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[RUSH TRANSCRIPT BELOW] Michael Lucci is the founder, CEO, and chairman of State Armor. He helps states enact policies and solutions that protect their assets from foreign adversaries like communist China.

“They’re trying to invade our homeland, 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,” he says. “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 regime has managed to infiltrate our critical infrastructure and communications systems at the local, state, and federal levels.

“It’s the largest military buildup since World War Two is what China is doing right now,” says Lucci. “If they’re just in our back doors, listening, reading, following everything we’re doing, following the pattern of life for important officials across the country, that’s a pretty deep problem.”

Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of NTD.

RUSH TRANSCRIPT
Jan Jekielek:
Michael Lucci, such a pleasure to have you on American Thought Leaders.

Mr. Jekielek:
You recently issued a comprehensive threat assessment of communist China. Give me a rundown of what you found.

Mr. Lucci:
What we found is that state and local governments face unique threats from communist China, and that was our target. 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 the existential threat, not just what happens in the first island chain, if they go to take Taiwan, then 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 communication 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 embedded there. They’re sort of living off the land, they say. They’re just laying low and waiting for someday to do something. The difference between these hackers now is previously when China would subject the United States to cyber attacks, there was an economic incentive. They wanted to take something, intellectual property, whatever, back to China, and build a business.
That’s not what we’re seeing now. They are 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 and the federal government procure 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 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, and gain investment dollars for China, which they’ve been doing quite well.

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 the threat assessment we looked at is first the risk of a conflict that they would start.

What would that mean here? How do you start mitigating that? But 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

Mr. Jekielek:
Give me an example of how that might manifest in the lives of everyday folks. What kind of technology would it be other than the routers?

Mr. Lucci:
Outside of the routers, outside the drones, basically it’s computers that come from Chinese companies. 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’s saying there’s some bad stuff going on here, they just keep conducting business, selling that product through what we call brute force economics, where they overproduce a product in order to wipe out American and allied competitors for that product.

Mr. Jekielek:
One thing that comes to mind are patient monitors. So tell me about that.

Mr. Lucci:
Yes. 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 patient monitors. It’s the healthcare monitor that might sit next to a hospital bed with your blood pressure, with your pulse, your oxygenation levels.

According to our federal government in this release, that data is all going back to one place in China. Who knows how many health care data privacy laws that violate it. But furthermore, they can execute code on those devices, meaning they can make your blood pressure say something that it’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 is 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, is extraordinarily 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?

Mr. Jekielek:
These large high-voltage transformers are only produced in China now and are installed all across the U.S. grid, creating vulnerabilities. What’s the status of that?

Mr. Lucci:
I believe it was in 2020 when 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. Now, power producers and distributors have been trying to get off of that Chinese transformer,
but they’re still coming in, to 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 backdoors 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. That makes it difficult for us to project power anywhere, so homeland security 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, even when they decide to go attack Taiwan.

Mr. Jekielek:
Some years ago I had Brendan Carr on the show, who is now the FCC Commissioner, talking about exactly this issue. There were Rip and Replace laws that were passed, and it took a long time. In some cases, they were actually never replaced, because there wasn’t a plan to actually complete the project in the first place. Are you aware of this situation?

Mr. Lucci:
There’s one place where it’s 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 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.

That is the reason why Nebraska moved on this. Governor Pillen and Senator Eliot Bostar 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 it 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.

Mr. Jekielek:
You’ve used Nebraska as 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?

Mr. Lucci:
In Nebraska, what’s really unique is that 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. 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 in combating the Chinese Communist Party.

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 depend on their technologies? How do we harden critical infrastructure before that day comes?

And they’re already executing some of it on 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.

You have this team in Nebraska, Governor Pillen and Senator Bostar, and they just keep pushing the best solutions. Now, as states go, this inspires competition. So we’re seeing other states look at what Nebraska is doing and saying, I want to match that. I want better than that. That’s what we love to see.

Mr. Jekielek:
Most recently, Governor Huckabee made a big announcement.

Mr. Lucci:
Governor Huckabee is rolling out 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 are under 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.

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.

Mr. Jekielek:
On this show, we’ve covered certain rare earths and certain medical precursors, which are exclusively made in China. Can you kind of give me a picture of some of these raw material areas of threat or dependency?

Mr. Lucci:
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.

The idea of a supply chain audit is what would the state not be able to buy? Rewind back to the coronavirus, when China clamped down on supply chains related to PPE and other things that they want to 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.

Mr. Jekielek:
You’re painting this picture, which is deeply disturbing, right? 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 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?

Mr. Lucci:
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 is 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 see 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. That is the situation they want to be able to execute if they have a blockade or an invasion of Taiwan.

The Chinese ideal would be, we just don’t have the ability to respond because maybe they close down the Panama Canal. They close 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.

The position that State Armor takes is that we want our leaders to have as much optionality as possible, and 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. So those are the kind of things that we want fixed.

Mr. Jekielek:
I don’t think I’ve had anyone explain the depth and gravity of the Volt Typhoon hack in the U.S. I am wondering if you could do that right now?

Mr. Lucci:
I’ll give you one slice of that. So when we were operating in our first year in multiple state houses, we were giving warnings about terrible things we thought China could do. And ironically, President Biden’s administration kept releasing information and letters that made us seem quite reasonable in the warnings that we were delivering. So we would deliver warnings about things they could do with cars, water systems, or whatever. Just a couple weeks later, coincidentally, there would be this release from the National Security Advisor.

I’ll give you one example. The previous National Security Advisor sent a letter to every governor in March of 2024, saying that China is developing and likely has the capacity to shut down water treatment facilities in your state. They’re actively probing and are developing the ability to do so in a state like Texas, where we live, in Arizona, where it’s not exactly a water-rich state. If you could knock out water treatment, that could have a really crippling effect on state and local government, on the energy industry in Texas. So it’s a low-cost way for the Chinese side to take out something that could cause massive amounts of problems on our side. That’s one example.

They’re doing that through various vectors of access. Some of it’s through routers, some of it’s through modems, some of it’s through other forms of cyber attack. They’re probably doing that through human sources, Chinese nationals working in these companies, and they’re doing that through other pieces of hardware that are attached to these important systems within the United States.

Now, water is one example. My understanding is that they have such sabotage set up across other systems, or they are trying to create the ability to do so. You could think of pipelines that they might want shut down. You could think, as we mentioned, ports, power grids, transportation facilities that they would want to shut down or just throw into havoc in a crisis.

Mr. Jekielek:
What about the hacks that have to do with listening in on both government communications and also the rest of us?

Mr. Lucci:
Volt Typhoon is where they’re hacking into critical infrastructure. Salt Typhoon is when they’re directly into our communication systems. So we put back doors into our communication systems after 9/11, you know, right or wrong to allow the federal government to tap in and, you know, look at what some bad actor’s doing. They got into that. And so they’re into, I think, at least the eight largest telecommunications providers in the United States. They have the capacity to listen in on calls, read messages.

Our government has never been super enthusiastic about Americans using encrypted messaging systems. But if you look late last year, our government started putting out memos saying, start using encrypted messaging systems unless you want China reading it, was the undertone of it. So when you look at our government, they have their own interests to do surveillance. But if they’re telling us to use encrypted messaging systems, you know that we have a really serious problem.

There were stories about President Trump’s team having their phones tapped, likely maybe the vice president team, maybe Kamala Harris’s team as well. It’s bad enough when their radio transponders can be corrupted in various ways. But if they’re just in our back doors, listening, reading, following everything we’re doing, following the pattern of life for important officials across the country, it’s a pretty deep problem. And it’s really a deep failure that they haven’t been kicked out by the previous administration.

Mr. Jekielek:
Explain to me why it’s a problem for gene sequencing technology developed in China to be running here.

Mr. Lucci:
So there’s gene sequencing technology. It has a lot of important uses.
Gene sequencing technology has a lot of important uses.Some of the uses that normal folks like my family use would be finding out your ethnicity, right? Family connections you didn’t know you had. Other important uses are to create a pharmaceutical solution. So if you’re looking at enough genetic information, you could find certain genetic vulnerabilities to certain diseases or syndromes, and you can start working on a pharmaceutical
solution for that.

So these are really important things that you could do with gene sequencing. What the Chinese side says they’re interested in doing is creating weapons that kill or incapacitate based upon ethnicity. And so this is one of these really surreal instances where the Chinese side pretty openly says what they’re doing. It’s horrific. It’s on the American side to start acting.

So the general who ran their National Defense University wrote in 2017 in a book that he published, basically what I said, the best weapons in the era of biotechnology are the ones that can kill or sterilize or lower the intelligence of certain groups of people based on their ethnicity while leaving other ethnic groups unscathed, which of course they’d be thinking of Han Chinese for that. They’re likely moving very aggressively on developing those types of weapons. And so it’s on us to say, this company shouldn’t be operating in the country.

You’re increasingly seeing states pass legislation that says, in our state, a medical facility, a research facility cannot use these genetic sequencers that are controlled by the Chinese Communist Party. Notably, the companies involved on the Chinese side are blacklisted by our Department of Defense for working with China’s military on creating these weapons. They’re also sanctioned by the Department of Commerce for human rights abuses. So it’s curious that they’re even allowed to be here at all.

The federal government’s been working on a solution kind of in bits and starts. What states are able to do is really quickly say, you have to get out of here. We don’t want this communist technology. We don’t want the People’s Liberation Army’s favorite DNA sequencer collecting data on our citizens. Because it could very easily be just sent back to China, to the giant database of all Americans.

Mr. Jekielek:
And actually, that’s something that’s worth talking about, the psych and genetic profiles of every American. A lot of people don’t understand that this is something that’s happening over there.

Mr. Lucci:
Take TikTok as one example. They’re able to collect intense amounts of data about whoever’s using that application. They’re storing it away. They’re going to save that for a day when they want to use it on that person or those groups of people. When you have tools that are coming out with large language models, that’s going to make it easier to synthesize and analyze all of that information. They want to be at the forefront of that.

They want to be at the forefront of understanding how to impact somebody’s health. That’s why they’re looking at people’s genetic information. They’re looking at your healthcare monitor. They’re collecting information all these ways. They’re always hacking hospital records and things like this. They want to collect all sorts of information. They’ll figure out later what to use it for.

They might have an intent in mind right now, or they’re just saying this is sensitive personal information. We’ll figure out a way to use it later. They’re collecting on as many people as they can, certainly federal employees. They’ve been really intent on hacking into federal systems and getting information on federal employees, but it applies for all Americans.

Mr. Jekielek:
I get the sense you don’t think Americans should have TikTok on their phones.

Mr. Lucci:
I don’t think Americans should have TikTok on their phones, nor should Americans have the replacement applications, Little Red Book (RedNote), which notably is named after a communist propaganda book written by Mao Zedong, called Mao’s Little Red Book. When the application is named after a communist propaganda book, that was the move. When TikTok was at risk of being shut down, they were trying to move people over to Little Red Book.

With the application DeepSeek, if you’re putting that on your phone, we know that data is going back to certain companies in China that we’re fighting for other reasons. Any keystroke you make on your device, if it has a Chinese application on it, you have to assume it’s going out. As I said earlier, their laws require this. Their 2017 national intelligence law requires that data to go back to Beijing. The safe thing to do is to assume that’s what is happening.

Mr. Jekielek:
Isn’t it kind of the case that all these people are rushing over to RedNote based on prompts from TikTok, that it’s not just a collection system, it’s an influence system. There are young people talking about how they’ve discovered that it is so good in China. Everyone has housing. I don’t know if you watched any of these videos. It was just stunning what people could be led to believe. An app like TikTok feels like an existential threat. Your thoughts?

Mr. Lucci:
I think you’re right that there was a push. There was an interesting effect on both sides. So the American side, as normal, received a lot of propaganda. And this is, you know, Xi Jinping describes these tools, these applications, short video devices and others as tools to win the smokeless battlefield of ideology. But I do want to also point out an interesting side effect.

You have a lot of communist propaganda on these apps, but there was some interaction between Americans and Chinese. And some of it was quite humorous, like when the Chinese would ask the Americans what their salaries were, and the Chinese side couldn’t believe what the Americans were saying. And so, you know, that was interesting.

But then we saw that the regulators in China started really wanting to rapidly hire censors that were really good at English, because they had to filter out this information. They didn’t want the Americans sending that information into China. They didn’t want Americans sending information about civil liberties into China. They just want one-way information control where communist propaganda comes towards us, but we don’t send information back in. So that’s how they approach these things.

It’s notable that as soon as they’re potentially losing one vector, they have a couple replacements. That shows you how important it is to them to be able to propagandize Americans and collect data on Americans. That should compel more action from us to more rapidly shut these things down. You’ve seen a lot of state governors cutting off these applications on state devices.

Mr. Jekielek:
Could you explain to me why it might be a bad idea to have a Chinese electric car?

Mr. Lucci:
If you recall, a couple years ago, there was a spy balloon floating across the country slowly, way up in the air, but probably collecting sensitive information. And Americans were rightly riled up. Imagine that spy balloon was down at street level with the most sensitive laser sensing devices known to man, with connectivity to the internet, with all sorts of other monitoring devices. And it’s just rolling around American streets all over the country at the scale of a couple million per year.

They’re just mapping everything everywhere. Those cars would be able to interact with other connected devices, whether it’s traffic control signals or otherwise. They’re able to map out to the nanometer everything within the United States. This is the capacity they would love to have. So we have likely already taken the step to block the Chinese cars themselves from coming into the country.

American auto loves that. What American auto should take note of is that the devices that make that car dangerous should not be going into your car either. So there are laser sensor devices, as I mentioned, internet connectivity devices that allow for remote access, command control, and exfiltrating data.

Actually, President Biden started looking at this, and the capacities that they said could be engendered in these devices going into American cars are really dystopian capacities. At a keystroke, they could say that the safe distance between cars is not 40 feet, it’s now four inches. It’s a massive mistake if we allow those to go into American cars.

Now, more recently, just in the last couple of days, there are some headlines coming out that American auto companies are interested in putting DeepSeek, the Chinese AI tool, into integrating that into the automobile system. So not only is all this connected technology coming from China into some of these cars, they’re going to use a Chinese AI that integrates all these technologies. This is a disastrous idea. Federal lawmakers, state lawmakers need to tell American auto companies, you’re not going in this direction.

Mr. Jekielek:
You have advocated for a whole government approach to respond to this. You describe communist China as an existential threat. But these days, many Americans are suspicious of a whole government approach. What are your thoughts?

Mr. Lucci:
That’s a very real challenge. I mean, we face that challenge. I’ll give you one example. There’s a certain state in the United States where we were working on legislation. The legislation mentioned the cybersecurity agency, CISA, and basically it was saying if there’s a company that’s on a list maintained by CISA for being a bad company, they shouldn’t be able to sell products into this state. CISA was involved in censorship of Americans as well.

How the CCP Infiltrated America’s Critical Infrastructure: Michael Lucci