Commerce's Raimondo returns from China, House select comm. warns of China's 'industrial espionage'

The special House panel recently held a roundtable in Wisconsin to highlight the Chinese Communist Party's threat to American manufacturing amid Commerce Secretary Gina Raimondo's efforts to forge with China new working groups and promote “economic exchange where it aligns with U.S. interests.” 

Wisconsin GOP Rep. Mike Gallagher, chairman of the House Select Committee on the Communist Chinese Party, opened the event Wednesday, saying “The decline of American industry is not inevitable. It never has been. Deindustrialization is a policy choice. And it’s been the favored choice of both parties for far too long.”

Gallagher argued the Chinese Communist Party has exploited this policy, using unfair trade practices and its “vast, state-directed industrial espionage apparatus” to maintain an advantage against U.S. industries. 

While the committee conducted its roundtable in the Midwest, Raimondo finished her four-day trip to Beijing and Shanghai where she met with Chinese officials and business leaders. 

During the trip, Raimondo’s met with Chinese Minister of Commerce Wang Wentao resulted in new working groups on commercial issues and export controls. The meeting made up part of “ongoing efforts to deliver on President Biden’s directive following his meeting with President Xi in November 2022 to deepen bilateral discussions,” according to a readout from the Commerce Department.  

Congress and the Biden Administration appear to be moving in opposite directions on trade with China, the country which Chairman Gallagher has called “the greatest threat to the United States.” 

The Wisconsin roundtable is part of the select committee’s ongoing efforts bring attention to Chinese threats to American manufacturing. The select committee was formed after the Republican Party took control of the House  in the 2022 midterms.

Gallagher was subsequently named chairman by Speaker-elect McCarthy. The committee’s mission is to “build consensus” and “develop a plan of action” to confront the growing China threat to the American economy and citizens.  

In his opening statement at the roundtable, the committee’s ranking member, Raja Krishnamoorthi (D-IL), identified China’s entrance into the World Trade Organization (WTO) and the normalization of trade relations between the United States and China as a turning point. “The CCP never intended to follow the rules. And that created an environment which they regularly, unfairly have an advantage over competitors,” Krishnamoorthi told attendees.

The WTO describes itself as “a system of rules dedicated to open, fair and undistorted competition,” yet Chairman Gallagher noted that China heavily subsidizes their own industries, provides free real estate to companies, eliminates internal competition, disrespects organized labor, and adheres to no meaningful environmental standards. According to the committee members, these practices, along with China’s state-directed industrial espionage apparatus, undermine the WTO rules and promote unfair competition. 

Krishnamoorthi cited a 2020 research report by the Economic Policy Institute (EPI) which claimed that the trade deficit with China has cost the United States 3.7 million jobs between 2001 and 2018. Indeed, the report concluded “that because imports from China have soared while exports to China have increased much less, the United States is both losing jobs in manufacturing… and missing opportunities to add jobs in manufacturing.” 

Krishnamoorthi argued that China’s regular economic interference, whether through subsidies, intellectual property theft, currency manipulation, or dumping in the U.S. market, is what provides Chinese industries with such an advantage over our own, leading directly to the kinds of job losses cited in the EPI report. 

“My district, the eighth congressional district of Illinois, has had more than 15,000 jobs displaced because of unfair trade practices by the CCP—that is the most, the most, of any congressional district anywhere in the state of Illinois,” Krishnamoorthi remarked. 

Bob Wahlin, the CEO of Stoughton Trailers—which hosted the roundtable in its Wisconsin factory—confirmed that his company had seen similar effects from unfair Chinese competition. Wahlin said that despite his company’s growth since his father founded it in the 1960s, “we've also experienced severe challenges in the past decade due to unfair competition from Chinese state-owned companies.”

Wahlin identified Stoughton’s main competitor as China International Marine Containers, or CIMC, a Chinese state-owned enterprise. CIMC was founded in 1980 as a joint venture between state-owned China Merchants Group and the East Asiatic Company. Now, CIMC is one of the “big 3” of the Chinese shipping companies and it alone accounted for approximately 42% of global market share in the first quarter of 2021, according to FreightWaves. 

Wahlin described how unfair product dumping on the U.S. market by CIMC and other Chinese companies forced Stoughton to close down its container manufacturing division after the International Trade Commission made a negative finding against a complaint Stoughton filed in 2015. 

More recently, in 2021, the International Trade Commission ruled in favor of Stoughton, alongside its partners in the Coalition of American Chassis Manufacturers, against unfair trade practices by similar Chinese companies in the “chassis and subassemblies” industry, according to a press release by the company.

At the same time the roundtable was held in Wisconsin, Raimondo was returning from her four-day trip to China. Her meetings formed part of the administration’s ongoing efforts to “deepen bilateral discussions” after President Biden’s November 2022 meeting with Chinese President Xi Jinping.

The secretary’s trip followed three recent visits to China by high-ranking Biden Administration officials, including Secretary of State Antony Blinken and Climate Envoy John Kerry. Treasury Secretary Janet Yellen also visited the country in early July, holding meetings with a variety of top Chinese officials to relay “the Administration’s desire to seek healthy economic competition with China that benefits both economies.” According to the New York Times, Yellen “sought repeatedly during her trip to allay China’s concerns that the United States sought to decouple” its economy from China’s and downplayed recent actions like President Biden’s limits on high-tech exports as “diversifying critical supply chains.”

Secretary Raimondo followed with the key goal of forming new working groups with the Chinese to manage bilateral commercial ties and “reduce misunderstandings” about U.S. national security policies, a reference to Biden’s recent export restrictions. 

In a meeting with Chinese Minister of Commerce, Wang Wentao, Secretary Raimondo agreed to form a “commercial issues working group” and an “export control enforcement information exchange” with her Chinese counterpart, according to the readout provided by the Commerce Department. 

Before Raimondo’s trip to China, Bloomberg reported that the establishment of the working groups was an objective of the secretary’s visit. In response, Chairman Gallagher sent a letter in coordination with other Republican committee heads urging Secretary Raimondo to abandon the planned working groups with China. 

“[We] believe it is deeply inappropriate for the senior-most U.S. government official in charge of export controls to let the PRC influence in any manner—including be invited into working groups with China–U.S. national security controls on sensitive technologies,” the committee chairs wrote to the secretary. 

“Exchanging information about how we protect some of our nation’s most sensitive technology with our foremost adversary, the Chinese Communist Party, is a horrible idea,” Chairman Gallagher told Just The News after Secretary Raimondo’s trip. “The CCP will use this latest working group as they have all other working groups, to slow the speed of U.S. defensive actions while continuing their strategy of stealing U.S. IP, circumventing our export controls, and weaponizing ill-gotten critical technologies.”

Yet, the Commerce Department emphasized in its readout that Secretary Raimondo “underscored the importance of leveling the playing field for U.S. workers and businesses and ensuring the fair and transparent treatment of U.S. companies in China.” In addition, the secretary emphasized “the Administration’s commitment to taking actions necessary to protect U.S. national security.” 

To this end, in early August before Secretary Raimondo’s trip, President Biden signed an executive order to prohibit “United States persons from engaging, directly or indirectly,” in transactions that “involve covered national security technologies and products” which will be determined by the Treasury Secretary in consultation with the Commerce Secretary.  

This new executive order closely follows the overall Biden Administration policy that Secretary Raimondo shared with Chinese officials, specifically “that export controls are narrowly targeted at technologies that have clear national security or human rights impacts and are not about containing China’s economic growth.” In other words, a policy limit trade and investment where national security is implicated, yet keep broader bilateral trade open. 

While the administration certainly shares some of the select committee’s concerns about China’s unfair trade practices, the Chairman Gallagher believes that participating in working groups with the CCP undermines the administration’s national security efforts. Additionally, Secretary Raimondo’s visit did little to address the concerns raised by the Wisconsin roundtable about the Chinese threat to American manufacturing outside of the narrow scope of national security.