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U.S. House Select Committee releases report on U.S.-China competition

January 04, 2024
By: Michele Hujber

A bipartisan report from the House Select Committee on the Chinese Communist Party says the People’s Republic of China (PRC) has failed to live up to the foundational principles of the World Trade Organization—open, market-oriented, non-discriminatory treatment. In its report, "Reset, Prevent, Build: A Strategy to Win America's Economic Competition with the Chinese Communist Party," the committee calls for resetting the U.S.'s economic relationship with China. They propose to do so, in part, through new research security measures and controls on technology exports.

The report is organized under three pillars:

  1. Reset the terms of our economic relationship with the PRC.
  2. Stem the flow of U.S. capital and technology fueling the PRC's military modernization and human rights abuses, and
  3. Invest in technological leadership and build collective economic resilience in concert with allies.

The report authors note that the first two pillars focus on defensive actions against the CCP’s economic warfare campaign.But the final pillar goes on the offensive, calling for the U.S. to invest in technological leadership and build economic resilience.

Reset our economic relationship

The House Select Committee found that the U.S. does not have a contingency plan for the economic and financial impacts of conflict with the PRC. The report states, "No office in the U.S. government bears primary responsibility for assessing the costs to the U.S. and global economy of a conflict with the PRC nor for doing contingency planning for how the United States and its allies would respond economically." They recommend that the U.S. assess and prepare to respond to the economic, financial, and industrial impacts of potential future conflict with the PRC.

The report also states, "The PRC uses an intricate web of industrial policies, including subsidies, forced technology transfer, and market access restrictions, to distort market behavior, achieve dominance in global markets, and increase U.S. dependency on PRC imports." The House Select Committee recommends that the U.S. prevent its companies from being driven out of the U.S. market by market-distorting PRC products.

The House Select Committee also found that “The widespread adoption of certain PRC-developed technologies in the United States poses a significant risk to U.S. national security and data protection concerns and threatens long-term U.S. technological competitiveness.” They recommend that the U.S. government be required “to prevent U.S. reliance on the PRC for advanced technology and to protect the U.S. market from harmful PRC technology."                                                 

Stop fueling the PRC’s military and human rights abuses

The report states that “American investors wittingly and unwittingly support the PRC’s defense industry, emerging technology companies, and human rights abuses.” It also states that,

In addition to capital—and despite past efforts to address the issue—U.S. technology also continues to flow to the PRC, supporting its military and technological ambitions. PRC money likewise continues to permeate critical and emerging technology sectors in the United States. The Biden administration has taken an important step with its October 7, 2022, export controls, but more needs to be done. (NOTE: See this SSTI article for more on other recent actions, including an August 9, 2023 executive order that limits investments in companies in China.)

The report recommends "restrict(ing) U.S. investment in entities tied, directly or indirectly, to China's People's Liberation Army (PLA), critical technology sectors, or forced labor and genocide."

The House Select Committee also found that "U.S. export controls have been slow to adapt to rapid changes in technology and attempts by adversaries to blur the lines between private and public sector entities, particularly the PRC's strategy of Military-Civil Fusion." They recommend that the U.S. "strengthen export controls to restrict the flow of critical and emerging technologies to any entity in the PRC and stop currently uncontrolled dual-use commercial technology from going to the PRC."

The House Select Committee also concluded that "the Committee on Foreign Investment in the United States (CFIUS) needs additional authorities and tools to effectively evaluate inbound investments from the PRC." They note that CFIUS does not distinguish between investments from friendly and adversarial countries. They recommend that the U.S. "amend the Foreign Investment Risk Review Modernization Act of 2018 to give CFIUS the legal authorities, mandates, resources, and focus necessary to address the PRC threat to U.S. technology."

A further finding was that "the PRC exploits the openness of the U.S. research environment to steal U.S. IP and transfer technology to advance its economic and security interests to the detriment of the United States." The House Select Committee recommended that the U.S. strengthen its research security and defend against malign talent recruitment.

Invest in leadership and build economic resilience

The committee found that the United States needs to catch up in the race for leadership in certain critical technologies. They recommend investing in American innovation and strategic sectors and creating tax incentives to encourage private U.S. investment.

The PRC is gaining on the U.S. in the race for global talent, according to the report authors. They recommended developing a talent strategy to promote research and development.

Another committee finding was that, by working with allies, the U.S. could "increase U.S. exports, reduce supply chain reliance on the PRC, and counter the PRC's economic and technology mercantilism." They recommend developing an economic agenda to encourage others to collaborate with the U.S.

The committee also found that the U.S. relies on the PRC for critical mineral imports. They suggest creating transparency in U.S. supply chain dependency and developing ways to reduce it.

The report also highlights the U.S.’ dependence on the PRC for pharmaceutical and medical device supply chains. It recommends transparency measures, trade authorities, and reforms to reduce U.S. dependency.

The report addresses the PRC's Belt and Road Initiative (BRI). The report states that, through BRI, “the Chinese Communist Party has expanded its influence around the world and gained significant positions in key supply chains and strategic infrastructure, such as ports and space facilities.” They recommend responding with stronger U.S.-led global development and strategic investments.

The recommendations presented in the report are followed by detailed lists of Congressional actions that could be taken to enact the recommendations. These and other report details are available here.

china, trade, competition