On December 12, the U.S. House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (the “Select Committee”) adopted a broad set of policy recommendations intended to reduce the United States’ economic and technological ties with China across a broad swath of the economy.
The Select Committee passed the 53-page report, containing 130 recommendations, on a bipartisan, though not unanimous, voice vote. The report is organized around three pillars:
- “Reset the Terms of Our Economic Relationship with the PRC,” emphasizing the scope of the United States’ strategic dependence on China;
- “Stem the Flow of U.S. Capital and Technology Fueling the PRC’s Military Modernization and Human Rights Abuses,” which calls for increasingly hawkish trade and investment-review policies; and
- “Invest in Technological Leadership and Build Collective Economic Resilience in Concert with Allies,” focused on strengthening the workforce, critical supply chains, and related capabilities.
The report urges Congress and the Administration to deploy a variety of tools to compete with China, including by building on the Biden Administration’s recent executive orders on artificial intelligence and outbound investment. With respect to trade, the Select Committee recommends implementing stricter export controls and moving China to a new tariff column, effectively revoking its permanent normal trade relations (PNTR) status. Furthermore, the report calls for broadly expanding authorities for the Committee on Foreign Investment in the United States (CFIUS), as well as for investments in international economic development to counter China’s efforts to influence the economic affairs of trading partners through its Belt and Road initiative. The report recommends several steps to protect U.S. innovators from intellectual-property-related abuses and sanction companies in China that threaten U.S. national security.
In addition, the Committee recommended several sector-specific reforms in the report. These include strengthening domestic capacity for critical technologies, including semiconductor manufacturing, battery recycling, and raw-materials processing; heightening disclosure requirements for market participants and private-equity firms, and prohibiting investment in entities that violate human rights; regulating federal procurement of active pharmaceutical ingredients; and funding technological research, workforce development, and education.
While the report does not specifically call for the United States to “decouple” economically and technologically from China, it notes that “[r]egardless of the choice of words, the United States must now chart a new path that puts its national security, economic security, and values at the core of its economic engagement with the PRC and invests in long-term American technological leadership.” In response to the report, a spokesman for the Chinese Embassy in Washington, Liu Pengyu, characterized the report as “pushing for decoupling and severing supply chains, and added that the recommendations would “undermine the international economic and trading order.”
Select Committee Chairman Mike Gallagher (R-WI) described the report’s approach as “balanced,” and Ranking Member Raja Krishnamoorthi (D-IL) noted that it presents a “unified message to the CCP” and U.S. allies abroad. One member, Rep. Jake Auchincloss (D-MA), publicly expressed opposition, noting that while he agrees with much of the report, he has concerns about promoting “protectionism.” Another Select Committee member, Rep. Ritchie Torres (D-NY), raised concerns with the report’s “vague” recommendation for changing China’s trade status.
Other committee leaders also commented on the report. A spokesperson for Ways & Means Committee Ranking Member Richie Neal (D-MA) criticized the Select Committee’s recommendations for lacking cohesion, noting several are “better suited for headlines than guidelines.”
Looking ahead, we expect Rep. Gallagher and other members to propose legislation reflecting many of the report’s recommendations that committees of jurisdiction may consider in the months ahead. The Select Committee is authorized through the end of the 118th Congress, and we can expect it will continue to investigate, hold hearings, and report additional factual findings and legislative recommendations through the end of 2024.