US-China Watch

With the world in flux as never before, macroeconomic insight and analysis is always at risk of chasing a moving target. That is especially the case when it comes to the US-China conflict, driven by the oft unpredictable crosscurrents between the world’s two largest economies and their ambitious geostrategic aspirations. Through the combination of blogging and tracking the rapidly shifting news flow, the weekly updates below will attempt to keep you abreast of the latest developments on the US-China watch.

Call in the FBI!

I’ve got to give Congressman Mike Gallagher (R-Wisconsin) credit for one thing: As Chairman of the new House Select Committee on China (actually the CCP, to be technically correct), he has made more effective use of the bully pulpit than anyone in Washington has for a long, long time. Despite the surprising recent announcement of his impending resignation from Congress, Gallagher has achieved instant notoriety. It’s all proudly displayed on the Committee’s slick Amazon-like website, or even Instagram, if you prefer.

Since its inception almost a year ago, the Committee has held 11 hearings, all taking dead aim on the imminent threat(s) posed by China—from its military build-up and growing technological prowess to information distortion and alleged genocidal aggression against ethnic Uyghurs. Gallagher has taken his show on the road, with taxpayer-funded field trips in the US and overseas (including Taiwan, Australia, the Solomon Islands, and Papua New Guinea). A master at stagecraft, Gallagher also orchestrated a joint appearance with Chinese political dissidents in San Francisco on the eve of the Biden-Xi summit last November; and then there was his recent February 1 speech to the National Prayer Breakfast on the CCP’s threat to American souls.

The Committee’s notorious letter-writing and investigation campaign is especially noteworthy.  It has been aimed at a multitude of US companies and educational institutions involved directly or indirectly with China (including Blackrock, MSCI, Nike, Adidas, Ford, Apple, Sequoia Capital and a number of other venture capital companies, as well as the University of California, University of Montana, and Alfred University). Gallagher missives were also sent to the National Committee on US-China Relations and the US-China Business Council demanding a full accounting of the funding costs associated with the dinner they co-hosted for Xi Jinping on November 15 in San Francisco following the summit meeting with Joe Biden.

I have voiced my concerns earlier about the biased overreach of this Select Committee—so much so, that I made a conscious effort to hold my tongue as Gallagher’s anti-China campaign intensified. But I was struck by the hearing it held on January 31 on “The CCP Cyber Threat to American Homeland.” One witness got my attention—FBI Director Cristopher Wray.  In Wray’s words, “The PRC represents the defining threat of this era. There is no country that presents a broader, more comprehensive threat to our ideas, our innovation, our economic security, and ultimately, our national security.”  Wray, who went on to warn of the imminent threats posed by TikTok, got most of the press coverage, drowning out the messages of the other expert government cyber witnesses (Paul Nakasone, Jen Easterly, and Harry Coker).

When the FRI speaks, America takes notice. Yet Wray’s warning, in this case, was purely hypothetical—resting on the idea that if provoked by the US or anyone else, China now has the capacity to strike back with a crippling cyber blow against US infrastructure. I italicize the words, “if provoked,” to underscore the purely conjectural aspect of the warning that the FBI director was issuing. He is hardly alone in weaving this tale. My favorite account of the hypothetical Chinese cyber-attack scenario can be found in the fictional best-seller, 2034: A Novel of the Next War by James Stavridis and Elliott Ackerman—a much better read than Wray’s fear-mongering testimony. Far be it from me to question the intelligence assessment that any FBI Director has at his disposal. But Wray’s message is not about any evidence of an imminent attack. He is warning of what might happen if the Chinese were provoked—again, big emphasis on the conditional “if.”

It turns out that Wray has a history of highly politicized anti-China fear mongering dating back several years. In the summer of 2020, as the presidential election campaign was heating up, Wray joined three other senior officials from the Trump Administration (Secretary of State Mike Pompeo, Attorney General William Barr, and National Security Advisor Robert O’Brien) in a succession of carefully orchestrated anti-China tirades. The “gang of four,” as I dubbed them back then, were actors in Trump’s political theater. Wray has been unwavering in his negative views on China ever since. With Mike Gallagher sharing a like-minded political agenda, it was hardly surprising that the FBI director was welcomed with open arms to the Select Committee’s January 31 hearing.

You can follow me on X/Twitter @SRoach_econ

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