Protecting Texas Critical Infrastructure

Introduction

Thank you, Chairman Hefner and the Committee for the opportunity to join today’s hearing. My name is Nate Picarsic. I am a Senior Fellow at the Foundation for Defense of Democracies. And I am grateful to have the opportunity to provide remarks today on the risks to critical infrastructure posed by foreign adversaries.

Overview

The People’s Republic of China (PRC) is the primary foreign adversary posing immediate risks to critical infrastructure in Texas and across the United States. China deploys a deliberate and calculated industrial policy to seize global market share and influence in priority sectors, product spaces, underlying supply chains, and supporting science and technology. China prioritizes a variety of fields that imperil critical infrastructure in Texas.[1]

China’s strategy is implemented via a State-led, Enterprise-driven model. Firms receive support and guidance from Beijing and go out into the world to accrue strategic positions and market share. It is cliché at this point, but it remains true: China plays a long game. Beijing’s strategy relies upon a bevy of non-market tools to subvert global markets and market-based competition. The Chinese state is willing and able to underwrite this agenda based on the strategic returns it ultimately promises. And Beijing has crafted a national strategy of “military-civil fusion” to guarantee that seemingly commercial stakes and positions translate into coercive power.[2]

China’s goal is asymmetric dependence. China’s leaders want to insulate the country’s domestic market while at the same time penetrating global markets, leaving international actors more dependent on Beijing than Beijing is dependent on them. That ambition is codified in framings like Xi Jinping’s conception of “dual circulation” and the fundamental premise of “two markets, two resources” that preceded it.[3] All of which is to say that China’s approach and the risk it presents are neither new nor hollow. The Chinese has deliberately been developing and leveraging its industrial policy to seize its current positions for decades. Those positions are maintained by deep supply chains, expansive raw material advantages, world leading manufacturing prowess, and massive firms that engage globally to win market share via non-market means.

China’s approach is increasingly recognized for the disruptive, non-market force that it is.[4] But China’s size and the nature of contemporary information technology and globalized supply chains leave many of the extant tools for redressing distortive forces utterly neutered. All the while, critical infrastructure invites new – and increasingly difficult to predict or deter – risks of foreign adversary meddling.

New protections are needed. They are needed urgently: Substitutes and commercially viable alternatives to China’s leading actors and products do exist. But they need to be backed by government-led protections and market-based catalysts now before it is too late – too late for those alternatives competitively and too late for the security of critical infrastructure sites that operate under risk of foreign interference today.

Texas has an opportunity to lead. Both for Texas and for the United States.

Critical Infrastructure Supply Chains of Concern

China’s dominance of materials, supply chains, and systems on a global basis imperils the security of critical infrastructure in the United States. As Texas moves to lead in growth sectors – energy, artificial intelligence, and other dual use technologies – it is imperative that the state close gaps that foreign adversary-linked firms and products are able to exploit. Foreign adversaries use these gaps to access critical infrastructure sites and the proximity they offer to operations that are vital to the safety, security, and prosperity of the people of Texas. I will discuss a series of relevant product spaces. These are all prime examples of active risks to critical infrastructure that exist in Texas today. Sadly, this set is far from exhaustive.[5]

Batteries

Electrification has ushered in new products and applications for – and therefore new reliance on – batteries. Energy storage systems and electric vehicles have become massive markets just in the past decade. And China’s players have positioned to dominate these supply chains. They have done so despite the fact that much of the underlying technology for today’s battery surge traces back to right here in Austin, where John B. Goodenough and colleagues at the UT Battery Research Group invented rechargeable lithium-ion batteries.[6]

China’s leading battery players – including both those that supply automotive use cases and those focused on battery energy storage markets – benefit from direct state-backing. China’s battery champions also benefit from state backing in extractive industries that decrease material costs for Chinese batteries. Those players have ridden Beijing’s subsidies and guidance into market leading roles across anode, cathode, and finished good segments of the battery sector.[7]

This carries immediate and dire implications for strategic energy security and for grids that depend on Chinese batteries. Automotive use cases run the risk of disruption on roadways. That risk is compounded by additional supply lines that expose connected vehicles to China’s champions in equipment, like LiDAR.[8]

The battery energy storage risk is just as severe. Single points of failure mean that power grids and closed-loop systems that incorporate batteries and battery management systems linked to China are exposed to the danger of failure, manipulation, and disruption from cascading effects.[9]

Inverters

Power inverters present another system necessary for the expansion of energy storage facilities and the operation of a wide variety of power facilities. China has prioritized power inverter supply chains alongside batteries and solar panels.[10] The resultant Chinese inverter champions allow Beijing’s other downstream energy technology players to operate in cartel-like fashion across the entire value chain of an energy storage or solar power project.

Chinese firms dominate the inverter sector. Those firms include none other than Huawei, one of China’s leading telecommunications champions – and a company that has for years been designated as a risk actor by multiple US Federal government authorities.[11] Huawei’s presence in the inverter space in the United States has decreased over the past five years. But much of that market share has been absorbed by other Chinese firms with similar ties to the Chinese government.

The Federal Communications Commission (FCC) just this week expanded its Covered List of prohibited foreign vendors to include new inverter products.[12] That determination was based on a national security justification and clearly signals Federal recognition of operational and supply chain risks posed by this equipment. Inverters stand at a vital position at the project level. Their ties to external firmware updates present an ever evolving and complicated attack surface.

Networking Gear and Components

Batteries and power inverters demonstrate areas where Chinese made products threaten critical infrastructure. Both are systems. But systems are not always the risk vector. Component-level supply chains are increasingly vulnerable and increasingly serve as active channels through which operational disruption and strategic supply chain risks manifest.

Data centers, for example, depend on a laundry list of complex materials for construction and operation. The cutting-edge of GPU chips draws much of the policy and popular attention in the compute layer of the artificial intelligence infrastructure in Washington. American and allied companies may be well positioned in those advanced fields. But myriad threats exist at other steps of the data center value chain. At the site level, foreign adversaries risk exerting influence via components. Chinese vendors often find a way into domestic US compute infrastructure via optical transceivers and servers that connect and transmit information throughout data centers.[13] Those points of entry offer innumerable attack methods for cyber data collection and operational disruption.

Recently, the Federal Department of War added relevant Chinese vendors to its list of actors designated as tied to the Chinese military. That suggests recognition of how component-level supply chains can feed adversary intelligence and security operations. But by virtue of their relatively obfuscated position, many of these “hidden Huaweis” continue to proliferate across critical infrastructure.[14]

Conclusion

Texas is already at the vanguard of protecting against these risks. The Lonestar Infrastructure Protection Act outlined a novel framework that should be built upon moving forward.[15] Additional attention should be paid to ways in which recent Federal actions – including, for example, Covered List designations made by the FCC and tax credit eligibility restrictions on prohibited foreign entities by the IRS – may alter adversarial modes of operating and present new risks.[16] Chinese industrial policy is not standing by idly. Chinese firms are not disappearing or giving up hope of accessing the American market and proximity to critical infrastructure in Texas.

Thank you for your time and for convening this important hearing.

[1] Chandler Treon, “Texas Senators Examine Foreign-Linked Risks to Grid Supply Chain,” April 2, 2026, https://insider.govtech.com/texas/news/texas-senators-examine-foreign-linked-risks-to-grid-supply-chain.

[2] Emily de la Bruyère and Nate Picarsic. “Military-Civil Fusion: Crafting a Strategic Response.” CHIPS: The

Department of the Navy’s Information Technology Magazine, September 2019, https://www.doncio.navy.

mil/CHIPS/ArticleDetails.aspx?ID=12635.

[3] Nate Picarsic and Emily de la Bruyère, “The Rhetoric and Reality of De-Risking US-China Ties,” Hinrich Foundation, July 27, 2023, https://www.hinrichfoundation.com/research/wp/trade-geopolitics/the-price-of-dependency-the-rhetoric-and-reality-of-de-risking-us-china-ties.

[4] “Moolenaar Introduces Legislation to Revoke China’s Permanent Normal Trade Relations,” House Select Committee on the Chinese Communist Party, November 14, 2024, https://chinaselectcommittee.house.gov/media/press-releases/moolenaar-introduces-legislation-to-revoke-china-s-permanent-normal-trade-relations.

[5] Phoebe Benich, Harry Krejsa, and Emma Stewart, “Electrotech Moneyball: An Industrial Strategy for Ranking Risk and Opportunity in Energy and AI Supply Chains,” Foundation for the Defense of Democracies and Carnegie Mellon Institute for Strategy and Technology, May 12, 2026, https://www.fdd.org/analysis/2026/05/12/electrotech-moneyball/.

[6] “Facts: John B. Goodenough,” The Nobel Prize, https://www.nobelprize.org/prizes/chemistry/2019/goodenough/facts/.

[7] Frank Bickenbach, Dirk Dohse, Rolf J. Langhammer, Wan-Hsin Liu, “EU Concerns About Chinese Subsidies: What the Evidence Suggests,” 2024, https://www.intereconomics.eu/contents/year/2024/number/4/article/eu-concerns-about-chinese-subsidies-what-the-evidence-suggests.html.

[8] “Policy Alert: Urgent U.S. Response Needed to Counter China’s Strategic Use of LiDAR Technology,” Foundation for the Defense of Democracies, September 23, 2025, https://www.fddaction.org/policy-alerts/2025/09/23/policy-alert-urgent-u-s-response-needed-to-counter-chinas-strategic-use-of-lidar-technology/.

[9] David Jones, “Grid-scale battery energy storage systems face heightened risk of cyberattack,” Cybersecurity Dive, December 11, 2025, https://www.cybersecuritydive.com/news/battery-energy-storage-systems-risk-cyberattack/807675/.

[10] Caspar Hobhouse, “The dragon in the grid: Limiting China’s influence in Europe’s energy system,” European Union Institute for Security Studies, January 15, 2026, https://www.iss.europa.eu/publications/briefs/dragon-grid-limiting-chinas-influence-europes-energy-system.

[11] Christian Roselund, “Roth: Huawei exits U.S. solar inverter market,” PV Magazine, June 25, 2019, https://pv-magazine-usa.com/2019/06/25/roth-huawei-exits-u-s-solar-inverter-market/.

[12] See the corresponding announcement: https://www.fcc.gov/document/fcc-adds-foreign-produced-power-inverters-and-robots-covered-list-0.

[13] Nate Picarsic and Emily de la Bruyère, “Electro-Industrial Stack Vulnerabilities: Surfacing Hidden Huaweis,” Real Clear Defense, February 4, 2026, https://www.realcleardefense.com/articles/2026/02/04/electro-industrial_stack_vulnerabilities_surfacing_hidden_huaweis_1162735.html.

[14] Nathan Picarsic and Emily de la Bruyère, “Hidden Huaweis: Beijing’s Forward Deployed Global Force,” Real Clear Defense, September 30, 2025, https://www.realcleardefense.com/articles/2025/09/30/hidden_huaweis_1137911.html.

[15] For additional context, see ERCOT’s presentation on the Act: https://www.ercot.com/files/docs/2026/04/01/LSIPA-_April2026_Hearing.pdf.

[16] Jack Burnham, “FCC Confronts Chinese-Produced Power Inverters and Robots,” Foundation for the Defense of Democracies, July 29, 2026, https://www.fdd.org/analysis/2026/07/29/fcc-confronts-chinese-produced-power-inverters-and-robots/.