are they doing?
They're accessing critical infrastructure through routers and through other attack modes.
They're embedding in there.
They're sort of living off the land, they say.
They're just sort of laying low and waiting for some day to do something.
The difference on these hackers now is previously when China subjected the United States to cyber attacks, there was an economic incentive.
They wanted to take something, you know, intellectual property or whatever, take it back to China, build a business.
That's not what we're seeing now.
Coming in and just waiting for something.
Now, you could go further down threats that face state and local governments when they procure Chinese technologies.
The safe thing to assume would be at some point that data is going back to Beijing.
State and local governments, not just them, the federal government procures routers that have known security risks.
They procure drones.
I mean, we're deeply dependent on drones that are sanctioned by our federal government in multiple ways.
Getting out of the hardware and software?
Some of the threats that are very important are about political warfare, human intelligence and political warfare at the state and local level.
In 2022, the Director of National Intelligence issued a memo that every state leader should really look at.
It's here's what China is trying to do with what they call the sub-national level, state and local level.
They're trying to co-opt officials that they could leverage later, collect data, personal data sometimes, develop economic dependencies.
Gain investment dollars for China, which they've been doing quite well.
So they're trying to exploit our system and the seams and cracks in our system, seams and cracks being between the federal government, state and local governments.
They try to get in there.
They try to convince state governments to do some things that perhaps the federal government would think to be a very bad idea.
So this is the threat assessment we looked at, is first the risk of a conflict that they would start, and what would that mean here, and how do you start mitigating that?
Set that conflict aside.
The technological dependence, the espionage that that allows, the political warfare that they conduct at the state and local level, all those problems also have to be sussed out regardless of whether there's a conflict.
Give me an example of some of the, like concretely for people on the street, everyday folks, how that might manifest in their lives.
Like what kind of technologies are we talking about?
That's outside of the routers.
Outside of the routers, outside of the drones, basically computers that come from a Chinese company.
Let me take a step back.
China has a national intelligence law.
It's their 2017 national intelligence law.
You must engage in espionage on behalf of the party state when asked to do so.
So any Chinese company that's involved in work here, collecting data here, Maybe they're putting cameras on critical infrastructure.
We just heard from DHS that there are 12,000 Chinese cameras on critical infrastructure across the United States.
DHS notified us of this because they're worried about the espionage risk.
They're worried about that data being sent back to China.
There are batteries being connected to cars in critical infrastructure.
There are laser sensors.
Many of these products are actually sanctioned or blacklisted in some way by our federal government.
There are DNA sequencing devices.
These are all being sold and used in hospital facilities, research facilities, state and local governments.
Even though the federal government is saying there's some bad stuff going on here, they just keep conducting business, selling that product in through what we call brute force economics, where they overproduce a product.
In order to wipe out American and allied competitors for that product.
One thing that comes to mind are patient monitors.
So tell me about that.
Yeah, so for someone who's in this every day looking at these technological risks, this headline even shocked me.
So this was put out two or three weeks ago by our FDA and our cybersecurity agency at the federal level.
The headline itself is quite scary.
It just says, CONTEC has a backdoor.
CONTEC is a provider of a...
Patient monitors.
So it's the healthcare monitor that might sit next to a hospital bed with your blood pressure, with your pulse, your oxygenation levels.
And according to our federal government in this release, that data is all going back to one place in China.
Who knows how many healthcare data privacy laws that violates in itself.
But furthermore, that they can execute code on those devices, meaning they can make Your blood pressure say something that's not.
So if you're at 125 over 80, they might execute code to make it say 160 over 110.
And all of a sudden, your emergency room physician thinks that he or she's dealing with a very different situation because they're getting poor information on your vital signs.
So that headline, which came out of our federal government, It's extraordinary shocking that they would be selling anything that we care about into the healthcare system is a problem, but really we shouldn't be allowing them to sell anything into the United States that connects to the internet.
They have laws that require those companies to engage in espionage, so why are we letting them sell connected devices of any type into the United States?
I want to touch on a few pieces of critical technology that I've covered on the show before.
For example, these large high-voltage transformers, which from what I understand are only produced in China now and are installed all across the U.S. grid, creating vulnerabilities.
What's the status of that?
Well, in 2020, I believe it was, President Trump's team intercepted one of these transformers and began inspecting it.
My best understanding is that they did find some things that they don't like.
Power producers and distributors have been trying to get off of that Chinese transformer, but they're still coming in, is my understanding.
And there are very few global competitors for producing power transformers.
So we have a deep dependence on technologies like that that we rely on for everyday life that if they install back doors into those pieces of technology like they've done with port cranes, like they've done with drones, healthcare monitors, they can make life very difficult all across the country all of a sudden.
This is an economic strategy for them that really has military undertones to it.
They could do military work in the Pacific.
And just wreak havoc here in the United States.
And so that makes it difficult for us to project power anywhere.
So the homeland security, the homeland needs to be secured.
We have to have strategic space here in the United States in our hemisphere.
If we're under pressure here, then we're not able to project power to help free countries elsewhere.
They're trying to invade our homeland.
And they're trying to develop the capacity, and they likely have developed the capacity, to make life very difficult, to create crises within the United States, whether it's power, whether it's wastewater treatment, whether it's telecommunications.
They want the capacity to create problems here, if and when they decide to go attack Taiwan.
You know, some years ago I had, who's now the FCC Commissioner, Brendan Carr, on the show, talking about exactly this issue.
There were rip-and-replace laws that were passed.
But in the end, it took a long time.
And in some cases, I don't think they were actually ever replaced because there wasn't a plan to actually complete the project in the first place.
Are you aware of this situation?
There's one place where it's about getting done.
That's the state of Nebraska.
That's because state lawmakers and the governors came together and said, this stuff needs to get out immediately.
So yes, President Trump in his first term.
We started sanctioning Huawei, the company, and then they created this rip and replace program.
It is going very slowly, to say the least.
Now, in some areas of the country, this is really a crisis.
And the reason why Nebraska moved on this, Governor Pillen and Senator Elliott Bostar, you know, have teamed up to lead on a lot of these issues.
That equipment surrounds our nuclear missile silos in western Nebraska, also in eastern Colorado, southeast Wyoming.
We have a fleet of nuclear missile silos out there.
They're surrounded by Huawei equipment.
If you go on Google Earth and you can zoom in on where the missile silos are, You can go not very far and find Huawei radio transponders.
There was some data released, information released in a report in 2022 where our intelligence agencies assessed that they could likely disrupt the communications around our nuclear missile silos.
There's also Strategic Command in Nebraska, very sensitive information being transmitted there.
And so that's why the Nebraska team came together and said that needs to come out immediately.
and they've really pushed the pedal down to try to get that equipment out.
Most of the rest of the country is just coming along pretty slowly.
And in most of the rest of the country, it's not clear what sensitive assets are surrounded by that Huawei equipment.
Michael, we're just going to take a quick break and we'll be right back, folks.
Thanks.
And we're back with Michael Lucci, founder and CEO of State Armor.
You know, you've used Nebraska as a bit of a model state.
So this isn't the only area where Nebraska has committed itself to basically removing the Chinese Communist Party's technologies and perhaps other areas of influence.
Can you describe that to me a little more?
So Nebraska, what's really unique here is you have this tremendous Democrat leader and a tremendous Republican leader being the governor who came together.
And just pushed hard into these issues.
What I just described on getting the Huawei equipment out of the state of Nebraska, state armor didn't exist when they were executing on that really critical problem.
We actually adopted what they did and we started taking it to other states in various forms.
But it was obviously a signal in this state, these folks are very serious about taking on these problems.
And so, you know, we just started meeting.
I actually met Senator Bostar.
Testifying in Nebraska on tax policy and sort of got to know him through that.
It was only later that I saw he was doing these great things on combating the Chinese Communist Party.
So Senator Bostar won our Lawmaker of the Year Award for 2024.
He enacted what we call a Pacific Conflict Stress Test, which is an audit of critical infrastructure.
It's an audit of state supply chains.
It's an audit of state financial holdings.
And it asked the question, if China goes to attack Taiwan, What is going to happen here in the state of Nebraska?
How do we mitigate that today?
How do we get our pensions out of China?
How do we get our supply chains to be less dependent on their technologies or not dependent on their technologies?
How do we...
Hardened critical infrastructure before that day comes.
And they're already executing on some of it on the telecommunications, but they're moving the ball forward on other areas of that.
They're blocking procurement of Chinese technologies.
They're kicking China off their land.
They did that all in 2024.
They're blocking their laser sensors.
So they did all that type of work.
And they're coming back for, I guess, a trilogy this year.
They have this huge package of awesome legislation.
They want to register foreign agents from the bad guy countries, from the foreign adversaries.
They want to punish crimes that are done on behalf of foreign governments differently than how we punish it if it's just a couple of Americans.
And they want to get China's genomic sequencing devices out of the state of Nebraska entirely.
They also say no tax credits for foreign adversary companies.
And they're fixing some other problems as well.
It looks like they want to do a broader pension divestment this year as well.
So you have this team in Nebraska, Governor Pill and Senator Boestar, and they just keep pushing the best solutions.
As states go, you know, this inspires competition.
And so we're seeing other states look at what Nebraska is doing and saying, I want to match that.
I want better that.
And that's what we love to see.
Well, most recently, I'm thinking about Governor Huckabee with a big announcement, right?
Governor Huckabee is rolling out just an awesome agenda dealing with China's influence in higher education, some of their espionage as well, some of the technologies that they sell into the state of Arkansas, sister city agreements, which are often a vector for espionage that China uses.
So she rolled out this huge agenda.
It should be noted that Governor Huckabee was the first governor, first leader in the United States to actually kick China off the land.
So a Chinese company owned land in Arkansas.
Arkansas passed a law to say you can't do that.
That company kind of waited around for a while, and the governor and lawmakers there forced them off the land.
The company ended up having to cut a check to the state of Arkansas, if I recall correctly, because they'd overstayed their welcome, basically.
There was a timeline when they were supposed to get out.
They didn't meet that timeline.
So they had to leave, and they had to cut a check to the state of Arkansas.
So she was the first one to actually kick them off Arkansas land.
I'm excited to look at this supply chain audit that Nebraska has done.
It's very interesting because I'm aware, again, on this show, we've covered all sorts of things, certain rare earths, certain medical precursors, which are exclusively made in China.
Can you give me a picture of some of these raw material areas of threat or dependency?
Raw materials, minerals that go into batteries.
For electric vehicles, but also batteries that are going into our power grid in various ways, a lot of that is sourced from China.
As you mentioned, the power transformers, a lot of that is sourced from China.
And then the precursors, the molecule precursors for a lot of generic drugs that we depend on for everyday life, a lot of that comes from China.
And so that's the idea of a supply chain audit.
What would the state not be able to buy?
So rewind back to the coronavirus, when China sort of clamped down on supply chains related to PPE and other things that they want to sort of hoard within China, we felt the effects of that here.
This time around, they will do it intentionally.
If they start a conflict over Taiwan, they will intentionally cut all those supply chains.
So we ought to know what that looks like going in.
We ought to be able to start mitigating that before they would take action.
You're painting this picture, which is, frankly, deeply disturbing.
On the one hand, you're saying that there's all these hackers that are coming in and just kind of lurking, in effect, waiting for the right moment.
I'd love to know a little more about how we know that, but on the one side.
On the other hand, there's all these vulnerabilities.
And so you can imagine this kind of perfect storm, which could be executed from outside at a time when it's most inopportune for the United States or perhaps the whole West.
I think that what they would like to do is develop the capacity, one, to win a kinetic fight on the battlefield over Taiwan with the United States Navy, with Marines over there.
So they want the capacity to do that.
And they've been militarizing.
It's the largest military buildup since World War II, is what China's doing right now.
At the same time, they want to have sort of a co-equal capacity to just cause total destruction here within the United States.
And they want the capacity to maybe punish allies that might help the United States.
They want to develop all these capacities so that on some day, you know, maybe their leader decides he wants to execute a certain contingency to blockade Taiwan or full-on invade Taiwan or do something else.
We're going to have to think deeply and profoundly about what it means to defend Taiwan.
I think you need to be in the president's seat and seeing all of the intelligence that he's going to see to be able to make that decision.
Where we take a position is the president should have that optionality.
And he will not have that optionality in some dystopian world where China could just literally just turn off everything in the United States.
The president doesn't have the ability to make those types of decisions.
And I know that the new president, President Trump, I'm sure his team is working out these problems within the United States.
State officials need to be doing a huge part of that as well.
And so that is the kind of situation they want to be able to execute on is if they have a blockade or an invasion of Taiwan, the Chinese idea would be we just don't have the ability to respond because maybe they closed down the Panama Canal.
They closed down our ports because a lot of those ship-to-shore cranes can likely be controlled by China.
They can threaten to turn on or off power systems, water systems that we depend upon.
And so they want to sort of cripple us into saying, like, you know, just the fight to get to the fight would be too big.
And so maybe we just back off.
And so the position that State Armour takes is we want our leaders to have as much optionality as possible, decide whatever they think is best for the country.
That's what needs to be solved at the state level, the subnational level, whether they do the fixing on their own or they partner with the federal government to fix these problems so that the president, military leaders and everyone can make the decisions that's best for the country without having to worry about the $400 billion of investments that get vaporized as soon as we defend Taiwan because we have too much money over there in China.
What do you think the most important piece of legislation that every state should have right now is?
What I think is the most important piece of legislation is probably the more difficult piece that we do, and it's broad critical infrastructure protection.
This is the near-term potential crisis point where states could have an impact, which is get their connected technologies off of critical infrastructure, don't allow Chinese companies to be directly accessing critical infrastructure, and make sure that Critical infrastructure companies are not giving direct access to foreign adversary individuals.
That's a pretty complicated matter.
So we have to be intensely involved in a state to succeed on that.
But they're easy.
I mean, the other one I would say is get your pension out of China immediately.
It should have been out 10 years ago.
It wasn't out 10 years ago.
Get your pension dollars out of China right now.
Think about this.
If China invades Taiwan and the president is making a decision.
Xi Jinping can sit there and say, if you decide to defend Taiwan, your people are going to lose about a trillion dollars table stakes, because Americans have roughly a trillion dollars in various forms, one to two trillion invested in China.
And we'll just turn that off immediately.
The state and local governments' pensions probably have between one and two hundred billion dollars invested in China.
That all disappears immediately.
So now you have these pension systems going broke.
You could fix that.
With a keystroke.
Sell this index that has all this Chinese stuff, move to this index that doesn't have this Chinese stuff.
That's a simple solution every state should do immediately.
More complex side, the critical infrastructure protections, getting in there, figuring out where you have risks, and mitigating those risks, because that's where China's going to hit states.
If you're a state legislator watching this show, or perhaps a constituent that wants to call attention to everything that you're doing, where do they find out more?
We're at StateArmor.org.
StateArmor is also our Twitter handle, and mine is Michael Lucci is my name on Twitter.
And the one thing we would encourage state lawmakers to do is make confronting and countering communist China an every-year policy item, just like education is, just like law enforcement is.
Make it an every-year policy item where you're always improving.
On what you did in the previous year, building out new capacities, building out new powers to confront and combat communist China.
That's why it's a little bit of a challenge at first because they've never confronted these foreign threats.
It's been generations since they've thought about this.
So put this in.
Every year you should be passing legislation, doing executive orders, doing regulatory rulings, having attorney generals take action to counter communist China every single year.
Well, Michael Lucci, it's such a pleasure to have had you on.
Thank you, Jan.
Thank you all for joining Michael Luce and me on this episode of American Thought Leaders.
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