OPINION:
The recent midterms may not have yielded the results that many in the GOP expected. But if there’s a consistent message across voter polling, it’s that the American people remain deeply concerned about two things: jobs and China. In response, lawmakers in the next Congress must address China’s rise, particularly China’s stealthy use of American financial markets to subsidize its military and industrial growth.
Unfortunately, many in the GOP have long been devoted to free trade. And some Republicans still invoke President Ronald Reagan when pushing for new trade agreements. But Reagan’s loyalty was always with heartland America. As he wisely noted in 1985: “When governments subsidize their manufacturers and farmers so that they can dump goods in other markets, it is no longer free trade. … I will not stand by and watch American workers lose their jobs because other nations do not play by the rules.”
It’s time for the GOP to follow Reagan’s advice, particularly when China’s authoritarian regime represents exactly the sort of “evil empire” that Reagan considered a threat to global peace and prosperity.
Essentially, the GOP must pursue a commonsense approach to China that includes elements of both Reagan’s “peace through strength” policy and the “America First” goals of the recent Trump administration. That starts with recognizing how “normalized” trade with Beijing failed to produce the prosperity, democratic values and open society in China that many free traders had promised. In fact, Beijing’s egregious treatment of Uyghurs and other minorities — including more than 80,000 Uyghurs sent to forced labor between 2017 and 2019 alone — makes clear that Beijing isn’t interested in greater freedom.
The United Nations recently confirmed China’s “crimes against humanity” — including Uyghur slave labor. But if such human rights abuses don’t pique the concerns of lawmakers, there’s also China’s military posture toward Taiwan as well as its expanding presence in the Pacific and Latin America.
To counter this, Congress must tackle Beijing’s access to U.S. financial markets, including passive investment products such as exchange-traded funds (ETFs) and mutual funds. This is a key means by which Beijing continually funnels billions of American investment dollars to Chinese companies.
It’s now a national security issue — that Wall Street continues to trade funds that have significant exposure to companies owned or controlled by the Chinese Communist Party (CCP). Particularly concerning is the federal employee Thrift Savings Plan (TSP), which contains at least 22 China-only funds. To counter this, Congress must pass legislation that will instruct the Federal Retirement Thrift Investment Board (FRTIB) to remove adversarial Chinese firms from the investments of federal workers, military families, veterans and even members of Congress.
Unfortunately, there are plenty of other loopholes in U.S. sanctions policy, since federal agencies often work at cross-purposes when identifying “bad actors” in China. Sanctions harmonization legislation is urgently needed to ensure that when a federal department or agency identifies a particular Chinese entity, it triggers meaningful action — including reviews by other departments and agencies in order to compel divestment.
Congress must also draft legislation regarding A-shares to remove Chinese companies from ETFs and other financial products. Adding robust requirements for transparency, disclosure and investor protection means that U.S. investors will know where their money is actually going. Similarly, Congress must aggressively oversee the implementation of the Holding Foreign Companies Accountable Act (HFCAA) to expand the protocols required for publicly listed Chinese companies.
Beijing’s human rights violations must be addressed as well. Congress should expand on the work begun in December 2020 to identify corporate bad actors and link them to capital market sanctions. Specifically, Republicans should press for a Chinese Corporate Human Rights Abusers Bill — to increase the number of Chinese companies sanctioned under U.S. law.
The GOP must stop thinking of China as a market opportunity — with endless capital flowing to the CCP. This is reckless and shortsighted, particularly given Beijing’s aggressive posture toward Taiwan and America’s excessive dependence on high-tech imports.
The bottom line is that Congress must work to end U.S. investor funding of Chinese companies — particularly those tied to Beijing’s military agenda. This is what the American people want, and the GOP should no longer be seen as the party that talks tough on military strategy but actually profits from investment in China.
• Robby Stephany Saunders is the national security adviser at the Coalition for a Prosperous America. She has previously served as a senior adviser in the State Department, the House of Representatives and the Senate.
Please read our comment policy before commenting.