Even Before The War, Washington Had Shown An Increasingly Anti-China Side

Even before questions over Russian sanctions had increased tensions between Washington and Beijing, Congress and the White House had edged toward more open economic warfare with China. Several bills in Congress – most with bilateral support – would either limit American sourcing in China or constrain American investments in Chinese firms or both. In addition to Congress, the White House indicated that it is considering executive orders along the same lines. All would hurt China, though not as much as some proponents think. All would form a basis for punitive measures should China show too much support for Russia.

Whatever else such measures would do, they would constitute an unprecedented expansion of government oversight in American economic activity. They would affect both importing and investing. It would take up too much space to itemize all the bills now circulating in Congress and orders contemplated by the White House, but they be grouped into two sorts: those that focus on reducing supply chain vulnerabilities to China and those that would limit American support, mostly through finance, of Chinese technological innovation and military advantage. Past efforts to limit how much American investment can get involved in activities that would enhance the abilities of the Chinese military was clearly too narrowly focused. Militaries across the globe have long shown an ability to weaponize any technological advance however seemingly harmless on its face.

The most prominent piece of proposed legislation 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 mostly on American supply chains in China, screening business ventures to limit Chinese influence on American needs. Elsewhere in Congress, Democrats Rosa DeLauro of Connecticut and Bill Pascrell of New Jersey have pushed legislation to limit investment monies going to China, while some in the Senate would expand the Casey-Cornyn legislation to authorize a federal commission to screen U.S.-based investments in China, especially in critical industries such as health care, energy, and defense.

For all Biden’s vitriol toward Trump, proposed executive orders read as if Trump wrote them. Administration spokespeople have talked about executive orders that would screen American funding for Chinese startups and technology firms. It would greatly expand the already existing strictures put in place by Trump in 2020 to stop investments going into some 30 Chinese firms aligned with the People’s Liberation Army. The Biden White House has also talked about issuing orders to extend government oversight of American supply chains in China and American lending to Chinese firms of all kinds. So far, the president has refrained from endorsing any of the proposed bills going around in Congress, though both the Commerce Department and the Treasury have made clear that they are talking to the proposers.

It hardly needs saying that corporate America will oppose any of these measures. In fact, the U.S. Chamber of Commerce has for over a year lobbied actively against the Casey-Cornyn supply-chain bill. Such lobbying killed a similar bill in 2018. Several other corporate interests have indicated that the bill would affect some 43% of all American investments in China and have gotten sympathetic lawmakers to describe the bill as entirely “too broad.” These interests have argued further that the proposal to use the Office of the U.S. Trade Representative for the screening would overtax its available resources. Still, the anti-China sentiment in Washington is so strong the U.S.-China Economic Security Review Commission has declared this sort of legislation a “fait accompli,” with the only question concerning “how extensive” it will be.

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