- Reset, Prevent, Build
WASHINGTON, USA – For a generation, the United States bet that robust economic engagement would lead the Chinese Communist Party (CCP) to open its economy and financial markets and in turn to liberalize its political system and abide by the rule of law. Those reforms did not occur.
Since its accession to the World Trade Organization in 2001, the CCP has pursued a multidecade campaign of economic aggression against the United States and its allies in the name of strategically decoupling the People’s Republic of China (PRC) from the global economy, making the PRC less dependent on the United States in critical sectors, while making the United States more dependent on the PRC. In response, the United States must now chart a new path that puts its national security, economic security, and values at the core of the U.S.-PRC relationship.
The House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (Select Committee) has studied the PRC’s pattern of aggression and economic manipulation and recommends the following strategy for economic and technological competition with the PRC.
The strategy has three pillars, and the Select Committee identified the following key findings:
Pillar I: Reset the Terms of Our Economic Relationship with the PRC:
- The PRC’s economic system is incompatible with the WTO and undermines US economic security.
- Despite the heightened risks associated with US investment in Chinese companies, the full extent and distribution of that risk and the implications for US national security and financial stability remain unknown.
- The United States lacks a contingency plan for the economic and financial impacts of conflict with the PRC.
- 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 US dependency on PRC imports.
- The widespread adoption of certain PRC-developed technologies in the United States poses a significant risk to US national security and data protection concerns and threatens long-term US technological competitiveness.
Pillar II: Stem the Flow of US Capital and Technology Fueling the PRC’s Military Modernization and Human Rights Abuses:
- American investors wittingly and unwittingly support the PRC’s defense industry, emerging technology companies, and human rights abuses.
- US 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.
- The Committee on Foreign Investment in the United States (CFIUS) needs additional authorities and tools to effectively evaluate inbound investments from the PRC.
- The PRC exploits the openness of the US research environment to steal US intellectual property (IP) and transfer technology to advance its economic and security interests to the detriment of the United States.
Pillar III: Invest in Technological Leadership and Build Collective Economic Resilience in Concert with Allies:
- The United States is falling behind in the race for leadership in certain critical technologies.
- The PRC is gaining on the United States in the race for global talent.
- By working with allies, the United States can increase US exports, reduce supply chain reliance on the PRC, and counter the PRC’s economic and technology mercantilism.
- The United States is dangerously dependent on the PRC for critical mineral imports.
- The United States’ dependence on the PRC for pharmaceutical and medical device supply chains poses a distinct national security risk.
- Through its Belt and Road Initiative, the CCP has expanded its influence around the world and gained significant positions in key supply chains and strategic infrastructure, such as ports and space facilities.
Read the full document – reset-prevent-build-scc-report.
