Even before the war, Washington had shown an increasingly anti-Chinese side


Even before questions about Russian sanctions had heightened tensions between Washington and Beijing, Congress and the White House had moved closer to a more open economic war with China. Several bills in Congress — most with bilateral backing — would limit U.S. sourcing from China or limit U.S. investment in Chinese companies or both. Besides Congress, the White House has indicated that it is considering executive orders to the same effect. All of this would hurt China, but not as much as some proponents think. All would form a basis for punitive measures if China showed too much support for Russia.

Whatever else such measures do, they would constitute an unprecedented expansion of government surveillance of US economic activity. They would affect both import and investment. It would take too much space to detail all of the bills currently circulating in Congress and the orders being considered by the White House, but they should be grouped into two types: those that focus on reducing supply chain vulnerabilities towards China and those that would limit US support, primarily through finance, Chinese technological innovation and military advantage. Past efforts to limit the amount of U.S. investment that could be involved in activities that would improve the capabilities of the Chinese military were clearly too narrowly targeted. The militaries around the world have long demonstrated their ability to weaponize any technological advance, no matter how harmless it may seem at first glance.

The most important bill comes from two senators, Democrat Bob Casey of Pennsylvania and Republican John Cornyn of Texas. Their bill, which recently received support from a group of Democrats in the House of Representatives, would focus primarily on US supply chains in China, reviewing business ventures to limit Chinese influence over needs. Americans. Elsewhere in Congress, Democrats Rosa DeLauro of Connecticut and Bill Pascrell of New Jersey have pushed to limit investment in China, while some in the Senate would expand the Casey-Cornyn legislation to authorize a federal commission to screen US investment in China, especially in critical sectors such as healthcare, energy and defence.

For all of Biden’s vitriol toward Trump, the proposed executive orders read as if Trump wrote them. Administration spokespersons have spoken of executive orders that would filter U.S. funding for startups and Chinese tech companies. This would significantly expand the already existing restrictions put in place by Trump in 2020 to prevent investment in some 30 Chinese companies aligned with the People’s Liberation Army. The Biden White House has also raised the possibility of issuing orders to expand government oversight of US supply chains in China and US loans to Chinese businesses of all kinds. So far, the president has refrained from approving any of the bills proposed to Congress, although the Commerce Department and the Treasury have made it clear that they are talking to the proponents.

Needless to say, American businesses will oppose any of these measures. In fact, the United States Chamber of Commerce has been actively lobbying against the Casey-Cornyn supply chain bill for more than a year. Such lobbying killed a similar bill in 2018. Several other business interests said the bill would affect about 43% of all U.S. investment in China and caused sympathetic lawmakers to call the bill outright. is “too wide”. These interests further argued that the proposal to use the Office of the US Trade Representative for screening would overburden its available resources. Yet anti-China sentiment in Washington is so strong that the U.S.-China Economic Security Review Commission has declared this type of legislation a “done deal”, with the only question being “how extensive will it be?” “.

Of the two areas involved, those close to politics suggest that investment screening is more likely to advance than supply chain screening. There are, after all, presidents on the investment side already, but not on the supply chain side. There is a certain irony in this mix of probabilities, as the supply chain is both where the United States is most vulnerable to disruption and where the legislation could have the greatest impact on the Chinese economy. . Precedents aside, investment limitations are more likely to keep Americans out than slow technological advances in China, which history shows has a way of finding fertile economies no matter how how much other powers try to limit access. As effective as they are, the recent rise in Washington-Beijing tensions makes the adoption of these measures much more likely than a month ago.

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