AMAC Exclusive – By Andrew Shirley
On Tuesday, the House Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party (CCP) released an alarming new report highlighting glaring deficiencies in the United States’ preparation for economic competition and conflict with China.
The House committee, which was formed by Republicans following their victory in the 2022 midterms, has been one of the few sources of bipartisan consensus this Congress. Although there have still been some political disputes, Chairman Mike Gallagher (R-WI) has largely succeeded in unifying both parties behind the committee’s actions and reports.
This latest report, titled Reset, Prevent, Build: A Strategy to Win America’s Economic Competition with the Chinese Communist Party, was a joint product of Republicans and Democrats on the committee, with both Gallagher and Ranking Member Raja Krishnamoorthi (D-IL) stressing the importance of urgent action.
The report reveals that, since joining the World Trade Organization in 2001, the Chinese Communist Party has embarked on a “multi-decade campaign” to simultaneously decouple China from the global economy while making the United States more dependent on China. According to the report, this strategy has been an even greater success than previously thought, and America must “chart a new path” to counter China’s advances before it’s too late.
The decision to permit China to join the World Trade Organization in 2001 was controversial and divisive. Business leaders, some conservatives, and blue-collar workers were afraid the move would allow a flood of cheap Chinese products to enter Western markets and make the United States economically dependent on China.
But establishment elites in D.C. reassured Americans that the measure would actually make China more dependent on the global community. They predicted that China would become interconnected economically with the United States, creating a new Chinese middle class that would overthrow the communist government and give way to a new democratic-capitalist China.
As the report acknowledges, the opposite happened. China formed international conglomerates backed by CCP money to sell products to the West, enriching and further entrenching China’s authoritarian government. Beijing was able to take advantage of the West’s capitalist economies to benefit itself while continuing to oppress the Chinese people and sow chaos and discord around the world. Initiatives like Beijing’s “Belt and Road” project have spread debt-trap diplomacy to dozens of developing nations and allowed China to expand its economic and political influence around the globe.
Even worse for the United States, within a decade of joining the World Trade Organization, almost four million jobs left America for China; nearly three-quarters of which were in manufacturing. Cheap Chinese goods continue to flood U.S. markets and undermine domestic industries.
The report makes it clear that addressing America’s disadvantage with China will take sustained effort and a comprehensive approach.
The strategy the House China committee recommends is structured around three key pillars, the first of which is to “reset the terms of our economic relationship with the People’s Republic of China.”
The policy proscriptions for that “reset” – more than 130 in all – constitute the report’s most sweeping set of recommendations that would have far-reaching effects for the American economy if implemented. The report states outright that “the PRC’s economic system is incompatible with the World Trade Organization and undermines U.S. security.”
Specifically, the report calls for higher tariffs on Chinese goods, more limitations on U.S. investments in China, and further restrictions or outright bans on U.S. market access for Chinese companies like TikTok and certain drone manufacturers.
The second pillar calls on lawmakers and private industry to “stem the flow of U.S. capital and technology fueling the PRC’s military modernization and human rights abuses.” Specifically, that means more robust action to stop Chinese intellectual property theft, estimated to be worth up to $600 billion every year.
But as the report notes, this will mean weaning American enterprise off the cheap availability of Chinese labor and the high demand for American technology. Turning back China on these fronts likely also will involve granting greater influence over international business to government agencies like the Committee on Foreign Investment in the United States (CFIUS).
The third pillar, entitled “invest in technological leadership and build collective economic resilience in concert with allies,” outlines domestic steps America can take to spur the innovation necessary to stay ahead of China and prepare the U.S. economy for a potential rapid decoupling in the event of a future military conflict. The House panel warns that many major banks and financial institutions likely couldn’t withstand the hit from sudden loss of access to China in the event of a war, calling on the Federal Reserve to begin “stress tests” in the immediate future.
Notably, many of the policies the report recommends are identical to those advanced by former President Donald Trump. Although it seems unlikely that Democrats will ever give Trump his due, there appears to be an emerging consensus in Washington that Trump’s tough-on-China stance was indeed the correct approach to dealing with Beijing. That could become a major issue as the 2024 presidential race kicks into full swing.
As the report acknowledges, there are significant challenges ahead for the United States. New avenues of trade that circumvent Chinese supply lines, new factories to replace Chinese labor, and new trade partners to replace Chinese demand will take years to develop, and the transitions will be difficult for the U.S. economy.
But as lawmakers from both parties now recognize, the cost of doing nothing could be far greater.
Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.
