A U.S. congressional panel focusing on China’s economic and security policies on Wednesday released a report urging policymakers to take a hard-nosed approach to Chinese challenges to American interests globally after decades of hoping that trade and contacts would liberalize the communist country.
The 2018 annual report by the U.S.-China Economic and Security Review Commission (USCC) said that the strategy of encouraging Chinese economic liberalization in the hope of eventually leading to political liberalization was flawed, especially as China under Xi Jinping and the Chinese Communist Party (CCP) transform itself into a global power both economically and militarily without fundamentally reforming.
“For several decades, U.S. policy toward China was rooted in hopes that economic, diplomatic, and security engagement would lay the foundation for a more open, liberal, and responsible China. Those hopes have, so far, proven futile,” said the authors in an opening statement.
"U.S. policy makers have difficult decisions to make, but one choice is easy: reality, not hope, should drive U.S. policy toward China," the report said.
This transformation under Xi, who has eliminated term limits and taken control of nearly all important decision-making bodies in his country, suggests that China’s ascension as a direct challenge to the existing world order.
“In word and deed, the CCP has abandoned any inclination for economic and political liberalization,” it said.
“President Xi now appears able to focus on personally guiding China’s political, economic, military, and diplomatic policies for the foreseeable future. Under his control, it is already clear that China is growing increasingly authoritarian at home and assertive abroad,” said the panel.
Citing the high price of access to the Chinese market, unfair trading practices and the increasing trade deficit, the report says that a trade-based approach has been damaging to U.S. interests.
The Belt and Road Initiative (BRI), Xi’s signature development strategy publicly advertised by the Chinese government as “a bid to enhance regional connectivity and embrace a brighter future,” represents a new type of colonialism, the report suggests.
“Beijing often contrasts its so-called no-strings-attached approach to development with the established global norms which condition financing on good governance, sustainability, transparency, and freedom from corruption,” it said.
“In practice, however, accepting an offer of Chinese money often means also agreeing to purchase the services of Chinese companies and the labor of Chinese workers, aligning certain policies with Beijing’s preferences, and possibly ceding sovereign rights over strategic assets or infrastructure,” said the report.
The report says that recipient countries of BRI projects have been “pushing back,” by canceling or renegotiating deals, due to predatory economic practices, lack of transparency, and failing to adhere to global governance standards.
“Some have also criticized China over its influence operations and use of the Belt and Road Initiative to establish a new type of colonialism,” it said.
‘World-class’ military force
Supporting China’s attempts to dominate regional and global economics, Chinese military modernization raises deep concerns, the report said.
It cited the CCP under Xi’s leadership hastening the modernization of the military so that it can more quickly become a “world-class” force. A stronger military enables China to project more confidence in diplomatic negotiations, making international cooperation in responses to crises more difficult, it said.
In addition, military might only has the effect of emboldening China in its regional territorial disputes. The military has been preparing for possible future clashes with the U.S. military, the report said.
“Today, while working to overcome significant military shortcomings, China is already more assertively advancing Beijing’s sovereignty claims throughout the Indo-Pacific, intensifying preparations for combat, and enhancing its capabilities to deter and defeat the U.S. military should it be required to do so in a future conflict,” said the report.
Among several key recommendations to the U.S. Congress, the USCC called for efforts to blunt the impact of Chinese security threats, while protecting trade interests through enhanced transparency.
The commission called for the Office of Management and Budget to prepare an annual report that rates U.S. government agencies’ plans to limit industrial supply chain vulnerabilities, with special attention to cybersecurity and communications technology, 5G networks and smart devices manufactured in China. The proposed report would also make recommendations each year on how to better prevent these vulnerabilities as technology evolves.
The USCC also recommended exploring the possibility of bringing a case to the WTO against China to legally nullify specific international agreements, or to charge China with violating its commitments to the U.S. and its allies. It also called for the identification of trade-distorting practices of Chinese enterprises and how to lessen the anticompetitive impact of such practices.
The panel also recommended efforts to monitor China’s propaganda activities within the U.S. and to clearly label information from foreign entities, such as the China Daily, the largest English-language newspaper in the PRC that also has wide distribution in the U.S. and also publishes paid inserts in American domestic newspapers.
Other recommendations aimed at strengthening the U.S. strategy on North Korea included putting sanctions on Chinese business entities that continue North Korean activities in violation of U.N. sanctions on Pyongyang aimed at halting its nuclear and missile programs.