Balancing Trade is Key to the Competition with China, Members of Congress Say

There’s growing bipartisan agreement that the lopsided trade deficit with China is harmful to U.S. interests. Growing American manufacturing is critical to fixing the problem.

Reducing the trade deficit and strengthening American manufacturing is critical to boosting U.S. economic competitiveness with China, a panel of experts told the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party – better known as the Select Committee on the CCP – during a hearing on Thursday. 

The panel convened to review the Biden administration’s policy towards China, delving into various issues surrounding trade, economic competition, and national security. Witnesses included Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner; Assistant Secretary of State for East Asia and Pacific Affairs Daniel J. Kritenbrink; and Assistant Secretary of Commerce for Export Administration Thea Rozman Kendler.  

In their testimony and answers to member questions, the witnesses advocated for several ways the United States could best compete with China, including trade de-risking, strengthening America’s industrial and manufacturing base, and securing supply chains through expanding domestic critical mineral mining.

One of the strongest cases for strengthening American manufacturing came from Rep. Ro Khanna (D-Calif.), who appeared on The Manufacturing Report back in June.   

“I think there is an area in the committee where there is clearly bipartisan agreement. And that is … we’ve hollowed out our industrial base, we have had massive trade deficits with China increase … since we allowed China to join [the WTO]. I believe that’s a colossal mistake,” Khanna said. “You look at the top 15 steel companies in the world, the United States doesn’t have a single one, nine of them are in China. How in the world did we allow that to happen as a country? It was a bipartisan mistake for 40 years. And I think on this committee there can be an agreement that we need to start rebuilding the industrial base and reducing the trade deficit with China.”  

Khanna asked the witnesses if they believed that the U.S. needed to do far more to reduce the trade deficit with China and reshore critical industries — and Ratner, Kritenbrink, and Kendler all agreed. Additionally, Khanna advocated for making the reduction of the trade deficit and the strengthening of domestic manufacturing a central part of the United States’s policy towards China, saying of the One China policy toward Taiwan: “I suggest a fourth communique, which is to lower the trade deficit and bring manufacturing home.” 

Several members of the committee echoed Khanna’s comments, displaying a broad and bipartisan agreement that reshoring and strengthening American manufacturing and reducing our trade deficit is a key strategy toward remaining economically competitive with China.  

Rep. Mikie Sherrill (D-N.J.), another recent guest on The Manufacturing Report, touted the progress the Biden administration and Congress have made through legislation like the CHIPS and Science Act and the Inflation Reduction Act, citing historic gains in manufacturing jobs and increased private investment.  

Rep. Haley Stevens (D-Mich.) — who also appeared on The Manufacturing Report! — stressed the importance of America being a leader in the production and sale of electric vehicles, a topic she discussed at length with AAM President Scott Paul.  

Rep. Carlos Gimenez (R-Fla.) echoed other Members in raising the importance of re-establishing America’s industrial base, citing its importance to national security. Gimenez questioned Kendler on the Commerce Department’s efforts in this area, who cited the importance of domestic chip production and trade in fostering innovation here at home.  

Rep. Michelle Steel (R-Calif.) stressed the importance of domestic mining and refining of critical minerals in the U.S. transition to a greener economy. She also advocated for the importance of American leadership in the mining sector, noting that American mining practices are among the safest and most environmentally friendly in the world. Kritenbrink echoed Steel’s sentiments, stressing the importance of domestic critical mineral mining in decreasing America’s dependence on foreign sources of critical minerals to strengthening our supply chains. 

Several members of the committee argued for the complete cessation of trade with China, arguing that America’s trade deficit means that the U.S. is funding Chinese activities that in turn undermine American interests. But each of the witnesses reaffirmed the commitment to engaging in trade with China, so long as such trade is not harmful to national security. 

“I believe that the world’s biggest economies should continue commercial trade that does not affect or harm our national security interests,” Kendler said. “Our innovation in the United States is driven by exports.” 

The committee’s hearing displayed the growing consensus around the importance of taking on China and the centrality of economic competitiveness to that effort. More and more, it seems Democrats and Republicans alike understand that the reshoring and strengthening of American industry and manufacturing and the importance of reducing our trade deficit are vital components toward fostering prosperity at home and countering Chinese economic influence abroad. 

Watch the full hearing here or below.