The Chinese government is subsidizing a wide range of industries in an effort to dominate global markets and develop the ability to push the United States into crisis, according to the new chairman of the House Select Committee on the Chinese Communist Party.
Chinese companies produce 90 percent of commercial drones used in the United States and 77 percent of drones flown by hobbyists, according to commission data. And the Pentagon has been watching the battlefields in Ukraine for lessons about the combat value of unmanned aerial vehicles.
“We should not depend on the CCP for technology,” said Rep. John Moolenaar (R-Mich.), the panel’s chairman, referring to the Chinese Communist Party. “I believe it is all hands on deck to win this strategic competition and address the threats the CCP has to our way of life.”
On Wednesday, the committee will hear testimony about Chinese practices in the drone, semiconductor, shipbuilding and steel industries, “areas where the Chinese Communist Party is seeking dominance and exploiting vulnerabilities that we have in our supply chain,” Moolenaar said in a telephone interview.
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Among those present is Adam Bry, CEO of drone maker Skydio. The San Mateo, California-based company produces drones for both commercial and military use. Ukrainian officials are using Skydio drones, which can perform three-dimensional scans of surface terrain, to investigate possible war crimes, according to Bry’s LinkedIn page.
In March, Moolenaar’s panel, formally known as the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, called for “immediate action,” including new tariffs, to counter China’s drone dominance . The commission may propose legislative solutions later this year.
“We have seen China’s economic playbook repeatedly in steel, aluminum, glass, paper, consumer electronics and other industries. And that playbook has wreaked havoc on our American industrial base. And so we don’t want to sit idly by while they use that same playbook, especially as it relates to strategic sectors that could impact our economic and national security,” said Rep. Raja Krishnamoorthi (D-Ill.), the panel’s senior Democrat. .
China provides generous subsidies to companies in a variety of sectors. According to a study by the Center for Strategic and International Studies, the total support for beneficiary companies amounts to almost 2 percent of production. The $248 billion China spent on subsidies in 2019 exceeded its defense spending and was about double what the United States spent, according to CSIS.
Chinese steel mills, electric vehicle makers, semiconductor developers, solar panel makers, shipbuilders and oil producers all benefit from a vast web of state support. The central government provides cheap loans from state-owned banks, free or cheap land, discounted electricity, and cash support from sovereign wealth funds.
The United States has complained about Chinese industrial subsidies for years to little effect. World Trade Organization rules limit, but do not ban, subsidies.
The Trump administration planned to pressure Beijing to review its use of subsidies in negotiations aimed at following the 2020 “phase one” trade deal between the US and China. But that never happened. President Biden recently imposed 100 percent tariffs on Chinese electric vehicles in an effort to prevent subsidized auto imports from flooding the U.S. market.
America’s dependence on China for a range of goods and materials is the result of decades of bipartisan trade policy.
“I believe there was a misunderstanding on our country’s part, thinking that China would become more like the United States and that they would become more freedom-loving, more free-market oriented, and more based on the rule of law. And as China’s middle class grew, people expected their government to be more open,” Moolenaar said. “And unfortunately the opposite happened.”
