May 15, 2024 | New York Post

Congress must move to stop Beijing from making US rely on Chinese firms

May 15, 2024 | New York Post

Congress must move to stop Beijing from making US rely on Chinese firms

The United States is determined to thwart Beijing’s efforts to secure victory around the world in three key areas: military, intelligence and diplomatic.

Yet the greatest threat to US national security comes from Beijing’s success in undermining the resilience and autonomy of our industrial base.

China seeks victory along this fourth path precisely because the US government is not structured to respond to a security threat disguised as run-of-the-mill business competition.

Indeed, President Biden imposed tariffs on Chinese goods like electric vehicles and solar panels this week not for national-security reasons but because of what he called “unfair” competition.

As an executive at global telecommunications companies, I saw how Beijing strove to ensure the rise and ultimate dominance of Chinese telecom equipment makers, especially ZTE and Huawei.

When I began writing “Wireless Wars,” a book originally intended to be about telecom competition, I presumed that Beijing was backing its commercial champions so they could achieve economic success.

But I soon saw how Huawei deployed its cellular gear around America’s nuclear missile bases and ZTE sold equipment to North Korea, despite the risk of violating US sanctions. ZTE had to pay a billion-dollar fine for a $32 million sale to Pyongyang.

It became clear the goal of these firms was not to earn profits but to advance the strategic objectives of the Chinese Communist Party.

By intervening in the telecom sector, Beijing destroyed Nortel, Motorola, Lucent and other Western companies that once led the world in communications technology.

The CCP invested over $75 billion in the success of these companies, making it unlikely they’d ever be profitable.

But profit was never the point. For less than the cost of an aircraft carrier, China crushed the business of Lucent — turning Bell Labs, which developed America’s sonar, radar and anti-missile technology, into a mere R&D arm for a Finnish telecom company.

The true objective was to have CCP-controlled companies install the 5G networks and other advanced equipment that enabled American farms, factories and ports to operate efficiently — or fail to do so at a moment of Beijing’s choosing.

While the ban on Huawei blocked the company’s deployment in America, the destruction of our industry forced us to rely on vendors from Europe, Korea and Japan to equip our networks.

China has similar ambitions in other vital markets. Its companies now have a dominant share in the production of electric car batteries (77%) and solar panels (78%).

No less than 90% of the generic inputs for antibiotics come from China. 

We couldn’t start making our own if we wanted to.

The Commerce Department is expected to lead the government’s response to Beijing’s gambits, but it’s the wrong agency for the job.

Its stated goal is to “improve America’s economic competitiveness” and serve as the “voice of business.”

Yet addressing a security threat disguised as business competition requires actions that impose significant costs on both the US economy and individual firms. How can Commerce tell businesses to stop buying from the cheapest suppliers or selling into the biggest market — in the name of national security?

Yes, Commerce has the authority to do this, through tools like its “Entity List,” which bars foreign companies from selling into or buying from the US market.

The department also has a Bureau of Industry and Security (BIS) whose “paramount concern is the security of the United States.”

But it tempers that with a duty to “not impose unreasonable restrictions.”

The conflicting mandates of Commerce leave it unable to effectively focus on its security mission.

The only viable solution is a new entity born to fight back against China’s commercial offensive.

This means Congress will have to step in.

When TikTok emerged as one of the most effective cogs in the CCP propaganda machine, the House and Senate acted quickly and in a bipartisan fashion to pass a bill requiring TikTok to sell off its US operations or shut down.

Now it’s time for Congress to create, fund and empower a new entity to address the Chinese threat.

For the nucleus of this new body, the government could enlist staff from the Committee on Foreign Investment in the United States, including those from the Treasury and the Defense, State and Commerce departments, among others.

Commerce’s BIS could augment the CFIUS team with a mission to stop Chinese subversion that takes the shape of business competition.

Freed from pressure to advance the interests of the business community, this new entity could make the tough choices needed to thwart China’s ambitions and protect America.

Yet the first step to fighting back is recognizing which battlefield the war is being fought on.

Jon Pelson is the author of “Wireless Wars, China’s Dangerous Domination of 5G and How We’re Fighting Back” and an adjunct fellow at the Foundation for Defense of Democracies.

Issues:

China Military and Political Power Sanctions and Illicit Finance U.S. Defense Policy and Strategy