In the space of 24 hours this week, a pair of U.S. House committees held hearings exploring the impact of China’s aggressive use of economic power against the U.S. and its allies, and considered measures the U.S. might take to counter Beijing’s efforts.
More than half a dozen witnesses told lawmakers about the ways China uses its economic might to coerce smaller countries into providing favorable trade arrangements and to force businesses that want to operate in China to surrender intellectual property, which is then provided to Chinese-owned competitors.
Other witnesses testified that China’s economic policies are part of Chinese President Xi Jinping’s broader ambition to turn China into a globally dominant economic player that will ultimately outweigh the United States on the world stage.
One of the witnesses, Robert Lighthizer, who served as U.S. Trade Representative under former President Donald Trump, captured the tone of both hearings when he said, “It is not an exaggeration to say that the Chinese Communist Party has been waging an economic war against the United States for decades.”
VOA asked the Chinese Embassy to reply to the allegations detailed in the hearings but did not receive a response.
However, last week, when Chinese Foreign Ministry spokesperson Wang Wenbin was asked about G-7 countries' complaints about Chinese economic coercion, he turned the accusation back on the U.S, saying, "If any country should be criticized for economic coercion, it should be the United States. The U.S. has been overstretching the concept of national security, abusing export control and taking discriminatory and unfair measures against foreign companies. This seriously violates the principles of market economy and fair competition."
A ‘naive bet’
In a hearing on Wednesday night, the Select Committee on the Chinese Communist Party (CCP) convened a hearing titled, “Leveling the Playing Field: How to Counter the CCP's Economic Aggression.”
Rep. Mike Gallagher, the Republican who chairs the panel, began the hearing with a video that documented efforts by past U.S. administrations, both Republican and Democratic, to welcome the People’s Republic of China (PRC) into the global economic community, including granting it privileged trade status in the 1990s and early 2000s.
“For the last 25 years, both parties largely made the same naive bet on China, that robust economic engagement would lead the Chinese Communist Party to political liberalization,” he said. “But Beijing saw our quintessentially American optimism as an opportunity to exploit and our treaties and international commitments as rules ‘for thee but not for me.’”
“Well, now the error of wishful thinking is over,” he said. “The CCP’s economic warfare uses any and all available leverage to coerce us and our allies and it's time that we defend ourselves and the free world.”
The committee’s ranking Democrat, Rep. Raja Krishnamoorthi, was equally adamant about the need to challenge China on the global stage.
“This is the fundamental question: Who will be the economic and innovation leader for the remainder of the 21st century? Will it be America, or the CCP?” Krishnamoorthi said.
Stepping in to counter China’s various forms of economic influence in the world must be “pressing priorities” for the U.S., he said. “The moment to act is not in 10 years or five years or next year. It's now.”
In addition to Lighthizer, the committee heard from Roger Robinson, former chairman of the U.S.-China Economic and Security Review Commission. In his testimony, Robinson claimed that U.S. investors are, in some cases unknowingly, subsidizing Chinese companies by participating in investment funds that contain Chinese corporate debt.
Robinson argued that because Chinese firms are not subject to the same disclosure requirements as firms in the U.S. and other developed countries, they should not be allowed continued access to U.S. capital markets.
A third witness, former Google CEO Eric Schmidt, called for immediate action to bolster investment and innovation in key emerging technologies, including artificial intelligence, to keep the U.S. ahead of China in some areas and to catch up in others.
“It’s never too late to stop digging our own grave,” he said.
Rejecting economic coercion
On Thursday morning, in a hearing before the Indo-Pacific Subcommittee of the House Foreign Affairs Committee, Rep. Young Kim opened the hearing with a statement that was highly critical of China’s behavior towards its neighbors. For example, she accused Beijing of causing the recent crash in Sri Lanka’s economy by pressuring its leaders to take on excessive debt through its “Belt and Road” infrastructure-building initiative.
She called on members to “recognize the immense economic pressure that the PRC puts on our allies, partners and friends around the world.”
“The CCP uses debt-trap diplomacy through the Belt and Road Initiative to achieve its political goals abroad,” said the Republican lawmaker. “So much so that it is willing to crash economies and generate instability as it did in Sri Lanka.”
Last month, after Sri Lanka and its creditors launched debt restructuring talks without the participation of China, the country's largest creditor, Foreign Ministry Spokesperson Wenbin was asked if the absence of his country reflected frustration about Beijing's approach to third-world countries indebted to China. He said, "China calls on commercial and multilateral creditors to jointly participate in Sri Lanka’s debt restructuring under the principle of fair burden-sharing. We have been in close communication with Sri Lanka and supported Chinese financial institutions in actively discussing debt treatment arrangements with Sri Lanka."
Rep. Ami Bera, the ranking Democrat on the sub-committee, pushed back against Beijing’s claims that the U.S. is trying to isolate China economically, saying, “Truth is, we'd like to maintain the status quo, which has lifted all the countries in that region through a rules based order, but we have to respond to Chinese aggression and Chinese economic coercion.”
Bera called on Congress to pass a measure that would direct the Biden administration to form “an interagency task force to respond to the PRC government's acts of economic coercion and required the evaluation of the impacts on U.S. business and economic performance.”
The same bill, he said, would give the president “new tools to provide rapid economic support to partners and allies facing economic coercion from the PRC and hold the PRC accountable for its actions.”
Intellectual property theft
Thursday’s panel heard from Alon Raphael, CEO of FemtoMetrix, a company that makes a set of software tools used in the manufacture of advanced semiconductors. Raphael told the panel that in 2020, three of his company’s former employees, all Chinese nationals, “covertly absconded with thousands of files and years’ worth of proprietary information” that they used to set up a competing company called Weichong Semiconductor in mainland China.
Weichong has filed for patents in China using FemtoMetrix technology, Raphael said, and has pitched its services to his company’s existing customers, sometimes using slide decks that still contain the FemtoMetrix logo.
“Weichong is not an outlier, but an exemplar for the theft of American intellectual property,” Raphael said.
FemtoMetric has sued Weichong, Raphael said, but has little hope that a result will come quickly, or that a judgment in his company’s favor would be enforced by Chinese authorities.
“Companies like Weiching have become accustomed to exploiting the court system’s slow pace and high cost,” he said. “Alternative means of addressing such international theft are needed.”