Transcript of Ranking Member Krishnamoorthi's Opening Statement From Select Committee on the CCP Hearing on Perils of Doing Business in PRC

WASHINGTON, D.C. – On Thursday night, the Select Committee on the Strategic Competition Between the U.S. and the CCP held its latest hearing, titled, “Risky Business: Growing Peril for American Companies in China”, to highlight the challenges faced by American companies and workers operating in the People’s Republic of China (PRC).

The following witnesses provided testimony at Thursday’s hearing:

1. Ms. Piper Lounsbury, Chief Research and Development Officer, Strategy Risks
2. Mr. Shehzad Qazi, Chief Operating Officer and Managing Director, China Beige Book International
3. Mr. Desmond Shum, Author of Red Roulette: An Insider's story of Wealth, Power, Corruption and Vengeance in Today’s China

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

Good evening, and thank you, Mr. Chairman.

For more than fifty years, the U.S. has welcomed the PRC into the global economy. We agreed to the PRC’s entry into the World Trade Organization,  American companies invested billions in the PRC , and we granted the PRC permanent normal trade relations status.

The whole time, we were promised fair access to a new Chinese market that would transform American companies and provide new opportunities for American workers. And while the Chinese Communist Party (CCP) has allowed some American companies in, they have pursued an aggressive strategy that includes forced technology transfer, large scale and state-sanctioned theft of U.S. intellectual property, cyberespionage, and economic coercion.

Forced technology transfer, or the requirement that U.S. companies share their technologies with PRC companies, is a primary tactic of IP theft according to research by the U.S. Trade Representative.  One example has been in the auto industry where U.S. companies typically cannot enter the PRC market unless they partner with a PRC company.  According to the USTR, new CCP rules issued in 2017 require “foreign automakers transfer key technologies” to the PRC company “so that the [PRC company] can demonstrate ‘mastery’ of the technologies needed for the … manufacture of new energy vehicles in China.”  The CCP has used that mastery to become the world’s top auto exporter as of this year.

According to the FBI, the annual cost to the U.S. economy from IP theft alone is potentially as high as $600 billion.  In fact, cyber operations by just one CCP-affiliated actor, called APT 41, is estimated to have taken billions in IP theft from multiple sectors of the economy.

FBI Director Chris Wray said last year that the CCP has “a bigger hacking program than that of every other major nation combined”, and according to Crowdstrike, CCP-affiliated actors are responsible for 67 percent of state-sponsored cyberattacks.  Because of that threat, the FBI opens up a new CCP counterintelligence operation every twelve hours.

Most recently, we have seen new headlines shining a light on raids of American firms, the detention of their staff, and exit bans on employees, meaning they cannot leave China.

These challenges to American companies and workers operating in the PRC have escalated to the point where just last month, the U.S. State Department issued a travel advisory to Americans traveling to China, citing the “arbitrary enforcement of local laws, including in relation to exit bans, and the risk of wrongful detentions.”

These are all examples of the risks of doing business in the PRC. Let’s be clear, America asked only for a fair competition, but that competition has not yet happened.

When Chairman Xi Jinping says “our struggle with Western countries is irreconcilable,” and that he sees “long-term cooperation” with countries like the U.S. as the first stage in “capitalism’s ultimate withering away” , he signals potentially ominous intentions toward foreign competitors.

When Xi talks about forging “assassin’s mace” technologies to “tighten international production chains’ dependence on China” , it appears he’s looking for China not to just merely excel in these areas, but for China to acquire economic coercive power relative to other countries.

Tonight, you’ll hear more about these practices by the CCP, but it’s up to us to go beyond shining a light on them to actually offer a better alternative here in America.

American businesses and investors increasingly face a choice: do we invest more of our capital, our supply chains, and our futures in the CCP, or do we invest more in America?

To me, the choice is clear. It’s time to invest more in America. We have made notable progress through bills like the bipartisan CHIPS and Science Act, but there’s still more work to do. I look forward to working with my colleagues on both sides of the aisle to get this done.

Thank you, and I yield back the balance of my time.

###