Lawmakers highlight China’s “coercive” economic practices

US lawmakers on Thursday accused the Chinese Communist Party of using coercive economic practices to achieve global dominance over the United States.

The allegations came at a House of Representatives Select Committee on Strategic Competition between the United States and the Chinese Communist Party hearing days after Treasury Secretary Janet Yellen traveled to Beijing to discuss the economic relationship between the two countries.

Yellen said that while the US is taking specific national security measures, “a decoupling of the world’s two largest economies would be disastrous for the interests of both countries and destabilizing for the world, and would be virtually impossible to carry out. We want a dynamic and healthy global economy that is open, free and fair.”

Diplomatic relations between the two countries have been tense since the US shot down a Chinese spy balloon earlier this year. Witnesses told the House panel Thursday that US companies operating inside China face increasing threats.

“There is no such thing as a private company in China, a series of laws such as the updated counter-espionage law, the data security law, the foreigner sanctions law have codified what was always true: China reserves the right to review any data, seize any assets and take whatever intellectual property you want,” committee chairman Mike Gallagher said.

According to committee members, China’s restrictive environment is giving rise to the so-called “brain drain” of its own entrepreneurs, making China the world’s leading outlet for wealthy people fleeing what they fear will is the possibility of the Communist Party to arbitrarily seize the property.

Witnesses testified that the environment in China is becoming increasingly restrictive for American businesses and individuals.

“Over the past few months, the PRC authorities are charging any domestic or foreign businessperson with espionage simply for providing any service using PRC information to provide or give to third-country customers,” said Piper Lounsbury, director of research and development Strategy Risksa risk management firm for companies doing business in China.

“The crackdown on consulting firms, the expansion of secrecy laws and the flow of information from the PRC only highlight the negative symmetry we have with China. This means that even companies now can’t even do the due process before any kind of business transaction,” she added.

China’s foreign ministry on Monday pushed back against criticism of its business practices in response to a travel advisory issued this month by the State Department warning US citizens of the “risk of wrongful detention.”

However, the Foreign Ministry spokesman, Mao Ning, stated that “China is a country with a rule of law. The decision of the relevant departments to carry out a security review of foreign companies in accordance with the law is based on laws and facts.”

“China welcomes citizens and businesses from all over the world to visit China and do business in China, and protects their security and legitimate rights and interests in China, including freedom of entry and exit,” he added.

However, the witnesses told the committee that they told lawmakers that US companies face a restrictive environment led from the top by President Xi Jinping, potential theft of intellectual property and the constant threat of asset confiscation.

“The question is how much do I need to lose to have access to the market, so it’s a balancing act,” said Desmond Shum, a businessman whose ex-wife, Whitney Duan, was arrested by the Chinese.

Shum, the author of Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China (“Red Roulette: An Informed Story of Wealth, Power, Corruption and Vengeance in China Today”), told the US news program 60 Minutes that he and his then-wife engaged in corrupt business practices in China. .

In its last report to Congress in 2022, the US-China Economic and Security Review Commission, established by Congress in 2000 to monitor and report on the national security implications of the US-China economic relationship and to make recommendations, said that US firms and investors are reassessing their reinstatement in China.

“China has upended the world trading system and moved further from the spirit and letter of its obligations under its WTO accession protocol,” the report says.

“China’s subsidies, excess capacity, intellectual property theft and protectionist out-of-market policies exacerbate distortions in the global economy. These practices have harmed workers, producers, and innovators in the United States and other market-based countries.”

The commission went on to say that the United States’ ability to overcome harmful trade practices was undermined by the lack of a coherent strategy.

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