After China’s leaders opened their country to foreign investment in the early 1990s, US transnational companies flooded in searching for cheap labor and new markets. Foreign direct investment [FDI] in Chinese plants and factories, as well as portfolio investment in Chinese corporate shares, skyrocketed.[1] Established in tax-haven jurisdictions like the Cayman Islands, shell companies – “special purpose entities” – smoothed the way for foreign venture capital, hedge funds, and other speculative interests to take advantage of the boom.
For thirty years, US manufacturing and finance capital profited mightily from these arrangements.[2] By setting conditions on foreign investment and through other measures, meanwhile, China’s strong state strengthened and expanded its own economy. At the same time, continuing a trend which began during the late 1970s and 1980s, US working-class communities experienced prolonged devastation as high-wage jobs were relocated, exported, or simply eliminated. Anger and deepening political disaffection were the results.
Drawing opportunistically on this anger, the unexpected presidency of Donald Trump produced a sea-change in US-China relations. Though there’s plenty of informal everyday racism in the United States, to bring it to bear on political-economic objectives requires organizational work. To rationalize his “America First” economic policy toward China, Trump turned to anti-Chinese racism, for example by referring to Covid as the “Chinese virus” and the “Wuhan virus.”[3]
The Biden administration heightened the stand-off by supplementing Trump’s tariffs with export controls on state-of-the-art semiconductor technologies, AI, and quantum computing – citing both economic and national security.[4] Democrats and Republicans now combined a stepped-up racism with attacks on purported Chinese “subversion.” Laws restricting Chinese nationals from buying property were enacted by fifteen US states, with other such laws pending in twenty others. Academic scientists at US universities of Chinese descent experienced racial profiling and harassment, and many did not feel safe in their jobs; Chinese graduate students were barred from academic laboratories in Florida.[5] Violence inflicted upon Asian Americans rose during the Covid 19 pandemic, and persisted at a high level.[6]
China’s Xi Jinping reciprocated by according new emphasis to nationalistic rhetoric and with defiant economic policies toward the U.S.[7] A dominant political faction in the US then took US aggression up a notch.
Similar in this way to the anti-Communist witch-hunts conducted by Senator Joseph McCarthy’s Permanent Subcommittee on Investigations during the early 1950s; and, equally infamously, by the House Committee on Un-American Activities, between 1938 and 1975 – the vanguard of anti-Chinese organizational work is formed today by the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.
This Committee was established in January 2023, after a bipartisan vote of 365-65 in the House of Representatives. It possesses no lawmaking capacity; its power lies in its ability to hold hearings, foment publicity, and make legislative recommendations. Its chair, Republican Representative Mike Gallagher (WI) – a onetime Marine Corps intelligence officer – is also a member of the House Permanent Select Committee on Intelligence and the House Armed Services Committee. Twelve other Republicans and eleven Democrats round out the committee, whose formation was opposed by 23 House members on grounds that it was likely to spread anti-Asian hate.[8] The ranking Democrat, Rep. Raja Krishnamoorthi (IL), previously co-sponsored a bill with Gallagher that would ban TikTok nationwide. Key staff members possess experience that qualifies them to contribute to the anti-China frenzy. They have worked in government, corporate and university settings, in national security and intelligence, high technology, and China policy.[9]
The Committee’s inaugural hearing set its overall tone: “The Chinese Communist Party’s threat to America.” This was followed by (among others) hearings on the “The Chinese Communist Party’s Ongoing Uyghur Genocide”; “Leveling the Playing Field: How to Counter the Chinese Communist Party’s Economic Aggression”; “Risky Business: Growing Peril for American Companies in China”; “Systemic Risk: Chinese Communist Party’s Threat to U.S. Financial Stability”; “Discourse Power: The CCP’s Strategy to Shape the Global Information Space”; and “Transnational Repression: The Party’s Efforts to Silence and Coerce Critics Overseas.” The committee also generates research and documentation, and transmits coverage of its activities via an email list on a near-daily basis.
The bipartisan character of a federal congressional committee grants it overarching advantages in generating publicity (advantages that HUAC pioneered in exploiting). When the China Committee released a letter citing “grave concerns” about a research partnership between the University of California, Berkeley, China’s Tsinghua University and the city of Shenzhen, the New York Times reported studiously on the affair.[10] In December, drawing on its hearings and investigations conducted during 2023, the Committee released a long list of bipartisan legislative proposals to “reset” US economic relations with China “that it said would prevent the US from becoming the ‘economic vassal’ of its chief geopolitical rival.”[11] A battery of rightwing think-tanks, trade associations, and NGOs – as well as Robert Lighthizer, former President Trump’s Trade Representative and today one of Trump’s close advisors on trade and economic policy – endorsed the Committee’s hawkish policies.[12] Reuters, Foreign Policy, Politico, the Washington Post and the New York Times, accorded grave consideration to its findings – which would restrict investment and trade and withdraw favorable tariffs.[13] It was, in short, a hatchet-job: One could feel US policy being shoved toward increased bellicosity.
There’s no doubt that US-China relations need sober attention and adjustment. Capital flight, however, should have been stringently overseen and severely restricted when it began, decades ago – before its ravaging effects inflamed the racism and political reaction which pervade US politics today.
— Dan Schiller
[1] Thilo Hanemann, Daniel H. Rosen, and Cassie Gao (2016), Two-Way Street: 25 Years of US-China Direct Investment. New York: National Committee on U.S.-China Relations and Rhodium Group.
[2] Whereas, before the early 2020s foreign companies reinvested $25-$50 billion in profits they made each year in China back into their Chinese operations, as growth slowed there they pulled more than $160 billion in total earnings from China out of the country during six successive quarters through the end of September 2023. Jason Douglas and Weilun Soon, “Foreign Firms Pull Billions in Earnings Out of China,” Wall Street Journal, November 6, 2023.
[3] Historian Mae Ngai states that “the idea that China poses a threat to Euro-American civilizations remained just beneath the surface” during the decades since World War II – when the US repealed the 1882 Chinese exclusion law barring immigration and citizenship. Mae Ngai, The Chinese Question: The Gold Rushes and Global Politics (New York: W.W. Norton, 2021),314.
[4] Chris Miller, Chip War: The Fight for the World’s Most Critical Technology (New York: Scribner, 2022).
[5] Mae Ngai, “Ron DeSantis ‘Banned China From Buying Land in the State of Florida.’ How Did We Get Here?” New York Times, December 11, 2023; Jeffrey Mervis, “New Florida Law blocks Chinese students from Academic labs,” Science 12 December 2023 (thanks to Min Tang for this reference).
[6] Melissa De Witte, “A Long History of Insecurity, Fear, Vulnerability among Asian American Communities,” Stanford News, January 31, 2023.
[7] Chris Buckley, “China’s New “Helmsman’ Offers a Strident Nationalist Message,” New York Times, March 20, 2018; “Full Text of Xi Jinping’s speech on the CCP’s 100th anniversary,” Nikkei Asia, July 1, 2021; “Xi Jinping has nurtured an ugly form of Chinese nationalism,” The Economist, July 13, 2022; Ministry of Foreign Affairs of the People’s Republic of China, “US Hegemony and its Perils,” Xinhua, February 2023; Gregory C. Allen, “China Is Striking Back in the Tech War With the U.S.,” Time, July 20, 2023.
[8] Pramila Jayapal, “House Progressives on Opposition to Republican Select Committee on China,” January 10, 2023.
[9] Congressman Mike Gallagher, “Gallagher Announces Senior Staff Hires for Select Committee on the Chinese Communist Party,” February 8, 2023, Washington, D.C.
[10] Ana Swanson, “House Committee Targets U.C. Berkeley Program for China Ties,” New York Times, July 17, 2023.
[11] Michael Martina, “US committee offers 2024 legislative ‘blueprint’ for countering China,” Reuters, December 12, 2024.
[12] American Securities Association, Alliance of American Manufacturing, Uyghur Human Rights Project, National Council of Textile Organizations, Federation of American Scientists, Victims of Communism Memorial Foundation, Coalition for a Prosperous America, American Compass, America First Policy Action. Select Committee on the CCP, “Select Committee Adopts Proposal to Reset Economic Relationship with The People’s Republic of China,” December 12, 2023; Charlie Savage, Jonathan Swan and Maggie Haberman, “A New Tax on Imports and a Split from China: Trump’s 2025 Trade Agenda,” New York Times, December 26, 2023.
[13] Ana Swanson and Alan Rappeport, “Lawmakers Call for Raising Tariffs and Severing Economic Ties With China,” New York Times, December 12, 2023.
