Commentary
The Biden administration’s tough-sounding
announcement on Aug. 9 of selective curbing of future U.S. private investment in mainland China (existing deals exempted) is shining a spotlight on the whole matter of our decades-long, massive economic engagement there.
Beijing has found the honey of capitalist ways more effective against the West than the Soviet Union’s vinegar of military subversion in the Third World,
nuclear warhead overkill, and relentless hostile rhetoric and
propaganda. U.S. consumers are addicted to low-priced Chinese-manufactured products; U.S. businesses love the cheap labor costs of their Chinese factories; Washington delights in diplomacy with the Chinese Communist Party (CCP), faithful to the tenet that self-styled peacemakers are always blessed, never naive.
Beijing has indeed concealed its dispositions; to many Americans, China exemplifies a free market, not the oppression at home and expansionism abroad that is the reality. Undoubtedly this is why we are not combating communist China with the seriousness we employed against the Soviet Union.
Under President Ronald Reagan, the United States banned the export of high technology to the Soviets; we imposed sanctions that, for instance, obstructed the building of the Soviet natural gas pipeline to Western Europe by
stopping U.S. construction equipment titan Caterpillar from selling tens of millions of dollars worth of pipe-laying equipment to Russia, and stopping General Electric from sending turbine rotors there.
Indeed, as historian Steven Hayward of UC Berkeley’s Institute of Governmental Studies
notes, Soviet leader Mikhail Gorbachev angrily disclosed during the 1986 Reykjavik Summit that the U.S. role in reducing the global price of oil was succeeding as a weapon of economic warfare against Moscow; President Reagan had ended domestic oil and gas price controls and used U.S. military power to convince Mideast OPEC nations to boost supply. He and British Prime Minister Margaret Thatcher also teamed up on
withholding financial credits from the West to Moscow—assistance that, under Communist Party official Leonid Brezhnev, had
propped up the Russian economy and possibly prevented the demise of the Soviet Union decades earlier.
Nothing resembling this kind of economic retaliation is being carried out by the United States today against communist China, despite CCP leader Xi Jinping’s explicit declarations that China
seeks by mid-century to become a “global leader in terms of comprehensive national power and international influence” through “the system of socialism with Chinese characteristics.”
Instead, the Biden administration has actually been selling China millions of barrels of oil from the U.S. Strategic Petroleum Reserve, which was designed as an emergency resource for this country. And this took place after Biden’s energy secretary
conferred with a CCP official.
Where are the Republicans?
All over the place. Sen. John Cornyn of Texas joined with Pennsylvania Democratic Sen. Bob Casey in amending the Defense Department appropriation with the
Outbound Investment Transparency Act, requiring U.S. firms to notify federal agencies when selling technology to China and other bad actors in the fields of semiconductors, microelectronics, artificial intelligence, quantum science, and similar advanced areas. It’s so passive in its anti-China thrust that Senate Majority Leader Chuck Schumer and all Senate Democrats but Arizona independent Kyrsten Sinema
voted in favor. This is the equivalent of a department store installing security cameras chronicling mass shopliftings; collecting evidence of undesirable behavior is not a prohibition of the behavior.
Sadder than sad, Mr. Cornyn and Mr. Casey’s original version of the legislation would have armed the federal government with the ability to step in and prevent American companies from making agreements with Chinese tech companies that threaten national security. Still, it was
watered down by one of the most intriguing Republicans running for president in 2024: Senate Banking Committee ranking member Tim Scott of South Carolina, a black man whose message of hope and civility and rags-to-riches biography could go a long way in uniting Americans and popularizing conservative policies were he to reach the White House. Even co-author Mr. Cornyn admits his law’s teeth were removed by Mr. Scott’s committee, rendering it “merely a transparency provision at this point.”
President Joe Biden may absurdly (and unfairly) come out looking more hawkish on China than Mr. Scott.
In the House of Representatives, meanwhile, Financial Services Committee Chairman Patrick McHenry, the North Carolina Republican, prefers the expansion of cabinet departments’ corporate blacklists without any new requirements for disclosure of deals with Chinese entities. Mr. McHenry recently disparaged Mr. Cornyn’s tack as “a terrible idea” that “will be cumbersome for capital allocation internationally, it will be a massive expansion of state powers, and it won’t work.”
North Carolina GOP Sen. Thom Tillis, who was one of only six senators voting against the Cornyn transparency amendment, recently
commented that “the main priority is to continue investing in the Chinese market where it benefits us, and there are a lot of opportunities for that.”
Last fall, outgoing Senate Banking Committee ranking Republican Pat Toomey of Pennsylvania
warned of establishing an unnecessary federal bureaucracy aimed against China, pointing out that the Commerce Department’s Bureau of Industry and Security already “has complete authority to block the transfer, of any kind, of technology, intellectual property, blueprints, procedural know-how, or software going to China, including when Americans make investments in China. What, then, is the need for an outbound investment notification regime?” He also warned that a Biden executive order could be abused in the future by presidents of either party.
But Mr. Toomey, a fierce free trader, also asked, “Why would you start a firm in the U.S. if you know doing so risks precluding you from investing in China—the second largest economy in the world?”
It all has sparked headlines
crowing about Republicans being “soft on China.” It is also sure to ignite populist suspicions that such softness can be traced to K Street corporate lobbyists bribing select GOP figures to make sure no one spoils the party for U.S. companies using China to maximize profits.
Countering this perception is House Select Committee on China Chairman Mike Gallagher, the Wisconsin Republican, who seeks “a sector-specific approach” fully banning the sale of various advanced technologies to China, “the obvious areas where we shouldn’t be subsidizing our own destruction.” Then beyond that, bans on university endowments and state and local governments’ investments in China.
Free-market Republicans versus China-hawk Republicans is a false division. President Reagan—who cut taxes across the board, lowered the top income tax rate to 28 percent, reduced the growth of discretionary domestic spending, and slashed regulations—saw no contradiction between market principles and economic war against communism. The problem today is not philosophical. It is that too few Republicans appreciate the gravity of the threat to the free world in the 21st century posed by the Chinese Communist Party—that current threat deserves the urgency we successfully applied in the 20th century to the Soviet threat.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
