Senate Hearing: It’s High Time to Stop China’s Economic Coercion

July 25, 2018 Updated: July 30, 2018    

Amidst an accelerating trade war with China, a Senate hearing was held on July 24 to examine the economic coercion employed by the Chinese Communist Party and what the United States should do to fight back.

In remarks opening “The China Challenge: Economic Coercion as Statecraft,” Sen. Cory Gardner (R-Colo.), Chairman of the Foreign Relations Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy, explained the background for the hearing: “According to the national security strategy for decades, U.S. policy was rooted in the belief that support for China’s rise and for its integration into the post-war international order would liberalize China. Contrary to our hopes, China expanded its power at the expense of the sovereignty of others.”

Gardner said the purpose of the hearing is “to identify the tools the United States has at its disposal to counter the disturbing developments posed by China’s less than peaceful rise.”

The concern about the Chinese regime was bipartisan. Ranking member Sen. Edward Markey (D-Mass.)  pointed out “a growing Chinese willingness to bend and break longstanding rules.” He declared,  “This must stop.”

According to Markey, rules that the United States put in place across the globe in the wake of devastating world wars have created “a level playing field for all.”

“Unfortunately, the Chinese government is undertaking coercive activities across the board: economically, militarily and politically that threaten to alter this playing field,” Markey said.

Gardner recalled that when he visited China and met with some American businesses in 2015, these businesses were still saying, “just give China a little bit more time to see if the reforms will work.”

According to Dan Blumenthal, Director of Asian Studies at the American Enterprise Institute, one of the two witnesses at the hearing, the era of reform and opening up was over 10 years ago. Now, state banks, state-owned enterprises (SOEs), and their associated links with Party officials are what drive the Chinese economy.

Ely Ratner, Vice President and Director of Studies of the Center for a New American Security, the other witness at the hearing, proposed “bold, innovative and bipartisan” initiatives to “blunt China’s economic coercion.”

Some of the recommendations proposed at the hearing included the following:

* Limits on student visas for the children of the Party elite;

* Bans on market access in accord with European actors on the worst-offending SOEs (for example, those that consistently engage in forced technology transfers);

* Targeted information campaigns within China in Chinese that advertise the corrupt patronage networks that exist between the Chinese Communist Party (CCP) and key SOEs;

* Global armadas that convoy Chinese fisherman and oil exploration vessels to areas where they are lawfully allowed to conduct their economic activities;

* Enhancing cyber-cooperation and economic ties with Taiwan, including the quick signing of a Bilateral Investment Treaty;

* A comprehensive National Economic Security Strategy;

* Enhancing American competitiveness by continuing to support increases in funding for basic research, formulating strategic immigration and visa policies, and investing in education, among other priorities;

* Reconstituting a 21st-century version of the U.S. Information Agency (The USIA acted to inform foreign publics in line with U.S. interests);

* Providing resources and directing the Defense Department to develop the means to circumvent China’s “Great Firewall” and make it easier for Chinese citizens to access the global internet.

Frank Tian Xie, a professor in business at the University of South Carolina Aiken, thinks that it is high time for the Senate to hold such a hearing, as the world is waking up and has realized that “the CCP is a threat to everything, from regional peace, to the world’s economic and trade order, including the WTO, as well as to democracy, human rights, freedom, etc. ”

Xie also believes that the Trump administration’s trade war with China will weaken the financial position of the CCP and bring effective changes to Chinese society.