US Response to Taiwan Invasion Should ‘Go Far Beyond’ Russia Sanctions, Senator Says
The U.S. should prepare a range of economic and financial restrictions against China to deter it from invading Taiwan, including new sanctions against Chinese banks and outbound investment restrictions on Chinese technology sectors, said Sen. Dan Sullivan, R-Alaska. Sullivan said the sanctions should “go far beyond what has been imposed on Russia” and make clear to Beijing that “no corner of its economy will be left untouched by sanctions.”
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Sullivan, speaking during an event last week hosted by the American Enterprise Institute, said he is hoping to include legislation as an amendment to the FY 2023 defense spending bill that would trigger a host of sanctions against China if it invades the Taiwan Strait. Sullivan said he’s “confident” his Sanctions Targeting Aggressors of Neighboring Democracies with Taiwan Act (see 2201250068) will pass either as part of the National Defense Authorization Act or eventually as a stand-alone bill, adding “a lot of” Democrats and Republicans “are very interested in that legislation.”
The bill would trigger sanctions on several Chinese industries, from “finance to trade to industrial capacity,” Sullivan said. “We will go after party members and officials themselves for aggression, casting a wide net.” He added that he has pitched similar deterrence sanctions to U.S. allies in Europe, Japan, South Korea, the Netherlands and elsewhere, saying those countries have had “difference reactions” but have generally been receptive.
“Imagine what we could do, this amount of GDP in the global economy, the United States and our allies, to be ready in terms of deterrence to sanction the Chinese Communist Party and critical sectors of the economy if they invade Taiwan,” Sullivan said. “I think it could have an enormous deterrence factor.” He said the U.S. and allies learned from Russia’s invasion of Ukraine that “financial sanctions have the best chance of deterring a conflict when they are clearly articulated and ready to go before the conflict begins.”
Sullivan also didn’t rule out imposing more sanctions and export restrictions before a potential Chinese invasion of Taiwan. He said there’s a “whole host of ones that we should be consistently looking at,” adding he gives “credit” to the Biden administration for its “very significant” October semiconductor-related export controls on China (see 2210070049).
“Those are the kinds of continuing economic applications that I think are needed writ large for the whole economic relationship between the United States and China,” Sullivan said. “There's a whole host of things that I agree that you need to shape the environment on, [including] the export controls, particularly as it relates to high tech.”
He also said he would support an outbound investment screening tool to prevent U.S. companies from investing in sensitive technology industries in China. “This is an issue where I've kind of diverted from some of my Republican colleagues,” Sullivan said, “but I worry a lot about the American financial community, some of whom turn a blind eye to the challenges with regard to China and are fully investing in things like [artificial intelligence], quantum computing.” An outbound investment screening tool has the support of some Republicans, but they would prefer a new screening regime to be established by Congress rather than through a unilateral presidential executive order (see 2209290043).
“I'm seriously thinking about looking at the possibility of legislation regarding outbound investment,” Sullivan said. “It's a blunt instrument. It's not really where I want to go. But if you have an American investor class that seems to be fine with investing in advanced microchips and AI in China, that's a real problem.”