US Senator Marco Rubio proposes legislation to counter ‘Made in China 2025’ while top China hands warn White House to ‘course correct’ Beijing relationship
- Rubio seeks to use China’s industrial policy as a blueprint for fighting ‘a threat to US industry’
- Meanwhile, former foreign policy officials start a tour of Washington with warning about China
China faces a tougher fight in its stand-off with Washington after calls to counter Beijing’s global ambitions gained momentum in the US capital on Tuesday.
Republican Senator Marco Rubio proposed legislation that would restrict and tax Chinese investment in the United States to counter Beijing’s “Made in China 2025” (MIC2025) industrial modernisation programme, which includes direct subsidies for domestic companies developing advanced semiconductors.
Many Republican and Democratic lawmakers say the programme threatens US companies in the tech sector.
Meanwhile, an influential group of former top policymakers and China hands delivered a report urging a “course correction” for the bilateral relationship as part of a tour throughout Washington to warn the administration of US President Donald Trump and senior lawmakers about the need to confront Beijing.
Rubio, a Florida senator, announced the release of the report, “Made in China 2025 and the Future of American Industry”, on Tuesday.
It was published by the US Senate Committee on Small Business and Entrepreneurship, of which Rubio is t he committee chair, and says that evaluating MIC2025 will help Washington understand how to respond to China and defend American businesses and jobs.
“Changes of the 21st century economy have upended millions of working lives of Americans,” Rubio said in a video posted on Twitter.
“Americans understand that something has gone wrong and failure for Washington to respond is one of the underlying currents in our nation’s disunity.”
The report analyses 10 cutting-edge industries considered strategic in what the authors call China’s bid for global technology dominance.
China had identified these industries as priorities when it unveiled MIC2025 in 2015. The list includes aerospace, new energy vehicles, next-generation information technology and robotics. With the programme, China aims to reduce its dependency on imported tech by developing its own.
The report “highlights the challenges posed by China’s blatant industrial espionage and coercion, actions that threaten our economic framework and our national prosperity”, Rubio said.
“US policy should respond to the practical and political economy challenges,” he said. “This includes enacting strategic US China capital flow restrictions and corresponding defensive measures for domestic industries targeted by the plan.”
The report also suggests that US businesses that have felt the pain of Trump’s punitive tariffs could find relief through government subsidies and other measures.
Also on Tuesday, a policy task force co-chaired by Susan Shirk – a former deputy secretary of state, responsible for US policy towards China, released a report called “Course Correction: Toward an Effective and Sustainable China Policy”.
The Task Force on US-China Policy, a group comprising China specialists convened by the Asia Society’s Centre on US-China Relations and the University of California San Diego’s 21 Century China Centre, is also co-chaired by Orville Schell, the Asia Society unit’s director and author of 10 books about China.
“We believe that we need to have more pressure and accept more friction in the relationship,” Shirk said, launching the report.
“[We believe that] we need to publicly call out China for its unfair ideological and assertive policies, that we need to push back harder against them, and the Trump administration has definitely got that part right.
“The Chinese government has adopted mercantilist, zero-sum policies that advantage Chinese firms at the expense of international competitors and they’re doing this to build their national strength, including their military strength and this huge state-funded effort to make China into a hi-tech superpower is at the centre of that policy.”
Task force participant Charlene Barshefsky, the former US trade representative who opened the door to the World Trade Organisation (WTO) for China, called the level of the Beijing government’s support for domestic producers of advanced semiconductors – a key component of MIC2025 – “unfathomable”, citing estimates of as much as US$240 billion.
The task force is in Washington this week to brief a wide range of government stakeholders about their report, including the White House’s National Security Council, Congress’s US-China Working Group, and Rubio’s staff.
While calling for a more assertive strategy, the group also called for continued dialogue between the two sides.
Shirk also cautioned repeatedly against any attempt to “de-couple” the two economies and overreacting in a way that portrayed all ethnic Chinese as playing a role in illegal or unfair efforts to undermine the competitiveness of US companies.
“We’ve been trying to negotiate with China for a long time,” Shirk said. “Many people have grown frustrated and have given up. I think it’s fair to say our group has not given up.”
China received further rebukes from a Democratic lawmaker on Tuesday.
Speaking at The Brookings Institution, a Washington-based think tank, Senator Seth Moulton echoed the sentiments of Rubio about China’s efforts to gain a technological advantage over the US.
“China’s rapid development of technology, both defence and non-defence technology ... is a great concern,” Moulton said.
“This is not just about China developing new types of military weapons like hypersonics, it’s also about China developing the leading technology for 5G, and setting the rules and controlling the way we communicate at home and across the world. So these are serious, serious national security concerns.
“We need to dramatically up our investment in autonomous hypersonic and cyberweapons to compete and win.”
The report by Rubio and his colleagues on the US Senate Committee on Small Business and Entrepreneurship is the latest in a series of moves by US lawmakers against alleged improper Chinese trade practices such as the theft of intellectual property and the forced transfer of proprietary technology from foreign companies to Chinese joint venture partners.
Last week, a bipartisan group of senators including Rubio and the group’s Democratic leader, Maryland’s Chris Van Hollen, introduced a bill that would reimpose sanctions on ZTE Corp if the telecoms equipment maker failed to comply with US laws.
The action tightened the US government’s grip on ZTE, which violated US sanctions that prevent companies from doing business with Iran and North Korea.
These efforts came as trade negotiations entered a critical period ahead of a March 1 deadline agreed to by the parties on December 1 in Buenos Aires.
On Tuesday, Trump said he would consider extending the deadline before raising tariffs on Chinese products to close a trade deal.
A US delegation led by US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin is in China this week for a new round of talks.
The focus is now on establishing a framework for a comprehensive agreement. The thorniest issues include protection of intellectual property and forced tech transfers.
Also pending is the US’ upcoming extradition of Meng Wanzhou, a top executive at Huawei Technologies, the world’s biggest supplier of telecoms equipment, on charges she conspired to violate US sanctions on Iran.
Meng, the daughter of Huawei founder Ren Zhengfei, was released on bail after her arrest in Vancouver and awaits her hearing on March 6.
Additional reporting by Wendy Wu