How to keep American jobs and innovation out of Chinese hands
The United States became the most powerful nation in the world through American ingenuity, innovation, and manufacturing strength. However, over the past few decades, U.S. companies have invested heavily in China, despite the risks of putting critical American economic and national security capabilities directly into the hands of our adversaries. This means the U.S. government is knowingly at risk of being complicit in our Nation’s decline. We need to stop letting the Chinese Communist Party (CCP) eat our lunch.
The pandemic shined a spotlight on a storm that was quietly brewing underneath the surface: Chinese government-backed companies control much of the world’s supply chains, and many that are critical to the U.S.’s economy. When COVID-19 first hit, U.S. hospitals and medical professionals could not find basic personal protective equipment (PPE) to keep doctors safe as they treated COVID patients. At that time, China was producing half of the world’s masks and hoarding masks for themselves before distributing to the rest of the world. It took the U.S. months to catch up in terms of manufacturing our own supplies. During the height of the pandemic, automobile and cell phone prices rose because of a reliance on China. The federal government has little insight into which critical capabilities have been moved overseas, and at what scale. We need greater transparency into where there are vulnerabilities before the next crisis.
But the problem is much deeper and much more dangerous than China’s manufacturing power. U.S. companies that play a critical role in our national security are expanding operations into countries, including China and Russia, and transferring sensitive intellectual property to companies based in these countries. Some companies even have ties to the Chinese military, which is actively working to use these technologies against us. The risk is more than mergers and acquisitions between U.S. firms and Chinese-government-backed companies. We are sending U.S. know-how, creativity, innovation, and expertise through non-traditional means, including U.S. citizens serving on boards of Chinese-government affiliated firms.
This isn’t just globalization. The CCP doesn’t play by the rules and it isn’t afraid to sever access to a critical supply chain or use its economic power to bully other nations. In 2020, after Australia called for an independent inquiry into the origins of COVID-19, the CCP responded by slapping duties on Australian exports and revoking Australian producers export licenses. The CCP also retaliated against Lithuania in 2021 by inflicting a punishing campaign of economic coercion after that European nation allowed the opening of a Taiwanese representative office in its capital.
The U.S. is not immune to China’s bullying. In fact, the CCP is making a concerted effort to capture U.S. expertise. CCP-backed firms are strategically investing in industries critical to our economic and national security interests, which not only builds Chinese capacity, but also leaves the U.S. dependent on it. It’s not hard to imagine a scenario where China ceases exports on computer chips or critical rare metals, leaving the U.S. unable to respond due to a lack of domestic capacity. With an enemy using economic coercion as a geopolitical weapon with impunity, the U.S. needs to fully understand what types of critical investments are being made in adversarial countries.
Sen. John Cornyn (R-Texas) and I introduced legislation to create a mechanism to screen outbound investments so the U.S. can understand the risks created by outsourcing our manufacturing and technological know-how to our foreign adversaries. In the two years since we introduced this legislation, the bill has gained traction in Congress and earned support from national security experts, administration officials, and the U.S.-China Economic and Security Review Commission.
While I believe that our legislation provides the U.S. with the strongest foundation to compete in a global economy, American workers, businesses, and our national security cannot afford to wait. As deliberations continue in Congress, I strongly urge the Biden administration to move forward with executive action—which can then be bolstered by statutory provisions—to safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries.
Some in Congress say that export controls are the solution. But export controls are only a partial solution and do not adequately confront the scope of the threats we face. Export controls can prevent the actual technology from moving overseas, but not the human capital, expertise, and other investments that can strengthen our adversaries and harm our national security. We need additional tools.
The United States has never sat by and watched our adversaries bully the world. We cannot allow global competitors to manipulate economic tools for national security gains and global dominance. The first step is knowing what kinds of risks we’re putting ourselves in. We also need to bring along partners and allies in making sure their supply chains are secure, and that we are in lockstep to ensure critical national security technology remains among allied nations. An outbound investment screening mechanism would protect American innovation and jobs and keep our national and economic interests out of our adversaries’ hands.
Bob Casey is the senior senator from Pennsylvania and a member of the Select Committee on Intelligence.
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