New report to US Congress supports an increasingly hawkish view on China

  • US-China Economic and Security Review Commission says China’s rise has ‘put at risk the national security and economic interests of the United States’
  • Annual review contends President Xi Jinping seeks to change the global order to facilitate Beijing’s ambitions
PUBLISHED : Wednesday, 14 November, 2018, 1:02pm
UPDATED : Thursday, 15 November, 2018, 7:08am

China’s global rise has “undoubtedly put at risk the national security and economic interests of the United States, its allies, and its partners”, according to a commission that advises the US Congress on national security implications of the US-China trade and economic relationship.

The warning came in a 525-page report by the US-China Economic and Security Review Commission (USCC), which calls on lawmakers to enact a broad range of measures to better monitor and counter China’s global expansion strategies, trading practices, and influence campaigns abroad.

The commission contends that Chinese President Xi Jinping is seeking to fundamentally change the global order to facilitate China’s ambitions and warns US policymakers that the country is on track to reverse the strategic philosophy once espoused by the reform-minded leader Deng Xiaoping that China should “hide [its] capabilities, bide [its] time, and never take the lead” in international affairs.

The report offers a hawkish view on China that is finding increasing resonance within mainstream US politics, against the backdrop of an administration pursuing – with broadly bipartisan support – an aggressive rebuke of perceived unfair trade practices on the part of China.

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The report, to be delivered on Wednesday to Senator Orrin Hatch, the chairman of the Finance Committee, and House speaker Paul Ryan, was compiled on the basis of classified and unclassified hearings with witnesses from government, academia and the private sector, as well as research trips to Taiwan and Japan.

Commission members were not granted visas to visit China to conduct research in-country.

Senior Chinese officials have on a number of occasions denied that Beijing seeks to challenge US global dominance, and have played down the geopolitical and strategic nature of foreign policy endeavours like Xi’s signature “Belt and Road Initiative”.

That campaign, launched five years ago, partners China with dozens of countries around the world through largely state-facilitated infrastructure and development programmes.

Such declarations have been met with scepticism in Washington, with the USCC telling Congress that belt and road objectives included “bolstering energy security, expanding China’s military reach and advancing geopolitical influence by moving China to the centre of the global order”.

The report concludes that such criticism will likely be met with strong opposition from Beijing. China, it says, “will be quick to cast any pushback or legitimate criticism as fear, nationalism, protectionism, and racism against the Chinese people”.

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The commission called on Congress to insist that the director of national intelligence investigate the security ramifications of China’s growing access to the countries and regions along the belt and road route.

The commission also recommended that Congress establish a fund to provide assistance to countries deemed to be “a target or vulnerable to Chinese economic or diplomatic pressure”.

“China asserts itself with unique leverage” in countries unable to raise funds anywhere else due to poor credit ratings, said Robin Cleveland, the chairwoman of the USCC.

“We’re not going to be able to dollar-for-dollar compete when it comes to the trillion that the Chinese are willing to put on the table,” said Cleveland, who was appointed to the position by Senate majority leader Mitch McConnell.

“But I think that we can target assistance in the same way we did in Ukraine, Georgia and some of the Eastern European countries post-wall,” she said, referring to the fall of the Berlin Wall in 1989.

USCC’s recommendations come two days after the US government’s Overseas Private Investment Agency (OPIC) signed a trilateral memorandum of understanding with Japan and Australia, which, according to OPIC, will see that the three countries “collaborate on urgent issues facing the Indo-Pacific including enhancement of connectivity, shared development objectives, and the promotion of women’s economic empowerment”.

OPIC was initially earmarked for erasure in the early part of Donald Trump’s presidency, but was given a lifeline this summer as part of the administration’s “Indo-Pacific Economic Strategy” – widely regarded as a counter to Beijing’s belt and road plan, albeit on a much smaller scale, and will see OPIC’s finance cap double to US$60 billion, from US$30 billion.

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The commission’s wide-reaching recommendations included a call to examine the security threat posed by Chinese technology or services being put to use in 5G networks around the US.

Another recommendation was to investigate whether the intellectual property of US researchers and firms is adequately protected in cases of US-China joint ventures and whether the Chinese military is benefiting from US taxpayer-funded research.

The commission also wants a determination on the applicability of US laws to sanction Communist Party affiliates involved in the coercion or threatening of US residents.

We are no longer considered outliers, and it’s not because we’ve changed our views. It’s because the debate has shifted
Carolyn Bartholomew, US-China Economic and Security Review Commission vice-chairwoman

The USCC also calls on the Department of Justice to clarify that materials disseminated by bodies determined to be “foreign agents” – a classification recently imposed on Chinese state news agency Xinhua and television broadcaster CGTN – must carry a prominent label identifying the publisher as such.

The commission’s members were once considered to be “outliers and very hawkish”, said Carolyn Bartholomew, the body’s vice-chairwoman. “We are no longer considered outliers, and it’s not because we’ve changed our views. It’s because the debate has shifted.”

The depth and breadth of the issues the report raises add weight to analysts’ warnings that any deal Trump and Xi might strike as a result of their expected meeting at the G20 summit at the end of the month will fail to resolve many of Washington’s fundamental grievances against Beijing.

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Even simply within matters of trade, according to Justin Thomson, chief investment officer of equity at the asset management firm T Rowe Price, “the two sides will be able to agree on 70 per cent of the issues but not the rest”.

“China isn’t going to back down on what makes China China, which is to advance its technology.”

In remarks delivered at the Asia Society in New York on Tuesday, former US treasury secretary Henry Paulson warned that “underlying tensions will persist” beyond any resolution to the trade war, but said leaders should make it a priority to “alter the downward spiral for the well-being of all nations of the world”.

Speaking out against advocates of an economic “decoupling” between the US and China, Paulson, who served under George W. Bush and later founded the Paulson Institute, called on the Trump administration to “dial down the rhetoric” and suggested that perceptions of China’s threat to the US were overblown.

“Strategic competition is a fact,” he said.

“But China does not pose an existential threat to American civilisation. In the 242nd year of our great democratic experiment, we should have more confidence in America and the resilience of our system.”

Additional reporting by Jodi Xu Klein