By Joseph Chalfant

On July 14, the Senate Subcommittee on Fiscal Responsibility and Economic Growth hosted a hearing entitled Defending and Investing in U.S. Competitiveness.

Subcommittee Chair Sen. Elizabeth Warren (D-MA) and Ranking Member Sen. Bill Cassidy (R-LA) lead the hearing. Witnesses included Howard University professor Dr. William Sprigs, United Steel’s Roy Houseman, University of Michigan professor Dr. Mary Gallagher, Center for a New American Security Senior Fellow Yaya Fanusie, International Coalition Against Illicit Economies Executive Director David Luna, and Center for Strategic and International Studies Senior Fellow Jane Nakano.

The senators opened with member statements that set the focus on U.S. competitiveness in the face of a rapidly expanding Chinese economy. Sen. Warren emphasized China’s lack of protections in labor rights and the tendency of multinational corporations to facilitate trade with China to keep production costs down and boost profits for shareholders. Sen. Cassidy noted that China was the world’s largest polluter by a significant margin. Both senators echoed concerns over China’s lack of adherence to global labor norms and their willingness to violate human rights to achieve a competitive global market position.

Opening statements from witnesses began with Dr. Sprigs.

Sprigs supported the expansion of collective bargaining agreements to match that of top American trading partners. He advocated for a bolstered unemployment insurance system and an increased minimum wage. He also stressed the need for investments in childcare incentives. Sprigs noted that the U.S. ranked 6th in resources for childcare out of the G7 nations.

Houseman followed. He said that the U.S. required a greater degree of green infrastructure if the country wanted to maintain its footing in the 21st-century global economy. He indicated that growing wage disparity was partly due to American de-unionization and advocated for increased funding for job training programs like Europe and Australia. Houseman also said the U.S. should update its trade enforcement laws to hold bad actors accountable.

Dr. Luna expressed concerns over China’s dealings in illicit economic activity. He remarked that Chinese products account for 90% of counterfeit products in the U.S., ranging from electronics to sportswear and other apparel. He further explained that, during the pandemic, China exported faulty personal protective equipment (PPE) to the detriment of U.S. consumers.

Dr. Luna said that corrupt Chinese government agents are growing ties with criminal organizations worldwide, and the country now accounts for half of global money laundering schemes that amount to $1.5 to $2 trillion a year. He stressed the need to empower law enforcement agencies to combat criminal expansion.

Yaya Fanusie dove into the future of cryptocurrency and the internet as China expands its investments into those technologies. He said there would be an “information revolution” in the coming years. The Chinese government is working diligently to develop a “blockchain service network,” which may be the future of telecom infrastructure.

Fanusie explained that this upgrade could upend the current structure of the internet to move away from linear information transfer in favor of a more open style of information transfer. If successful, China would control the infrastructure for this revolutionized internet, limiting American competitiveness.

He then focused on digital currency, noting that while the U.S. dollar won’t face short-term competition as the world’s reserve currency, China’s focus on data capture and electronic transaction infrastructure may be of interest and adopted by countries in the long term.

Jane Nakano wrapped up opening remarks by diving into China’s energy infrastructure. She acknowledged that while China was the world’s largest financier of coal products, they have also become the leading exporter of clean energy technology. Their abundance of rare earth minerals has given them a competitive edge in the market. She further noted that China had become an emerging force as a nuclear power exporter.

She stressed that the U.S. must craft policy to combat China’s energy financing and that more doors need to be opened to introduce competitiveness in all energy market sectors.

When questioning began, Sen. Warren inquired about the effects the World Trade Organization (WTO) agreement for trade with China has had on the American and Chinese economies.

Gallagher stated that China has no requirement to adhere to any standard of labor practices commonly seen in the Western world. Springs estimated that 6 million American manufacturing jobs had been lost since the adoption of the agreement. Houseman was troubled that labor activists were only allowed to advise and comment on the WTO agreement and said that lack of labor input hurt poverty-stricken communities the most.

Sen. Cassidy prodded Gallagher about the future of China’s population. She stated that China is currently facing a decline in its workforce population and that the country’s overall population will shrink over the next century.

Sen. Sheldon Whitehouse (D-RI) questioned Nakano on the future of a competitive American policy. She said that decarbonization was advisable and that nuclear energy provided the most robust alternative.

Further questioning from the members provided details into previous witness testimony. You can find the written witness testimony as well as a recording of the entire hearing here.