Secretary of State Michael Pompeo wasn’t bluffing when he said that the Trump administration is “not finished yet” with China. In mid-November, the President signed an executive order banning U.S. firms from investing in Chinese companies that are owned or controlled by the Chinese military. Though the move has yet to receive the attention it deserves, it represents one of the most significant actions against the communist regime by the current White House.
According to the order:
“[T]he People’s Republic of China (PRC) is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas, including by developing and deploying weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions against the United States and its people … the PRC’s military-industrial complex, by directly supporting the efforts of the PRC’s military, intelligence, and other security apparatuses, constitutes an unusual and extraordinary threat…”
In September, the Department of Defense released its annual report on China’s military. Among other findings, it discovered that “China has already achieved parity with—or even exceeded—the United States in several military modernization areas,” including shipbuilding, land-based conventional and ballistic cruise missiles, and integrated air defense systems.
It is outright dangerous for U.S. firms to provide funding that helps the Chinese military develop weapons systems designed to destroy our military.
But concerningly, as the threat emanating from China’s military has increased, so too has the direct investment positions of U.S. firms in the country. From 2013 to 2019, annual American investments in the People’s Republic rose from $60.45 billion to $116.2 billion, an astounding 92% increase. By comparison, the U.S. only invested $11.14 billion in the country at the start of the century, 943% less than they provide it today.
Of particular concern is that many of the entities funded by these U.S. firms are directly or inadvertently tied to the Chinese military.
Take AVIC Auto and China General Nuclear Corp, two companies that Hunter Biden partnered with or helped finance through his now infamous investment firm. U.S. officials have accused both enterprises of conducting espionage campaigns against the United States through their parent companies or on their own.
The case of CGNC shows why security checks are so important. The subject involved—nuclear technology—is sensitive to national security, and the ostensible theft occurred for over twenty years. The spy, Dr. Szuhsiung Ho, is said to have informed China of America’s nuclear innovations while operating in the open within the United States (like the Bidens, he lived in Wilmington, Delaware). While we will likely never know the full extent of the damage CGNC has done, the Pentagon seems to have tied its actions to China’s expansion of nuclear power in the South China sea.
Regarding AVIC, the U.S. has even more surety on the trouble it’s caused to U.S. national security. In a letter from last August, Senator Chuck Grassley (R-IA) laid out how the Obama administration allowed AVIC to steal sensitive data around America’s Joint Strike Fighter program, which it used to develop China’s J-20 and J-31 aircraft—important pieces of military equipment for the Chinese military.
The U.S. should not be funding companies of this ilk, plain and simple. That’s why Americans for Limited Government—the 501c4 non-profit organization dedicated to restoring the constitutional, limited powers of government that this author is the president of—launched its www.DivestChinaNow.org campaign earlier this year. It is outright dangerous for U.S. firms to provide funding that helps the Chinese military develop weapons systems designed to destroy our military.
HOW TRUMP’S EXECUTIVE ORDER WILL STOP THESE PARTNERSHIPS
President Trump’s executive order accounts for AVIC, CGCN, and nearly 30 others that the Department of Defense identified this summer as Communist Chinese military companies. Effective January 11th, the order will prevent American companies from continuing to provide these companies the assets—”direct investment in publicly traded securities as well as indirect investments via directives or other instruments providing exposure to company securities”—they need to continue harming U.S. security.
The executive order is the furthest thing from political posturing. It represents a commonsense way to protect the interests of the American people.
The executive order is the furthest thing from political posturing. It represents a commonsense way to protect the interests of the American people. But the Trump administration shouldn’t stop here. To further safeguard America from Chinese aggression, it should also set precise requirements and standards for current U.S. contractors who work with the communist regime.
The risks that Chinese-connected American companies pose don’t end with the money they provide to the adversary. For those who contract with the U.S. government, their mere association with it is harmful because of a policy known as “Military Civil-Fusion.”
In China, the line between defense and private enterprise is largely a mirage, with oversight often coming from top officials. This results in every company operating within mainland China being subjugated to strict compliance laws, like the aforementioned Military-Civil Fusion strategy, which forces companies to hand over all intelligence and military data deemed beneficial for China’s interests.
One goal of this policy is to advance China’s military capabilities by using private enterprises to acquire innovations that also serve defense purposes. This theft is a large part of almost $600 billion a year taken from the American economy, not to mention the incalculable damage it’s done to America’s security through over 130 instances of publicly reported espionage.
Military-Civil Fusion puts U.S. contractors who work with defense-critical agents and departments here at home in a tough spot. They may not want to help the People’s Liberation Army, but many feel that it’s all part of doing business and that they don’t have a choice.
Members of Congress have proposed measures to assess contractors’ security vulnerabilities.
The Trump administration deserves praise for advancing its America First defense agenda at a time when the world remains distracted by election results and other pieces of political theater.
Sen. Cory Gardner (R-CO) has proposed amendments to the NASA Authorization Act to allow NASA and the Government Accountability Office to conduct background checks of current and future contractors for ties to China. His amendments are significant when considering that contractors like Elon Musk remain connected to the regime in the form of $1.6 billion in loans, meetings with members of the Chinese Communist Party’s inner circle, and investment partnerships with Chinese firms accused of illegal data collection. With Musk’s network handling rocket defense contracts, it’s vital that those secrets not fall into adversarial hands like his other innovations have.
Additional legislation has included bills like the Restricting Predatory Acquisition During COVID-19 Act by Rep. Jim Banks (R-IN), which would expand regulatory examination of purchases made by firms with Chinese connections during the pandemic. Several bills authored by Sen. John Cornyn (R-TX) have also proposed expanding regulatory oversight to limit Chinese espionage in the country.
The Trump administration should also work on further measures of its own that protect the Department of Defense, NASA, and the rest of the government from Chinese interference will make Congress’s effort more thorough and comprehensive. The White House can do so in the form of another executive order, new departmental investigations that lead to further administrative action, or through an all-of-the-above approach.
The Trump administration deserves praise for advancing its America First defense agenda at a time when the world remains distracted by election results and other pieces of political theater. As President Trump and Secretary Pompeo continue working on finishing the job against China in their final weeks in power, they just need to enact a couple of new policies that close the few remaining Chinese loopholes and backdoors in our government.
It will only be a matter of time before analysts deem their work in this respect as one of the administration’s most significant achievements and legacy items.