Balloon Incident Underscores U.S.-China Competition Concerns

The Chinese surveillance balloon incident may elevate the issue of China competition in the public consciousness and galvanize bipartisan support, particularly in the House, for addressing aspects of the U.S.-China bilateral relationship.

1. What we are watching: On February 9, the House unanimously voted on a resolution that condemns “the Chinese Communist Party’s use of a high-altitude surveillance balloon over United States territory as a brazen violation of United States sovereignty,” on a rare unanimous 419-0 vote.

2. Between the lines – a changing calculus in Congress? House Republicans had previously planned on a resolution criticizing the Biden Administration’s handling of the incident, but instead pivoted towards a broader bipartisan message against perceived Chinese hostility in an apparent attempt to buildup political capital before they turn to other legislative priorities on which finding common ground with Democrats will likely be more elusive.

3. 2024 coming up: Former Vice President Mike Pence, former Secretary of State Mike Pompeo, and former Ambassador to the United Nations Nikki Haley (all potential Republican presidential contenders) accused President Biden of appearing weak on China. Where China was brought up rarely in the midterm elections, the rush by these probable presidential candidates in citing China as a basis for distinguishing themselves from the incumbent has raised the profile of U.S.-China policy as well.

State of the Union – China Elements Not Prominent

On February 7, President Biden gave his State of the Union (SOTU) address in front of the 118^th Congress, setting forth his vision for the coming two years. President Biden sparsely referred to China and the bilateral relationship during his address—something we find not at all surprising, and in fact, quite purposeful.

1. Between the lines: Rather than oversubscribe political significance to the balloon incident, the administration seems to recognize that U.S.-China issues are politically relevant to the electorate’s ultimateappraisal of President Biden as vigorous, cognizant, steady, and strong. Hence, the sparse but pointed references to China in the SOTU. President Biden’s lack of references to China might reflect a more disciplined view—that bringing a very complicated, strategically significant bilateral relationship into the realm of highly partisan political discourse tends to be folly and that politicizing the issue would not be conducive to working with Republicans on other policies or legislative initiatives on China that he wants to pursue in the 118^th Congress.

Hearings, Hearings, Hearings—Notable Discussions in Congress This Week

1. U.S.-China strategic competition. Ahead of a Senate Foreign Relations Committee (SFRC) hearing on U.S.-China policy, SFRC Democrats issued a report recommending the Biden Administration commit more diplomatic and security resources to the Indo-Pacific to push back against China. During the hearing, Chair Bob Menendez (D-NJ) and Ranking Member Jim Risch (R-OH) announced their intent to re-introduce and “expand” the Strategic Competition Act, a wide-ranging bill that would establish an array of programs and initiatives to set up a strategic approach to China.

2. Outbound investment screening. During a House Financial Services Committee on “Combatting the Economic Threat from China,” House Republicans sought to slow momentum to regulate U.S. investments in Chinese technology, revealing a fissure over an issue that has been a top priority for policymakers in Congress and the White House. Chair Patrick McHenry (R-NC) and other Republicans advocated for a more constrained approach that could expand sanctions on Chinese firms and disclosure rules for U.S. investments in China. On the other hand, Ranking Member Maxine Waters (D-CA) and other Democrats pressed expert witnesses, including former CFIUS officeholders, on the benefits of establishing a so-called outbound review board, like a planned executive order from the Biden administration.

3. Balloon incident. The Senate Appropriations Subcommittee on Defense held a hearing titled “The People’s Republic of China’s High Altitude Surveillance Efforts Against the United States.” Subcommittee Chair Jon Tester (D-MT) criticized Republicans for political jostling over the incident, saying they were using China’s actions as an “opportunity to score some cheap political points and get attention on social media.” Tester vowed to “hold anyone accountable” over the spy balloon, and pressed defense officials over why the balloon was not shot down earlier, saying “I don’t want a damn (sic) balloon going across the United States, when we potentially could have taken it down over the Aleutian Islands.” Appropriations Committee Chair Sen. Patty Murray (D-WA) also vowed to keep the issue in the spotlight in the months ahead.

4. House Armed Services Committee (HASC): The HASC held a hearing on the “Pressing Threat of the Chinese Communist Party to U.S. National Defense.” HASC Ranking Member Adam Smith (D-WA) said the U.S. must rely on trusted partners and allies to increase weapons production and not depend on China for critical components.

Notable Quotables

1. House China Select Committee member Rep. Andy Kim (D-NJ) on the focus of the Select Committee: “just I think the conversation is too skewed in that direction of thinking about this solely through military tools and security tools rather than economic and trade and innovation.”

2. House Foreign Affairs Committee Chair Michael McCaul (R-TX) and House Appropriations Ranking Member Rosa DeLauro (D-CT) wrote an op-ed calling for the passage of the National Critical Capabilities Defense Act and stating the “Biden administration has the ability to stop the bleeding now by taking immediate action through an executive order providing for outbound investment screening to safeguard our national security and supply chain resiliency.”

3. Virginia Gov. Glenn Youngkin (R) – a potential 2024 presidential contender – said the White House was “soft” on China and encouraged Biden to “shoot straight” on China.

The Week in Numbers

1. The Financial Services Committee considered seventeen bills intended to isolate China’s economy—bills that Committee Chair Patrick McHenry (R-NC) described as “batting practice,” that is to say, “easy” bipartisan bills that will likely be reported favorably out of Committee quite easily;

2. Sixteen China-related bills were introduced in Congress since last Friday;

3. This week, eight congressional hearings have been held focusing on China—each by a different committee or subcommittee; and

4. The House Energy and Commerce Subcommittee on Innovation, Data and Commerce reported five China-related bills favorably out of the subcommittee.