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HOW CONGRESS WANTS TO COUNTER CHINA’S GROWING ECONOMIC CLOUT


THE HOUSE SELECT COMMITTEE HELD A HEARING WEDNESDAY ON ECONOMIC COMPETITION WITH
CHINA.

Read full article
474
Alexander Nazaryan
·Senior White House Correspondent
Thu, May 18, 2023 at 3:47 PM EDT·5 min read

In this article:
 * Oops!
   Something went wrong.
   Please try again later.
   More content below
   

 * Robert Lighthizer
   US Trade Representative
   



Robert Lighthizer, a former U.S. trade representative, participates in a
discussion during the America First Policy Institute's summit in 2022. (Tom
Williams/CQ-Roll Call via Getty Images)

“This was fun,” former U.S. trade representative Robert Lighthizer said near the
end of Wednesday evening’s House hearing on economic competition with China.
While his assessment is debatable (several of the committee’s members have young
children, and the hearing ran well into the evening), Democrats and Republicans
agreed that in the decades to come, the role of the United States as a global
superpower will be tested by how it handles China’s economic and geopolitical
ascent.

Some lawmakers have cautioned that while it is necessary to meet the challenge
from East Asia, competition with China must be kept from devolving into
xenophobia or nationalism.

Members of the select committee have said that their target is Chinese
leadership, not Chinese people, but that distinction can arguably get lost in
the heated anti-Beijing rhetoric.



President Biden has said he seeks competition, not confrontation, with China;
Wednesday’s proceedings gave that competition an existential cast. “We need to
stop fueling our own destruction,” said Rep. Mike Gallagher, R-Wis., the select
committee’s chairman.


President Joe Biden gives a brief update of the ongoing negotiations over the
debt limit on Wednesday. (Chip Somodevilla/Getty Images)

Three highlights from the hearing, below.


'I WANT THEM TO CHOOSE THE U.S.'

“The top people have choices. I want them to choose the U.S.,” said former
Google CEO Eric Schmidt, the highest profile of Wednesday’s witnesses. He was
the second Silicon Valley leader to testify on Capitol Hill this week, after
OpenAI founder Sam Altman appeared before a Senate panel on Tuesday.

Like Altman, Schmidt is now deeply involved in the torrid race to develop and
deploy generative artificial intelligence.

So, of course, is China.

Schmidt argued that to keep pace with China in AI and other critical fields — he
enumerated several, including quantum computing, biology and energy — the United
States needs to attract more high-skilled immigrants, including Chinese students
trained at top American universities (now, most of them return home).

"Let's start with our best friends and invite them to the party and keep them at
the party,” Schmidt said. Those invitations come in the form of H-1B visas,
which are distributed through a lottery.

Story continues

Because so many workers in high technology come from abroad, H-1B visas function
as a kind of lifeblood for Silicon Valley, which has long advocated for reforms
in what can be an onerous and unpredictable process.

A new bill introduced by Sens. Chuck Grassley, R-Iowa, and Dick Durbin, D-Ill.,
would eliminate some loopholes in the H-1B process while giving priority to
highly skilled applicants.

Read more from our partners: Biden's new export curbs place many Chinese
Americans at risk of losing their jobs or their citizenships.


U.S.-CHINA TRADE


Cargo ships load containers at a port in China on Monday. (CFOTO/Future
Publishing via Getty Images)

The intricacies of shipping policy may seem like an obscure point in a rivalry
between two nuclear superpowers, but the debate over a tariff exemption for
imports known as “de minimis” almost perfectly encapsulates how deeply the
Chinese and American economies are intertwined.

“Two million packages a day — almost all from China,” Lighthizer said. “We have
no idea what’s in them.”

Like other China hawks, Lighthizer is a proponent of annulling the de minimis
rule, which exempts imports valued under $800 from duties. Effectively, the rule
hugely benefits Chinese e-commerce companies that ship online orders directly to
American consumers.

As top U.S. Customs and Border Protection deputy John Leonard quipped last year,
“China has a free trade deal with the U.S.: it's called de minimis." One
estimate suggests the exemption cost the United States $188 billion in lost
revenue from shipments originating in China last year.

The previous de minimis limit was $200, but Congress raised the exemption to
$800 in 2016. Now, some experts and lawmakers think the de minimis threshold
should be brought down again or otherwise amended to deprive Chinese retailers
of a sizable competitive advantage.

Proponents of such a move note that China’s own de minimis threshold is much
lower than that of the United States: $8.

Read more from our partners: Shein and Temu the latest China tech targets in
Congress body's sights.


ECONOMIC 'DECOUPLING'


Chairman of the U.S. China committee Dick D'Amato, left, and co-chairman Roger
Robinson answer questions at a news conference in 2005. (Joe Marquette/Bloomberg
News via Getty Images)

"These are dangled in front of our Wall Street friends, and they're buying into
it every time,” said committee witness and China expert Roger Robinson, who
supports economic “decoupling,” in particular when it comes to American private
investment in Chinese companies.

The United States now sends some $118 billion in what is called foreign direct
investment to China each year. And since the companies reaping that investment
are very possibly state owned (as the biggest and most prominent companies in
China tend to be), those funds ultimately redound to the benefit of Beijing’s
Communist rulers.

In effect, American investors are funding China’s economic rise, Robinson argued
on Wednesday night.

“This sounds difficult to believe, but it is an empirical fact: the majority of
American investors are unwittingly funding Chinese concentration camps, weapons
systems for the People’s Liberation Army (PLA), and more,” he has previously
written.

The White House shares Robinson’s concern and is working on rules, to be issued
soon, that would prevent American entities from funding China’s high-technology
ventures.

Read more from our partners: Proposed China investment curb by U.S. sparks
debate among chipmakers.

Cover Thumbnail Photo: Jade Gao/AFP via Getty Images





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