President Joe Biden has taken a number of steps to prevent the flow of strategic U.S. technologies to China, but many in Congress feel that he hasn’t done enough.
Wisconsin Rep. Mike Gallagher, the Republican chairman of the House Select Committee on the Chinese Communist Party, said Monday that he is not confident that the Treasury Department will be aggressive enough in implementing new restrictions on U.S. investment in Chinese companies working with militarily applicable advanced technologies that Biden proposed last month.
Biden erred in “putting Treasury in the lead with a ton of off ramps,” Gallagher said during an event staged by the Council on Foreign Relations, adding that the Treasury Department, even during the Trump administration, has historically had a “more dovish position” on China than other executive departments.
“We shouldn’t be financing our own destruction,” Gallagher said, arguing that Congress should legislate a stricter rule banning U.S. entities from investing in specific sectors of the Chinese economy, including artificial intelligence and micro electronics.
He also argued that the Biden administration’s decision to only block outbound investment from private sources, while allowing investment in Chinese companies that trade on stock exchanges, is inadequate.
“If you’re just talking about private investment….that’s at most 17% of the problem,” Gallagher said. “What do we do about the rest of the money flowing to China?”
Derek Scissors, chief economist for the China Beige Book, estimates that Americans have more than $1 trillion invested in Chinese stocks and bonds, and the outbound investment rule proposed last month suggests exempting this type of investment from any restrictions.
U.S. listed shares of Chinese companies
have lost value in recent months as a slowdown in the Chinese economy has dented economic performance and investor confidence, but U.S. investors’ interest in these companies remains significant.
Gallagher also took exception to comments made by Biden over the weekend in which he said China’s “capacity” to invade Taiwan has been reduced by its recent economic slowdown.
“Xi Jinping is preparing for war,” Gallagher said, adding that economic troubles at home could make an invasion more likely, as Xi may calculate that a war for Taiwan could distract from failed domestic policies.
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