[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
CHINA'S EXPANDING INFLUENCE IN EUROPE AND EURASIA
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HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE, EURASIA, ENERGY, AND THE ENVIRONMENT
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
May 9, 2019
__________
Serial No. 116-35
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Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
ELIOT L. ENGEL, New York, Chairman
BRAD SHERMAN, California MICHAEL T. McCAUL, Texas, Ranking
GREGORY W. MEEKS, New York Member
ALBIO SIRES, New Jersey CHRISTOPHER H. SMITH, New Jersey
GERALD E. CONNOLLY, Virginia STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida JOE WILSON, South Carolina
KAREN BASS, California SCOTT PERRY, Pennsylvania
WILLIAM KEATING, Massachusetts TED S. YOHO, Florida
DAVID CICILLINE, Rhode Island ADAM KINZINGER, Illinois
AMI BERA, California LEE ZELDIN, New York
JOAQUIN CASTRO, Texas JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York BRIAN MAST, Florida
TED LIEU, California FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLPS, Minnesota JOHN CURTIS, Utah
ILHAN OMAR, Minnesota KEN BUCK, Colorado
COLIN ALLRED, Texas RON WRIGHT, Texas
ANDY LEVIN, Michigan GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey STEVE WATKINS, Kansas
DAVID TRONE, Maryland MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas
Jason Steinbaum, Democrat Staff Director
Brendan Shields, Republican Staff Director
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Subcommittee on Europe, Eurasia, Energy, and the Environment
WILLIAM KEATING, Massachusetts, Chairman
ABIGAIL SPANBERGER, Virginia ADAM KINZINGER, Illinois, Ranking
GREGORY MEEKS, New York Member
ALBIO SIRES, New Jersey JOE WILSON, South Carolina
THEODORE DEUTCH, Florida ANN WAGNER, Missouri
DAVID CICILLINE, Rhode Island JIM SENSENBRENNER, Wisconsin
JOAQUIN CASTRO, Texas FRANCIS ROONEY, Florida
DINA TITUS, Nevada BRIAN FITZPATRICK, Pennsylvania
SUSAN WILD, Pennsylvania GREG PENCE, Indiana
DAVID TRONE, Maryland RON WRIGHT, Texas
JIM COSTA, California MIKE GUEST, Mississippi
VICENTE GONZALEZ, Texas TIM BURCHETT, Tennessee
Gabrielle Gould, Staff Director
C O N T E N T S
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Page
WITNESSES
Le Corre, Philippe, Nonresident Senior Fellow, Europe and Asia
Programs, Carnegie Endowment for International Peace........... 7
Segal, Stephanie, Deputy Director and Senior Fellow, Simon Chair
in Political Economy, Center for Strategic & International
Studies........................................................ 18
Kendall-Taylor, Andrea, Senior Fellow and Director, Transatlantic
Security Program, Center for a New American Security........... 27
Cooper, Zack, Research Fellow, American Enterprise Institute..... 38
APPENDIX
Hearing Notice................................................... 69
Hearing Minutes.................................................. 70
Hearing Attendance............................................... 71
RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD
Resposnses to questions submitted from Representative Pence...... 72
Resposnses to questions submitted from Representative Spanberger. 75
ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD
Channeling the Tide Report....................................... 78
CHINA'S EXPANDING INFLUENCE IN EUROPE AND EURASIA
Thursday, May 9, 2019
House of Representatives
Subcommittee on Europe, Eurasia, Energy and the Environment
Committee on Foreign Affairs
Washington, DC
The subcommittee met, pursuant to notice, at 10:01 a.m., in
room 2167 Rayburn House Office Building, Hon. William Keating
(chairman of the subcommittee) presiding.
Mr. Keating. The hearing will come to order. We are in a
different room, I can tell just from the microphones. It is
reverberating. The subcommittee is meeting today to hear
testimony on China's Expanding Influence in Europe and Eurasia.
Without objection, all members will have 5 days to submit
statements, questions, extraneous materials for the record,
subject to the length and limitation in the rules. I will now
make an opening statement and then turn it over to the ranking
member for his opening statement.
We are holding this hearing today on China's engagement in
Europe and Eurasia as part of a series of hearings being held
within the Foreign Affairs Committee this week, all of them on
China. I am pleased that the committee is taking this step in-
depth because I firmly believe that failing to develop a
strategy for engaging with an increasingly competitive China,
we will be confronted with one of the greatest security threats
of our generation.
The goal of today's hearing is not to preemptively
disqualify Chinese investments as illegitimate. Competition
after all is the bedrock of a successful capitalist system.
However, a core value of Western democratic countries is also
that competition must be fair and everyone must play by the
same rules. So as we consider the range of China's economic and
financial endeavors across Europe and Eurasia today, that is
the principle that we must keep in mind. And the question we
must ask is this, is China playing by the rules? Unfortunately,
the overwhelming evidence across the range of China's global
dealings indicate, really, that at this time they are not.
In today's hearing, we will be able to assess China's
investment in Europe and Eurasia through the Belt and Road
Initiative and by Chinese companies, with an eye toward
understanding the risks of accepting these investments when
China does not adhere to the rules and abide by principles of
free and fair competition. There are real security and economic
risks if we do not take this opportunity to reaffirm the rules-
based international order.
And whether it is using Chinese companies to build Europe's
5G networks or investments in ports and critical
infrastructure, there are real security concerns for NATO and
cooperation with our allies. And with the lack of transparency
around these deals and evidence of predatory lending, the
economic risks are clear. Further, we see that China uses their
newfound economic ties for leverage within Europe to avoid
criticism for their human rights record and other concerning
policies.
All of this undermines our shared values around democracy
and the rule of law and the principles and cooperation that we
have made in the U.S. and share with our allies and have shared
for more than 70 years.
Today is an important day because today is Europe Day, May
9th, the anniversary of the Schuman Declaration which first put
forth the idea of a unified Europe on peace. We all can
appreciate and celebrate that today. It is an important day not
just for Europe, but for us in the United States as well,
because a united Europe is a stronger Europe. These are our
allies and closest partners in security and in business, and
when Europe is stronger, we are stronger.
For our part, we can do more here in the United States to
enforce our standards and make sure China is playing by the
rules here at home. This is our own companies that embrace free
and fair competition and make our economy stronger and they are
not pushing and going to be pushed out by the unlevel playing
field that China has so far been involved in, so that we do not
have to also leave ourselves more vulnerable to cyber and
security threats.
Europe must do the same, and I am very encouraged by the
screening mechanism framework which we will hear something
about I hope that was passed quickly by the EU and went into
force this year. This is a critical step and we should continue
to work with the EU and our allies and partners across the
region to harmonize our screening mechanisms and share
information on how to watch for risks associated with these
Chinese investments.
We should also recommit to working together to offer
alternatives to Chinese investments. Countries are not wrong to
want to have investments in important sectors in their
economies, and we have to make sure that alongside of working
with governments to avoid predatory and unfair Chinese
investments, we are also there to offer safe alternatives to
make our economies and our alliances stronger.
The U.S. took an important step in this regard passing the
BUILD Act last year and Europe has announced its similar
connectivity strategy and spur for greater investment and
projects around the world. This is something we can work on, I
believe, together not just independently. We can do more.
A troubling poll earlier this year in Germany found that 43
percent of Germans thought China was a more reliable partner
than the United States on economic partnerships. At a time when
Russia and China are actively working to chip away at our
alliance with Europe and undermine the values and rules that we
have brought for greater security and prosperity for all of us,
this is a moment where we must reaffirm our alliance, recommit
to trade, recommit to investment agreements and reinforce our
shared standards for rule of law. That is how we operate from a
position of strength in responding to threats from Russia and
China.
So I would like to thank our witnesses for being here today
so we can examine these issues carefully and our policy options
for moving forward in this way. Now I will turn to the ranking
member for his opening statement.
Mr. Kinzinger. Well, I thank the chairman. And I thank the
witnesses for being here today. And I want to apologize up
front, I have another hearing in Energy and Commerce I will
have to leave for, but that does not belittle the importance of
this issue.
And I think it is important to note that there is no
daylight between the Republicans and Democrats, the chairman
and I, on this threat, this concern. A lot of our differences
get a lot of media attention, but there is way more that unites
us than actually divides us, and so that is important to note.
When President Xi assumed power in 2013, he set China on an
ambitious path to increase its regional control while expanding
its global reach. During the cold war, we had this great battle
of ideas between capitalism in the West and Communism in the
East. This has shifted to a battle between democracy versus
authoritarianism and the United States must respond
accordingly.
We have seen the CCP conduct influence operations around
the world to affect how media, business, academia, and
politicians view the Chinese threat. Whether it be Chinese,
Russian, or ISIS ideological ideas, we should not be brushing
them off without a second thought. Yet this is what many
countries around the world are doing when it comes to China's
debt-trap diplomacy. Through State-funded projects such as Made
in China 2025 and the Belt and Road Initiative, the CCP has
found a way to use capitalism to benefit the spread of their
authoritarian system.
By offering incentive-laced ideas, China has gained access
to European markets which have historically shied away from
their system of governance. China has had over 350 mergers,
investments, and joint ventures across Europe. In many cases,
they can access critical information about how these systems
work or even steal sensitive IP. More than half of China's
investments in Europe is in the largest economies, Germany,
United Kingdom, France, and Italy. What concerns me though is
that these are linchpins in our NATO alliance.
China has now passed the U.S. as Germany's largest trading
partner and they are closing the gap for the EU as a whole.
They have also bucked American concerns and have stated their
willingness to integrate their systems with Hauwei's 5G
networks which compromise our intelligence sharing. In the U.K.
alone, China has invested over 70 billion. They are trying to
get a foot in the door in anticipation of any Brexit deal that
sees the U.K. leaving the EU.
Italy is becoming the first G7 country to sign a memorandum
of understanding with China to participate in the BRI. While
not binding, it is a symbolic win for China to secure such a
significant nation. Chinese companies now either fully own or
have sizable investments in Greek and Portuguese ports, a
British and Portuguese energy system, and airports in London,
Frankfurt, and Toulouse. As a result, Chinese influence has
pushed countries like Greek and Hungary to water down EU
statements regarding China's illegal island-grabbing in the
South China Sea.
Following a massive flow of Chinese investment, the Czech
Republic's President stated that his country would become an
unsinkable aircraft carrier of Chinese investment expansion.
Luckily, amidst growing American and European concerns over
China's intention, the CCP has softened their tone and
decreased foreign investment over the past few months. By no
means do I believe that they will back down. This gives
Congress and the administration time to engage with our
European partners to formulate a plan as we must be ready for
China's next investment push.
Again, I thank the chairman for convening this extremely
important hearing today and I thank the panel for your
commitment in testifying for us, and I yield back.
Mr. Keating. The chair thanks the ranking member.
I will now introduce our witnesses. Philippe Le Corre is a
Nonresident Senior Fellow in the Europe and Asia Programs at
the Carnegie Endowment for International Peace and an affiliate
with the project on Europe and the transatlantic relationship
at the Harvard Kennedy School Belfer Center for Science and
International Affairs. He is a former Special Assistant and
Counsellor for international affairs to the French Minister of
Defense. And thank you very much for being here, Mr. Le Corre.
Stephanie Segal is the Deputy Director and Senior Fellow,
Simon Chair in Political Economy at the Center for Strategic &
International Studies, and the former codirector of the East
Asia Office at the United States Department of the Treasury.
Thank you for being here.
Dr. Andrea Kendall-Taylor is the Senior Fellow and Director
of Transatlantic Security Programs at the Center for New
American Security and a former Deputy National Intelligence
Officer for Russia and Eurasia at the National Institute
Counsel and the Office of Director of National Intelligence,
thank you.
Dr. Cooper, Dr. Zach Cooper is a Research Fellow focusing
on U.S.-China strategic competition at the American Enterprise
Institute. He is also an Adjunct Assistant Professor at
Georgetown University with an Associate from Armitage
International and a National Asia Research Fellow. He
previously served at the National Security Council and at the
Department of Defense.
I would like to thank all the witnesses for being here
today and look forward to your testimony. You will have the
opportunity, although we are not going to put a clock over your
head too harshly, to limit your testimony to the range of 5
minutes. Without objection, your prepared written statements
will also be part of the record. As I stated at the outset,
members will be able to forward other questions in the future
for your response.
I will now go to Mr. Le Corre for his statements.
STATEMENTS OF PHILIPPE LE CORRE, NONRESIDENT SENIOR FELLOW,
EUROPE AND ASIA PROGRAMS, CARNEGIE ENDOWMENT FOR INTERNATIONAL
PEACE; STEPHANIE SEGAL; ANDREA KENDALL-TAYLOR; AND, ZACK
COOPER, RESEARCH FELLOW, AMERICAN ENTERPRISE INSTITUTE
STATEMENT OF PHILIPPE LE CORRE, NONRESIDENT SENIOR FELLOW,
EUROPE AND ASIA PROGRAMS, CARNEGIE ENDOWMENT FOR INTERNATIONAL
PEACE
Mr. Le Corre. Thank you very much, Mr. Chairman, Ranking
Member, distinguished members of this committee, thank you for
inviting me for the second time in a year. And I have to say,
this hearing takes place in the context of a shift in the
attitudes of both the United States and Europe toward China's
economic and political rise.
For the past 2 years, the U.S. has taken a tougher stance
in dealing with China especially in the field of economic
reciprocity and violations of international norms of
intellectual property. More broadly, Washington has taken a
consensual bipartisan approach vis-a-vis Beijing, which now
appears as the main threat to American interests.
But I also want to stress that Europe, the Europe we are
dealing with today is not the one we were dealing with 3 years
ago in this particular context. True, Europe remains divided
vis-a-vis the People's Republic of China, but for the past 3
months a number of important events and developments have taken
place.
First and foremost, on March the 12th, the European
Commission published a document called the ``EU-China: A
Strategic Outlook''. The tone and the language of this document
is quite different from what we are used to, those of us
looking at European documents. It labels China as a systemic
rival and it lists all the issues that are basically in the way
of a smooth relationship between China and the EU. For example,
the role of State-owned enterprises, intellectual property
issues, the lack of market access in China, 5G, and generally
different values and issues that have become a problem, and
also in the eyes of European countries.
Second, in March again, President Xi Jinping visited
Europe. He visited Italy and he visited France. In Italy, yes,
he did sign an MOU with the Italian Government on the Belt and
Road Initiative, but it is only an MOU and I will come back to
that in a minute. But in France he was welcomed not just by
President Macron, but also by Chancellor Merkel and the
president of the European Commission, Mr. Juncker.
This is a far cry from the usual attitude, the divided
attitude of Europeans vis-a-vis China. Of course, you could
argue that the Chinese Prime Minister who later came to Europe
and countered the 16 countries, the 16+1 mechanism, but not
much came out of this except perhaps, you know, it became the
17+1.
But I think the most important thing to remember is that
there is a unified position toward China at least represented
by the EU. The EU-China annual summit took place on April the
11th in Brussels in the presence of Premier Li Keqiang, and it
concluded with a joint communique that sets a date for
comprehensive agreement on investment that is also quite
important.
And fourth and last, but not least, in April again, the EU
introduced a new screening mechanism as you were referring to,
Mr. Chairman, on foreign investment after less than 2 years of
internal discussions. Despite divisions within Europe, no EU
country, in the end, opposed this new nonbinding scheme.
At the same time, Chinese investments in the EU have
declined considerably after peaking in 2016. This is mainly due
to restrictions of capital outflows from China and also the
fact Chinese investments are mainly in the area of technology
and infrastructures, particularly as part of President Xi
Jinping's signature project, the BRI. I mean the BRI by the way
targets not just Europe, but pretty much every continent except
North America. It is true that 12 European leaders attended the
BRI forum in Beijing, but neither the German Chancellor or the
French President took part. The EU was represented, but not by
its most senior officials.
Division remains, but countries in Europe have become aware
of China's discourse and feel the need to protect themselves
through the European Union. The EU today remains one of the
strongest advocates of liberal and democratic values in the
world, many of them shared in America, which is why, Mr.
Chairman, distinguished members of the committee, I would urge,
in conclusion, that Congress does all it can to collaborate
with Europe to build consensus over the immediate security,
technological, and geoeconomic threats of China's expansion.
As the current U.S. administration continues to send mixed
messages to America's oldest and most reliable allies, it is
critical that Congress takes a leading role in reinforcing a
transatlantic dialog on China's global influence. Thank you.
[The prepared statement of Mr. Le Corre follows:]
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Mr. Keating. Thank you, Mr. Le Corre, for those comments
and look forward to coming back to you with some questions
about some of those comments.
Ms. Segal, thank you for being here. You may proceed.
STATEMENT OF STEPHANIE SEGAL, DEPUTY DIRECTOR AND SENIOR
FELLOW, SIMON CHAIR IN POLITICAL ECONOMY, CENTER FOR STRATEGIC
& INTERNATIONAL STUDIES
Ms. Segal. Thank you, Mr. Chairman, Mr. Ranking Member,
members of the committee. Thank you for the opportunity to
contribute to today's hearing. I have submitted my full written
statement for the record. My comments today will focus on
Chinese investments in the context of the Belt and Road
Initiative and China's strategy to become a global innovation
leader. I will conclude with a few thoughts on cooperation
between the United States and Europe.
While China's going out strategy can be traced back to the
1990's, initiatives under President Xi have focused on
strategic and geopolitical goals. These include One Belt and
One Road, the Asian Infrastructure Investment Bank, and Made in
China 2025. One Belt, One Road, renamed the Belt and Road
Initiative, or BRI, is China's most ambitious going out effort
to date. Over 125 countries have signed BRI cooperation
documents and, in April, Italy became the first G7 country to
sign on.
Here are the concerns with China's investment and critical
infrastructure and recipient countries' excessive reliance on
debt to finance such investments. To date, European interests
under BRI are most directly implicated in Central and Eastern
Europe. Through its 16+1 format, recently expanded to 17+1 with
Greece's participation, China has increased its activities in
the region. Since its inception, criticism of BRI has mounted,
particularly in the areas of transparency and debt
sustainability. One cautionary example is Montenegro where a
Chinese-financed highway project has sent the country's debt
soaring.
Moving to another Chinese initiative, Made in China 2025
aimed to establish China as a global innovation leader. A
report from the Council on Foreign Relations notes that Chinese
companies have been encouraged to invest in foreign companies
to gain access to advanced technology. Here are the concerns
with China's acquisition of advanced technologies and the
potential for China to gain unfair competitive advantage that
will distort global markets. In response to external pressure,
China has downplayed the formal Made in China 2025 slogan, but
there is little doubt that China will continue pursuing
policies that foster homegrown innovation.
In recent months, Europe has sharpened its approach to
China. As Philippe just mentioned, in March, the European
Commission delivered a strategic outlook to the European
Parliament and the European Council. Significantly, that report
refers to China as an economic competitor and a systemic rival
promoting alternative models of governance, echoing language
from the National Security Strategy of the United States.
Recently, Europe has taken steps which reflect the growing
appreciation in Europe that the balance of challenges and
opportunities presented by China has shifted. As we mentioned,
the new EU-wide foreign investment screening mechanism mandates
information sharing in certain circumstances and incentivizes
all EU members to adopt investment screening mechanisms.
A recent report attributed last year's decline in foreign
investment from China in Europe to greater scrutiny in
recipient countries as well as the macro conditions in China.
There is also focus on export controls to address potential
risks from the sale or licensing of sensitive technology. As
indicated in the Commission's strategic outlook, European
policymakers are considering modalities to address national
security risks stemming from outbound investment and emerging
technologies, in particular to address the challenges of
different jurisdictions between member States, the European
Union, and other advanced technology-exporting countries.
Regarding trade and the WTO, Europe is calling on China to
adhere to stronger disciplines on industrial subsidies and is
also working in the trilateral context with the United States
and Japan. Just a few comments on cooperation, cooperation
between the United States, Europe, and other like-minded
countries maximizes the chances for shaping China's behavior
and protecting U.S. interests.
Coordination with Europe is essential to ensure problematic
investments or technology transfers are not simply diverted
from one country to another. Such cooperation can take the form
of greater information sharing as well as ex ante coordination
on possible listings of sensitive technology. With respect to
trade, cooperation to discipline China's behavior in the area
of subsidies, self-declaration as a developing country, and
digital issues will be necessary to shape global outcomes.
Separate but related, I would like to add that the
imposition of tariffs, including on U.S. allies on national
security grounds, undermines trust in the United States as a
reliable partner. China has capitalized on U.S. rhetoric and
actions. To reset the narrative, the United States should
remove steel and aluminum tariffs imposed under Section 232,
and end the threat of new tariffs on autos and auto parts,
especially on U.S. allies and partners.
Again, I thank the subcommittee for the opportunity to
offer these thoughts and I look forward to answering members'
questions.
[The prepared statement of Ms. Segal follows:]
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Mr. Keating. Thank you, Ms. Segal.
Dr. Kendall-Taylor?
STATEMENT OF ANDREA KENDALL-TAYLOR, SENIOR FELLOW AND DIRECTOR,
TRANSATLANTIC SECURITY PROGRAM, CENTER FOR A NEW AMERICAN
SECURITY
Ms. Kendall-Taylor. Chairman Keating, distinguished members
of the subcommittee, thank you for the opportunity to be here
to discuss China's influence in Europe. I want to begin my
statement by briefly highlighting four overarching ideas that I
think should shape Washington's approach to competing with
China and Europe.
First, is the issue of prioritization. As the United States
develops its approach to Europe, it must recognize that in the
coming decade China will be our No. 1 challenge. To effectively
compete with China, the United States will need strong and
cohesive relations with Europe. On the security front, the
United States and Europe must divide and conquer. The U.S.
needs Europe to do more to provide for its own security and
defense to free up Washington to focus on the Indo-Pacific.
Outside the security realm, the United States and Europe
must stand together. The U.S. needs Europe as a partner to
confront China on economic, democracy, and human rights issues
globally. This arrangement will require a new deal with Europe.
Washington will have to accept that greater European autonomy
will inevitably transform the transatlantic alliance. And,
finally, Washington must realize that now is the time to engage
Europe and China. As has been said, in the last 2 years and in
particularly in recent months, Europe has grown more attuned
and concerned about China.
So what does China seek to accomplish in Europe? First and
foremost, China is pursuing its economic interest, but it is
looking to translate its investment into greater political
influence. China seeks to use its investment to secure support
for China's interests or at least prevent the EU from taking a
unified position that is at odds with China.
China is also looking to undermine Western cohesion, weaken
democracy norms, and is looking to access European innovation
including technologies, intellectual property, and talent that
it can use to upgrade its industrial capacity. China goes about
advancing these interests in a number of ways. I elaborate on
these tactics in my written statement, but they include things
like using divide-and-rule tactics to weaken European cohesion,
leveraging U.S.-Europe fissures, and constructing networks
among European politicians, businesses, media, think tanks, and
universities to create support for pro-China positions.
I also want to call attention to one additional tactic and
that is the growing synergy between China and Russia. Relations
between China and Russia are deepening. Although their
approaches to Europe are different and seemingly uncoordinated,
taken together they are having a more corrosive effect than
either would have singlehandedly. So what will China's growing
influence mean for U.S. interests? The bottom line is that
China's economic influence in Europe will translate into
political leverage. This will affect U.S. interests in a number
of areas like U.S. prosperity and competitiveness. It will
affect global values and norms from rules governing data and
privacy to internet freedom, AI, and governance.
And it is on the issue of democracy where the synergy
between China and Russia is especially problematic. Russia's
assault on democratic institutions weakens some actors'
commitment to democracy, but it is the alternative model of
success that China presents and especially the revenue that it
brings that gives countries the capacity to pull away from the
West.
China's rising influence also has implications for NATO.
China does not pose a direct military threat to NATO, but
Beijing's growing presence will interfere with NATO mobility.
China's investments in European ports and its construction of
rail lines in particular could hamstring NATO's ability to move
troops and equipment across Europe. This is yet another area
where China-Russia synergy is concerning. It is not hard to
imagine a scenario, for example, where China uses its control
of key infrastructure like ports and rail to delay a NATO
response to Russian aggression.
And, finally, is 5G. Allowing China to build Europe's 5G
network would introduce systemic risk, making Europe more
vulnerable to things like intellectual property theft, and
weaken data privacy, things that enable China to continue to
steal the know-how that enhances its competitiveness.
So what can be done? There are number of approaches the
U.S. can take to check Chinese influence. The U.S. should
enhance cooperation and coordination with Europe to combat
China's unfair and illegal trade and investment practices. By
combining our shared heft, we can exert much greater leverage
on the Chinese.
The U.S. should engage on norms in new spaces, cyber,
artificial intelligence, and space. The U.S. should encourage
EU and European defense and security initiatives that would
better enable the United States to prioritize the Indo-Pacific.
To counter the adverse effects of the Belt and Road, Washington
should capitalize on growing disillusion with the Belt and
Road, particularly in Central and Eastern Europe, and work with
Europe to provide alternatives to Chinese investment in Europe
and beyond.
And, finally, Congress should enable the U.S. Government to
consider China and Russia together as well as separately. Given
the trend toward deepening China-Russia relations and the
significant implications that a more robust partnership would
pose to U.S. interests, policymakers will have to account for
the ways in which these players are working together.
In sum, it is clear that the United States must do more to
stand up to Chinese threats to U.S. interests, but to do that
effectively Washington must work with its European allies.
Thank you.
[The prepared statement of Dr. Kendall-Taylor follows:]
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Mr. Keating. Thank you very much.
Dr. Cooper?
STATEMENT OF ZACK COOPER, RESEARCH FELLOW, AMERICAN ENTERPRISE
INSTITUTE
Mr. Cooper. Chairman Keating and other distinguished
committee members, it is an honor to join you today. I believe
that the growing transatlantic divide on China policy is a
serious challenge not just for our policy on Europe, but also
for broader American grand strategy. Our greatest strength in
the competition with China is our global network of allies and
partners and increasingly we are finding that network put under
pressure.
The good news is that there is an emerging and largely
bipartisan consensus in Washington on the challenges that the
Chinese Communist Party poses. The bad news, however, is that
this consensus is not yet shared with many of our European
allies. Furthermore, there is still no agreement either on this
side of the Atlantic or the other or on the Pacific as well
about what kind of China strategy we should be pursuing.
Although the United States has identified China as a
strategic competitor, it has not yet adopted a clear set of
objectives for that competition. In my written testimony, I
describe three areas that are undermining transatlantic unity
on China, Chinese investments with noncommercial aims, targeted
technology acquisition, and coercive economic Statecraft. Most
notably, our European allies, as has been discussed, have
largely chosen a strategy of mitigation rather than exclusion
with regard to the Belt and Road Initiative and 5G
infrastructure as evidenced by recent decisions in London,
Berlin, Rome, and elsewhere.
During a recent trip to Europe to discuss Chinese
activities on the continent, European leaders expressed concern
and frustration with some U.S. policies. In particular, they
singled out the administration's criticism of allies and its
embrace of unpredictability as sources of concern. These
divisions make clear that we must do more to fashion a united
transatlantic strategy on China.
And with this in mind, I want to suggest three ways in
which the Congress could help bridge the transatlantic divide
on China. First, Congress could work with the administration to
empower our allies and partners to better mitigate the risks of
Chinese investment and broader economic Statecraft. Many
countries are choosing to accept Chinese investments and
infrastructure and technology regardless of U.S. objections. We
may not agree with these decisions, but we should be helping to
mitigate the risks. Therefore, Congress could work with the
administration to help provide greater technical assistance to
allies and partners, not just in Europe but elsewhere, to help
them manage Belt and Road and 5G technology challenges.
Second, Congress could encourage cooperation with allies
and partners on an overall China strategy with clear aims and
objectives. We should forge a common position on critical
issues such as intellectual property theft, market access,
technology standards, foreign investment review, and human
rights concerns. I am encouraged that the House Foreign Affairs
Committee is holding five hearings this week on China alone and
its role globally, and U.S. strategy on China in particular,
and I think including allies and partners in these discussions
is absolutely critical.
Third, Congress could continue to forge a bipartisan
consensus on China and increasingly to try and broaden that
consensus by including the American people in the debate. The
BUILD Act, FIRRMA, and the Asia Reassurance Initiative were all
important signals of America's ability to execute a coherent
long-term strategy. But polls suggest that a gap is emerging
between views in Washington and those in much of the rest of
the country. Discussing China policy more directly with
constituents would ensure that our policies are supported not
just inside Washington, but outside as well.
And, finally, while we must be clear-eyed about the
challenges that China poses. We should always acknowledge that
our concerns have to do with the actions of the Chinese
Communist Party, not with the aspirations of the Chinese
people. Upholding the principles of freedom, democracy, and
rule of law will strengthen our united position and send a
clear signal about the seriousness and the sustainability of
our strategy.
So I thank you for holding this important hearing and
providing me the opportunity to testify, and I look forward to
your questions.
[The prepared statement of Mr. Cooper follows:]
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Mr. Keating. Thank you, Dr. Cooper. I will now recognize
myself for 5 minutes for questions.
And I would like to get back to what I mentioned in the
opening statement that about the screening process that is now
underway, and in particular what can the U.S. do, if anything,
to be more influential in that process themselves so it is just
not a unilateral EU process in screening?
Mr. Le Corre?
Mr. Le Corre. Thank you, Mr. Chairman. I do believe the
lack of information has been an issue for the past few years
when it came to Chinese investments in Europe and
infrastructures, especially in ports, airports fields. I do
believe there is a lack of knowledge about the political system
in China as well as the economic strategy. The Belt and Road
Initiative which has been mentioned a few times already today
is still a fairly vague project that originally targeted
Europe, but now is looking at across the world.
And I think some of the sort of work that has been done in
Washington and other parts of America on sort of looking
forward to this new superpower that is China, it could be, you
know, it could be shared with Europeans where the level of
sinology, unfortunately, is not what it was. So, generally, I
think more information on what China is about and on the risks
in the technology fields, for example, as well as
infrastructures, what it would mean to have, you know, the Suez
Canal----
Mr. Keating. So, essentially, it is information from us
that----
Mr. Le Corre. Yes.
Mr. Keating [continuing]. Would be helpful as well.
So, I am just curious too, just anyone that might want to
comment on this. It was referenced about Italy's decision as
just being a memorandum of understanding and trying to downplay
that. But what risks does that take and with Italy moving
forward? Anyone that wants to jump in on that would be helpful.
Dr. Cooper?
Mr. Cooper. Yes, so I was just in Rome right after the
decision on the memorandum of understanding was made, and I
think Philippe is absolutely right that, yes, it is just a
memorandum of understanding and the real question will be what
kinds of projects do we see the Italians engaging in.
But I think the question that many of us should be asking
is whether the Italian Government has the support it needs to
actually be able to provide the oversight for those projects.
And when I was in Rome, there were a lot of questions asked
about the government's ability to do that and so this is where
I think we can be very helpful. We know a lot about some of the
challenges we have seen with Belt and Road, with the lack of
transparency, with environmental protections, financial
arrangements, and we should be helping our allies like Italy
that are engaging in Belt and Road projects so that they make
sure that, fine, they sign a memorandum of understanding, but
let's actually make sure that the projects they get are high-
quality, high standards, just like the projects that we would
expect from any other country.
Mr. Keating. Yes. It was mentioned too, if I could just
skip topics too a little bit, would the reaction--I was just in
Europe, I think, about 6 weeks ago, myself. And I cannot
understate the feeling of the European leaders--I do not think
we recognize that fully--with the tariffs imposed. Not just the
tariffs themselves, but the rationale that was given that they
are a security risk of the U.S. and they are taking that to
heart, frankly, and how deep is that fissure?
And, No. 2, if we move ahead with automobile tariffs or
something, how much more deeply will the fracturing occur
between the U.S. and the EU countries in that respect and what
will be the ramifications, in your opinion?
Ms. Segal?
Ms. Segal. So, if I could also go back just to the question
you asked about the concern or the implications of Italy
signing the MOU, I would like to highlight the fact that it is
a G7 country. And when we think about different mechanisms for
coordination, to have what could be a potentially dissenting
voice in the G7, I think, is another thing that is problematic.
As far as the impact of tariffs and how deeply it is felt,
I have had a similar impression in our trips to Brussels and
also to member States and I think, there, it is important to
recognize that when Europe looks at the risks stemming from
China, they may have less of a focus on national security risks
as compared to the sentiment here in the United States, but
there is more of an emphasis on the economic security risks.
And if their main concern with China is its ability to use
its State-driven model and to push that out to distort global
markets and trading relationships, the fact that the United
States is then relying on tariffs imposed under the guise of
national security, I think in their perception that has the
same sort of distortive effect on the trading relationship and
that is their rationale for why they see that so problematic.
Mr. Keating. Great. My time is past and I will now
recognize the ranking member, Mr. Kinzinger.
He was here a minute ago. The chair will recognize
Representative Pence.
Mr. Pence. Thank you, Chairman Keating and Ranking Member,
for convening this. To all the witnesses, I say thank you for
being here today.
Dr. Kendall-Taylor, I was very intrigued by an article you
and your colleague, Dr. Shullman, wrote titled, ``How Russia
and China Undermine Democracy.'' In this article, you both
wrote, ``Russia and Chinese actions are converging to challenge
a U.S.-led global order.'' You do not argue that China and
Russia are acting in a coordinated manner with one another, but
that their actions are converging in new and synergistic ways.
Your example of Serbia was well taken. I think you
described quite well how Russian and Chinese actions there are
destabilizing and reinforcing one another. While you and your
co-author used Serbia as an example, it is not unique in facing
this challenge. Russia and Chinese actions are undermining the
sovereignty of countries across Europe. While this is something
Europe is waking up to, I am concerned about the potential for
Russia and China's currently uncoordinated and unintentional
strategies becoming just that coordinated.
As you say in your article, ``The countries' strategies
have become mutually reinforcing in power, if perhaps
unintended, in different ways.'' Dr. Cooper, you stated that
Congress could help encourage cooperation with allies and
partners on an overall Chinese strategy. Republican leader
McCaul and Chairman Engel, Championing American Business
Through Diplomacy Act, H.R. 1704, is a good step in countering
Chinese debt-trap diplomacy and I am a proud co-sponsor of the
legislation.
My questions are to all of you. What would be the
implication for U.S. policy in Europe and beyond if the
currently unintended efforts of Russia and China become
unintentional, and what specifically should Congress's response
be to a coordinated Russian and Chinese effort in Europe?
Ms. Kendall-Taylor. Thank you for the question. I also
share your concern. And of the issues that I think that I am
looking at today, the growing relationship between Russia and
China, I think, is one that causes me the most concern. So when
we look down a whole kind of spectrum, all areas, all
dimensions of their relationship, the trajectory is toward
closer relations.
So in economic terms, China has become Russia's single,
most important trading partner. They are the single, largest
purchaser of Russian oil and gas. Military ties, Russia
continues to sell China advanced military systems. They are
exercising together for the first time with the Vostok-2018
exercise where Russian and Chinese soldiers exercise together.
Certainly, the political ties between Putin and Xi are very
close, but it does not stop there. We increasingly see this
grow into deeper levels of government in ways that provides, I
think, a very kind of solid foundation. And the key is, so we
have thought of this as an issue where Russia and China are
united in their discontent, that they have these shared
grievances, but my concern is that as we see these repeated
interactions that this relationship turns into something more
deep, meaningful, and sustainable.
And you can think about Russia's relationship with Iran as
an example. That had historically been a relationship where
there was significant mistrust. But given their interactions
over the JCPOA and in close operations on the battlefield in
Syria, that is now a very close relationship.
So my point is that it is because of the repeated
interaction, this has the ability to turn into something. And I
will also note that the DNI in his annual threat assessment has
marked this as an issue where we are seeing increasing
coordination and collaboration between the partners.
Simple solutions to drive wedges between them will be
ineffective. Russia looks at the United States and is more
suspicious and concerned about our efforts to destabilize his
regime. There is a very immediate threat that he feels and the
immediacy of that threat is more important than the much
longer-term threat that I think he views coming from China.
And so, he would prefer to trade that risk and he has put
his lot in with the Chinese. And particularly after 2014 he
sees no opportunities in the West, and so I think you see Mr.
Putin increasingly willing to become the junior partner. So
given his deep suspicions of the United States, driving a
master wedge between Russia and China is going to be a very
difficult thing to do.
And so, I think this is an issue that needs more
investigation and more thought because certainly labeling both
as adversaries, although is an important and I think right
strategy, it also has the unintended consequence, I think, of
pushing them closer together.
So one of the things I highlight is to look for
opportunities to drive mini-wedges, and so the Arctic could be
one such place where they have interests that are at odds,
perhaps in the Middle East where they compete for energy and
military sales and other things. I think it is a series of
things that the United States will do some kind of careful
diplomacy I think will be required to put the brakes on the
relationship.
And also, I highlighted in my testimony today for the
Congress to enable the U.S. Government to look not just at
Russia and at China, but to consider them in a combined
framework so that we are thinking through how what we are doing
might affect the relationship between them.
Mr. Pence. Well, thank you, Doctor. I yield back.
Mr. Keating. The chair recognizes the vice chair of the
committee, Representative Spanberger.
Ms. Spanberger. Thank you very much, Mr. Chairman. Thank
you to the witnesses today for being here.
To followup a little bit on what Dr. Kendall-Taylor has
written, you recently wrote in the Foreign Affairs that
empowering U.S. ally populations to stand up against foreign
subversion would be the most effective weapon against Chinese
and Russian influence. And the success of the strategy does
rely on the strength of our historic transatlantic ties and our
shared value.
But I am very concerned over the fact that of February
2019, Gallup poll across 133 countries showed that Chinese
leadership had a higher approval rating than in the United
States. And then in pivoting over to what Mr. Le Corre was
saying, my question is as we are looking at many of the larger
EU States such as France and Germany, and as they wish to adopt
a coordinated EU approach to China that allows their countries
to effectively stand up to China as an equal partner, and Mr.
Le Corre in your testimony you talked about the European
Commission's recently issued strategic outlook when they look
at China as a systemic rival and a strategic competitor, my
question is, what should the U.S. role be in supporting or
facilitating the coordinated EU approach which would provide a
greater opportunity to mitigate China's influence in Europe,
and ideally by extension positively impact the United States'
challenges that we are facing with China? And I will open it up
to Mr. Le Corre or Dr. Kendall-Taylor or the other two
witnesses as well.
Mr. Le Corre. Thank you, Congresswoman. I think, you know,
the EU remains the most efficient body that we have in Europe
when it comes to advocating values and democracy and the rule
of law and norms which are--in fact, Congressman Pence was
referring to Serbia earlier. Serbia is not part of the European
Union and that is one of the reasons why both Russia and China
are using it as some kind of playing field.
In Western Europe and I would say in the whole of the EU,
you have a difference set of values. And the fact that the
high-speed train project between Hungary and Serbia has not
even started has a lot to do with the fact the European
Commission started an investigation in Hungary when Hungary did
not actually go through the normal competition rules, and
therefore on the Serbian side they have not even started
either.
I think, you know, again the fact that all of the EU
members supported the screening mechanism, supported the EU-
Asia Connectivity Strategy is a sign that people are sort of
waking up in many cases. I would say as well that if you look
at things from a Chinese perspective, they are trying to sort
of divide the EU by dealing with countries on a separate basis,
the 16+1, now 17+1 mechanism, and a good example. The U.K. is
another good example if the U.K. is to leave the European
Union. And then they also tried to have a 5+1 mechanism with
Southern Europe.
So by having the EU as a strong sort of entity--and the
European Commission is actually mainly a trade body but is now
handling investment quite interestingly, it was not part of its
mission originally--I think that is the best thing that the
United States could do.
Ms. Kendall-Taylor. Maybe I will just chime in with a much
broader point on the cohesion issue. And I mean, I think it is
probably recognized here, but the cohesion and the unity
between the United States and Europe is key. Both Russia and
China want to break it. Those are both kind of explicit goals.
Both Russia and China seek to break the transatlantic unity.
And I think Russia, but especially China, realized very early
on that its rise would trigger balancing in the West and it has
done everything that it can to influence Europe to make sure
that Europe sits on the fence.
The worst thing from China's perspective is if Europe is
firmly aligned with the United States and so where there is
that break in unity, that is a good-news story from China's
perspective, because if the United States and Europe could
combine our collective heft, we hold, the U.S. and the EU, 40
percent of global GDP. So if we are going to lean on China to
change its unfair trade practices and all of these other things
that we are so concerned about, it has got to come from a
unified position.
And I think the problem is just as you say, the trust for
the United States right now is really stymying cooperation, and
what we see then in Europe is that they are looking to kind of
go it on their own. So far, I think their attitude has been
that they are going to look to improve their own capacity and
not build a joint approach with Europe. And that is going to be
problematic, because as China is putting pressure on both of
us, if we fill some holes, they are going to pop up somewhere
else. And so, you know, in terms of stealing technology and
global supply chains it has got to be a unified approach.
Ms. Spanberger. Thank you very much. I am out of time. But
I did want to State for the record that, Dr. Cooper, I will be
submitting another question to you because I was particularly
struck by your comment that there is a bipartisan consensus
related to China within Washington, within the government, but
we really need to bring the American people into that
conversation. I look forward to following up with you on that.
Thank you. I yield back.
Mr. Keating. The chair recognizes the ranking member, Mr.
Kinzinger.
Mr. Kinzinger. Thank you, Mr. Chairman. And again, thank
you all for being here. I will get right to it. The access to
Chinese 5G from companies like Huawei in Europe remains a
primary concern for the United States.
Dr. Cooper, what would 5G inclusion in NATO-member
countries mean for transatlantic security?
Mr. Cooper. Well, I think we are going to see that it means
when we are deploying forces abroad, especially flowing them
through Europe, that there are going to be greater risks to
those forces because Russia, potentially, could gain access to
that information as Dr. Kendall-Taylor said. And the Chinese
likely will have some access to that information depending on
which parts of the 5G backbone Huawei and ZTE are involved in.
But I would say that I think that is going to be a reality.
Even if the Brits and the Germans go along with us on 5G, which
is looking unlikely at the moment, other countries in Europe
are going to accept them. So we are going to have to come up
with a mitigation strategy to manage that risk.
Mr. Kinzinger. Thank you. Expand a little on what the
potential harm to NATO operations could be in that case.
Mr. Cooper. Well, there has been a statement recently by a
number of retired four-star commanders both in Europe and in
the Pacific suggesting that increasingly our forces will use
battle networks that include 5G networks. Those 5G networks
obviously it would be better if we and our allies and partners
controlled them. I think the reality though is if you are
looking in Eastern Europe, Huawei is already in a lot of those
networks, inside the 3G and 4G networks, and they are
definitely going to be inside the 5G networks that are going to
buildupon them.
So the Chinese are going to have some access to technology
about U.S. forces as they flow through Europe and maybe through
Asia as well.
Mr. Kinzinger. There has been a controversy surrounding the
firing of British Defence Minister Gavin Williamson as he took
the fall for the leak of a potential deal between Britain and
Huawei on 5G integration.
Dr. Cooper, what should this action tell us about Britain's
relationship with China?
Mr. Cooper. Well, I do not know all the details and of
course there has been a lot of speculation in the press about
what happened with the firing. I think one question is what the
decisions are being made within GCHQ on 5G technology. There
has been some discussion that suggests that the British feel
confident that they can manage the 5G challenge of having
Chinese companies inside their 5G networks because they think
they have been able to manage the 3G and 4G challenge. I think
we do not know yet because we have not seen the public
statements exactly where GCHQ has come out, but I hope that we
will have a better understanding. And I know Secretary Pompeo
is just returning from a trip to London to talk about those
issues.
Mr. Kinzinger. And what do you think that means for the
future of British and Chinese economic engagement on
controversial topics?
Mr. Cooper. Well, there has been no question that the
British have been trying to get increased Chinese investment in
London. I think we have seen the same thing in Berlin and
elsewhere and that is going to be a challenge. And we have seen
this outside of Europe as well, where the Chinese have
substantial economic involvement, they gain substantial
leverage and they are often willing to use it.
And so, we should not be surprised when many of our friends
are put in a difficult position and they are basically offered
either Chinese investment or technology, or the decision to
side with us on security issues. So I think increasingly our
friends are going to be put in this kind of tough position and
we are going to have to work to make sure that they make the
decisions we want, but also that we keep the alliances together
by not putting too much pressure on them politically that puts
them in a difficult position.
Mr. Kinzinger. And Montenegro has seen their debt rise from
63 percent to 80 percent over the past few years as the result
of a deal with China to construct a 103-mile long highway from
the Adriatic to Belgrade. Unfortunately, the project is not
complete and the IMF has warned Montenegro to avoid any further
loans.
And a question again for you, Dr. Cooper, what would be the
ramifications of China making Montenegro default on its loans
for the bridge project?
Mr. Cooper. Well, this is the much-discussed debt-trap
diplomacy question and I think many of us will have views. Some
people think that we have not seen a lot of debt-trap diplomacy
other than a few cases. But what we definitely have seen is an
increase in debt that the Chinese often hold that allows them
to gain access to infrastructure and in some cases to either
gain leases for 99 years on that infrastructure or to basically
take over ownership.
And so, we should all be very concerned, I think, about the
kind of debt agreements that countries make in making sure that
the recipient countries when they enter into agreements know
whether they can handle the debt level or not. And I think in
Serbia and Montenegro this has been one of the major issues
with the Chinese investment. The debt levels are very high and
it is not clear that the payoff and the infrastructure is going
to be worth the sacrifice those countries are making.
Mr. Kinzinger. Thank you. And again, even though my
questions were just to you, I thank all four of you for being
here and providing your expertise. And I will yield back to the
chairman.
Mr. Keating. Thank you very much. The chair recognizes
Representative Cicilline from Rhode Island.
Mr. Cicilline. Thank you, Mr. Chairman. And thank you to
you and the ranking member for this important hearing. Thank
you to our witnesses.
I think we all recognize that the United States must have a
clear-eyed approach to China that seeks cooperation where we
can, but also ensure that we are able to compete where we must,
and of course defend our interests where necessary. We have to
be smart and we have to continue to invest in education,
infrastructure, technology, and job training here at home and
we need to work with like-minded countries in Europe and
elsewhere to stand up for international norms, our rules-based
world order, and defend fundamental human rights.
Sadly, working on a coordinated approach with Europe is
difficult given the Trump administration's erratic policies and
often confusing rhetoric toward Europe, but I think this is
where Congress has a particularly important role to play and
make clear that we will not allow any transatlantic rift to
prevent transatlantic cooperation in the face of an emerging
China.
And so, my first question is, the Chinese Government
sponsors intellectual property theft through means such as
forced technology transfer and cyber espionage and it has
caused an estimated tens of billions of dollars in annual
losses for American companies. Efforts by the United States
thus far to deter these practices have had little or no impact.
And I am wondering what steps European governments might be
taking to address this issue if there is an opportunity for
more cooperation between the United States and some of our
European allies to help protect U.S. intellectual property.
Are there things that Congress should be doing in this
regard? Maybe Dr. Taylor, if we could start?
Ms. Kendall-Taylor. I do not focus explicitly on the kind
of economic coercion side of this, but as we have been talking
about with the investment screening mechanisms and the need for
coordination between the United States and Europe, I would say
that is kind of the most important, from my perspective, is
that we are kind of sharing information about what the nature
of the threat.
In a lot of these countries too there is not a lot of good
capacity and area expertise on China, so kind of working with
especially at the country level vice at the European level, if
we are working at the national level of government, helping to
build the capacity in-country to understand the nature of the
threat to help improve their kind of national level
legislation. But I think, really, it is the coordination piece
that we are in lock-step so that we can break down that kind of
squishing mechanism, I would say, or seeping mechanism.
Mr. Cicilline. Thank you.
Ms. Kendall-Taylor. But I will let my colleagues who might
have some more specific ideas.
Mr. Cicilline. Sure.
Ms. Segal. I would just add on trade-related issues and
economic issues and I would include the protection of IP, that
it is important then for the United States to be working with
other like-minded countries. There is a trilateral mechanism
between the United States, Japan, and the European Union to
address a number of trade related issues including some in the
digital economy space, and I think we need to leverage those
mechanisms. Because as has been pointed out previously, our
ability to influence China's behavior is going to be maximized
by bringing together allies and partners and really isolating
China when it is behaving poorly and is a bad actor.
Mr. Le Corre. I would just add, Congressman, that the fact
the Europeans and the Chinese are now looking at a bilateral
investment treaty as are the Americans and the Chinese,
although I understand it is not making much progress, is an
interesting opportunity for both sides of the Atlantic to
cooperate on IP as well as technology, the issue of technology
transfers which is as damaging to European companies as to
American companies.
And, in fact, referring to reports by the American Chamber
of Commerce in China as well as the European Union Chamber of
Commerce in China, you have the same feeling that companies are
both affected, I mean on both sides affected by this issue. So
I think it is the right moment to start a kind of conversation
on norms and on market access.
And I understand there is some, you know, potential there
from the Chinese side as well since the recent session of the
Chinese Parliament that they might actually reduce technology
transfer requirements to certain investments inside China.
Mr. Cicilline. Thank you.
And, finally, Freedom House has ranked China as not free.
And, actually, in Freedom House's 2019 survey of democracy
around the world, China ranked as one of the least free
countries in the world, as you know, stamping out dissent,
throwing those who speak out in prison, and extraordinary
surveillance and an effort to stamp out free speech and free
thought, and while at the same time gobbling up lots of data
about its citizens.
And as China emerges as a growing power, the United States,
in my view, has to speak out against these violations of human
rights. But sadly, in many instances, European Governments have
been more vocal than the United States. I wondered if you would
share what your thoughts are on the impact and the kind of
message it sends when the United States fails to speak out
forcefully and what can Congress do to promote stronger
transatlantic condemnation of human rights abuses and the kind
of role that as China's power rises and as they emerge, this
human rights record of course has a greater impact on a greater
number of people.
Mr. Le Corre. Congressman, I think it is a serious issue
that needs to be addressed and perhaps in the context of the
G7. Unfortunately, the United Nations has become a complicated
venue for big nations to express their views on this for
reasons that were expressed earlier with, you know,
interference and setting the role of China and Russia as
permanent members of the Security Council.
I think, you know, again, in Brussels there is a will to
express strong views on Xinjiang, on human rights records in
China, and again there should be some kind of discussion on
both sides of the Atlantic to make it a stronger stance.
Mr. Cicilline. Thank you. I see my time has expired.
Thank you, Mr. Chairman. I yield back.
Mr. Keating. The chair recognizes Mr. Wright from Texas.
Mr. Wright. Thank you, Mr. Chairman. I thank all of you for
being here today.
Ms. Segal, you mentioned something earlier that had been
discussed a great deal and that is the impact of the tariff
situation on our allies. We need to maintain strong alliances
and not create a situation that would make dealing with China
more appealing. At the same time, we have an obvious need to
from time to time review all our trade agreements and trade
situations to make sure that they are working the way they were
intended and, more importantly, to make sure that they are fair
to the American people.
So how do you suggest we reconcile those two goals that we
maintain strong alliances, but we also have these agreements
that are fair to the American people?
Ms. Segal. Thank you very much for that question, because I
agree a hundred percent with the fact while the U.S. is looking
out for national security interests as it should, it also needs
to look out for its economic security and its economic
interests. My comment was more related to the mechanisms that
we use, and in particular the mechanism of the 232 tariff is
one that is based on a national security concern.
So to the extent that that is the rationale for the
imposition of those tariffs, I think that is one of the pieces
that is of concern to Europe, but also of concern to many of us
that look at the impacts of that on the system. And here there
are spill-over effects to the United States invoking national
security concerns as the basis for a protectionist policy and
there is concern that once the United States does that, that
basically opens the floodgates for others to do it and to use
it against us, which would be not in our best interest
economically.
Mr. Wright. Right.
Dr. Cooper, would you have any comment on that?
Mr. Cooper. Well, the only thing I would add is I was in
Europe, and overnight before some of our meetings the U.S.
Trade Representative put on tariffs on some of our European
allies. And I have to tell you, it made the discussions the
next day much more difficult on asking the Europeans to work
with us on 5G and on Belt and Road. And so, I think everything
that Ms. Segal said is exactly right. We have got to think hard
before we put tariffs on our friends.
And I understand what the President's logic is, but the
downside in Europe is that often it looks like the Chinese are
coming with money and with technology and investment, and we
have got to provide something positive in response and I just
do not think tariffs are the right way to do that.
Mr. Wright. OK.
And, Dr. Kendall-Taylor, I have a large Czech population in
my district and I am co-chair of the Czech Caucus. And we know
that the Czech President is very cozy with the Chinese, but
that is mainly a ceremonial office. Do you see any--and I will
also open this up to you, Mr. Le Corre--concern there that the
President of the Czech Republic is so cozy with them?
Ms. Kendall-Taylor. I think, broadly speaking, what is of
concerning is where we see democratic backsliding in Europe
leading to closer relationships with Russia and China. So even
in the academic research there is some good research that
demonstrates that kind of shared regime-type provides a solid
foundation for cooperation. And so, when we are thinking about
the democratic backsliding and the rise of populism in Europe,
it is not just a democracy and human rights issue, it is a
national security issue.
And I think we will have to be highly attuned to where we
see some of this backsliding taking place, whether or not that
is creating kind of shared foundation where maybe it did not
exist before for closer relationships between those countries
and countries like Russia and China. So, yes, it is a concern.
Mr. Wright. Thank you.
Mr. Le Corre?
Mr. Le Corre. Thank you. If I may just add, I think there
is actually a debate going on in Prague, a much stronger debate
than in many European countries, about the relationship with
China. The fact the Czech President has had dealings with China
through a number of advisors, one of them being Chinese and
currently under house arrest in China, has sort of raised an
awareness among the media and the think tank community in the
Czech Republic, which I think is quite healthy. On top of the
fact the Czech Republic is in, you know, situated in the middle
of Europe, Eastern Europe, and there is a new government, and
the Prime Minister has expressed very different views about
China and Russia than the President who, as you suggested
yourself, is more of an honorary figure.
Mr. Wright. OK, great. Thank you very much and I yield
back.
Mr. Keating. Thank you. The chair recognizes Representative
Wild from Pennsylvania.
Ms. Wild. Thank you, Mr. Chair. And thank you to the
witnesses for being here this morning.
I have, as I know many people do, significant interest and
concern about cybersecurity and the use of surveillance by the
Chinese. Recently, in my home district office, I was visited by
a young family who are Uyghurs and--I think I am pronouncing
that correctly--it was a husband, a wife, and their three young
daughters, two of whom had been born in China, one of whom was
born in Pennsylvania. And they described for me that the wife
parents have been sent to a detention camp where they are--
where they have both lost considerable weight, are receiving
some kind of daily injections, are being generally mistreated.
They shared with me that the Uyghurs make up approximately
11-1/2 million of the Chinese population. And they described
for me the use of facial recognition technology that is being
widely used to recognize the Uyghur people and that according
to them, many are being taken right off the streets of China
and sent to these detention facilities, or I do not even know
if that is the right word. I honestly knew nothing about this
until I had the visit from these people.
But it caused me to do a little bit of followup reading and
my understanding is that Chinese authorities and companies have
developed and deployed tens of millions of surveillance cameras
as well as facial, voice, iris, and other biometric collection
equipment. And these technologies are believed to be used to
target and track movements and internet use of ethnic Tibetans
and Uyghurs, among others, and reports that I have seen suggest
that Chinese companies have exported these kinds of systems to
18 countries at least.
So my question is this and for Dr. Cooper or Dr. Kendall-
Taylor or whoever feels qualified to answer it, what are the
risks associated with these Chinese exports especially with
respect to jeopardizing information that we share, the U.S.
shares with our allies in Europe, as well as with respect to
global human rights and individual privacy rights and what can
we do in the cybersecurity and surveillance space to prevent
this technology from being used in an abusive way?
Mr. Cooper. Well, thank you for the question,
Congresswoman. I think this is an important issue and something
we have not talked about enough in the last few years. And I
think the human rights community has done an amazing job of
bringing this to light and some pretty courageous journalists
as well.
It is incredibly difficult to report now in Xinjiang. Even
for the best reporters based in China, there are a lot of
roadblocks to them reporting on the kinds of stories that you
are talking about. And the U.S. Government's estimates at the
moment are that between one and three million Uyghurs are in
detention in northwestern China, which is a tremendous number
of people, and it is hard to believe that this story hasn't
garnered more attention. I think we do not----
Ms. Wild. That by the way was exactly my reaction.
Mr. Cooper. Yes, exactly. And I think the human rights
community here has been working incredibly hard to bring
attention to this issue. I do not think we have seen a lot of
great policy answers from anyone around the world other than
bringing more transparency to the behavior that we are seeing
occurring. And the one area where I think this touches the most
on Europe is the current concern that some of us have that
whether the Chinese are using the 17++1 institution or it is
Germany or Italy or London's desire to have more Chinese
investment, that we might see European countries not being as
willing to speak out on these issues as we would want them to
be. So I hope that we can address this in a coherent, united
manner with our European allies.
Ms. Kendall-Taylor. And could I just add one point?
Ms. Wild. Sure, please do.
Ms. Kendall-Taylor. I agree with everything that Zack just
said. But it really, I mean it is such an important question
and I am so glad that you raised it, because China is exporting
its authoritarian tactics and that will create an environment
more conducive to authoritarianism all around the globe.
And so--and we should also note that in addition to the
Belt and Road Initiative, there also is a component of this
they are calling the Digital Silk Road and that will be an
important vehicle through which they will be able to export and
share some of these surveillance and other authoritarian best
practices.
And the other concern here is 5G. So why would we allow the
Chinese Government to be building our 5G networks? Why would we
put that responsibility in the hands of a government that has a
long track record of surveillance and a track record of human
rights abuses, and so that should raise concerns for all of us.
And so if we are hesitant or it seems like the direction
that this is going particularly in Europe is that some of these
countries for obvious reasons do not want to outright ban
Huawei, but if we can move toward kind of an objective list of
criteria for selecting vendors that would address some of these
issues and that are true to our values in the United States and
Europe, that provides a more objective way, I think, for making
decisions.
And that would, because of all of the abuses that you have
highlighted, effectively screen out Huawei and other providers.
Ms. Wild. Thank you for that very useful information. I
have dozens of questions I would love to ask you, but
unfortunately my time is up. But I would like to followup at
some point. Thank you.
Mr. Keating. Thank you, Representative Wild, for those
insightful questions. The chair recognizes Representative
Burchett.
Mr. Burchett. It is Burchett, Mr. Chairman.
Mr. Keating. Burchett, sorry.
Mr. Burchett. Burch like the tree, and ett like I just ett
breakfast.
Mr. Keating. This is the European influence, I think.
Mr. Burchett. I guess it is.
Mr. Keating. It is overtaking me this morning, I apologize.
Mr. Burchett. That is all right.
And thank you all for being here. I guess I would, you
know, dealing with China, it seems that they have a tendency,
maybe it is just my opinion, but they exploit either our
stupidity, greed or arrogance, or a combination of all those
things. And, Dr. Taylor, and I note you all are on the screen
and currently I am on the screen, and I am wondering if that
screen is made in China.
But, Dr. Taylor, in your testimony you mentioned the
importance of European initiatives such as permanent structured
cooperation, PESCO, and the European Defense Fund to better
prioritize issues pertaining to China in the Indo-Pacific
region. These two initiatives and a potential EU army seem to
be more duplicative and a competitor to NATO. Would it not make
more sense for our NATO allies to just to pony up and spend
more than 2 percent of their GDP on defense rather than waste
money on silly and unworkable initiatives?
Ms. Kendall-Taylor. I agree that the 2-percent is an
important benchmark that all our European allies should be
working toward. I think even when you talk to NATO officials
that most of them are confident that the initiatives that I
have talked about, PESCO, the European Defense Fund, and
others, are not duplicative, but complementary to what NATO is
achieving. And as long as they are rolled out in ways that are
consistent and supportive and not redundant with what NATO is
doing, then I think the United States should be encouraging
rather than discouraging European efforts to do more for their
own security and defense.
I will also note that things like the EI2 initiative,
France's European--what is it, EI2--European Intervention
Initiative, also has the goal of doing more and allowing Europe
to play a greater role in places like North Africa. Again, the
more that our European allies can help us police and secure not
only Europe, but places like North Africa, it allows the United
States to pivot and focus more on the Indo-Pacific.
Mr. Burchett. OK. And this is, I guess, for the entire
committee. I am not sure who would be the most qualified to
answer, but anybody that feels like they should, please do.
You know, in Tennessee I was in the State legislature and
there was an initiative to have these toll roads put in. And I
am not going to debate the merits of those, one way or the
other, but there was--I actually had put an amendment on the
bill that said that they needed to be, at least one end of the
toll road needed to be owned by an American entity, and
immediately the support for the bill dropped. And that made me
wonder too about the reports that Chinese companies currently
own and have access to about 10 percent of the ports in Europe.
And I was fortunate enough to go to Israel for 4 days and I
noticed that their deepwater port was, in fact, constructed by
the Chinese, which to me is very alarming. What is behind their
strategy to gobble up these ports in Europe? Is it purely
economic or do they have some long-term security interests? I
think I probably know the answer to that, but I would like to
hear what you all say.
And could you all discuss the specific security risk to
NATO allies of Chinese access to these European ports? Thank
you all.
Ms. Segal. Thank you for the question. I can start and
maybe others will have their own views on this. I think the
fact that China is investing abroad and has increased its
investment abroad in and of itself is not the primary concern.
The concern are the potentially strategic motivations behind
that investment. And the difficulty then for recipient
countries, including the United States and in Europe, is to
differentiate which are those investments that an entity in
China is making for its own economic interest and the recipient
country is benefiting because it is getting capital that then
fuels its economy, and which are the investments that actually
go beyond that are of geostrategic import and have a strategic
interest.
And that is what these whole, the motivation behind these
investment screening mechanisms like CFIUS like what has been
adopted now at an EU-wide level in Brussels, that is what those
mechanisms are designed to suss out. And so, I think it is
important to differentiate those two. And the fact that this
debate is being had and that the recipient countries are not
sensitized to look out for what might be the strategic
motivations behind these investments, that is the important
balance to strike between pro-growth investments and
investments----
Mr. Burchett. Excuse me, but, you know, it is kind of like
up here when we talk about we are going to form a study
committee and do some studying and is just going to sit on some
shelf somewhere. Are they actually doing anything when they say
that or is it just the money that they are getting? Because I
have read some reports that some of the ports and projects that
they have done, they will pull out or they will do subpar labor
that what we would consider the standard here by our labor
folks in this country.
Ms. Segal. Right. And so those are related issues. One are
the strategic kind of national security concerns which these
mechanisms would pick up, the other is the quality of that
Chinese investment. And the concerns behind Belt and Road
investments are of both categories, but is actually that
quality question and the debt sustainability question that is
also something for recipient countries to think about.
And so, among the initiatives that the U.S. has taken both
to encourage allies to strengthen investment screening
mechanisms is also an effort to get countries to strengthen
their mechanisms for just evaluating the economic worth of such
projects. So if what China is offering is an investment but one
that comes with it strings that require Chinese workers to be
used, come with it returns back to China that actually make the
project not viable in the country, those are things that
recipient countries when they are making their decisions about
who to award the contract to, they should be sensitized to that
and then make their decisions based on that sort of
information.
Ms. Kendall-Taylor. And maybe just really quickly to
highlight the security concerns as we talked about, NATO
mobility will be key when we are talking about Belt and Road
infrastructure, so with the ports and rails in particular
Chinese investment in those provide the capacity for China to
slow a NATO response that makes it. They have the ability then
to leverage to complicate our movement of people and troops
across Europe and that is something that NATO is going to have
to grapple with.
Mr. Burchett. Thank you.
Mr. Chairman, I apologize for running over, brother. Thank
you.
Mr. Keating. Those were great questions. I think also that
we could followup beyond the ports and look at the rail and the
testimony that was given before about how that screening
mechanism did help or has helped delay and give greater
scrutiny to the rail line between Hungary and Serbia too. So it
would be interesting to see how that has worked and been
effective.
Representative Costa from California?
Mr. Costa. Thank you very much, Mr. Chairman. I appreciate
this important hearing.
I am one of those that believe that Russia and China's
interests do align and they are increasingly so. While they may
not as you have testified today be coordinated to the degree
that would further make their efforts more effective, clearly,
I think we need to be concerned about it. I have some questions
that really deal with the comments that I think the four of you
made, and that is that for a more effective use of our ability
to deal with both China and Russia that we need to be
coordinated with our European allies. I think there was a
consensus by all of you in that statement. And certainly, we
know that Russia, going back to 2013 when General Gerasimov was
talking about their strategies to undermine Western democracies
by using the election process in Europe to destabilize that
economy and also to undermine NATO as a defensive for all us,
not only the Europeans but for the United States, and they have
done that. They have been interfering in European elections for
years and of course in our elections in 2016.
So, I want to understand with all the challenges that
Europe is facing with populism, with nationalism, with the
refugee challenges that they are getting from the Middle East
and from Africa, how you believe we can better coordinate our
efforts with our European allies--they are not our adversaries,
they are our allies where we share so many common values--in
the backdrop of the comments that we have been making about
NATO? Even though three administrations have agreed that 2
percent-plus is necessary for the NATO countries to commit to,
but you add as you testified the steel and aluminum tariffs,
you know, commenting that the basis is national security when
these are our NATO partners. Very contradictory not to mention
insulting, the potential of imposing auto tariffs, which is
crazy, I mean the largest export of cars made in America is
BMW, and that the statement that Europe is an adversary by our
President, and then you add to that the cheerleading of Brexit
that has taken place in this country by some, how can any of
you on the panel articulate what our current administration's
policy is toward our European allies?
Mr. Le Corre. I can start to have a go at it, but it is not
an easy answer to make.
You know, I think, there is no evidence that there is
coordination between Russian and Chinese actions in Europe.
That there is a Chinese sort of----
Mr. Costa. No, but there could be in the future.
Mr. Le Corre. There could be. And certainly, if you look at
Greece, for example----
Mr. Costa. There interests align in a number of areas.
Mr. Le Corre. Right, so the issue is really for countries
such as Greece, Portugal that are NATO members as well as
members of the----
Mr. Costa. And Italy.
Mr. Le Corre. And Italy, they have been repeating that they
remain, you know, involved in the alliance and the EU, but
there might be some discussions to be having at NATO level on
what it means for countries that are selling some of their
national assets including, for example, the National Grid of
Portugal----
Mr. Costa. Right.
Mr. Le Corre [continuing]. To a nation like China, or to
sell some of its territories in the Azores in the middle of the
Atlantic to a Chinese scientific center.
Mr. Costa. We have been very concerned about that, many of
us, and we have tried to make those concerns known to the
Department of Defense on that. But please, what is our policy?
Can you articulate our policies toward Europe, our allies?
Ms. Segal. I do not know if I want to articulate our policy
not being a member of the administration, but I do think what
you have identified is that there is a tension between the
security issues and how we should be engaging with European
partners and economic issues on how we engage.
Mr. Costa. I think the Secretary General when he spoke to a
joint session of Congress put it well. It is nice to have
friends. And these relationships that we have had with our
European allies for decades, the longest peacetime period in
Europe, the last 70 years, in over 1,000 years is the result of
these coordinated alliances that we have with NATO, with the
European Union.
And so I mean, I think you are struggling to suggest what
the policy is part of the problem. We do not have a
coordinated, clear policy toward our European allies. If we
did, we would have a much more, I think, thoughtful address
toward China and how we are dealing with China. I mean, I think
that is the answer to the question.
Mr. Cooper. Can I just make one very brief comment? I think
there is a philosophical question about what we think leads to
greater alliance cooperation and contributions. I think the
administration's belief is you get more alliance coordination
and cooperation when the leader of the alliance pushes its
allies hard. I think a lot of the academic literature would say
that you get allies cooperating more when they think there is a
higher threat.
So I think that is where a lot of this disjuncture is
between the administration's strategy and what we are actually
seeing from Europe. So as the Europeans get more concerned
about Russia, they will contribute more to NATO. If they are
not deeply concerned, they are not going to contribute up to
the 2-percent level or beyond.
Ms. Kendall-Taylor. Maybe just a really quick comment. I
think what the strategy has been and it has been articulated by
people like Assistant Secretary of State Wess Mitchell before
he resigned, I mean, so this administration has rightly set out
this vision of strategic competition putting China front and
center. But where we break down and fall apart is by not
prioritizing Europe and that relationship.
And there has been a belief that we have to go after our
European allies and correct imbalances in our relationship and
once we correct those imbalances, then this administration, I
think, incorrectly believes that we can pick up where we were
and move on to confront China. So I think in my mind that is
what the policy has been, China front and center, but with the
incorrect assumption that if we bash our allies and correct the
imbalances that then we are in a better place to address China.
Mr. Costa. Well, and I think that is the feeling that you
are receiving that the chairman and I receive when we go to
Europe. We have been there two or three times this year and
this is the constant questions that we are asked as to what
really is our policy toward our allies to, you know, we used to
be consistent in terms of our approach and they could always
count on us, and there is a deep feeling today that that is no
longer the case.
And then therefore why should we cooperate with you if you
are not going to be that friend, as the Secretary General
stated last month that it is nice to have friends. And now that
is all being undermined, I believe, and it is being questioned,
unnecessarily so. No one disagrees with the 2-percent
expenditure.
Let me just ask one final question, if I might, Mr. Chair?
Mr. Keating. It is all right. Mr. Guest.
Mr. Costa. Because this is something that you and I have
talked about. Would it--do you think if this subcommittee
worked closer together with the European Parliament, they are
having elections this month, and the European Commission as we
go forward to address some of these issues that we are talking
about today that that would be constructive and more helpful in
terms of our partnership?
Mr. Le Corre. If I can answer to that I think it would be
an excellent idea for one simple reason. I believe many of the
new mechanisms that have been introduced, which I was
describing earlier, were originated in the European Parliament.
The status economy, the market economy status that was denied
to China by the EU 2 years ago originated, again this decision
originated by the European Parliament and there are strong
members of the European Parliament that have been sort of
supporting, you know, actions for China, for example,
especially on the reciprocity issues and intellectual property.
So I think, you know, obviously this is a transition year,
Congressman. There is going to be elections very soon. This
country knows about elections too. And so it is going to be a
difficult year for engaging with the European Parliament, but I
believe from October again there will be new committees and
people that will look very thoroughly into the issue of Chinese
influence in Europe.
Mr. Costa. Well, the chairman and I have expressed interest
in doing so and I thank you for--I have exceeded my time, but
we will followup on that.
Mr. Keating. Thank you, Mr. Costa, for your work. And the
chair thanks Mr. Guest for being patient through that
questioning, and now the chair recognizes Mr. Guest from
Mississippi.
Mr. Guest. Thank you, Mr. Chairman.
Before I begin my question, I have a report from the Center
for International Private Enterprise entitled, ``Channeling the
Tide: Protecting American Democracies Amid a Flood of Corrosive
Capital.'' This was published last fall. This report examines
the impact on the government norms, practices, and economic
values in the countries that have received Chinese investment.
I ask by unanimous consent this report be inserted into the
record.
Mr. Keating. Without objection.
[The information referred to follows:]
Mr. Guest. My question to the witnesses on the panel, as I
understand it, the Chinese are using basically a multifaceted
approach to either gain or to expand influence not just in
Europe but around the world, things such as investment, trade,
technology, education through the Confucius Institutes, but
what I would like to talk about and focus my question on is the
growing Russian-Chinese relationship.
Of course, we see that in Latin America, particularly as it
relates to Venezuela, where you have an unholy alliance, if you
will, between Russia, China, and Cuba as they are continuing to
prop up the Maduro regime. But I believe at least two of the
witnesses here spoke of that in your written testimony.
Ms. Kendall-Taylor, I think you said on page 5, you said
``The relationship between China and Russia are deepening. The
growing alignment of their values and visions on how the world
should be ordered raises the prospect that Moscow and Beijing
will increasingly coordinate their efforts to undermine U.S.
influence.''
And it was also addressed by you, Mr. Le Corre, I think on
page 7, you actually referred to it as the ``emergence of a
Russia-Chinese nexus and it directly affects NATO's primary
mission. The relationship should not be exaggerated, but the
two countries have conducted joint naval exercises.'' You also
talk about military exchanges or military leadership exchanges.
And so, my question to the panel and anyone can answer is,
how concerned should we be about this growing nexus, as you
referred to it, Mr. Le Corre, between China and Russia as we
can see them continuing to work together and to work against
American interest?
Mr. Le Corre. Thank you, Congressman. I think, you know,
the issue is to be looked at not just in Europe, but globally.
Certainly if you look at the Belt and Road Initiative a lot of
it has to do with Central Asia, for example, and parts of Asia
that are under Russian influence. So I would say there is a
real concern there.
And the people of some of the Central Asian countries are
very wary about the rise of China and the economic rise of
China, and somewhat the Russian umbrella that used to be their
protectorate, you know, and I am thinking of Kazakhstan and
Tajikistan, for example, is no longer there because it is
basically this collusion going on with China.
As far as Europe is concerned, I think, you know, America
should basically, you know, rise again in the eyes of many of
these European citizens and offer an alternative narrative to
the authoritarian narrative that is now sort of coming up in,
you know, from China or from Russia. And, you know, this is
like Greece, should basically look toward Western values and
not toward, you know, authoritarian values, and unfortunately
these are the values that China is bringing when investing in
some of these countries.
Ms. Kendall-Taylor. We talked about it a little bit earlier
kind of all of the ways in which the relationship is growing,
and I think as has been talked about the implication of that
growing relationship is significant and I would put that close
to the top of the No. 1 issue, or close to the top of the
issues that I am concerned about.
So in a world of great-power competition, there are three
and the United States is not going to be alone on the side with
one. We have talked about how the growing relationship, I
think, is serving to undermine democracy particularly in
Europe, but it is also the way that they are creating an
alternative to democracy.
China in particular demonstrates that the road to
prosperity and democracy no longer runs through the United
States. They are exporting their best practices. President
Putin is showing other leaders that if, you know, that you can
stand up to the United States and it is emboldening other
leaders across the world.
But it is more than a democracy and human rights issue. It
is very much a national security issue. And I have given a
couple of examples, I think, of how that synergy or how their
coordination could affect the United States. But, really, at
the most basic level you could imagine a scenario where Russia
and China decide to make moves in their respective spheres of
influence at the same time.
So what happens and the United States would, and NATO in
particular would struggle to respond to coordinated moves
between Xi Jinping in the South China Sea and Putin in Europe.
That would severely strain U.S. military capacity to respond to
those challenges.
So I think these are the types of things--that certainly is
a long way off, but I think these are the types of things that
policymakers need to be thinking about now, because we have to
plan for those contingencies and also work to prevent the
closening relationship from coming to fruition in ways that
would have that much of a consequence.
And I think there, when we talk about the importance of
values and democracy, I mean getting our own house in order and
providing an alternative, an attractiveness of a democratic
model that other countries will want to emulate I think is one
of the most important ways, that is kind of a two-for-one. It
helps deter all of the kind of a hostile, malign actions that
both Russia and China are taking both in the United States and
Europe.
So it is a two-for-one, but these are the types of things
that I think we need to be thinking about now.
Mr. Guest. Thank you. I yield back, Mr. Chairman.
Mr. Keating. Thank you very much. The chair recognizes and
we are going to let him--give him a chance to sit down,
Representative Gonzalez from Texas. Thank you for joining us. I
know it has been a busy morning. Representative Gonzalez.
Mr. Keating. Thanks. He is yielding back.
Just following up with what Representative Guest said, I
think one of the key aspects of this morning's, among many,
testimony from our witnesses was the concern for this growing
relationship coordination and collaboration between Russia and
China. And I think it makes the issue even more compelling from
a U.S. standpoint of why we have to work hard to strengthen our
existing relationship with our European Union coalition
partners, that we have control over more than we do dealing
with the activities of China and Russia.
And I think that is one of the more important messages of
this morning, also even beyond Europe and Eurasia to have the
U.S. proactively get involved in providing alternatives and
having a stronger role to try and combat that growing influence
together it is important.
I would just as part of my closing, and then I know that
the vice chair has some final comments and perhaps a question
as well, just one thought I had digging down to a specific and
I am worried about the fractures that occur and that I see
occurring in Europe. I understand Congress has a critical role
going forward and we are exercising that in this committee and
in the larger Foreign Affairs Committee. We are doing it in
Armed Services and so many of our other committees trying to
project that and actually have been, I think, in this short
period of time very successful in doing so.
But I want to give an example of something I hear from time
to time and it is nothing to undercut our alliance with the
U.K., our great ally, but we hear conversations from the
administration, even from other members, talking about having a
bilateral trade agreement with U.K.
And even though they have to wait for Brexit to get over
for anything like that to occur, having these discussions and
having discussions about, you know, fast tracking when the time
comes or prioritizing a bilateral agreement with U.K. but not
having that kind of discussion with the rest of the EU, I see
that as a growing concern of mine in terms of how that can
fracture our relationship particularly during these difficult
times of dealing with the Brexit issue.
Could you comment on how that kind of discussion, although
it might be well-intended, could have an unintended effect of
further fracturing our relationship with the rest of the EU,
which after all is 80 percent of our trading partners in
Europe? If anyone wants to comment on that.
Mr. Le Corre. Mr. Chairman, I do not know if you are
referring to the missed opportunity of a meeting between the
Secretary of State and the German Chancellor, but that was
certainly not well taken in Germany. But meanwhile, I
understand Secretary Pompeo went to London.
Obviously, from my point of view as somebody looking at
China, I think there are real concerns about the bilateral
relationship between China and the U.K. As we have discussed
earlier, the level of Chinese involvement, economic involvement
in Britain is much higher than in any European country already,
and the U.K. is certainly the U.S.', you know, oldest ally and
there is a very strong link between the two countries.
On the other hand, as you pointed out, 80 percent of the
trade is done with the rest of Europe. And there is an
integrated European market that is working quite well, and in
fact, the pro-European sentiment has increased over the past 2
years ever since the referendum in the U.K. decided for Britain
to leave, apparently. But it hasn't been done yet and the
process is not completed.
So I think, you know, looking at the European Union as a
strong partner is something the U.S. should certainly do and
the U.K. should try to be, I mean, you know, looked at as a
European country not as a standalone country. It will remain
part of Europe. In fact, you know, British officials do say
that on a regular basis and I cannot see otherwise in terms of
geographics. And, you know, vis-a-vis China or vis-a-vis
Russia, I think, you know, the relationship will remain close
between the EU and the U.K. and between the U.K. and the U.S.
So, you know, I think these two things should be done in
parallel.
Mr. Keating. Great.
Ms. Segal?
Ms. Segal. Just to add to that, I think as your question
references it has been a very complicated process between the
EU and the U.K. ever since the Brexit vote and that issue is
still not resolved. And I would make the argument also on the
basis of what is in the U.S. national interest that we do not
really want anything that is going to result in a destabilizing
resolution of that issue.
So any sort of interference that actually complicates and
potentially destabilizes the outcome of how that Brexit vote is
resolved is actually harmful to the United States.
Mr. Keating. Yes. Well, I hope that our friends in Europe
know from this committee and from a very strong bipartisan
standpoint that we are sensitive to the issues that they are
dealing with, particularly with elections coming up and dealing
with the Brexit issue.
And that as a Congress I can speak for this committee as
well as the full committee, we are sensitive to that issue. We
are not taking our relationship with our closest allies and our
coalition for granted and we will continue to adopt that
attitude, because the attitude is important too as substance in
many instances as we see now.
I now yield to the vice chairman of the committee who may
have a final comment and a question.
Ms. Spanberger. Thank you, Mr. Chairman.
We have talked a lot today about 5G technology threaded
throughout the conversation, but I did want to followup just in
a closing statement with a question.
So as we talk about 5G technology, recognizing the
potential that it holds to transform telecommunications as we
know it resulting in huge, potentially huge economic benefits
to our citizens and American companies, we are facing
challenges with companies that have close ties to the Chinese
Government such as Huawei that are currently leading global
competitors in early 5G equipment and software production.
According to NATO's Cooperative Cyber Defence Centre of
Excellence, Huawei's growing influence as a leading supplier of
5G technology in Europe could be exploited by China to engage
in espionage, monitor foreign corporations and governments, and
ultimately support Chinese military operations.
My question as we close out this discussion is how can we
ensure that the United States and our allies are not left
behind by these technological advances and forced to choose
between putting our data at risk and waiting around for the
rest of the market to catch up, and how can we improve the
competitiveness of U.S. companies in this space, specifically
how can non-Chinese companies compete with Huawei given that
its telecom networks typically cost 20 to 30 percent less than
our competing products?
Ms. Kendall-Taylor. So I think all of the kind of
advantages that Huawei has you have rightly noted. Currently,
the discounts that European companies are offered are somewhere
in the realm of 20 to 30 percent. So Huawei is able to come in
and because of the subsidies they receive from the State they
are offering their services at a much discounted price.
They are also vertically integrated, I understand, which
means that Huawei is providing a soup-to-nuts solution that
other providers just are not doing and they are ready to go
now. So there is very valid concerns in Europe, I think, that
by banning Huawei that we would delay the deployment of 5G
networks in Europe. So there are all of these considerations
and figuring out how to counter it, I think, is something that
will be and has to be front and center in terms of priorities
now.
There is some really excellent work that is being done at
the Center for New American Security and there should be a memo
that is coming out soon that lays out a whole host of
recommendations that would also address what the United States
should be doing in terms of its own kind of domestic posture.
And one of the things that you highlighted is rightfully making
sure that the United States is prioritizing and investing in 5G
as a foundation for American competitiveness. And we have to be
able to offer an alternative and that is just not where we are
at the moment.
And it also highlights the need to work very closely with
like-minded countries in Europe to do things like as we have
already talked about, creating this objective screening
criteria. So if countries in Europe are reticent to taking
sides, which they are, they do not want to have to be seen as
choosing between the United States and China, then going down
this route where we are coming up with these objective criteria
that providers have to meet in order to be allowed to be the
provider of choice. That is an objective approach then, which
essentially would screen out Huawei given all of the human
rights and surveillance considerations that you highlighted.
There are other opportunities too, making sure that 5G
networks are secure by design from the start. And I think it is
also incumbent on the United States to continue to make the
case with Europeans about what our rationale is. Because there
is obviously concerns by the Europeans that we are being
protectionist, that we want to keep Huawei out, given the huge
kind of economic and competitiveness implications that any
country will have in being the 5G provider.
So leaning on the intelligence community perhaps to be more
forward-leaning where they can in terms of sharing intelligence
or the rationale for why we are making the decisions that we
can. We have seen that was really useful, for example, with the
INF treaty. It took the intel community a very long time to
share the information and data that was ultimately able to get
the Europeans to come along with us, so that could be kind of a
best practices case study that we could learn from.
So, I think, generally speaking, there is a whole host and
it is not a simple solution, but I would hopefully as soon as
the CNAS report is out, would kind of recommend it to others
because I think it has some really excellent suggestions.
Ms. Spanberger. Thank you, Dr. Kendall-Taylor.
Dr. Cooper?
Mr. Cooper. Just one more comment to add on this. I think
one of the challenges here is that the U.S. approach has
largely been to exclude Huawei and ZTE and others from the U.S.
market and there are lots of good reasons for that. But the
reality is, is that is not going to work in Europe. It will
work in some places in Europe, but broadly I think the
Europeans are going to decide to mitigate the challenges
inherent in Chinese 5G technology just the way they have in 3G
and 4G. And so, I think we are going to have to come up with an
approach and we might not like it, but one that accepts that we
are going to be in a risk-mitigation world.
And the problem we have is that we have spent so much time
in the last few months explaining to our friends that you
cannot mitigate the risk, that now when we come back and say,
``Well, here, let us help you mitigate it,'' it is a little
confusing to them. And so we have got to shift our strategy, I
think, pretty quickly and be just as nimble as the Chinese have
been in changing how they talk about Huawei and 5G technology
in general.
Ms. Spanberger. Thank you.
Mr. Le Corre?
Mr. Le Corre. Thank you. Just a few comments. I think I
agree with what Dr. Cooper just said. It is very difficult to
change Europe when it comes to dealing with Chinese
telecommunication companies. They have been there for quite
some time and in many cases they have invested. They have hired
local people. Not very many, in fact, and that may be a point
that should be underlined that they have not created a lot of
jobs, for example, and it is mainly about bringing technology
into Europe.
So investment might be the answer, because as we know
Huawei was the first to invest in 5G technologies, you know,
almost 10 years ago, and so the rest of the world and the West
in particular has not done very much. So I would say that, you
know, within each European country, especially those strong
NATO allies of the United States and strong EU members, you
know, there is a debate inside these countries within the
security agencies, the defense establishments, let's say, and
also, you know, the foreign ministries, the economics
ministries, and the business community.
But I would say sort of the sort of the very heavy-handed
discourse coming out of China and which you pointed out
yourself, or the other Congresswoman, I am sorry, the
surveillance mechanisms, all this, this is not really helping
China's image. And again, you know, information and explanation
of what 5G actually is and what it is going to mean to live in
a connected house in a connected city, smart city, that is
something that people will need to know about and having, you
know, counter offers will be critical.
Ms. Spanberger. Thank you. I yield back, Mr. Chairman.
Mr. Keating. Well, thank you. I want to thank our
witnesses. I will tell you, this was an excellent hearing,
excellent testimony and in a time when the full committee is
looking at many of the challenges coming from China, we spent
most of this morning looking at what the future challenge will
be, not just the present, and I think that was very helpful to
us as a committee and certainly helpful as a Congress. So thank
you very much for your participation and we will look forward
to further communications and any questions the members might
have in writing. Thank you.
[Whereupon, at 11:53 a.m., the subcommittee was adjourned.]
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