Powerful U.S. business leaders were smuggled in through the back door of a building in New York City in September 2023 for a tabletop exercise simulating a Chinese invasion of Taiwan.
The secrecy made it look like they were “in a witness protection program because they were so concerned about retaliation from the CCP [Chinese Communist Party],” said Rep. Mike Gallagher (R-Wis.), who hosted the exercise.
“If this retaliation is how the CCP will treat business partners in peacetime, think about how it would act in war—and the ramifications to our economy, especially our critical supply chains, including pharmaceuticals and semiconductors, in a Taiwan invasion scenario,” Mr. Gallagher told The Epoch Times.
The idea of the tabletop simulation stemmed from his exchanges with financial executives.
One told him there is “zero” chance that the CCP will invade Taiwan. Another said the United States would never sanction China, even if the regime were to invade the self-governed island.
“It’s clear that, in many cases, Washington and Wall Street are living in two different worlds. One is the real world, the other a fantasy land,” Mr. Gallagher said.
The simulation focused not on military conflicts but on areas of economic warfare such as shipping routes, supply chains, and money transfers.
“We saw that if China were to invade Taiwan, the losses across our financial system would dwarf the write-downs taken at the outset of the Russia–Ukraine war. The entire U.S. economy and banking system would be imperiled,” Mr. Gallagher said.
“Equity markets would drop precipitously as global shipping lanes closed, shipping insurance premiums skyrocketed, supply chains broke down, and the specter of global conflict grew. Americans would see their pensions shrink and their bank accounts hemorrhage cash.”
In addition, the United States can’t afford to rely on economic means alone to deter China from taking Taiwan by force; credible military deterrence is a must.
“I think the executives who took part left aware of the danger, but many remain afraid to speak out,” Mr. Gallagher said.
Restricting U.S. outbound investment to China is a top priority of the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, also known as the Select Committee on the CCP.
When such investments help Chinese companies develop technology that the regime then uses to advance its military capabilities, the panel views it as the United States funding its own destruction.
House Speaker Mike Johnson (R-La.) left the language out of the yearly defense act that was approved in December 2023; an updated version for a House floor vote is expected this year.
Bipartisan Product
Since its formation last January, the Select Committee on the CCP has demonstrated a rare bipartisan culture on Capitol Hill.Rep. Dusty Johnson (R-S.D.), a committee member, says the two leaders have been accommodating to different views. Economic policy recommendations released by the group in December had the endorsement of all but one member.
“Our product is a consensus work product,” Mr. Johnson told The Epoch Times.
Rep. Ashley Hinson (R-Iowa), another committee member, also credits Mr. Gallagher and Mr. Krishnamoorthi for leading “the most substantive, bipartisan work in Congress.”
In an email to The Epoch Times, she highlighted a roundtable event held by the panel in her home state of Iowa regarding the CCP’s agricultural theft as an example of how the panel used “firsthand knowledge” and “real experiences” to “craft the policy blueprint to ensure the U.S. is competing with China rather than enabling their malign and destructive behavior.”
The committee’s work hasn’t gone unnoticed by the subject of its attention: the CCP.
Chinese propaganda articles label the committee an “anti-China pioneer” and often report its action as another “restless move.”
A September 2023 paper published by China’s Tsinghua University’s Center for International Security and Strategy warned that the committee might transform into a “center coordinating China policies for all parts of the U.S. Congress.”
The article warned that the panel could raise the American public’s awareness of the China threat, which it labeled “misinformation.”
A Deal Contingent on Taiwan
Since the inception of the Select Committee on the CCP, Mr. Gallagher has repeatedly warned that the current timeframe is the “window of maximum danger” related to Taiwan.However, some analysts don’t view military conflict over Taiwan as inevitable.
Shi Shan, a China expert with decades of journalism experience both in the mainland and in Hong Kong, said that view was “correct in theory.” He uses an alias to avoid reprisals from the CCP.
Mr. Shi has learned from CCP insiders that Xi has to deliver Taiwan to his Party within a certain timeframe in exchange for his lifetime CCP leadership—a prize that, if achieved, would elevate him to the level of Mao Zedong, who established communist China in 1949 and drove his political enemies to Taiwan.
Xi began his third term last year after removing the two-term or 10-year limit in China’s Constitution. The constitutional amendment was passed in March 2018. At the 19th Party Congress a year ago, Xi persuaded CCP senior leaders to extend his reign by promising them Taiwan, Mr. Shi said.
Mr. Gallagher and Rep. Michael McCaul (R-Texas), the House Foreign Affairs Committee chairman, said that when authoritarian dictators warn the world about their plans, we should listen to them.
Mr. Shi told The Epoch Times more about Xi’s inflexible internal situation.
“Xi is preparing China for a war with Taiwan. Because of that, the Party needed a leader beyond the previous term limit. If he gives up on the goal, the disagreeing forces within the Party will hold him accountable because he has made himself an exception and made the economy suffer. He has so much on the line that he cannot change his course.”
Xi has been working toward the goal for a while.
When he took over the CCP in 2013, Xi started planning the largest-ever military reform, which was formally kicked off a year later. The changes included shifting resources away from the army to the navy, air force, and rocket force. The rocket force took its current name in 2016 and was transformed from a land-based missile force to one with long-range missile launch capability from air, land, and sea.
The report estimates China had “more than 500 operational nuclear warheads as of May 2023—on track to exceed previous projections.”
Mr. Shi said the realistic danger of a Taiwan conflict has driven a fundamental change in U.S.–China relations.
“The tension will keep escalating unless Xi Jinping abandons his goal for Taiwan,” he said.
He said he thinks that if the United States doesn’t support Taiwan all the way, it could lead to the fall of the U.S.-led global security apparatus, which could trigger the fall of the dollar-based financial system and, eventually, the end of the U.S. era.
“If we are willing to get into that war in the first place, we must win it or else we have destroyed our own place in the world,” he said.
Phil Saunders said the “potential gains are very high” for the CCP if they could pull off a win over a U.S.-backed Taiwan. Mr. Saunders is director of the Center for the Chinese Military Affairs at the Washington-based National Defense University.
Foreign Capital and National Security
If a China–Taiwan war breaks out, it could be a repeat of what happened to U.S. assets and investments in Russia after the invasion of Ukraine, according to David Asher, a senior fellow at the Hudson Institute.Mr. Shi acknowledged the same risk and added that China’s security environment had entered a phase of “complete hostility toward and control of foreign capital,” partly due to gearing up to take Taiwan by force and partly due to rising nationalism.
Mr. Shi said that the trend he’s observing is not merely the U.S. government’s regulating and limiting the flow of capital to China, but also that the escalating security environment for both countries will lead to more tension and the nature of investment risks will shift, curbing or stopping U.S. capital flow to China.
He said he believes that Congress is riding on the trend, rather than driving it.
A US–China Relations Reset
After a year of investigation, the Select Committee on the CCP issued a list of 150 policy recommendations “to fundamentally reset the United States’ economic and technological competition” with China.Steve Yates, chair of America First Policy Institute’s China Policy Initiative, said that the committee’s work “stands out in recent decades” because of its bipartisan effort. It addresses the economic relationship—the “cornerstone” that justified the engagement policy with China at the end of the Cold War, he said.
He noted that many now think of the past approach as a mistake.
Mr. Gallagher is one example.
“For decades, many Americans believed that unbridled economic engagement with the Chinese Communist Party would lead to social liberalization and democracy in China,” he said.
“We made a bet on the Chinese Communist Party and we got it wrong. We had to take a chance on engagement, but that chance failed. And now the era of wishful thinking about the CCP has to be over.”
Mr. Yates said the select committee’s recommendations are “a crucial downpayment on resetting the terms of the U.S. economic relationship with the CCP.”
He also said he’s confident that sound policy out of Congress has “a real likelihood of coming to fruition in the coming years because it’s bipartisan.”
“Ensuring the United States is doing everything possible to maximize American competitiveness while strengthening and modernizing our trade relationships around the world requires our cooperation on common sense policy.”
Mr. McCaul is leading a bipartisan bill to restrict U.S. investments in China.
Human Rights Central
Human rights has been central to the committee’s comprehensive strategy on China, because how the CCP treats its own people indicates how it will treat others, according to sources close to the Select Committee on the CCP.
The human rights community—members of which have been targets of the CCP’s persecution for years and have been sidelined in bilateral talks—is so far happy with the committee’s support of people repressed by the communist regime.
“I was quite impressed that from the get-go, they’ve really put human rights at the center of things and done quite an impressive job of connecting the dots between threats to the United States and how human rights ties in with all of that,” Julie Millsap, government relations manager at the Uyghur Human Rights Project, told The Epoch Times.
Ms. Millsap said that although “the blinders have fallen off” and both political parties have realized that economic development won’t bring about human rights improvements in China, activists still feel unsafe, even in the United States.
“Every single person that I know that works in the human rights space deals with this on a daily basis; we don’t feel physically safe in the United States,” Ms. Millsap said.
“We have family members threatened or ourselves threatened, we have constant attempts to hijack identities, and many people received death threats,” she said.
The FBI calls it “transnational repression.”
After the hearing, a select committee staff member visited the dean of Georgetown Law School to discuss the matter.
“They took action; that’s very kind of them,” Mr. Zhang told The Epoch Times. “I really appreciate it.”
Georgetown’s Dean, William Treanor, didn’t respond to an inquiry by The Epoch Times by press time.
Mr. Zhou said he was impressed by Mr. Gallagher’s comprehensive understanding of the CCP’s influence operations, including the different types of United Front organizations, Chinese student organizations, and the Party’s hidden influences in Hollywood, Silicon Valley, and other parts of U.S. society.
“The China committee is absolutely a new energy with great execution power,” Mr. Zhou told The Epoch Times.
Rep. Michelle Steel (R-Calif.) said she is proud of the committee for “giving a global platform to those who are being marginalized by the CCP.”
Looking Ahead
Mr. Johnson said that he doesn’t think the even slimmer Republican majority in the House this year will affect the committee’s work.“Whether the Democrats or the Republicans were in charge on a given day, I don’t know that the message of the committee would change that much because everything we’ve done has been done in a bipartisan way,” he said.
Mr. Johnson said he views the committee’s first year as dedicated to policy development and looks to the second year as more about implementing the policy recommendations and working with committees to pass bills. He said he wants to first “rebalance” the U.S.–China economic relationship.
Mr. Gallagher agreed.
“Ensuring that American outbound capital does not finance PLA modernization or the human rights abuses of the Chinese Communist Party remains a leading priority for our committee, and I look forward to continuing to work with other Chairs in the coming year,” he said, referring to China’s official military, the People’s Liberation Army.
A year ago, then-House Speaker Kevin McCarthy established the two-year committee.
As chairman, Mr. Gallagher said his mandate is “not about litigating the past, but finding the right policies for the future, particularly when it comes to how we economically engage with CCP-controlled China.”
“We may call this a ‘strategic competition,’ but this is not a polite tennis match,“ he said. ”The most fundamental human rights and freedoms are at stake.”
