Transcript of Ranking Member Krishnamoorthi's Opening Statement from Hearing on Combatting the PRC's Strategy to Dominate Semiconductors, Shipbuilding, and Drones

WASHINGTON, D.C. – Today, the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) held a hearing to understand how the PRC has come to dominate three key sectors (ships, legacy chips, and drones) and appropriate U.S. responses. The following witnesses provided testimony:

• Mr. Adam Bry, Founder and Chief Executive Officer, Skydio
• Mr. Chris Miller, Professor at Fletcher School at Tufts University, Nonresident Senior Fellow at the American Enterprise Institute
• Mr. Scott Paul, President, Alliance for American Manufacturing

Below is a transcript of the opening statement from Ranking Member Raja Krishnamoorthi (D-IL). Footage of the Ranking Member’s opening statement can be found here, and his questions to the witnesses can be found here.

Thank you, Mr. Chair.

“Made in China 2025” was a plan to ensure China took the lead in key industries – including, among others, Ships, Chips, and Drones by the year 2025 – that’s next year, by the way.

The CCP set global market share targets in each sector. In shipbuilding, for example, they set a target to control half the global market by next year, which they’ve already surpassed­.

This wasn’t by accident. Xi Jinping has called for heightened restrictions on foreign products sold in China while trying to, quote, “tighten international…dependence on China.”

How do they do this? They heavily fund the production of goods far in excess of what their internal demand requires, and then export the surplus to other countries at prices designed to undercut the competition. This Chinese practice creates overcapacity – and it makes it nearly impossible for the rest of the world to compete, thus the Chinese monopolize markets.

History shows us what happens if we don’t respond forcefully. Consider what happened to our glass and steel industries.

Between 2004 and 2008, the CCP gave glassmakers $30 billion in subsidies – including discounted energy and soda ash – the key ingredients to making glass.  This led to a seven-fold surge in exports by 2007. As a result, in seven years, America lost 40,000 in the glass industry.

And then there’s steel. China produces almost 108% of its domestic demand for steel. That 8% surplus may not sound like a lot, but it’s equivalent to what the U.S. produces in an entire year.

And China produces “prices…40 percent lower than what U.S. steelmakers charge.” It’s no surprise why. China’s largest steelmaker – known as Baowu – is owned by the government – and, just like those glassmakers, gets cheap financing and subsidies for coal.

China is now the world’s largest steel maker, by far – producing 12 times more steel than America produces in a single year.

We can’t let history repeat itself. But, in some cases, unfortunately we are.

Take ships. In 1975, we were the world’s number one shipbuilder. Now, we don’t even produce one percent of the world’s large oceangoing vessels. For every 359 large oceangoing vessels China builds, we’re building one.  That’s not a typo. We’re building one container ship for every 359 the Chinese are building each year.

Or take drones. As this chart shows, China currently controls a whopping 90% of the U.S. drone market.  

So what do we do about it? Here’s a brief analogy. In a few weeks, athletes from around the world will gather for the Olympics. Some athletes win by breaking the rules – but others win through investing in themselves and becoming the best at their sport. It’s the difference between a rigged game and a fair competition.

It turns out that outcompeting the CCP isn’t all that different. Because the CCP is currently not playing fair, we need to do two things – one: we need to stop the CCP from breaking the rules, and two: we need to invest in ourselves to win.

First, we stop the CCP through trade enforcement. For example, USTR recently launched a Section 301 investigation into the CCP’s unfair shipbuilding practices, including investigating the overcapacity issue we discussed earlier.

But then it’s on us to win the gold. We do this by making smart investments. For example, the CHIPS Act. The CHIPS Act, has led to a surge in new chip factories being announced.

And unlike the CCP, which favors its own state-owned enterprises, America is building these chip factories in partnership with others. Just look at TSMC’s investments in Arizona or Samsung’s investments in Texas. Taiwanese and Korean companies are creating American jobs.

But it’s time to consider what else needs to be done in other industries. We can win the gold, but we need to do the work to win the gold.  

Thank you, Mr. Chair. I look forward to hearing our witnesses, and I yield the balance of my time.

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