House Financial Services Committee to Hold Hearing on Chinese Regime’s Economic and Geopolitical Threat

House Financial Services Committee to Hold Hearing on Chinese Regime’s Economic and Geopolitical Threat

As the world’s attention shifts heavily to Beijing’s role in the world in the aftermath of the shootdown of its spy balloon over U.S. territory on Feb. 4, a special hearing of the House Financial Services Committee will address subversion and aggression emanating from communist-ruled China and consider legislative proposals to counter these threats.

A topic of special interest will be how to offer alternatives to U.S. businesses that buy and sell intensively in China and make heavy use of Chinese labor, including forced labor in Xinjiang Province.

Entitled “Combatting the Economic Threat From China,” the hearing features four confirmed speakers with expertise in economic policy, global trade and diplomacy, and counterterrorism. The witnesses scheduled to testify are Clete Willems, a partner at the law firm Akin Gump Strauss Hauer & Feld and a special assistant to the president for international trade, investment, and development during the Donald Trump administration; Tom Feddo, founder and director of The Rubicon Advisors LLC; Eric Lorber, principal of the Cyber, Risk & Regulatory practice at PricewaterhouseCoopers and a senior advisor to the undersecretary of State for Terrorism and Financial Intelligence during the Trump administration; and Rich Ashooh, corporate vice president for global trade and government affairs at the Lam Research Corporation.

The timing of the hearing, just two days after an international incident involving alleged Chinese espionage within U.S. borders, is coincidental, Willems told The Epoch Times, noting that the hearing was organized well in advance of the discovery of the balloon. But the incident all the more underscores one of the hearing’s themes; namely, how to counter the growing danger posed by the Chinese regime’s territorial, geostrategic, commercial, and technological designs.

The administration of President Joe Biden has come in for criticism for its response to Beijing’s chronic violations of its World Trade Organization (WTO) membership, its abusive trade practices, its threatening of the sovereignty of Taiwan, and its documented genocide against the Uyghur minority.

Treasury Secretary Janet Yellen advocated for scaling back the tariffs put in place during the Trump administration which were aimed at punishing Beijing for its myriad abuses and violations.

Decoupling Trade and Investment

The Chinese communist threat is seriously exacerbated by the close business relationship between the regime in Beijing and U.S. businesses drawn to the lucrative potential of a market of over a billion people.

“It’s one thing to crack down on capital flows, and make sure that we’re not funding China’s military, but at the same time, if we’re going to decouple U.S. companies and investors from that market, we need to give them alternatives. You need to open up third-country markets if you’re going to shut down the Chinese market,” Willems told The Epoch Times.

Curbing Beijing’s opportunities for espionage, intellectual property theft, forced technology transfers, and other abusive and illegal business practices calls for at least the partial decoupling of U.S. businesses from that market, and this in turn requires offering them attractive new opportunities for business and investing in non-Chinese markets, he said.

Willems acknowledged the obvious reasons why U.S. business are drawn to a market of such size, but stressed the possibility of alternatives that would make it much harder for Beijing to exploit business relationships between East and West.

“You need to provide companies with positive incentives to relocate, such as trade agreements. There are reasons for firms to be in the Chinese market, they want to be globally competitive, they need to have a foothold there. So we need to have a thoughtful and comprehensive strategy that, on the one hand, talks about where we need to crack down, but also talks about positive incentives so that we remain the most competitive economy in the world,” Willems said.

At the hearing, Willems plans to outline in detail his plans for such alternative arrangements.

“There are national security imperatives that require us to disengage with China on certain technologies and capital flows. I’m going to talk about how you draw those lines. I don’t think we should totally decouple from China, because there are innocuous forms of trade that benefit the United States. As you draw these lines, you’ll recognize that there is an economic cost [for decoupling], and that’s where you need to open up these third-country markets. If you can’t sell into China, then I’d like you to be selling more into Vietnam,” Willems continued.

IMF and World Bank

In addition to further expanding business relationships with non-Chinese markets, Willems plans to speak about strategies for curbing Beijing’s exploitation and manipulation of global financial institutions that should not be serving the interests of China’s ruling Chinese Communist Party.

“We will talk about Chinese role in international institutions, including the World Bank and the International Monetary Fund (IMF), and how it’s frankly absurd that China remains one of the largest borrowers all while they’re moving forward with the Belt and Road Initiative,” Willems said, referring to Chinese leader Xi Jinping’s far-reaching plan to fund and develop new trade routes and establish China’s dominant position in a global network of commerce and investment.

Another topic at the hearing will be China’s abuse of the IMF, where Beijing has used its influence to hamper the restructuring of nations’ debt, Willems said. He emphasized the need to put pressure on China to become “a responsible actor” in the global economic order.

Willems sees his background as an ideal fit for the agenda at this hearing.

“I think the reason they asked me to be a witness is that in my role at the White House, I had oversight over an entire economic portfolio that includes these capital flows, the IMF and the World Bank and includes trade. I tended to cover all these things and help develop strategies for dealing with these problems,” he said.

Other legislative proposals on the table at Tuesday’s hearing include various actions for the United States to take in the event of a Chinese invasion of Taiwan, as well as strategies for disrupting the financing of fentanyl and precursor chemicals originating from China that largely drive the opioid epidemic inside U.S. borders.

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