By SCOTT PAUL
For decades, the Chinese Communist Party has telegraphed its economic intentions. Its five-year plans, its Made in China 2025 program, its military-civil fusion doctrine, and its Belt and Road Initiative all point to the same goals: Dominate key industries, set global standards, find opportunity in crisis, and weaken competitors.
The United States is its chief competitor. Its ultimate goal is to weaken us. And, in many ways, we have helped it achieve that end.
This is what I told the House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party when I testified at its inaugural hearing last month. The growth of an increasingly ambitious authoritarian state would not have happened without the buy-in of American policymakers over 20 years ago. Our business class and most of the political establishment sold the country on the potential of the Chinese market. Open trade would open China, was the argument.
And so we opened ourselves to China. We should have seen the results coming.
Normalizing trade relations with the Chinese government in 2000 paved its way to enter the World Trade Organization and all the new market access that entailed. U.S. political leadership shrugged off the blatant mercantilism that followed. The CCP created an impossible-to-match “China price” that masked the true cost of production. Trillions in direct subsidies. Currency manipulation. Nonexistent environmental protections. Exploited workers, with credible reports of forced labor. Lax safety inspections that harmed American consumers. Overproduction at state-owned zombie factories that just won’t die, roiling global markets.
Time and again Washington accepted empty promises from Beijing that it would live up to its commitments, but it brought no real consequences to bear when Beijing didn’t. Through it all U.S.-based multinational companies agreed to intellectual property transfer programs and outrageous self-censorship to maintain access to the Chinese market. American governors meanwhile sought out Chinese firms for high-profile projects that cost American jobs. The rebuilt San Francisco-Oakland Bay Bridge, for example, forewent federal money so it could have its center span produced by a Chinese firm that had never built a bridge before, but offered a fantastic price. The project came in late, over budget, and beset with workmanship problems.
This has all come at an incredible cost to our domestic economy. We have run years of goods trade deficits, and it was the American worker who bore the brunt of that import competition. Between 2001 and 2018, 3.7 million jobs vanished, the majority of them in manufacturing, and wages for those displaced workers plunged. Deindustrialization is a real thing in the United States, and the lingering “China shock” is evidenced by an uptick in deaths of despair and evidence of social unraveling in American manufacturing communities.
Despite high tariffs and increased scrutiny of Chinese economic policy, business has hardly budged. The bilateral goods trade reached $690 billion in 2022, and most of that trade was coming this way. The U.S.-China trade deficit that year was $382 billion.
This behavior hasn’t abated. But even though our recognition of it has increased, there are plenty of international businesses that will fight any attempt to steer the economic relationship in another direction.
And that’s where this committee’s work comes in. It isn’t responsible for crafting the legislation that will respond to unfair Chinese trade. It can, however, shine a bright light on it and those exacerbating its problems, providing both a sharp focus on them and appropriate countermeasures. Here’s what I recommend it focus its attention on:
The committee should examine proposals to screen outbound investment of U.S. companies in China and tighten Chinese investments here, particularly in critical sectors. We should also build upon highly effective semiconductor technology restrictions.
It should also examine proposals to sharpen existing trade tools. The bipartisan Leveling the Playing Field Act 2.0 would improve the application of anti-dumping and countervailing duties. Other members of Congress have called for a reform of “de minimis” policy that gives Chinese shopping apps like SHEIN and online retailers like Amazon a way to skirt import inspections and tariffs.
It should drive attention to enforcement of a law – the Uyghur Forced Labor Protection Act – that bans the import of goods made by what is essentially slave labor in China’s Xinjiang region.
It should draw the link between the implementation of the CHIPS Act, 2021’s Bipartisan Infrastructure Law, and the clean energy-focused Inflation Reduction Act as the kind of industrial policy that can buttress the American economy against a fast-growing competitor that has demonstrated it isn’t interested in fair trade.
And lastly, it should amplify calls to revoke normalized trade relations with China, which would open it up to an annual congressional tariff review. The CCP doesn’t deserve the same trade status as our allies and reciprocal partners.
First our hubris and then our neglect aided Beijing’s ambitions, weakened our capabilities, and hollowed out our middle class. But American manufacturing is resilient. Our factories are rebounding, a result of public policies and pressure on corporations to rethink supply chains and re-shore industrial capacity.
They must be made to keep thinking about it. And that, ultimately, is what the China competition committee’s work will be.
Scott Paul is president of the Alliance for American Manufacturing, founded in 2007 by domestic manufacturers and the United Steelworkers to push for policies to strengthen American manufacturing.