It’s no secret that the competition between the United States and China is heating up. The Chinese Communist Party (CCP) is in a position today to challenge the U.S. diplomatically, militarily, and economically across the globe. This challenge presents an existential threat to the American-led international order and is already set to define the 21st century.
U.S. Sen. Thom Tillis, R-NC, gave a compelling overview of the China challenge in a recent speech to the Senate Finance Committee. Tillis identified the many ways in which the CCP cheats the international system to gain unfair advantages for its own companies. For example, he rightly called out the CCP for a lack of transparency in its financial system, which allows state-backed entities to engage in illicit activities such as money laundering.
Tillis also rightly pointed out that China dumps steel into our country and threatens countless good-paying jobs in the process. In 2018, the Commerce Department concluded that Chinese steel imports reduced U.S. steel industry employment by 35% since 2001. This is the result of massive state subsidies from Beijing that are often as much as 30% to 45% of the steel product’s value. Chinese steel producers are able to flood the global market with an excess of subsidized steel, snuffing out any competitors that can’t also sell products below production cost. Essentially, we’ve allowed China to game the international system in its favor to fuel its astronomical rise.
The effects of China’s rise as an economic power are clearer than ever, especially in North Carolina. Our state is among the hardest hit by China’s economic coercion. Just take a look at Hickory, North Carolina, where the influx of Chinese goods — furniture, in particular — shuttered factories and stunted wages. The increase in Chinese imports between 1990 and 2007 is valued at a devastating $12,140 per worker in the city. Many other areas in the state faced similar fates. We all know what the Chinese did to our once-vibrant textile industry.
The economic turmoil many North Carolinians are facing is not the result of honest competition on a level playing field. China’s cheating exacerbates its trade advantages and exposes businesses in our state to an onslaught of foreign undercutting. For example, North Carolina is one of the top states in terms of jobs supported by steel production, which puts our state economy at particular risk of China’s tricks.
Nucor, a Charlotte-based steel producer, knows this all too well. They not only have to compete with the Chinese steel dumping, but they also have to watch out for Intellectual Property (IP) theft. In fact, Nucor has already blocked Chinese attempts to break into its computer systems and steal vital IP. “Fair” is clearly not in the CCP’s vocabulary when it comes to trade and competition.
Our company has also had to deal with the dual threats of illegal subsidies and IP theft. As former CEO of Charlotte Pipe and Foundry, I witnessed IP theft that was beyond blatant. A company in China stole our name and logo and put our name on their pipe and fittings. As well, they used our trademark on their building in Shanghai, emblazoned in neon lights. We have also brought unfair trade cases before the USITC against Chinese pipe and fitting manufacturers and it was determined that they were dumping and receiving subsidies up to 350%.
Bipartisan action is urgently needed to address this issue. As Tillis explained, a whole-of-government and whole-of-Congress approach is needed to effectively push back against China’s economic bullying, theft, and deceit. That means that strategic competition with China cannot be owned solely by the new House China Select Committee. Committees with relevant jurisdiction, like the Senate Finance Committee, must take bold action through hearings, oversight, and legislation. Congress must exhaust every option to protect Americans from the CCP’s threats.
Tillis was right to bring attention to the China challenge. As the most consequential challenge of our lifetime, we cannot afford to lose. North Carolina has already seen the impact of the CCP’s head start in this race. Congress must not leave individual companies and states to face the CCP on their own. Instead, lawmakers from both sides must come together if we are to catch up.