Regulatory intelligence for US exporters

Hearing on Chinese Coercion Talks Outbound Investment, TikTok, Sanctions Tools

The leaders of the House Foreign Affairs Subcommittee on the Indo-Pacific are trying to pass legislation to give the president the ability to respond to economic coercion of allies, but Chair Young Kim, R-Calif., asked witnesses at a subcommittee hearing she convened to advise what else could be done to stand up to China's economic aggression.

Start A Trial

"The [Chinese Communist Party] must know that every act of coercion will result in a countermeasure from the United States and its allies," she said. And, she said, the U.S. should make it more costly for China to continue subsidizing its companies and requiring tech transfer from foreign firms.

"American money and technology that fuels CCP coercion and predation cannot keep going to the [People's Republic of China]," she said May 18. "It makes no sense to increase the PRC's ability to coerce the United States and help it gain more leverage over us."

Witness David Feith, a fellow at the Center for New American Security, said Congress should find a way to ban TikTok, because he believes a Chinese firm owning a platform this pervasive gives them the ability to spread propaganda and influence our democracy.

Rep. Brad Sherman, D-Calif., replied, "There are a lot of Americans who really enjoy TikTok, who worry that it will be taken away from them. I argue America can be self-sufficient in cat video distribution systems."

Feith said in his opening statement that a recent report by the Center for Strategic and International Studies on Chinese attempts to coerce Mongolia, Lithuania, Japan and others show that it loses more than it wins.

"Target countries sometimes prove surprisingly resilient politically and adapt commercially by finding new markets other than China for their goods," his written opening statement said. "When it generates fear and loathing among foreign governments and businesses, it spurs diversification away from the China market. That can diminish China’s leverage with those targets in the future."

But, he said, the U.S. and likeminded allies need to know more about the strengths and weaknesses of economies that might be targets in the future, so they can prepare for mitigation strategies.

Feith argued that policy incentives to shift away from fossil fuels increase China's ability to behave as a "Super-OPEC," referring to the Organization of the Petroleum Exporting Countries.

Rep. Mike Waltz, R-Fla., agreed, saying that China's dominance in cobalt, lithium and manganese and other minerals used for electric vehicle batteries increases China's leverage over the U.S. economy.

Feith said new export controls on advanced semiconductor technology announced by the Netherlands, the U.S. and Japan (see 2303310031, 2303090032 and 2210070049) "are a step in the right direction," but said that politicians should not ignore more mature chip technology, because it would be dangerous if China dominated chips for cars, too.

Rep. Andy Barr, R-Ky., mentioned his bill that would harmonize sanctions lists among various agencies and make it illegal to invest in certain firms on foreign stock exchanges, not just in America (see 2302280064 and 2305180060). "I think the bill would be an important step forward," American Enterprise Institute's Derek Scissors said.

Barr said he's working on a revision to the text that would direct the administration -- as the agencies update their lists -- that it should pay more attention to sectors of special concern. "This needs to be a bipartisan effort," he said. "I think it can be and should be."