Testimony before the United States Senate Subcommittee on Economic Policy July 22, 2020.
Good afternoon, Mr. Chairman, Ranking Member Cortez Masto, and members of the subcommittee: It is an honor to be invited to testify before this subcommittee and its distinguished members. It is a great privilege to join you today to discuss the economic challenges the United States currently faces and will continue to face with regard to China.
Today there is great concern over China’s growing strength, its assertive behavior, and its potential to overtake the United States as the preeminent economic power in the world. Rising powers are often the cause of great concern to established powers like the United States. In the 1970’s and 1980’s, leaders in the United States looked on at Japan’s growing economy with worry. The U.S. imposed tariffs on semiconductors and other products that were the focus of dumping allegations. In the run-up to the 1984 presidential election, Walter Mondale “What do we want our kids to do? Sweep up around the Japanese computers?” A growing trade deficit with Japan and concerns over the low valuation of the yen amplified worries in Europe and the United States.
Unlike Japan, though, China does not accept the basic characteristics of the international system. More importantly, China does not share the same ambitions as Japan. In the recent past, China appeared to many observers to be a capitalist country operating within the global economic system with the common aspiration of expanding its economy and furthering its development. However, China’s political and economic apparatus is controlled by the state’s Communist Party. China must be thought of not as a developing nation working within the global economic system but as a communist country actively hostile to the current global economic system and world order. Because the Chinese government increasingly deploys the economic and financial tools at its command to undermine and subvert the American-led global system, every economic question about China is also a political one.