Congressional Shift on China Policy and Expansion of CFIUS Authority

SECTION 1 Congress During past presidential administrations, the US Congress has generally served as a brake on executive initiatives to “engage” China at the expense of other US interests that members have historically valued, such as maintaining good relations with Taiwan, interacting with the Tibetan government in exile, and expressing support for human rights. When President Donald Trump assumed office in 2017 and actively began courting Chinese President Xi Jinping, first at Mar-a-Lago and then at the Beijing summit, Congress took a wait-and-see posture. But as his own ardor for a partnership with Xi cooled and his administration became disenchanted with the idea of finding an easy new “engagement” policy, momentum began to shift. Soon Congress was working toward one of the most significant reevaluations of American-China policy since the start of normalization fifty years ago. And with the White House increasingly skeptical about the prospects of winning President Xi ‘s cooperation, a series of new initiatives began issuing forth from both the administration and the Congress, suggesting a rapidly changing landscape for US-China relations. What was telling was that this tidal shift now emanated not from Congress alone—where it had strong bipartisan support—but from the White House and National Security Council, the Pentagon, the Office of the US Trade Representative, the Department of the Treasury, and even the Department of State. As sentiment shifted away from hopes of finding common ways to collaborate, a spate of new US policy initiatives began appearing that suggested a sea change. Congress passed the 2019 National Defense Authorization Act, which sought to bolster US defenses against both Chinese military threats and China’s influence-seeking operations inside the United States. Congress also passed the Foreign Investment Risk Review Modernization Act of 2018 (FIRMMA), which empowered CFIUS (the Committee on Foreign Investment in the United States) to expand its oversight of foreign direct investment (FDI) from China. At the same time, members of Congress also began expressing ever more strenuous opposition to Chinese nonreciprocal practices in trade and investment, such as: putting whole sectors of the Chinese economy out-of-bounds to American investors; using Chinese companies to buy into sensitive high-tech areas of the US economy through mergers and acquisitions; and making the transfer of American advanced technology to Chinese partners the price of American companies being given access to Chinese markets. Congressional concern rose over Beijing’s continued expansion into and militarization of the South China Sea; the predatory lending practices that can be involved in President Xi Jinping’s signature Belt and Road Initiative; and Beijing’s continued persecution of Taiwan and opposition to US support for the island. This section reviews highlights of Chinese government’s efforts to influence the US Congress since the start of the normalization process in 1972. As suggested above, because it has HOUSE_OVERSIGHT_020468