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Key Recommendations
The Commission recommends:

Congress establish and fund a Manhattan Project-like program dedicated to racing to and acquiring an Artificial General Intelligence (AGI) capability. AGI is generally defined as systems that are as good as or better than human capabilities across all cognitive domains and would usurp the sharpest human minds at every task. Among the specific actions the Commission recommends for Congress:

Provide broad multiyear contracting authority to the executive branch and associated funding for leading artificial intelligence, cloud, and data center companies and others to advance the stated policy at a pace and scale consistent with the goal of U.S. AGI leadership; and
Direct the U.S. secretary of defense to provide a Defense Priorities and Allocations System "DX Rating" to items in the artificial intelligence ecosystem to ensure this project receives national priority.

(From Chapter 3: U.S.-China Competition in Emerging Technologies, Key Recommendation I)

With respect to imports sold through an online marketplace, Congress eliminate Section 321 of the Tariff Act of 1930 (also known as the “de minimis” exemption), which allows goods valued under $800 to enter the United States duty free and, for all practical purposes, with less rigorous regulatory inspection. Congress should provide U.S. Customs and Border Protection adequate resources, including staff and technology, for implementation, monitoring, and enforcement. (From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws, Key Recommendation II)

Congress consider legislation to eliminate federal tax expenditures for investments in Chinese companies on the Entity List maintained by the U.S. Department of Commerce, or identified as a Chinese military company on either the “Non-Specially Designated National (SDN) Chinese Military-Industrial Complex Companies List” maintained by the U.S. Department of the Treasury or the “Chinese military companies” list maintained by the U.S. Department of Defense. Among the tax expenditures that would be eliminated prospectively are the preferential capital gains tax rate, the capital loss carry-forward provisions, and the treatment of carried interest. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field, Key Recommendation III)

To enhance the effectiveness of export controls, Congress should:

Improve the analytic and enforcement capabilities of the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) by providing resources necessary to hire more in-house experts; establish a Secretary’s Fellows Program to more effectively attract interagency talent; expand partnerships with the national labs; increase access to data and data analysis tools, including the acquisition of proprietary datasets and modern data analytic systems; and hire additional agents and analysts for the Office of Export Enforcement.
Amend the Export Control Reform Act to require that within 30 days of granting a license for export to entities on the Entity List, including under the Foreign Direct Product Rule, BIS shall provide all relevant information about the license approval to the relevant congressional committees, subject to restrictions on further disclosure under 50 U.S.C. § 4820(h)(2)(B)(ii).
Direct the president to:
- Designate a senior official to coordinate efforts across the Administration to prioritize bilateral and multilateral support for U.S. export control initiatives; and
- Establish a Joint Interagency Task Force, reporting to and overseen by the national security advisor and with its own budget and staff, to assess ways to achieve the goal of limiting China’s access to and development of advanced technologies that pose a national security risk to the United States. The task force should include designees from the U.S. Departments of Commerce, Defense, State, Treasury, and Energy; the intelligence community; and other relevant agencies. It should assess the effectiveness of existing export controls; provide advice on designing new controls and/or using other tools to maximize their effect while minimizing their negative impact on U.S. and allied economies; and recommend new authorities, institutions, or international arrangements in light of the long-term importance of U.S.-China technology competition.
- Codify the “Securing the Information and Communications Technology and Services Supply Chain” Executive Order to ensure that as the authority is used more robustly, challenges to its status as an executive order will not constrain BIS’s implementation decisions or delay implementation.

(From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field, Key Recommendation IV)

Congress consider legislation to:

Require prior approval and ongoing oversight of Chinese involvement in biotechnology companies engaged in operations in the United States, including research or other related transactions. Such approval and oversight operations shall be conducted by the U.S. Department of Health and Human Services in consultation with other appropriate governmental entities. In identifying the involvement of Chinese entities or interests in the U.S. biotechnology sector, Congress should include firms and persons:
- Engaged in genomic research;
- Evaluating and/or reporting on genetic data, including for medical or therapeutic purposes or ancestral documentation;
- Participating in pharmaceutical development;
- Involved with U.S. colleges and universities; and
- Involved with federal, state, or local governments or agencies and departments.
Support significant Federal Government investments in biotechnology in the United States and with U.S. entities at every level of the technology development cycle and supply chain, from basic research through product development and market deployment, including investments in intermediate services capacity and equipment manufacturing capacity.

(From Chapter 3: U.S.-China Competition in Emerging Technologies, Key Recommendation V)

To protect U.S. economic and national security interests, Congress consider legislation to restrict or ban the importation of certain technologies and services controlled by Chinese entities, including:

Autonomous humanoid robots with advanced capabilities of (i) dexterity, (ii) locomotion, and (iii) intelligence; and
Energy infrastructure products that involve remote servicing, maintenance, or monitoring capabilities, such as load balancing and other batteries supporting the electrical grid, batteries used as backup systems for industrial facilities and/or critical infrastructure, and transformers and associated equipment.

(From Chapter 3: U.S.-China Competition in Emerging Technologies, Key Recommendation VI)

Congress direct the Administration to create an Outbound Investment Office within the executive branch to oversee investments into countries of concern, including China. The office should have a dedicated staff and appropriated resources and be tasked with:

Prohibiting outbound U.S. investment through a sector-based approach in technologies the United States has identified as a threat to its national or economic security;
Expanding the list of covered sectors with the goal of aligning outbound investment restrictions with export controls. The office should identify and refine the list of covered technologies in coordination with appropriate agencies as new innovations emerge; and
Developing a broader mandatory notification program for sectors where investment is not prohibited to allow policymakers to accumulate visibility needed to identify potential high-risk investments and other sectors that pose a threat to U.S. national or economic security. In addition to direct investments, the notification regime should capture passive investment flows to help inform debates around the expansion of prohibitions to cover portfolio investment.

(From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field, Key Recommendation VII)

Congress amend the Consumer Product Safety Act to (1) grant the U.S. Consumer Product Safety Commission (CPSC) unilateral mandatory recall authority over products where the Chinese seller is unresponsive to requests from the CPSC for further information or to initiate a voluntary recall and the CPSC has evidence of a substantial product hazard, defined as either failing to comply with any CPSC rule, regulation, standard, or ban or posing a substantial risk of injury to the public; and (2) classify Chinese e-commerce platforms as distributors to allow for enforcement of recalls and other safety standards for products sold on these platforms. (From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws, Key Recommendation VIII)

Congress repeal Permanent Normal Trade Relations (PNTR) for China. The PNTR status allows China to benefit from the same trade terms as U.S. allies, despite engaging in practices such as intellectual property theft and market manipulation. Repealing PNTR could reintroduce annual reviews of China’s trade practices, giving the United States more leverage to address unfair trade behaviors. This move would signal a shift toward a more assertive trade policy aimed at protecting U.S. industries and workers from economic coercion. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field, Key Recommendation IX)

Congress direct the Office of the Director of National Intelligence, within 180 days, to conduct a classified assessment, and brief its findings to Congress, of the intelligence community’s (IC) ability to accurately monitor strategic, nonmilitary indicators that would signal that China is preparing for imminent conflict and the extent to which China’s increasing lack of transparency affects the IC’s ability to monitor this information. The assessment should include, but not be limited to, the following:

The IC’s ability to monitor: China’s energy storage locations and stockpiling rates, particularly for crude oil, coal, and natural gas;
- Production shifts from civilian to military industries;
- China’s national defense mobilization system; and
- China’s strategic reserves and their compositions and locations;
The IC’s ability to coordinate with non-Title 10 and -Title 50 federal agencies that have technical expertise in agriculture and trade to monitor China’s food and energy stockpiling and any derived indicators that may signal a potential preparation for conflict;
Whether the IC’s current geospatial intelligence posture is adequate to compensate for the loss of open source information from China; and
The desirability and feasibility of establishing an Energy Strategic Warning system involving coordination between relevant entities including the National Geospatial-Intelligence Agency and the U.S. Departments of Energy, Commerce, and the Treasury.

(From Chapter 7: China’s New Measures for Control, Mobilization, and Resilience, Key Recommendation X)

Additional Recommendations
The Commission recommends:

Congress encourage the Administration’s ongoing rulemaking efforts regarding “connected vehicles” to cover industrial machinery, Internet of Things devices, appliances, and other connected devices produced by Chinese entities or including Chinese technologies that can be accessed, serviced, maintained, or updated remotely or through physical updates. (From Chapter 3: U.S.-China Competition in Emerging Technologies)

Congress enact legislation prohibiting granting seats on boards of directors and information rights to China-based investors in strategic technology sectors. Allowing foreign investors to hold seats and observer seats on the boards of U.S. technology startups provides them with sensitive strategic information, which could be leveraged to gain competitive advantages. Prohibiting this practice would protect intellectual property and ensure that U.S. technological advances are not compromised. It would also reduce the risk of corporate espionage, safeguarding America’s leadership in emerging technologies. (From Chapter 3: U.S.-China Competition in Emerging Technologies)

Congress establish that:

The U.S. government will unilaterally or with key international partners seek to vertically integrate in the development and commercialization of quantum technology.
Federal Government investments in quantum technology support every level of the technology development cycle and supply chain from basic research through product development and market deployment, including investments in intermediate services capacity.
The Office of Science and Technology Policy, in consultation with appropriate agencies and experts, develop a Quantum Technology Supply Chain Roadmap to ensure that the United States coordinates outbound investment, U.S. critical supply chain assessments, the activities of the Committee on Foreign Investment in the United States (CFIUS), and federally supported research activities to ensure that the United States, along with key allies and partners, will lead in this critical technology and not advance Chinese capabilities and development.

(From Chapter 3: U.S.-China Competition in Emerging Technologies)

Congress direct the U.S. Department of Homeland Security and U.S. Customs and Border Protection, in conjunction with the U.S. Department of Commerce, to develop assessment tools capable of identifying the true origins of parts, components, and materials contained in products entering the United States to prevent tariff evasion and limit safety and security risks in light of the increasing complexity of global supply chains. (From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws)

Congress require that the U.S. Trade Representative, in consultation with the U.S. Department of Commerce, the U.S. International Trade Commission, and other entities, as appropriate, prepare a comprehensive report within 90 days on the operation of the U.S.-Mexico-Canada Trade Agreement since its entry into force that provides data and information on:

Chinese-affiliated investments in Mexico and Canada and specific information on their production of goods and how those goods may enter the U.S. market either as finished products or as components in other products;
Trade flows of products produced in China to Mexico and Canada and how such trade flows have changed;
Prices of products produced in China shipped to Mexico and Canada as well as products shipped through those countries to the United States and how those prices relate to the prices of such goods shipped directly into the U.S. market; and
Trade enforcement actions by Mexico and Canada regarding Chinese-produced products (including those transshipped through third countries’ markets) and how such actions relate to U.S. trade enforcement actions.

(From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws)

Congress amend applicable laws to mandate that online marketplaces clearly disclose on product listings for Chinese-made goods the name, physical address, and contact information for the manufacturer. The online marketplaces should also be required to clearly display a warning label that the item is manufactured in a country that does not comply with U.S. consumer safety standards. (From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws)

Congress direct the U.S. Government Accountability Office to investigate the reliability of safety testing certifications for consumer products and medical devices imported from China. (From Chapter 4: Unsafe and Unregulated Chinese Consumer Goods: Challenges in Enforcing Import Regulations and Laws)

Congress direct the Office of the Director of National Intelligence to produce and provide to the U.S. Department of the Treasury within six months a detailed study of Chinese purchases of Iranian oil over the span of the last five years. The study shall include analysis of China’s use of transshipment points and shell companies as methods to insulate itself from sanctions. Congress should further direct that within six months of receipt of the study, the Treasury Department must make a determination if sanctionable activity is occurring and report its findings to Congress. (From Chapter 5: China and the Middle East)

Congress direct the U.S. member on the International Maritime Organization (IMO) Council to use their voice and vote to require China to abide by its treaty obligations under the IMO conventions, including by upholding safety regulations on the use of Automatic Identification System transponders. (From Chapter 5: China and the Middle East)

Congress direct relevant departments and agencies to expand their data collection and transparency initiatives into the volume and types of investment flowing into China by taking the following actions:

Amending the International Investment and Trade in Services Survey Act to require the Bureau of Economic Analysis within the U.S. Department of Commerce to publish more detailed sectoral breakdowns of U.S. direct investment in China on a nationality basis and the U.S. Department of the Treasury to publish annual sector breakdowns of U.S. portfolio investment in China on a nationality basis. The portfolio investment sectors should be more specific than those provided by the Commerce Department for direct investment. Additionally, Congress should require the Treasury Department to publish quarterly updates—without sector breakdowns—of nationality-based portfolio investment in China.
Requiring the U.S. Department of Commerce to produce a report on the feasibility and methodology for publishing nationality-based results for direct investment, where offshore tax havens and locales of incorporation would not be said to receive hundreds of billions of dollars and true destinations of the capital would be accurately identified.

(From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

Congress direct the Administration to impose sanctions on Chinese financial institutions that violate sanctions, including those that are proven to be working with or supporting the Russian military industrial base or facilitating purchases of Iranian oil. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

In light of the periodic and increasingly frequent removal of some of these materials from Chinese websites, Congress direct the executive branch to fund the creation and operation of a regularly updated, permanent data archive, in effect a series of snapshots of portions of the Chinese internet. In the past decade, foreign analysts have made use of open source Chinese-language materials to gain insight into various aspects of current policy as well as internal (but unclassified) discussions of future military, diplomatic, and economic strategy. Information would be stored in the permanent data archive, accessible to both government and private analysts. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

Congress consider legislation to set priorities and goals for U.S.-China economic relations. These policy priorities and goals should include:

Updating existing trade and economic tools to ensure their timely application, utility, and effectiveness in countering China’s non-market economic policies;
Limiting U.S. economic and security dependence on supply chains in critical and emerging products, technologies, and services provided by companies controlled, operating in, or subject to the influence of China;
Enhancing the accountability of the executive branch to Congress and increasing the transparency of its actions to ensure coordinated governmental action and respect for Congress’s constitutional Article I, Section 8 authority;
Prioritizing domestic production and employment while also recognizing the need, as appropriate, to coordinate and align policies with friends and allies;
Acting to address production overcapacity fueled by Chinese policies and actions; and
Advancing the resilience of the U.S. economy and ensuring its access to key inputs and technologies.

(From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

Congress pass legislation eliminating the ability of entities operating in U.S. Foreign-Trade Zones (FTZs) to qualify for zero or lower tariffs on products imported from China or Chinese-affiliated or -invested entities into the FTZ and then reexported. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

The relevant committees of Congress hold hearings to assess the desirability and feasibility of creating a trade defense coalition with other like-minded countries to forestall the risk of a second China shock. Such a grouping would seek to align policies for responding to the recent acceleration in China’s exports of subsidized, underpriced materials and manufactured goods. (From Chapter 6: Key Economic Strategies for Leveling the U.S.-China Playing Field)

Congress direct the U.S. Department of Defense to produce within 60 days a classified net assessment report on current People’s Liberation Army (PLA) Command, Control, Communications, Computers Intelligence, Surveillance, and Reconnaissance (C4ISR) capabilities and PLA electronic warfare (EW) capabilities (including electronic attack and electronic protection capabilities). The report should examine U.S. counter-C4ISR and counter-EW capabilities, assess the resiliency of U.S. capabilities, identify counter-C4ISR and counter-EW gaps, and provide a menu of procurement options to close the gaps. Not later than 60 days after its completion, the U.S. secretary of defense shall provide the report to the appropriate congressional committees and brief them on its findings. (From Chapter 8: China’s Evolving Counter-Intervention Capabilities and the Role of Indo-Pacific Allies)

Congress direct the Office of the Director of National Intelligence, in conjunction with the U.S. Departments of Defense, Commerce, and the Treasury, and other relevant agencies, to conduct a comprehensive review of potential technological chokepoints across the People’s Republic of China military industrial base and devise plans to apply controls, in conjunction with allies, to slow China’s military development. (From Chapter 8: China’s Evolving Counter-Intervention Capabilities and the Role of Indo-Pacific Allies)

Congress reinvigorate and recommit to space as an area of strategic competition, including by conducting a review of the commercial space industry to determine if there are regulatory updates that would ensure that the U.S. commercial space industry is able to innovate as quickly as possible while maintaining safety as a top priority. (From Chapter 8: China’s Evolving Counter-Intervention Capabilities and the Role of Indo-Pacific Allies)

Congress amend the Arms Export Control Act of 1976 to include Taiwan on the list of “NATO Plus” recipients. (From Chapter 9: Taiwan)

Congress create a “Taiwan Allies Fund” that would provide foreign assistance only to countries that have an official diplomatic relationship with Taiwan. No country could receive more than 15 percent of the appropriated funding each year. Countries that no longer have a diplomatic relationship with Taiwan would immediately be ineligible for this funding. (From Chapter 9: Taiwan)

Congress require the Administration to produce a determination whether reasonable grounds exist for concluding that the Hong Kong Special Administrative Region should be designated as a Primary Money Laundering Concern (PMLC) jurisdiction under Section 311 of the Patriot Act due to its growing role as the central sanctions evasion hub and transshipment center for illicit finance and technology to Russia, Iran, and North Korea. (From Chapter 10: Hong Kong)

Congress direct the U.S. Department of the Treasury, in coordination with the U.S. Departments of State and Commerce, to provide the relevant congressional committees a report assessing the ability of U.S. and foreign financial institutions operating in Hong Kong to identify and prevent transactions that facilitate the transfer of products, technology, and money to Russia, Iran, and other sanctioned countries and entities in violation of U.S. export controls, financial sanctions, and related rules. The report should:

Evaluate the extent of Hong Kong’s role in facilitating the transfer of products and technologies to Russia, Iran, other adversary countries, and the Mainland, which are prohibited by export controls from being transferred to such countries;
Evaluate Hong Kong’s role in facilitating trade and financial transactions that violate U.S. sanctions on Russia, Iran, and other countries and entities subject to U.S. financial sanctions;
Examine whether Hong Kong’s National Security Law has limited the ability of financial institutions to adhere to global standards for anti-money laundering and know-your-customer procedures; and
Describe the level of cooperation between Hong Kong and U.S. authorities in enforcing export controls and sanctions regimes.

(From Chapter 10: Hong Kong)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress consider legislation establishing a framework for corporate disclosure requirements to provide investors greater transparency into risks from publicly traded companies’ exposure to China. Factors encompassed within the framework may include but not be limited to the percentage of companies’ total assets in China, their joint ventures with Chinese firms, the amount and nature of research and development they undertake in China, and the influence of any company personnel associated with the Chinese Communist Party in corporate decision-making. (From Chapter 3: Potential Risks to China’s Future Economic Competitiveness, Section 2: Fiscal, Financial, and Debt Problems Weigh Down Beijing’s Ambitions, Key Recommendation I)

Congress establish a risk matrix framework to evaluate the national security threat posed by electronic products imported from the People’s Republic of China. To eliminate or mitigate risks identified in the threat matrix evaluation, Congress should consider the use of all trade tools, including tariffs. (From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 2: Weapons, Technology, and Export Controls, Key Recommendation II)

Congress direct the U.S. Department of Defense to work with European partners to protect the movement of U.S. military equipment, supplies, and personnel from Chinese surveillance via China’s National Transportation and Logistics Public Information Platform (LOGINK) and any other logistics platform controlled by, affiliated with, or subject to the jurisdiction of the Chinese Communist Party or the Government of the People’s Republic of China or any logistics platform that shares data with such a system. Coordination with European partners should include:

Identifying ports in NATO countries that currently utilize or intend to utilize LOGINK or similar systems from China or other countries of concern;
Assessing the U.S. military’s current and past potential exposure to Chinese surveillance via LOGINK or similar systems and the risks to U.S. interests and national security resulting from such exposure;
Identifying and assessing the feasibility of adopting alternative shipping routes through ports that do not currently utilize or intend to utilize LOGINK or similar systems, including by identifying any risks to U.S. military programs, activities, and movements that would be created by attempting to avoid exposure to such systems; and
Implementing joint measures to mitigate the identified risks of exposure to LOGINK and similar systems in European ports.

(From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 1: Europe-China Relations; Convergence and Divergence in Transatlantic Cooperation, Key Recommendation III)

Congress address China’s state-sponsored influence and interference in the United States by amending the Higher Education Act of 1965 as follows:

To require the U.S. Department of Education to share data on U.S. universities and colleges’ foreign gifts and contract disclosures, required under section 117 of the act, with U.S. federal law enforcement, intelligence agencies, and other relevant agencies, including but not limited to the Federal Bureau of Investigation and the Office of the Director of National Intelligence (ODNI). Such information sharing should encompass gifts and contracts extending back at least ten years, or a period of time determined by Congress, as well as all future gifts and contracts as they are disclosed to the department.
To direct an interagency review, led by ODNI, to assess the section 117 data to identify risks posed by China- and Hong Kong-origin money received by U.S. universities and colleges. The interagency findings should be reported to Congress and inform steps, including potential suspension of federal funds, to mitigate risks associated with continued receipt of China-origin money by U.S. universities and colleges.
To require universities and colleges to include in their section 117 reporting when a foreign gift or contract disclosure has been added retroactively or when a past entry has been revised and to establish penalties for late reporting. Penalties may include loss of federal financial assistance within three consecutive or nonconsecutive years of failing to disclose gifts or contracts above the current threshold of $250,000.
To direct the U.S. Department of Education to evaluate the adequacy of the current reporting threshold of $250,000 by conducting a study on the average amount of foreign gifts and contracts received or signed by U.S. universities and colleges in a variety of academic disciplines and to determine whether the threshold needs to be adjusted for programs in disciplines that Congress deems critical to U.S. national security. The study should also include an analysis of the amount, focus, and potential impact of China- and Hong Kong-origin gifts and contracts received by U.S. universities and colleges over the last ten years.

(From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front and Propaganda Work, Key Recommendation IV)

Congress enact legislation to address politically oppressive lawsuits initiated by the Chinese government or its proxies attempting to silence, intimidate, or impose significant litigation costs on parties for exercising protected rights through political engagement or other public participation. Such legislation would create a procedure providing for expedited consideration of efforts to dismiss such lawsuits and staying expensive discovery proceedings until the court has made a threshold determination on the merits of the lawsuit. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 1: Rule by Law: China’s Increasingly Global Legal Reach, Key Recommendation V)

Congress request an evaluation, to be completed within 180 days by the General Accountability Office, of the effectiveness of recently imposed semiconductor export control regulations in preventing China from either acquiring or developing the capacity to manufacture certain advanced semiconductors. The report should include an assessment of the extent of cooperation received from key allied governments, as well as both U.S. and foreign-based companies, and an evaluation of China’s efforts to circumvent these controls or to negate their effectiveness by developing its own indigenous capabilities. This assessment should be prepared for public release but may include a classified annex. The report should be updated annually. (From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 2: Weapons, Technology, and Export Controls, Key Recommendation VI)

Congress provide the Committee on Foreign Investment in the United States (CFIUS) the authority to review investments in U.S. companies that could support foreign acquisition of capabilities to attain technological self-sufficiency or otherwise impair the economic competitiveness of the United States, including:

Investments in technology areas prioritized in potential adversaries’ industrial policies, such as China’s 14th Five-Year Plan, Made in China 2025, and other related initiatives;
Investments in U.S. firms that have received funding from the U.S. Departments of Defense, Commerce, Energy, and other U.S. government funding for projects critical to national security and competitiveness; and
Other investments that may provide privileged access to expertise, business networks, and production methods critical to maintaining U.S. economic and technological competitiveness.

(From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 2: Weapons, Technology, and Export Controls, Key Recommendation VII)

Congress establish an interagency group, led by the Office of the Director of National Intelligence, to create a public database to assist U.S. companies, universities, and individuals in conducting due diligence on potential business or academic partners in China. The database should enable users to identify how China’s military, United Front Work Department, intelligence agencies, and security agencies may be linked to Chinese companies, investment firms and other financial institutions, research institutes, and universities. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front and Propaganda Work, Key Recommendation VIII)

Congress should direct the U.S. Department of Defense (DOD) to expand the training of Taiwan’s military to locations in the United States for the purpose of conducting weapons familiarization with systems that have been ordered by but not yet delivered to Taiwan in order to speed Taiwan’s adoption of those systems once delivered. Congress should authorize DOD to station standing observer teams from Taiwan at U.S. training installations and bases to observe and participate in such training. (From Chapter 5: Changing Relation with Europe, Taiwan, and Hong Kong, Section 2: Taiwan, Key Recommendation IX)

Congress direct the Administration to engage in discussion with European allies on plans and preparations to impose economic sanctions on China in the event of a confrontation over Taiwan, an escalation in China’s support for Russia, or other contingencies. Congress also direct the Administration to consult with Congress on the progress of these discussions. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 1: Europe-China Relations; Convergence and Divergence in Transatlantic Cooperation, Key Recommendation X)

Additional Recommendations
The Commission recommends:

Congress pass legislation requiring the Judicial Conference of the United States to prepare an evaluation and guidance for U.S. courts and administrative personnel on the Chinese legal system and body of law for purposes of assisting courts in assessing recognition of Chinese judgments and change of venue, choice of law, and forum non conveniens inquiries. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 1: Rule by Law: China’s Increasingly Global Legal Reach)

Congress pass legislation to amend the Foreign Investment Risk Review Modernization Act (FIRRMA) to expand the definition of “covered transaction” to include “research contracts.” Under the expanded definition, the Committee on Foreign Investment in the United States (CFIUS) should have the authority to review investments made by Chinese entities in the U.S. education system in the form of contracts. All parties to the transaction, including the foreign contracting organizations and U.S. institutions, should file a joint declaration to CFIUS ahead of their contract start date. Upon passage of this legislation, reporting requirements under section 117 of the Higher Education Act should be adjusted through regulation to include foreign gifts to U.S. universities and colleges, effectively transferring the administrative authority to receive and oversee the collection of foreign research contract reporting to CFIUS. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress amend the Lobbying Disclosure Act to require domestic associations, such as industry or trade associations, who employ an individual registered as a lobbyist to publicly disclose any donations or member contributions from entities based in China and other countries of concern, as well as their U.S. affiliates. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress support the establishment of a new entity under the U.S. Agency for Global Media (USAGM) to coordinate and disseminate news content internationally in Chinese, English, and other languages to promote fact-based information on China and counter Chinese Communist Party (CCP) global information manipulation. The entity could facilitate partnerships with international journalists and media and provide independent content, particularly where Chinese state and state-sponsored entities seek to discredit the United States and the values of liberal democracy and promote false narratives about China. This digital service will:

Curate and repackage the best of USAGM entities’ daily content to provide uncensored China-related news in Mandarin and English for countries around the world where China is making inroads promoting its values and attempting to discredit the United States; and
Engage audiences and partners through multiple platforms and multilateral means to promote responsible and fact-based journalism.

(From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress direct the U.S. Department of State, in coordination with the U.S. Department of Commerce and U.S. Trade and Development Agency, to prepare a public biennial assessment of the impact of China’s lending and other financial practices on Belt and Road Initiative participant countries and to recommend best practices for addressing the impacts of China’s activities through U.S. diplomatic and programmatic engagements.

The assessment should consider the impact of these practices on corruption and social stability within recipient countries, among other issues.
Based on the findings of the report, Congress request the U.S. Department of State, in coordination with the Development Finance Corporation, U.S. Trade and Development Agency, and other relevant agencies, to work with the EU to develop a unified approach to addressing the impact of China’s activities under the Belt and Road Initiative in third countries.

(From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress should consider legislative restrictions to address the national security and systemic risks raised by Chinese social media applications. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress should require the U.S. Department of State to establish as grounds for student visa revocation any instance where a foreign student surveils on behalf of or reports to any foreign-state intelligence, security, law enforcement, or political party authority the civil or political speech of any other student, or threatens to do so. The Department of State shall develop appropriate evidentiary sources and standards for revocation. (From Chapter 2: China’s Efforts to Subvert Norms and Exploit Open Societies, Section 2: Battling for Overseas Hearts and Minds: China’s United Front Propaganda Work)

Congress request a Government Accountability Office report assessing the reciprocal nature of information sharing, including access to databases, and scientific collaboration between the United States and the People’s Republic of China. Such a report shall include information on access by U.S. academics and experts to ongoing research activities, projects, symposia, and other scientific and technology activities in China. It should also assess whether such collaboration and activities provide comparable information and value to that which is available to researchers from China at international conferences and venues or in the United States. (From Chapter 3: Potential Risks to China’s Future Economic Competitiveness, Section 1: China Educating and Training Its Next Generation Workforce)

To combat tariff evasion by Chinese exporters, Congress amend the procedures for investigating claims of trade remedy laws in the Enforce and Protect Act of 2015 to include merchandise subject to tariffs under the findings of the 2018 Section 301 investigation into China’s acts, policies, and practices of related to technology transfer, intellectual property, and innovation. (From Chapter 3: Potential Risks to China’s Future Economic Competitiveness, Section 1: China Educating and Training Its Next Generation Workforce)

The Joint Economic Committee should consider resuming production of an annual unclassified report on the state of the Chinese economy and economic policy decisions of the Chinese Communist Party. The report would analyze open source and classified data and analysis, leveraging expertise from across the U.S. government, including analysts and economists from the relevant agencies of the intelligence community. (From Chapter 3: Potential Risks to China’s Future Economic Competitiveness, Section 1: China Educating and Training Its Next Generation Workforce)

Congress consider legislation requiring federal financial authorities, including the Federal Reserve, to seek specific information from bank and investment institutions regarding their exposure to, and involvement in, the People’s Republic of China. Such information shall include any wealth management products they offer within China and any Chinese investment vehicles they may sell to citizens of the United States directly or indirectly. (From Chapter 3: Potential Risks to China’s Future Economic Competitiveness, Section 1: China Educating and Training Its Next Generation Workforce)

Congress require the U.S. Department of Defense and the U.S. Department of State to provide to the appropriate committees of Congress within 180 days a classified briefing on China’s efforts to educate and train foreign military personnel. The briefing should address how China’s programs affect U.S. interests, including: (a) foreign military partners’ assessment of the value of China’s security assistance and training programs; and (b) whether the scale and offerings of U.S. military education and training programs are sufficient to maintain the United States’ status as a preferred partner. (From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 1: China’s Relations with Foreign Militaries)

Congress require the U.S. Department of Defense (DOD) to submit a report within 180 days that builds upon the restrictions on DOD’s contacts with the People’s Liberation Army (PLA) outlined in section 1201 of the National Defense Authorization Act for Fiscal Year 2000 by detailing measures DOD is taking to mitigate the risk of the PLA gaining indirect knowledge of U.S. Armed Forces’ equipment and operational tactics, techniques, and procedures through interactions with the militaries of U.S. allies and partners. The report should identify any obstacles to ensuring sufficient partner awareness of these risks and to conducting the necessary follow-up and end-use monitoring to ensure compliance. (From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 1: China’s Relations with Foreign Militaries)

Congress hold hearings to evaluate the potential for establishing a single export licensing system. Such a system would integrate the Commerce Control List, the dual-use technology licensing system managed by the U.S. Department of Commerce’s Bureau of Industry and Security, and the U.S. Munitions List, the armaments licensing system managed by the U.S. Department of State’s Directorate of Defense Trade Controls. In evaluating a single licensing system, Congress should consider:

Whether a single licensing system could improve the enforcement of export controls targeting specific end users, particularly those in jurisdictions with poor transparency into corporate ownership and commercial affiliations, such as China;
The potential commercial impact of combining the licensing systems, including how to reduce the compliance burden on industry without compromising national security;
Which technologies to include in a combined system and how to integrate appropriate technical expertise to scope evolving controls on dual-use emerging and foundational technologies;
Where such a system should be housed within the U.S. government and how to establish effective coordination between different agency stakeholders; and
How to provide the Department of State and other relevant agencies with appropriate information and authorities to advocate for multilateral export controls that advance U.S. security, foreign policy, and economic competitiveness.

(From Chapter 4: China Seeking Military Influence and Advanced Capabilities, Section 2: Weapons, Technology, and Export Controls)

Congress direct the U.S. Trade and Development Agency, the Development Finance Corporation, and the National Institute of Standards and Technology (NIST) to report on how they are incorporating promotion of U.S.-supported technical standards into U.S.-funded development projects or technical assistance provided abroad. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 1: Europe-China Relations; Convergence and Divergence in Transatlantic Cooperation)

Congress direct the Administration to establish a secure electric vehicle (EV) and new energy vehicle (NEV) supply chain by considering legislation that would foster U.S.-EU-UK coordination on:

Raising or maintaining tariffs on Chinese EV, NEV, and related inputs and technology; and
Promoting supply chain diversification and resilience in the EV and NEV markets.

(From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 1: Europe-China Relations; Convergence and Divergence in Transatlantic Cooperation)

Congress should pass legislation establishing a joint “center of excellence” operated by the United States and Taiwan to uncover, analyze, and counter China’s disinformation and offensive cyber operations against Taiwan. This center could be modeled on the NATO Cooperative Cyber Defence Centre of Excellence and foster cooperation, capabilities, and information sharing on disinformation and cybersecurity through education, training, and research. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 2: Taiwan)

Congress direct the U.S. Department of State and relevant agencies to produce an unclassified report examining the expected economic impact of a People’s Liberation Army blockade and/or quarantine of Taiwan. The report should seek to assess the following under each scenario: (1) the impact on global trade and output on timelines up to one year; (2) the top ten sectors that will be most disrupted by a sustained blockade; and (3) the expected impact on the domestic economies of each G7 country from such action. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 2: Taiwan)

Congress direct the U.S. Department of State to include in the annual report required by the Hong Kong Autonomy Act information on the Hong Kong government’s restriction of émigrés’ access to their financial accounts in the territory, including from the government-run Mandatory Provident Fund (MPF) pension scheme. Based on the findings of the report, the Administration should impose sanctions, as authorized under the 2020 Hong Kong Autonomy Act, on individuals involved in limiting freedom of emigration. Congress may consider further steps to prevent U.S.-based financial institutions involved in managing the funds of Hong Kongers from aiding in violating freedom of emigration by withholding pension funds from their rightful owners at the behest of Hong Kong’s government. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 3: Hong Kong)

Congress amend the Hong Kong Autonomy Act to add to the contents of the required annual report an evaluation of limitations on Hong Kong’s judicial independence. Specifically, the evaluation should assess whether the chief executive or any other body acting on behalf of China’s government has exercised undue influence over the Hong Kong judicial system in ways that violate the right to a fair and independent trial as guaranteed under the Basic Law of Hong Kong. Based on the findings of the report, Congress may impose sanctions, as authorized under the 2020 Hong Kong Autonomy Act, on individuals involved with the Hong Kong judiciary serving in Hong Kong, including foreign national judges that serve on the Hong Kong Court of Final Appeal. (From Chapter 5: Changing Relations with Europe, Taiwan, and Hong Kong, Section 3: Hong Kong)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress direct the Administration to produce within 90 days an interagency report coordinated by the Office of the U.S. Trade Representative to assess China’s compliance with the terms and conditions of the 1999 Agreement on Market Access between the People’s Republic of China and the United States of America. The assessment should be presented as a summary list of comply/noncomply status of the provisions under the agreement. If the report concludes that China has failed to comply with the provisions agreed to for its accession to the WTO, Congress should consider legislation to immediately suspend China’s Permanent Normal Trade Relations (PNTR) treatment. Following the suspension of PNTR, Congress should assess new conditions for renewal of normal trade relations with China. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices, Key Recommendation #1)

Congress direct the Administration to create an Economic and Security Preparedness and Resilience Office within the executive branch to oversee, coordinate, and set priorities for cross-agency efforts to ensure resilient U.S. supply chains and robust domestic capabilities, in the context of the ongoing geopolitical rivalry and possible conflict with China. This Office would be tasked with:

Establishing a dedicated Supply Chain Mapping Unit to determine requirements, set priorities, and coordinate efforts to continuously map, monitor, and analyze the most critical supply chains, including but not limited to semiconductors, rare earths, life-saving and life-sustaining medications and their active pharmaceutical ingredients, and castings and forgings.
- The unit would be tasked with developing interoperable performance measures to monitor and assess current U.S. supply chain resiliency and risk mitigation efforts, including data collection on U.S. supply chain dependencies on direct and indirect Chinese suppliers, prioritizing defense-critical supply chains.
Establishing a Defense Mobilization Unit responsible for coordinating and setting priorities for:
- Assessment of the requirements for weapons, munitions, supplies, and other equipment necessary to equip and support U.S. forces and to assist friends and partners in the Indo-Pacific region in a potential conflict with the People’s Republic of China, including conflicts of varying duration;
- Determination of the adequacy of existing stocks and available productive capacity to meet those needs;
- Identification of potential shortfalls or bottlenecks that might impede production and resupply in some scenarios; and
- Recommendation of corrective measures to address these problems.
Including in its assessments the effects of potential disruptions in U.S.-China trade on defense mobilization and domestic availability of critical materials, products, and supplies. Where it identifies likely requirements for additional capacity, the unit shall determine funding and support mechanisms to ensure the timely development of such capabilities and capacity.
Consulting with other departments and agencies to identify shortfalls in current defense industrial base and supporting industrial capabilities and what additional measures might be needed to address them.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience, Key Recommendation #2)

Congress enact legislation creating a permanent interagency committee in the executive branch charged with developing options and creating plans for the imposition of sanctions or other economic measures in a range of possible scenarios, including (but not limited to) a Chinese attack, blockade, or other hostile action against Taiwan. This committee would evaluate the potential economic and political consequences of various options, coordinate their implementation, and advise Congress of any amendments to statutory authorities or mandates required to enhance their effectiveness. The committee should coordinate and seek to devise joint plans with the relevant agencies of other governments that may be contemplating similar measures. The committee should include participants from the U.S. Departments of State, Treasury, Commerce, Defense, and Homeland Security. (From Chapter 4: Taiwan, Key Recommendation #3)

Congress direct the U.S. Food and Drug Administration in cooperation with other federal agencies, within one year and on an ongoing basis thereafter, to identify pharmaceutical products that utilize active pharmaceutical ingredients (APIs) and other ingredients and inputs that are sourced directly or indirectly from the People’s Republic of China and develop alternative sourcing arrangements through available tools and resources, including Defense Production Act authorities. The United States should maximize the production of such goods domestically or, as appropriate, from trusted countries. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience, Key Recommendation #4)

Congress direct the Administration as part of the Indo-Pacific Economic Framework (IPEF) to negotiate a prohibition on the utilization of China’s National Transportation and Logistics Public Information Platform (LOGINK) or similar systems provided by Chinese state-affiliated entities within IPEF member ports. A two-year transition period shall be provided for existing users of LOGINK or similar Chinese-controlled or -affiliated systems to terminate use of such systems and transition to secure logistics systems with no Chinese control or affiliation. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience, Key Recommendation #5)

Congress direct the U.S. Department of the Treasury to require U.S. corporations and U.S.-registered subsidiaries of foreign corporations to publicly disclose, on an annual basis, all holdings in firms linked to China’s military, including those that maintain any production permit, qualification, or certification issued by the People’s Liberation Army or China’s State Administration for Science, Technology, and Industry for National Defense. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience, Key Recommendation #6)

Congress create an authority under which the president can require specific U.S. entities or U.S. entities operating in specific sectors to divest in a timely manner from their operations, assets, and investments in China, to be invoked in any instance where China uses or threatens imminent military force against the United States or one of its allies and partners. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices, Key Recommendation #7)

Congress direct the U.S. Department of Defense to produce a classified report on current and future military posture, logistics, maintenance, and sustainment requirements to bolster the United States’ “capacity to resist force” in the event of a Chinese attack and attempted invasion of Taiwan. The report shall assess the requirements for all scenarios, including protracted combat in a contested environment (e.g., anti-access, area denial), and evaluate how to best enable a dispersed, distributed force in the Indo-Pacific. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: China’s Energy Plans and Practices, Key Recommendation #8)

Congress should make available significant additional multiyear defense funds in conjunction with: (i) a joint planning mechanism made up of Taiwan and U.S. defense officials identifying sets of interoperable and complementary capabilities required for the defense of Taiwan; and (ii) Taiwan legislatively committing significant additional funds to procure its share of those capabilities for its military. (From Chapter 4: Taiwan, Key Recommendation #9)

Congress, pursuant to the Hong Kong Human Rights and Democracy Act, amend the International Organization Immunities Act to remove Hong Kong Economic and Trade Offices as a covered organization, thereby eliminating diplomatic privileges enjoyed by such offices and their employees in the United States. This amendment could be reversed under one of the following conditions:

The People’s Republic of China negotiates an agreement with the United States to have Hong Kong Economic and Trade Offices considered an official part of the People’s Republic of China’s mission to the United States, and subject to the same requirements.
China alters its treatment of Hong Kong to allow for sufficient autonomy and abides by One Country, Two Systems as enumerated by the Hong Kong Policy Act.

(From Chapter 5: Hong Kong, Key Recommendation #10)

Additional Recommendations
The Commission recommends:

Congress pass legislation creating a new Federally Funded Research and Development Center (FFRDC) (to replace the Open Source Center closed in 2015) that will translate and maintain a publicly available collection of important open source material from the People’s Republic of China (PRC) and other countries of strategic interest. This legislation should require existing FFRDCs to provide to this new entity a copy of all open source Chinese-language materials collected or used in any government-sponsored analytical or related projects on an ongoing basis. (From Chapter 1: CCP Decision-Making and Xi Jinping’s Centralization of Authority)

Congress direct the Office of the U.S. Director of National Intelligence to produce an unclassified directory of Chinese Communist Party (CCP) senior members and organizations, similar to the “Directory of PRC Military Personalities” produced and updated by the U.S. Department of Defense.

The directory should be updated on an annual basis and consist of an unclassified public report on the CCP, including the Party’s organizational structure (including organizations affiliated with the United Front Work Department) and profiles of leaders and organizations at least to the level that the CCP defines as “senior cadre.”
The contents of each year’s directory should be retained in the form of an unclassified, publicly available, searchable database of CCP members and organizations.

(From Chapter 1: CCP Decision-Making and Xi Jinping’s Centralization of Authority)

Congress consider legislation providing the authority to impose retaliatory trade measures against China in support of an ally or partner subject to Chinese economic coercion. Such legislation shall authorize coordinated trade action with U.S. allies and partners. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct that any entity subject to national security restrictions or sanctions by a U.S. department or agency, including but not limited to the Entity List, should be denied access to the Clearing House Interbank Payments System (CHIPS), the Automated Clearing House (ACH), and the Federal Reserve’s funds transfer system (Fedwire). (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the U.S. Department of Commerce to provide regular (semiannual) reports on its enforcement of the foreign direct product rules and its approval of export license applications for entities seeking to export to China items produced from technology or software controlled for national security reasons. Such a report shall not identify U.S. exporters, but it shall include:

The number of licenses granted;
The number of licenses granted per export destination;
Item classifications for such licenses;
The value of such exports; and
The rationale for granting the licenses.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the U.S. Patent and Trademark Office to mandate that any applicant for a U.S. patent that has received support under a program administered directly or indirectly by the Chinese government provide the same disclosures that recipients of U.S. federal support must provide. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the U.S. Department of Commerce to develop a process to identify and self-initiate antidumping and countervailing duty petitions covering products from China. In developing the methodology to support such a process, the department shall utilize existing government data and develop new data collection efforts prioritizing the identification of products injuring or threatening to injure small- and medium-sized enterprises or industries facing long-term harm from Chinese industrial overcapacity. The department shall also develop the capabilities for the U.S. government to identify and pursue self-initiation of circumvention, evasion, and transshipment enforcement cases to address products originating from China. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the U.S. Department of Commerce to update its methodology in determining antidumping duty rates for products from China to net out the subsidy or dumping impact of Chinese-sourced inputs utilized in identifying relevant third-country proxy rates to determine dumping margins. This approach should allow for the adjustment of rates used to identify an appropriate proxy for market-based producers where China’s impact on such rates may skew the true market equivalent value of such products to determine dumping margins. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress consider legislation that would address the Chinese Communist Party’s efforts to undermine U.S. intellectual property protections through its use of antisuit injunctions. In considering such legislation, Congress should seek to ensure the integrity of U.S. patent laws and the strength of our nation’s patent system and its support for U.S. innovation by protecting patent rights and the sovereignty of U.S. courts and the U.S. adjudicatory system. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

In enacting legislation subsidizing research or production, Congress should evaluate whether China can legally gain access to that research or to the knowledge and equipment needed to produce that good to prevent the United States from indirectly subsidizing or supporting Chinese competitors. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the Office of the U.S. Trade Representative to monitor and publicly identify in an annual report the industries wherein China’s subsidies, including state monopolization and evergreen loans, pose the greatest risk to U.S. production and employment. A rebuttable presumption of guilt in antidumping and countervailing duty processes shall result from the findings of this report. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Challenging China’s Trade Practices)

Congress direct the U.S. Department of Defense to produce a classified report on the feasibility of and the military requirements for an effective blockade of energy shipments bound for China in the event of military conflict involving China. The report should place particular attention on the Strait of Malacca and the feasibility of operationalizing a blockade of shipping bound for China intending to transit that waterway. The report should also consider the extent to which China may be able to satisfy its energy needs during a crisis or conflict through stockpiles, by rationing supplies, and by relying on overland shipments through current and planned cross-border oil and gas pipelines. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: China's Energy Plans and Practices)

Congress direct the U.S. Department of Energy to produce an annual report detailing the extent to which U.S. supply chains for key energy technologies, components, and materials are subject to Chinese control or manipulation. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: China’s Energy Plans and Practices)

In enacting legislation subsidizing reshoring or existing production in the United States, Congress should evaluate whether the subsidies may lead to additional dependence on supply chains running through or relying on China to serve that production. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

Congress enact legislation requiring suppliers to the U.S. government in “critical” sectors, as defined by Congress, to confidentially disclose all tiers of their contractors for the purpose of identifying U.S. supply chain dependencies on China. If suppliers are unable to do this within three years and each year thereafter, they are ineligible to receive government contracts. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

Congress direct each federal agency administering Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) programs to develop a due diligence program to ensure the supply chain integrity of participating U.S. small businesses and decrease their dependencies on Chinese suppliers. The program should also include resources for participating businesses to prevent investments from Chinese firms, particularly those involved in China’s Military-Civil Fusion program, that target emerging technologies and innovations valuable to the U.S. Department of Defense and other SBIR or STTR sponsoring agencies.

The due diligence program of each SBIR or STTR administering agency should provide financial and technical assistance to U.S. small businesses for up to three years for the purposes of supporting sustained procurement opportunities for the government and improving small businesses’ internal capacity for federal engagement. Technical assistance may include establishing procedures for identifying foreign entities of concern within small businesses supply chains.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

Congress direct the Administration to release a comprehensive public report on the utilization of commercial-off-the-shelf (COTS) procurement of inputs, components, and products from China:

By the U.S. Department of Defense and contractors in major weapons systems; in Munitions List items; and in Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) items;
In critical infrastructure as identified by the U.S. Department of Homeland Security; and
In critical supply chains and sectors as identified in U.S. government agency reports submitted per section 4 of Executive Order 14017 on “America’s Supply Chains.”
Such a report shall identify the specific items that were purchased, overall quantities, and, where applicable, the value of the contracts in aggregate by item.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

Congress direct the Administration to provide a public semiannual report on the volume of products detained, excluded, or seized for violations of the Uyghur Forced Labor Prevention Act and related enforcement activities. This report should detail product sector, product quantity, and whether the shipment was stopped directly or indirectly containing any production linked to Uyghur forced labor. This report shall also detail any and all existing loopholes in U.S. trade law and trade enforcement mechanisms that inhibit the ability of relevant U.S. government agencies to trace mined, manufactured, or procured goods made using Uyghur forced labor. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

To ensure the U.S. government is able to assess its reliance on foreign sources, Congress direct the U.S. Department of Commerce to calculate U.S. import dependence at the product level across all industries, combining domestic production data (North American Industry Classification System [NAICS] codes) with U.S. export and import data (HTS [Harmonized Tariff Schedule] codes) in order to obtain a clearer picture of the United States’ import dependence and provide the results in a publicly accessible database. This database should be consistently updated and should for each industry and product category tabulate dependence on China or any major source location that is known to use components and materials from China. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S. Supply Chain Vulnerabilities and Resilience)

Congress direct the Office of the U.S. Trade Representative to create an updateable list of Chinese firms operating in critical sectors and found to have benefited from coercive intellectual property transfer, including theft. Such a list would enable the U.S. Department of the Treasury to ban investment in and the U.S. Department of Commerce to deny export licenses to these firms and related parties for a rolling period of five years to prevent Chinese beneficiaries from further gaining from U.S. intellectual property loss. If additional authorities are needed, such requests should be made to Congress on an expedited basis. (From Chapter 3: U.S.-China Security and Foreign Affairs, Section 2: China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States)

Congress direct the U.S. Department of Homeland Security to catalog Chinese-sourced surveillance equipment, first responder communication systems, and smart cities systems used by state and local governments. The Department of Homeland Security shall further identify:

Levels of risk from these systems as a result of foreign interference or malicious cyber activity;
Plans to remove and replace such equipment to protect U.S. interests; and
The necessary resources to implement these plans.

(From Chapter 3: U.S.-China Security and Foreign Affairs, Section 2: China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States)

Congress pass legislation codifying the concept of “systemically important critical infrastructure” (SICI) and requiring SICI-designated entities, defense contractors, and recipients of federal funding for research and development of sensitive and emerging technologies to undertake enhanced hardening and mitigation efforts against cyberattacks. These efforts shall follow cybersecurity standards and guidance as determined by the U.S. Department of Defense and Cybersecurity and Infrastructure Security Agency. Congress should provide appropriate legal liability “safe harbor” provisions to compliant SICI operators and appropriate support as necessary for SICI-designated small- and medium-sized companies to address the cost of compliance. Such legislation would also require that cybersecurity risk mitigation plans be a condition for the Small Business Administration (SBA) to award grants such as those under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. As part of the regular audit process, SBA and any relevant agencies should ensure implementation of these plans and require certification of compliance. (From Chapter 3: U.S.-China Security and Foreign Affairs, Section 2: China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States)

Congress direct the U.S. Secretary of the Treasury to prohibit investment in and other financial transactions with any Chinese entities that have been involved in cyber-enabled intelligence collection or theft of intellectual property sponsored by the People’s Republic of China against U.S.-based persons or organizations under authorities pursuant to Executive Order 13694 on “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities” (amended as EO 13757), including any individuals, research institutes, universities, and companies that have been affiliated with Chinese state-sponsored advanced persistent threat (APT) groups or served as contractors for China’s Ministry of State Security or People’s Liberation Army. (From Chapter 3: U.S.-China Security and Foreign Affairs, Section 2: China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States)

Congress direct the U.S. Secretary of State, U.S. Secretary of Defense, and Administrator of the U.S. Agency for International Development (USAID) to submit a strategy on U.S. interests in the Indian Ocean region with considerations for competition with China in the region, including:

Enhancing development and U.S. economic activity in the region;
Defending freedom of navigation;
Supporting and facilitating regional allies and partners in addressing security challenges in the region; and
Promoting cooperation with U.S. allies in the Indo-Pacific, including Japan and Australia, and major defense partners, including India, and NATO allies, including the United Kingdom and France, to support a rules-based order in the region.

(From Chapter 3: U.S.-China Security and Foreign Affairs, Section 3: China’s Activities and Influence in South and Central Asia)

Congress direct the Administration to submit a strategy on U.S. interests in Central Asia with considerations for significant changing circumstances in the region, including:

Russia’s diminishing presence as a result of its unprovoked invasion of Ukraine;
The Taliban’s rise to power in Afghanistan; and
China’s growing influence on members of the Shanghai Cooperation Organization through promoting Chinese governance concepts, including antiterrorism and law enforcement norms aimed at suppressing political opposition and cyber sovereignty and information security standards that empower authoritarian regimes to restrict the free flow of information.

(From Chapter 3: U.S.-China Security and Foreign Affairs, Section 3: China’s Activities and Influence in South and Central Asia)

Congress direct the U.S. Agency for International Development (USAID), the Development Finance Corporation, and other relevant agencies to make available training to relevant officials in South and Central Asia in assessing and mitigating the risks of China’s investment and lending in the regions. (From Chapter 3: U.S.-China Security and Foreign Affairs, Section 3: China’s Activities and Influence in South and Central Asia)

Congress direct the Administration to extend the deferral of enforced departure of qualifying Hong Kong citizens in the United States, which would otherwise end in February of 2023. The U.S. Departments of State and Homeland Security shall submit a plan to Congress within 180 days addressing the long-term status and treatment of Hong Kong citizens in the United States. (From Chapter 5: Hong Kong)

Congress consider legislation requiring U.S. entities with data operations in Hong Kong to submit an annual report on any requests or attempts to access such data from the Hong Kong government or Chinese authorities. This report will also detail the nature of any request or attempt to access and the U.S. entity’s compliance. (From Chapter 5: Hong Kong)

Congress direct the U.S. Secretary of State to include a detailed list of all websites blocked in Hong Kong pursuant to its annual report requirements under the Hong Kong Policy Act to document limitations to freedom of information. (From Chapter 5: Hong Kong)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress consider comprehensive legislation to address risks to U.S. investors and U.S. interests from investments in Chinese equity, debt, and derivative instruments by:

Prospectively prohibiting investment in Variable Interest Entities (VIEs) linked to Chinese entities.
Absent prohibition, ensuring that the risks of investments in VIEs linked to Chinese entities are more prominently identified for investors, including that the VIE structure is illegal under Chinese law, and that taxpayer subsidies do not support investments in such entities. Provisions that should be considered in support of this goal include:
Requiring prominent identification of the potential high risk for investments in VIEs linked to Chinese companies by:
Identifying VIEs linked to Chinese companies as such in their stock trading symbols on U.S. exchanges.
Requiring that broker-dealers provide risk warning labels on the potential lack of legal recourse for investors for their investments in VIEs linked to Chinese entities.
Prohibiting preferential federal tax treatment on losses and gains on investments in VIEs linked to Chinese entities made after the passage of appropriate statutory provisions.
Directing the U.S. Securities and Exchange Commission (SEC) as part of its evaluation of potential guidance on reporting on environmental, social, and governance matters by publicly traded companies to require reporting of:
Sourcing and due diligence activities of such companies involving supply chains that are directly or indirectly linked to products and services utilizing forced labor from Xinjiang.
Transactions with companies that have been placed on the Department of Commerce’s Entity List or those designated by Treasury as Chinese Military-Industrial Complex Companies.
Requiring index providers that include within their indices securities issued on mainland Chinese exchanges or the Hong Kong Stock Exchange, securities of China-headquartered companies listed on U.S. exchanges through a VIE, or derivative instruments of either of the preceding types of securities, be subject to regulation by the SEC.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security, Key Recommendation #1)

Congress take urgent measures to strengthen the credibility of U.S. military deterrence in the near term and to maintain the ability of the United States to uphold its obligations established in the Taiwan Relations Act to resist any resort to force that would jeopardize the security of Taiwan, including:

Authorizing and funding the deployment of large numbers of antiship cruise and ballistic missiles in the Indo-Pacific;
Authorizing and funding the requests of U.S. Indo-Pacific Command (INDOPACOM) for better and more survivable intelligence, surveillance, and reconnaissance in the East and South China Seas;
Authorizing and funding the requests of INDOPACOM for hardening U.S. bases in the region, including robust missile defense;
Authorizing and funding the stockpiling of large numbers of precision munitions in the Indo-Pacific; and
Authorizing and funding programs that enable U.S. forces to continue operations in the event central command and control is disrupted.

(From Chapter 4: A Dangerous Period for Cross-Strait Deterrence: Chinese Military Capabilities and Decision-Making for a War over Taiwan, Key Recommendation #2)

Congress ensure the effective implementation of the Export Control Reform Act of 2018 and the Foreign Investment Risk Review Modernization Act of 2018 by enacting legislation that:

Creates a Technology Transfer Review Group (TTRG) within the Executive Office of the President responsible for identifying emerging and foundational technologies. The TTRG should be chaired by the secretary of defense and include the director of the Office of Science and Technology Policy along with Cabinet-level secretaries or their designees from the U.S. Departments of Commerce, Energy, and Homeland Security.
Authorizes the TTRG to direct the Department of Commerce’s Bureau of Industry and Security to implement export controls following the identification of these technologies.
Authorizes and requires the TTRG to oversee multilateral engagement related to export controls, foreign investment screening, and regulations over technology transfer by relevant agencies to ensure that such engagement does not undermine U.S. national and economic security interests.
Require that additional resources be provided to improve and expand end-user verification of export controls. Export licenses to the following entities should receive strict scrutiny: end-users identified as Chinese Communist Military Companies per section 1237 of the National Defense Authorization Act for Fiscal Year 1999, those identified as contributors to China’s military-civilian fusion activities per section 1260H of the National Defense Authorization Act for Fiscal Year 2021, entities with direct and formal ties to the CCP or Chinese government, and entities identified by the U.S. Trade Representative, U.S. Department of Justice, and Federal Bureau of Investigation as being linked to efforts to steal or coerce the transfer of U.S. intellectual property. The inability to identify end-user facilities and, if identified, the lack of adequate and timely access to these facilities should strongly inform investigating officials and licensing officials.
Require that the TTRG engage with the Department of Justice, the Department of Commerce’s Bureau of Industry and Security, and other relevant agencies to align “deemed export” controls with engagement on knowledge transfer and expert recruitment strategies such as the 1,000 Talents Program as well as investigations of the CCP’s United Front Work Department and other entities and programs of the CCP designed to acquire U.S. technology and capabilities.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security, Key Recommendation #3)

Congress consider legislation to create the authority to screen the offshoring of critical supply chains and production capabilities to the PRC to protect U.S. national and economic security interests and to define the scope of such supply chains and production capabilities. This would include screening related outbound investment by U.S. entities. Such legislation would direct the secretaries of defense and commerce, along with the U.S. Trade Representative, to develop procedures to evaluate existing and proposed supply relationships with the PRC and identify whether critical U.S. interests are being adversely affected, including the loss of domestic production capacity and capabilities. The legislation would authorize the president to take appropriate action, including prohibiting supply relationships or certain transactions to protect U.S. national security. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: The Chinese Communist Party’s Economic and Technological Ambitions: Synthetic Biology, New Mobility, Cloud Computing, and Digital Currency, Key Recommendation #4)

Congress enact legislation expanding the jurisdiction of existing U.S. investment restrictions targeting Chinese entities placed on the NS-CMIC Companies List as well as the scope of entities to be targeted by such restrictions. Such provisions should include:

Expanding the prohibitions relating to transactions and supporting work by U.S. persons in NS-CMIC securities covered by Executive Order 14032 to include the execution, support, or servicing of transactions by U.S. persons in any market or for any other person, including both U.S. and non-U.S. persons; and
Providing additional resources to ensure that a more comprehensive list of entities engaged in supporting the Chinese military-industrial complex be published and that subsidiaries supporting such entities be included on the list. In identifying entities that should be evaluated for inclusion in such designations, authorities should include companies designated by Chinese securities issuing and trading entities as supporting the military-industrial complex.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security, Key Recommendation #5)

Congress prevent the erosion of U.S. strategic nuclear superiority and respond to China’s qualitative and quantitative theater nuclear advantages by directing the Administration to continue implementation of the Obama-Trump Program of Record for nuclear modernization. (From Chapter 3: U.S.-China Security, Politics, and Foreign Affairs, Section 2: China’s Nuclear Forces: Moving beyond a Minimal Deterrent, Key Recommendation #6)

Congress direct the U.S. Securities and Exchange Commission to require that publicly traded U.S. companies with facilities in China report on an annual basis whether there is a Chinese Communist Party (CCP) committee in their operations and summarize the actions and corporate decisions in which such committees may have participated. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: The Chinese Government’s Evolving Control of the Nonstate Sector, Key Recommendation #7)

Congress consider comprehensive legislation to ensure Chinese entities sanctioned under one U.S. authority be automatically sanctioned under other authorities unless a waiver is granted by the president or the authority applying the initial sanction. This legislation should rationalize existing U.S. sanctions targeting adversarial Chinese entities to ensure, for example, Chinese firms placed on the Entity List and/or Military End User List of the U.S. Department of Commerce are also placed on the Non-Specially Designated Nationals (SDN) Chinese Military-Industrial Complex (NS-CMIC) Companies List and vice versa. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security, Key Recommendation #8)

Congress mandate from Treasury an annual update of the accurate U.S. portfolio investment position in China since 2008, including money routed through offshore centers, such as the Cayman Islands. This should include exposure for:

Individual Chinese sectors;
U.S. institution types, such as state pension funds;
Sanctioned Chinese entities (Entity List, NS-CMIC List, and others);
Individual Chinese recipients who receive more than a minimum amount, such as $100 million; and
Individual U.S. investors with more than a minimum share of the total, such as 2 percent.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security, Key Recommendation #9)

Congress direct U.S. Customs and Border Protection to initiate action to impose a region-wide Withhold Release Order on products originating from Xinjiang, China. In addition, Congress should require the U.S. Department of Homeland Security to provide a comprehensive list of technologies needed and an outline of the resources required to enforce the Withhold Release Order and address other instances of China’s use of forced labor. (From Chapter 1: U.S.-China Global Competition, Section 1: The Chinese Communist Party’s Ambitions at Its Centennial, Key Recommendation #10)

Additional Recommendations
The Commission recommends:

Congress hold hearings including Administration witnesses to explore the advisability of forming an economic defense coalition with allies and partners. The object of such a coalition would be to provide mutual support in the event of economic coercion by the People’s Republic of China (PRC) against a coalition member. Such support could include:

Commitments not to seek, at the expense of the coerced party, market share created by China’s action;
Formal complaints to the World Trade Organization (WTO);
Assistance to the coerced party to reduce its incentive to comply with Chinese demands; and
Imposition of retaliatory measures against China in support of the coerced party.

(From Chapter 1: U.S.-China Global Competition, Section 1: The Chinese Communist Party’s Ambitions at Its Centennial)

Congress recognize that Chinese economic, diplomatic, and security initiatives in Latin America and the Caribbean are robust and growing and demand a comprehensive response. Steps Congress should consider include:

Strengthening U.S. competitiveness in building out Latin American and Caribbean infrastructure through the expansion of funding mechanisms, including but not limited to low-interest loans from U.S. lending institutions to U.S. companies willing to invest in targeted critical infrastructure projects in high-priority Latin American and Caribbean countries;
Supporting the deployment of novel coronavirus (COVID-19) vaccines in Latin American and Caribbean countries, including by requiring a public report issued by the U.S. Department of State every six months outlining vaccine deployment to countries in the region; and
Expanding educational exchanges between the United States and Latin America and the Caribbean, including by expanding partnership agreements between U.S. universities and higher education institutions in Latin American and Caribbean countries.

(From Chapter 1: U.S.-China Global Competition, Section 2: China’s Influence in Latin America and the Caribbean)

Congress support Latin American and Caribbean countries in the establishment of inbound foreign investment review processes for sectors critical to national security and economic security by doing the following:

Expanding the support given by the U.S. government to governments of U.S. allied and partner countries to establish inbound foreign investment review processes similar to those of the Committee on Foreign Investment in the United States (CFIUS) established in the Foreign Investment Risk Review Modernization Act within Title XVII of the National Defense Authorization Act for Fiscal Year 2019. Support for these governments will expand upon existing information exchange processes to include provision of technical assistance and personnel training.
Requiring the U.S. Department of State, in conjunction with CFIUS, to provide an annual report to Congress for three consecutive years after enactment of this provision. The report shall outline the progress and outcomes of its engagement with Latin American and Caribbean countries to establish their own inbound foreign investment review processes.

(From Chapter 1: U.S.-China Global Competition, Section 2: China’s Influence in Latin America and the Caribbean)

Congress require the director of national intelligence, in conjunction with the U.S. Department of State and U.S. Department of Defense, to produce an unclassified report, including a classified annex, documenting Chinese investment in port infrastructure in the Western Hemisphere and detailing any known Chinese interest in establishing a military presence at or near these ports. The report should include an assessment of China’s current and potential future ability to leverage commercial ports for military purposes and the implications for the United States. (From Chapter 1: U.S.-China Global Competition, Section 2: China’s Influence in Latin America and the Caribbean)

Congress enact legislation directing the U.S. Development Finance Corporation, U.S. Agency for International Development, U.S. Trade and Development Agency, Millennium Challenge Corporation, and other executive agencies responsible for disbursing foreign aid and development assistance to require within all aid-related applications mandatory disclosures on debt the applicant may owe to Chinese entities, including loan amounts, duration, rates, and contractual provisions. (From Chapter 1: U.S.-China Global Competition, Section 2: China’s Influence in Latin America and the Caribbean)

Congress enact legislation requiring the U.S. government authorities identified in the Maritime Security and Fisheries Enforcement (SAFE) Act within section 3544 of the National Defense Authorization Act for Fiscal Year 2020 to create a partnership with coastal Latin American states, similar to the Oceania Maritime Security Initiative and the Africa Maritime Law Enforcement Partnership. This partnership would assist coastal Latin American states in maritime domain awareness, with a particular focus on increasing partner countries’ capacity to combat illegal, unreported, and unregulated fishing by Chinese vessels in the region. (From Chapter 1: U.S.-China Global Competition, Section 2: China’s Influence in Latin America and the Caribbean)

Congress direct the U.S. Department of Energy, in coordination with the National Institute of Standards and Technology and other relevant agencies, to produce a report and research plan outlining a project for the collection and sequencing of nonhuman genomic data, analogous to the Human Genome Project. Such a plan shall include:

A description of the types of nonhuman genomic data to be collected and sequenced;
An explanation of research value and commercial applications from collecting and sequencing such data;
The designation of an existing Department of Energy National Laboratory to coordinate the project and award grants to U.S. universities and private companies in furtherance of the project’s goals;
A description of ethical considerations and processes for stakeholder engagement; and
Articulation of the National Institute of Standards and Technology’s role to:
- Codify technical standards related to the project;
- Share and protect data collected during the project; and
- Engage with the public and international partners on the project’s findings.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: The Chinese Communist Party’s Economic and Technological Ambitions: Synthetic Biology, New Mobility, Cloud Computing, and Digital Currency)

Congress direct the National Institute of Standards and Technology, in coordination with the National Institutes of Health, the U.S. Patent and Trade Office, the Department of Energy, and the Department of State, to establish a model framework for the protection, collection, and commercialization of nonhuman genomic data. The framework should seek to establish principles on intellectual property rights for the countries of origin of genomic data. This framework should also be used in international outreach regarding protection of national biotechnology assets and Chinese predatory collection of data. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: The Chinese Communist Party's Economic and Technological Ambitions: Synthetic Biology, New Mobility, Cloud Computing, and Digital Currency)

Congress request a report from the Administration regarding data servicing operations owned by Chinese firms. Such a report shall include:

Whether such firms are operating in the United States, what laws and regulations may apply to such operations and services, and what cloud computing services are offered or provided to U.S. persons;
Whether Chinese cloud computing providers are engaged in any joint ventures or servicing arrangements with U.S. firms and the nature of such operations;
Whether consumers of these services have access to prominently identified information regarding the ownership of such cloud computing services;
Whether U.S. firms can operate freely in the People’s Republic of China (PRC) and what, if any, restrictions might apply to their services and operations;
Where Chinese-owned firms may be providing equipment or services for the provision of cloud computing support in third-country markets and whether the market share of Chinese-owned firms in those markets may limit, in any way, the ability of U.S.-owned firms to operate independently of such operations; and
What support the Chinese government may be providing to cloud computing firms in terms of equipment and services that may act as a subsidy for such operations.

Congress consider legislation requiring that the U.S. Department of Transportation, in consultation with the U.S. Departments of Commerce, Energy, and Defense, and law enforcement authorities, develop regulations limiting access for Chinese-owned firms developing autonomous vehicle capabilities to protect U.S. national and economic security interests. In preparing such regulations, the authorities should consider the extent to which the Chinese government limits access of U.S. firms for similar uses. Specific attention should be given to data collection activities that may advance the interests of the Chinese military or intelligence agencies. In addition, such legislation shall address any need to protect the data utilized and collected by autonomous vehicles produced and/or serviced by Chinese-owned firms. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: The Chinese Communist Party’s Economic and Technological Ambitions: Synthetic Biology, New Mobility, Cloud Computing, and Digital Currency)

The committees of relevant jurisdiction in the House and Senate investigate and hold hearings with a view toward considering legislation on the operations of China’s Blockchain-Based Service Network, with particular attention to its operations in the United States and participation of U.S. companies in building out the network. Such investigation should look at the goals of the network in developing blockchain infrastructure and whether the involvement of the Chinese government and Chinese state-owned entities may put at risk any U.S. economic and national security interests. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: The Chinese Communist Party’s Economic and Technological Ambitions: Synthetic Biology, New Mobility, Cloud Computing, and Digital Currency)

Congress direct the Bureau of Economic Analysis at the U.S. Department of Commerce to amend its surveys of U.S. multinational enterprise activity in China to report on the presence and actions of CCP committees in the foreign affiliates of U.S. firms operating in China. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: The Chinese Government’s Evolving Control of the Nonstate Sector)

Congress pass legislation that defines categories of Chinese persons, Chinese entities, and Chinese Communist Party (CCP)-related persons and entities subject to full blocking sanctions and inclusion on the U.S. Department of the Treasury’s SDN list due to actions that harm the vital national interest or the national security of the United States or that constitute gross human rights violations. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Financial Connectivity and Risks to U.S. National Security)

Congress direct the Administration to conduct an interagency review of any Chinese universities that maintain research or training arrangements with China’s nuclear weapons research institutes, such as the Chinese Academy of Engineering Physics and the Northwest Institute of Nuclear Technology. The review should be led by the U.S. Department of Energy and include the U.S. Departments of Commerce, Treasury, and Defense; the Intelligence Community; and other federal departments and agencies as appropriate. The review would:

Assess the impact of such cooperation on China’s nuclear weapons programs and capabilities;
Assess whether current U.S. export controls adequately address risks from the transfer and exchange of information and technologies with applications to nuclear research, particularly by researchers and departments in relevant academic disciplines at U.S. universities to these Chinese universities;
Identify Chinese universities and research institutes that should be added to the Entity List, based on the risks posed by their cooperation with the Chinese Academy of Engineering Physics, Northwest Institute of Nuclear Technology, and other Chinese institutions involved in nuclear weapons development, as appropriate;
Identify Chinese universities and research institutes that merit a presumption of denial for all export licenses involving items covered by the Export Administration Regulations; and
Develop and maintain a list of all academic partnerships in fields with applications to nuclear weapons development entered into between Chinese universities and U.S. universities that receive federal funding for the purpose of determining whether these activities are subject to export controls.

(From Chapter 3: U.S.-China Security, Politics, and Foreign Affairs, Section 2: China’s Nuclear Forces: Moving beyond a Minimal Deterrent)

Congress enact legislation creating an independent bipartisan commission, similar to the Quadrennial Defense Review commissions authorized in the past, to assess the Nuclear Posture Review and advise Congress about whether the current U.S. nuclear posture is sufficient to maintain deterrence against the expanding Chinese and Russian nuclear forces. The Commission should:

Determine how Russian and Chinese nuclear capabilities have changed between 2010 and 2022;
Evaluate whether the current number of U.S.-deployed strategic weapons is sufficient to deter both Russia and China over the next 20 years; and
Identify any further changes required to U.S. force posture, doctrine, and missile defense.

(From Chapter 3: U.S.-China Security, Politics, and Foreign Affairs, Section 2: China’s Nuclear Forces: Moving beyond a Minimal Deterrent)

Congress authorize funding for a comprehensive diplomatic strategy on nuclear deterrence and arms control. This comprehensive program would include:

Intelligence diplomacy with key allies and partners in the Indo-Pacific and in Europe to inform them of developments in China’s nuclear forces;
Dialogue to convince these allies and partners to pressure Beijing diplomatically to enter into arms control talks and to explore these partners’ willingness to host U.S. intermediate-range forces and other U.S. assets; and
Continued efforts to engage both Russia and China in trilateral arms control talks, including by continuing efforts with Russia to persuade China to enter into arms control discussions.

(From Chapter 3: U.S.-China Security, Politics, and Foreign Affairs, Section 2: China’s Nuclear Forces: Moving beyond a Minimal Deterrent)

Congress enhance Taiwan’s ability to purchase U.S. defense articles and accelerate the process for their sale and delivery to Taiwan by:

Authorizing and appropriating on a multiyear basis Foreign Military Financing Program funds for Taiwan to purchase defense articles from the United States and allowing Taiwan to use Foreign Military Financing funds to purchase arms through direct commercial contracts;
Amending the Foreign Assistance Act to make Taiwan eligible to receive priority delivery of U.S. excess defense articles; and
Directing the Administration to use the Special Defense Acquisition Fund to reduce defense procurement lead times for arms sales to Taiwan by pre-stocking defense articles needed to maintain cross-Strait deterrence.

(From Chapter 4: A Dangerous Period for Cross-Strait Deterrence: Chinese Military Capabilities and Decision-Making for a War over Taiwan)

Congress amend the Hong Kong Autonomy Act to add to the contents of the annual report required by the act a determination of whether the Beijing-controlled Government of Hong Kong has violated freedom of emigration from Hong Kong. The report should assess whether the Government of Hong Kong has:

Denied Hong Kong residents’ right or opportunity to emigrate;
Imposed more than a nominal tax on emigration or on the visas or other documents required for emigration, for any purpose or cause whatsoever; or
Made emigration contingent on receiving official approval that is not practicably possible to obtain or is otherwise obstructed by authorities.

(From Chapter 5: Hong Kong’s Government Embraces Authoritarianism)

Congress amend section 421 of the U.S.-China Relations Act of 2000 to require the U.S. Trade Representative to include an assessment of Hong Kong’s treatment as a separate customs territory in its annual report on China’s compliance with commitments made in connection with its accession to the World Trade Organization (WTO). This additional section of the report should consider:

Hong Kong’s compliance to its commitments under the WTO;
Whether mainland Chinese entities operating in Hong Kong are using the Special Administrative Region’s status as a transshipment hub to circumvent U.S. duties on China;
Whether Hong Kong “possesses full autonomy in the conduct of its external commercial relations” and if the United States should continue to recognize Hong Kong’s rights as a separate customs territory under the WTO pursuant to section 201 of the U.S.-Hong Kong Policy Act of 1992; and
Whether the United States should apply tariffs and all other trade treatment to Hong Kong equivalent to that of the People’s Republic of China (PRC). The U.S. Trade Representative should consult the secretary of state’s determination of Hong Kong’s autonomy when making this recommendation to the president.

(From Chapter 5: Hong Kong’s Government Embraces Authoritarianism)

Congress, in consideration of the plight of prodemocracy activists from the Hong Kong Special Administrative Region, should encourage the secretary of homeland security to exercise their authority under the Immigration and Nationality Act on the basis of both a “compelling emergency” and “urgent humanitarian reason[s]” to parole into the United States aliens who are residents of Hong Kong and who are applying for admission to the United States. (From Chapter 5: Hong Kong’s Government Embraces Authoritarianism)

Congress require the U.S. Department of Justice and the U.S. Department of Commerce to collect information from U.S. companies operating in Hong Kong concerning requests from the Government of Hong Kong for content takedowns, access to data, and law enforcement assistance. The departments shall report their findings to Congress every 180 days specifying:

The number of requests fulfilled and by which companies;
Where such requests involved user data; and
Which local laws the requests invoked.

(From Chapter 5: Hong Kong’s Government Embraces Authoritarianism)

Congress direct the Department of Justice to require media outlets operating in the United States that are majority owned by the Government of the PRC or the Government of Hong Kong to register under the Foreign Agents Registration Act. Congress should also direct the Department of State to determine whether such outlets qualify as a foreign mission of the PRC. (From Chapter 5: Hong Kong’s Government Embraces Authoritarianism)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress adopt the principle of reciprocity as foundational in all legislation bearing on U.S.-China relations. Issues to be considered in applying this principle should include but are not limited to the following:

The ability of journalists and online media to operate without undue restriction;
The ability of nongovernmental organizations to conduct meaningful engagement with civil society;
Access to information, including but not limited to financial and research data;
Access for social media and mobile apps from U.S. companies;
Access for diplomatic personnel, including but not limited to diplomats’ freedom of travel and ability to meaningfully exchange views with the host country public; and
Market access and regulatory parity, including but not limited to companies’ ability to participate in trade, investment, and financial market transactions, cross-border capital transfer, and protections of intellectual property.

(From Chapter 1: U.S.-China Global Competition, Section 1: A Global Contest for Power and Influence: China’s View of Strategic Competition with the United States, Key Recommendation #1)

Congress expand the authority of the Federal Trade Commission (FTC) to monitor and take foreign government subsidies into account in premerger notification processes.

The FTC shall develop a process to determine to what extent proposed transactions are facilitated by the support of foreign government subsidies.
The definition of foreign government subsidies shall encompass direct subsidies, grants, loans, below-market loans, loan guarantees, tax concessions, governmental procurement policies, and other forms of government support.
Companies operating in the United States that benefit from the financial support of a foreign government must provide the FTC with a detailed accounting of these subsidies when undergoing FTC premerger procedures.
If the FTC finds foreign subsidies have facilitated the transaction, the FTC can either propose a modification to remedy the distortion or prohibit the transaction under Section 7 of the Clayton Act, which prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”

(From Chapter 1: U.S.-China Global Competition, Section 1: A Global Contest for Power and Influence: China’s View of Strategic Competition with the United States, Key Recommendation #2)

Congress direct the U.S. Department of State to produce an annual report detailing China’s actions in the United Nations and its subordinate agencies that subvert the principles and purposes of the United Nations. Such a report would at a minimum document the following:

China’s actions violating United Nations treaties to which it is a party;
China’s actions to influence the votes of United Nations members, including through coercive means;
China’s actions to nominate or support candidates for United Nations leadership positions that do not adhere to United Nations standards for impartiality or are subject to the influence of the Chinese government;
Actions by nationals of the People’s Republic of China and others currently holding United Nations leadership positions that appear to support the interests of the Chinese government in violation of United Nations impartiality standards;
Actions by nationals of the People’s Republic of China serving in functional positions in United Nations organizations impacting hiring practices, internal policies, and other functions that appear to support the interests of the Chinese government in violation of United Nations impartiality standards;
Actions by Chinese military and support personnel engaged in United Nations peacekeeping operations that are inconsistent with the principles governing these missions, including China’s deployment of these personnel to protect its economic interests and improve the power projection capabilities of the People’s Liberation Army; and
The number and positions of United States personnel employed by the United Nations and its agencies.

(From Chapter 1: U.S.-China Global Competition, Section 1: A Global Contest for Power and Influence: China’s View of Strategic Competition with the United States, Key Recommendation #3)

Congress hold hearings to consider the creation of an interagency executive Committee on Technical Standards that would be responsible for coordinating U.S. government policy and priorities on international standards. This Committee would consist of high-level political appointees from executive departments with equities relating to international technical standards, including the Department of Commerce, the Department of State, the Department of Defense, the Department of Energy, the Office of Science and Technology Policy, and other agencies or government stakeholders with relevant jurisdiction. The Committee’s mandate would be to ensure common purpose and coordination within the executive branch on international standards. Specifically, the Committee would:

Identify the technical standards with the greatest potential impact on American national security and economic competitiveness;
Coordinate government efforts relating to those standards;
Act as a liaison between government, academia, and the private sector to coordinate and enhance joint efforts in relation to standards;
Manage outreach to counterpart agencies among U.S. allies and partners;
Set funding priorities and recommendations to Congress; and
Produce annual reports to Congress on the status of technical standards issues and their impact on U.S. national security and economic competitiveness.

(From Chapter 1: U.S.-China Global Competition, Section 2: The China Model: Return of the Middle Kingdom, Key Recommendation #4)

Congress consider establishing a “Manhattan Project”-like effort to ensure that the American public has access to safe and secure supplies of critical lifesaving and life-sustaining drugs and medical equipment, and to ensure that these supplies are available from domestic sources or, where necessary, trusted allies. Such a project would supplement the recommendation the Commission made in its 2019 Annual Report that Congress hold hearings with a view toward enacting legislation requiring the U.S. government to procure medicines only from U.S. production facilities or from facilities that have been certified compliant with U.S. standards. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: U.S.-China Links in Healthcare and Biotechnology – Key Recommendation #5)

Congress enact legislation establishing a China Economic Data Coordination Center (CEDCC) at the Bureau of Economic Analysis at the U.S. Department of Commerce. The Center would be mandated to collect and synthesize official and unofficial Chinese economic data on developments in China’s financial markets and U.S. exposure to risks and vulnerabilities in China’s financial system, including:

Data on baseline economic statistics (e.g., gross domestic product [GDP]) and other indicators of economic health;
Data on national and local government debt;
Data on nonperforming loan amounts;
Data on the composition of shadow banking assets;
Data on the composition of China’s foreign exchange reserves; and
Data on bank loan interest rates.

(From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Vulnerabilities in China’s Financial System and Risks for the United States, Key Recommendation #6)

Congress direct the Administration, when sanctioning an entity in the People’s Republic of China for actions contrary to the economic and national security interests of the United States or for violations of human rights, to also sanction the parent entity. (From Chapter 1: U.S.-China Global Competition, Section 1: A Global Contest for Power and Influence: China’s View of Strategic Competition with the United States, Key Recommendation #7)

Congress consider enacting legislation to make the Director of the American Institute in Taiwan a presidential nomination subject to the advice and consent of the United States Senate. (From Chapter 4: Taiwan, Key Recommendation #8)

Congress amend the Immigration and Nationality Act to clarify that association with a foreign government’s technology transfer programs may be considered grounds to deny a nonimmigrant visa if the foreign government in question is deemed a strategic competitor of the United States, or if the applicant has engaged in violations of U.S. laws relating to espionage, sabotage, or export controls. Association with a foreign government’s technology transfer programs can include any of the following:

Participation in a foreign government-sponsored program designed to incentivize participants to transfer fundamental research to a foreign country via a talent recruitment program or in a foreign government-sponsored startup competition;
Acceptance of a government scholarship that requires recipients to study specific strategic scientific and technological fields, to return to the foreign country for a government work requirement after the scholarship term ends, or facilitates coordination with talent programs;
Association with a university or a department of a university that the U.S. government has designated as a participant in the foreign government’s military-civil fusion efforts; or
Status (current or past) as a scientist, technician, or officer for a foreign military, if the applicant does not disclose such information when applying for a visa.

(From Chapter 1: U.S.-China Global Competition, Section 1: A Global Contest for Power and Influence: China’s View of Strategic Competition with the United States, Key Recommendation #9)

Congress direct the Administration to identify and remove barriers to receiving United States visas for Hong Kong residents attempting to exit Hong Kong for fear of political persecution. (From Chapter 5: Hong Kong, Key Recommendation #10)

Additional Recommendations
The Commission recommends:

Congress require the Office of the U.S. Trade Representative, within 180 days, to prepare a report on China’s use of rules of origin intended to benefit countries eligible for the African Growth and Opportunity Act (AGOA) to ensure AGOA countries obtain the benefit of favorable trade policies and China is not using them to circumvent U.S. trade policies. (From Chapter 1: U.S.-China Global Competition, Section 3: China’s Strategic Aims in Africa)

Congress request that the Administration prepare a report on the research and development activities of the affiliates of U.S. multinational enterprises operating in China and the implications of such activities for U.S. production, employment, and the economy. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 2: Vulnerabilities in China’s Financial System and Risks for the United States)

Congress enact legislation to require ancestry and health testing services to (1) require explicit consent from customers to provide, sell, lease, or rent to any party individual data that is aggregated for the purposes of research; and (2) disclose to customers any parent company or subsidiary relationship. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: U.S.-China Links in Healthcare and Biotechnology)

Congress establish a new U.S. national laboratory focusing on biotechnology or designate an existing U.S. national laboratory to focus on biotechnology. (From Chapter 2: U.S.-China Economic and Trade Relations, Section 3: U.S.-China Links in Healthcare and Biotechnology)

Congress amend the TAIPEI Act to provide that the United States, as a member of any international organization, should oppose any attempts by China to resolve Taiwan’s status by distorting the language, policies, or procedures of the organization. (From Chapter 4: Taiwan)

Congress evaluate the opportunity to strengthen economic relations with Taiwan in key sectors where there are unique reciprocal opportunities, with technology as the initial sector for evaluation. (From Chapter 4: Taiwan)

Congress encourage the Administration to include Taiwan in multilateral efforts to coordinate and strengthen supply chain cooperation and security. This could be done through the expansion of Global Cooperation and Training Framework programming or a new multilateral arrangement with likeminded democracies. This multilateral engagement should focus on securing critical inputs and assuring supply chain resilience in strategic industries critical to economic competitiveness and national security, including information and communications technology, integrated circuits, and electronic components. (From Chapter 4: Taiwan)

Congress consider legislation extending political asylum to res- idents of Hong Kong born on or after June 30, 1997, who currently cannot apply for a second form of identification beyond a Hong Kong Special Administrative Region passport. (From Chapter 5: Hong Kong)

Congress direct the Office of the U.S. Trade Representative to produce a report within 90 days assessing the risk of mainland China using Hong Kong to evade or circumvent Section 301 trade enforcement actions or other U.S. trade remedies. (From Chapter 5: Hong Kong)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress enact legislation to preclude Chinese companies from issuing securities on U.S. stock exchanges if:

The Public Company Accounting Oversight Board is denied timely access to the audit work papers relating to the company’s operations in China;
The company disclosure procedures are not consistent with best practices on U.S. and European exchanges;
The company utilizes a variable interest entity (VIE) structure;
The company does not comply with Regulation Fair Disclosure, which requires material information to be released to all investors at the same time.

(From Chapter 3: U.S.-China Competition, Section 1: U.S.-China Commercial Relations, Key Recommendation #1)

Congress enact legislation stating that all provisions and the special status of Hong Kong included in the U.S.-Hong Kong 545 Policy Act of 1992 will be suspended in the event that China’s government deploys People’s Liberation Army or People’s Armed Police forces to engage in armed intervention in Hong Kong. (From Chapter 6: Hong Kong, Key Recommendation #2)

Congress enact legislation requiring the following information to be disclosed in all issuer initial public offering prospectuses and annual reports as material information to U.S. investors:

Financial support provided by the Chinese government, including: direct subsidies, grants, loans, below-market loans, loan guarantees, tax concessions, government procurement policies, and other forms of government support.
Conditions under which that support is provided, including but not limited to: export performance, input purchases manufactured locally from specific producers or using local intellectual property, or the assignment of Chinese Communist Party (CCP) or government personnel in corporate positions.
CCP committees established within any company, including: the establishment of a company Party committee, the standing of that Party committee within the company, which corporate personnel form that committee, and what role those personnel play.
Current company officers and directors of Chinese companies and U.S. subsidiaries or joint ventures in China who currently hold or have formerly held positions as CCP officials and/ or Chinese government officials (central and local), including the position and location.

(From Chapter 3: U.S.-China Competition, Section 1: U.S.-China Commercial Relations, Key Recommendation #3)

Congress hold hearings assessing the productive capacity of the U.S. pharmaceutical industry, U.S. dependence on Chinese pharmaceuticals and active pharmaceutical ingredients (APIs), and the ability of the U.S. Food and Drug Administration (FDA) to guarantee the safety of such imports from China, with a view toward enacting legislation that would:

Require the FDA to compile a list of all brand name and generic drugs and corresponding APIs that: (1) are not produced in the United States; (2) are deemed critical to the health and safety of U.S. consumers; and (3) are exclusively produced—or utilize APIs and ingredients produced—in China.
Require Medicare, Medicaid, the U.S. Department of Veterans Affairs, the U.S. Department of Defense, and other federally funded health systems to purchase their pharmaceuticals only from U.S. production facilities or from facilities that have been certified by the FDA to be in compliance with U.S. health and safety standards and that actively monitor, test, and assure the quality of the APIs and other components used in their drugs, unless the FDA finds the specific drug is unavailable in sufficient quantities from other sources.
Require the FDA, within six months, to investigate and certify to Congress whether the Chinese pharmaceutical industry is being regulated for safety, either by Chinese authorities or the FDA, to substantially the same degree as U.S. drug manufacturers and, if the FDA cannot so certify, forward to Congress a plan for protecting the American people from unsafe or contaminated drugs manufactured in China.

(From Chapter 3: U.S.-China Competition, Section 3: Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products, Key Recommendation #4)

Congress require the relevant departments and agencies of jurisdiction—including the U.S. Department of the Treasury, the U.S. Department of Commerce, and the U.S. Securities and Exchange Commission—to prepare a report to Congress on the holdings of U.S. investors in Chinese bonds and other debt instruments. Such a report shall include information on the direct, indirect, and derivative ownership of any of these instruments. (From Chapter 2: Beijing’s Internal and External Challenges, Key Recommendation #5)

Congress direct the National Space Council to develop a strategy to ensure the United States remains the preeminent space power in the face of growing competition from China and Russia, including the production of an unclassified report with a classified annex containing the following:

A long-term economic space resource policy strategy, including an assessment of the viability of extraction of space-based precious minerals, onsite exploitation of space-based natural resources, and space-based solar power. It would also include a comparative assessment of China’s programs related to these issues.
An assessment of U.S. strategic interests in or relating to cislunar space.
An assessment of the U.S. Department of Defense’s current ability to guarantee the protection of commercial communications and navigation in space from China’s growing counterspace capabilities, and any actions required to improve this capability.
A plan to create a space commodities exchange to ensure the United States drives the creation of international standards for interoperable commercial space capabilities.
A plan to streamline and strengthen U.S. cooperation with allies and partners in space.
An interagency strategy to defend U.S. supply chains and manufacturing capacity critical to competitiveness in space.

(From Chapter 4: China’s Global Ambitions, Section 3: China’s Ambitions in Space: Contesting the Final Frontier, Key Recommendation #6)

Congress direct the U.S. Department of Justice to reestablish a higher education advisory board under the Federal Bureau of Investigation. In concert with the U.S. Department of Commerce’s Bureau of Industry and Security, U.S. Department of Homeland Security, and U.S. Department of State, the higher education advisory board would convene semiannual meetings between university representatives and relevant federal agencies to review the adequacy of protections for sensitive technologies and research, identify patterns and early warning signs in academic espionage, assess training needs for university faculty and staff to comply with export controls and prevent unauthorized transfer of information, and share other areas of concern in protecting national security interests related to academic research. (From Chapter 3: U.S.-China Competition, Section 2: Emerging Technologies and Military-Civil Fusion: Artificial Intelligence, New Materials, and New Energy, Key Recommendation #7)

Congress direct the U.S. secretary of state to submit to Congress a report on actions that have been and will be taken by the United States to counter Beijing’s attempts to isolate Taiwan’s democratically-elected leaders and to strengthen support for Taiwan’s engagement with the international community, including actions the Administration will take should Beijing increase its coercion against Taiwan. The report should:

List measures the U.S. government has taken and will take to expand interactions between U.S. and Taiwan government officials in accordance with the Taiwan Travel Act.
Formulate a strategy to expand development aid and security assistance to countries that maintain diplomatic ties with Taiwan.
Detail steps to expand multilateral collaboration involving Taiwan and other democracies to address global challenges, such as the Global Cooperation and Training Framework’s workshops on epidemics, cybersecurity, and media literacy.

(From Chapter 5: Taiwan, Key Recommendation #8)

Congress direct the Office of the Director of National Intelligence to restore the unclassified Open Source Enterprise website to all of its original functions for U.S. government employees. Access to the Open Source Enterprise should also be expanded by making appropriate materials available to U.S. academic and research institutions. (From Chapter 4: China’s Global Ambitions, Section 1: Beijing’s “World-Class” Military Goal, Key Recommendation #9)

Congress amend the U.S.-Hong Kong Policy Act of 1992 to direct the U.S. Department of State to develop a series of specific benchmarks for measuring Hong Kong’s maintenance of a “high degree of autonomy” from Beijing. Such benchmarks should employ both qualitative and quantitative measurements to evaluate the state of Hong Kong’s autonomy in the State Department’s annual Hong Kong Policy Act Report. (From Chapter 6: Hong Kong, Key Recommendation #10)

Additional Recommendations
The Commission recommends:

Congress provide resources for programs that support independent media and the free flow of information to prioritize Indo-Pacific countries in their efforts to counter China’s influence and propaganda efforts. (From Chapter 2: Beijing’s Internal and External Challenges)

Congress require the U.S. Department of the Treasury to prepare a report to Congress on the operation of China’s Cross-Border International Payment System. As part of such a report, the department shall include information on the extent to which the Cross-Border International Payment System could be used to bypass international sanctions regimes. (From Chapter 2: Beijing’s Internal and External Challenges)

Congress enact legislation requiring the collection of data on U.S.-China economic relations. This legislation would:

Direct U.S. economic statistics-producing agencies, including the U.S. Census Bureau, the U.S. Department of Commerce’s Bureau of Economic Analysis, and the U.S. International Trade Commission, to review methodologies for collecting and publishing not only gross trade flows data, but also detailed supply chain data to better document the country of origin for components of each imported good before it reaches U.S. consumers.
Direct the U.S. Census Bureau to restart data releases in its Current Industrial Reports at the ten-digit industry level.
Direct the U.S. Department of the Treasury to coordinate with the U.S. Census Bureau to match U.S. firm-level data with their U.S. employees’ data.

(From Chapter 3: U.S.-China Competition, Section 1: U.S.-China Commercial Relations)

Congress direct the U.S. Government Accountability Office to conduct an assessment on the risks posed by Beijing’s efforts to co-opt foreign researchers or students at U.S. universities to unlawfully appropriate research and other knowledge for the benefit of the government, companies, or interests of the People’s Republic of China. This report should:

Include the number of foreign students and researchers from China studying in science, technology, engineering, and mathematics fields; past and current affiliations; primary areas of research; duration of stay in the United States; and subsequent employment;
Identify whether federally funded university research related to emerging technologies may have been unlawfully appropriated by individuals acting on behalf of Chinese entities; and
Evaluate the efficacy and ability of the U.S. Department of State’s visa screening mechanism to mitigate the risk of inappropriate technology transfer to China, including but not limited to: assessing the ability of that process to identify students, researchers, and research entities, through a visa disclosure requirement, that are receiving funding from the government of China or an intermediary entity acting in support of China’s government.

(From Chapter 3: U.S.-China Competition, Section 2: Emerging Technologies and Military-Civil Fusion: Artificial Intelligence, New Materials, and New Energy)

Congress amend Internal Revenue Code Section 41 to extend the research and development tax credit to initial stages of deployment for new products, processes, computer software, techniques, formulae, or inventions that increase the production of final and intermediary goods manufactured primarily in the United States. The tax credit should also extend to precompetitive commercial development of basic and applied research performed in the United States, particularly in industrial sectors where the People’s Republic of China threatens the technological leadership of the United States. (From Chapter 3: U.S.-China Competition, Section 2: Emerging Technologies and Military-Civil Fusion: Artificial Intelligence, New Materials, and New Energy)

Congress direct the U.S. Geological Survey, in coordination with the U.S. Department of Energy, U.S. Department of Commerce, U.S. Department of the Interior, and U.S. International Trade Commission to develop and maintain a risk assessment framework that identifies materials used in manufacturing industries critical to both national security and commercial vitality. Such a framework should provide an early warning mechanism for any threats to the U.S. supply of these critical materials, including an increasing concentration of extraction and processing by another country or entity and acquisition of significant mining and processing facilities; increasing export restrictions by another country; large gaps between domestic prices for these materials in another country versus prices on international markets; sharp increases or volatility in price; and substantial control in supply of minerals used within the same industry or related minerals that serve as substitutes by another country. (From Chapter 3: U.S.-China Competition, Section 2: Emerging Technologies and Military-Civil Fusion: Artificial Intelligence, New Materials, and New Energy)

Congress direct the National Science Foundation, in coordination with other agencies, to conduct a study on the impact of the activities of Chinese government, state-sponsored organizations, or entities affiliated or supported by the state in international bodies engaged in developing and setting standards for emerging technologies. The study should examine whether standards are being designed to promote Chinese government interests to the exclusion of other participants. (From Chapter 3: U.S.-China Competition, Section 2: Emerging Technologies and Military-Civil Fusion: Artificial Intelligence, New Materials, and New Energy)

Congress direct the U.S. Government Accountability Office to update its 2016 report, Drug Safety: FDA Has Improved Its Foreign Drug Inspection Program, but Needs to Assess the Effectiveness and Staffing of Its Foreign Offices. The updated report should focus on the U.S. Food and Drug Administration’s ability to conduct inspections of Chinese drug manufacturing facilities. (From Chapter 3: U.S.-China Competition, Section 3: Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products)

Congress consider legislation requiring generic drug manufacturers that sell medicines to the U.S. Department of Defense and U.S. Department of Veterans Affairs to disclose which essential drugs are at risk of shortage or supply disruption because the relevant products, active pharmaceutical ingredients, chemical intermediates, and raw materials contained in them are sourced from China. (From Chapter 3: U.S.-China Competition, Section 3: Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products)

Congress enact legislation requiring drug companies to list active pharmaceutical ingredients and their countries of origin on labels of imported and domestically produced finished drug products. (From Chapter 3: U.S.-China Competition, Section 3: Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products)

Congress enact legislation creating a risk-based system making importers of active pharmaceutical ingredients (APIs) and finished products liable for any health risks incurred by consumers in the event the product is proven unsafe due to contamination, mislabeling, or other defects. Special attention should be paid to finished drug products imported from China or containing APIs sourced from China. (From Chapter 3: U.S.-China Competition, Section 3: Growing U.S. Reliance on China’s Biotech and Pharmaceutical Products)

Congress direct the U.S. Department of Defense to incorporate an assessment in its Annual Report on Military and Security Developments Involving the People’s Republic of China of China’s progress toward achieving its goal to build a “world-class” military. The report should also include an explanation of how the department defines this term. (From Chapter 4: China’s Global Ambitions, Section 1: Beijing’s “World-Class” Military Goal)

Congress direct a classified assessment identifying where China has undertaken activities that may be aimed at establishing a military presence, operating location, or storage depot. This assessment would include Chinese state-owned enterprises or other commercial interests tied to the Chinese government investing in strategic assets, such as ports and airfields, and should suggest options that could be employed to dissuade host countries from agreeing to host a Chinese military presence. (From Chapter 4: China’s Global Ambitions, Section 1: Beijing’s “World-Class” Military Goal)

Congress direct the U.S. Government Accountability Office to conduct an assessment of the U.S. government’s ability to hire and retain Chinese-language-capable employees. The study would examine U.S. government agencies’ processes for determining Chinese-language-designated positions and hiring and clearing employees, assess the extent to which the agencies are meeting their language proficiency requirements for these positions, measure the effects of language proficiency and gaps on the agencies’ ability to perform their missions, and develop recommendations to address identified shortfalls. (From Chapter 4: China’s Global Ambitions, Section 1: Beijing’s “World-Class” Military Goal)

Congress direct the Office of the Director for National Intelligence to prepare a National Intelligence Estimate of China’s and Russia’s approaches to competition with the United States and revision of the international order. The assessment would consider the influence of both countries’ ideologies on their foreign policies, including areas both of overlap and of divergence; potential “wedge issues” the United States might exploit; and the implications for the North Atlantic Treaty Organization of a two-front conflict involving both China and Russia. (From Chapter 4: China’s Global Ambitions, Section 2: An Uneasy Entente: China-Russia Relations in a New Era of Strategic Competition with the United States)

Members of Congress promote U.S. interests in the Arctic by participating in congressional delegations to Arctic Council member states and attending the biennial Conference of Parliamentarians of the Arctic Region to discuss economic and security concerns regarding China and Russia. (From Chapter 4: China’s Global Ambitions, Section 2: An Uneasy Entente: China-Russia Relations in a New Era of Strategic Competition with the United States)

Congress direct the U.S. Department of Defense to take the following steps to ensure it is prepared to counter China’s and Russia’s destabilizing approaches to military operations in space:

Ensure U.S. Space Command and any future space-oriented service are responsible for protecting freedom of navigation and keeping lines of communication open, safe, and secure in the space domain, as the U.S. Navy does for U.S. interests in the maritime commons.
Strengthen the credibility of U.S. deterrence in space by fully integrating the space domain into policy, training, and exercises.
Ensure that programs designed to increase survivability, redundancy, reusability, resilience, rapid replacement, and disaggregation of critical U.S. space assets receive continued support, including those programs ordered in the National Defense Authorization Act for 2019 Title XVI, Subtitle A.

(From Chapter 4: China’s Global Ambitions, Section 3: China’s Ambitions in Space: Contesting the Final Frontier)

Congress urge the Administration to actively participate in international space governance institutions to shape their development in a way that suits the interests of the United States and its allies and partners and to strengthen U.S. engagement with key coalitional allies and partners in the space domain. (From Chapter 4: China’s Global Ambitions, Section 3: China’s Ambitions in Space: Contesting the Final Frontier)

Congress direct the Administration to assess the viability and impact of establishing new military training centers hosted by Indo-Pacific allies and partners to increase connectivity, interoperability, and shared professional military education among countries throughout the region. (From Chapter 4: China’s Global Ambitions, Section 4: Changing Regional Dynamics: Oceania and Singapore)

Congress support the implementation of the Indo-Pacific Stability Initiative to align U.S. budgetary commitments with national security objectives and build the confidence of allies concerning U.S. commitment to security in the Indo-Pacific region. (From Chapter 4: China’s Global Ambitions, Section 4: Changing Regional Dynamics: Oceania and Singapore)

Congress direct the U.S. Department of State to reinstate Peace Corps programs in Palau and the Federated States of Micronesia and consider expanding their presence in other Pacific Island countries to promote U.S. values while counteracting the spread of China’s authoritarian influence in the Pacific Islands. (From Chapter 4: China’s Global Ambitions, Section 4: Changing Regional Dynamics: Oceania and Singapore)

Congress direct the Office of the Director of National Intelligence to conduct a study on the impact of a Taiwan Strait contingency on the supply of high-technology products to the United States from Taiwan, China, Japan, and South Korea. (From Chapter 5: Taiwan)

Congress direct the U.S. Department of Defense to prepare a classified study on how People’s Liberation Army modernization targets to be met by 2035 will impact the ability of the United States to uphold its obligation established in the Taiwan Relations Act to maintain the ability to resist any resort to force that would jeopardize the security of Taiwan. This study would be briefed to all relevant committees of jurisdiction and provide the basis for a 15-year plan of action aimed at deterring Beijing from making a military attempt to unify Taiwan with China. (From Chapter 5: Taiwan)

Congress enact legislation to enhance U.S.-Taiwan security cooperation. Such legislation should contain provisions to:

Clarify that direct interactions between uniformed members of the armed forces of the United States and Taiwan in support of Taiwan’s self-defense capability are fully consistent with the Taiwan Relations Act and the U.S. position of maintaining relations with the people of Taiwan.
Direct the Administration to increase military exchanges and training with Taiwan, including but not limited to humanitarian assistance and disaster relief, search and rescue, and any other skills supporting regional peace and security.
Direct the Administration to permit active-duty Taiwan military officers to wear their uniforms during visits to the United States.
Direct the Administration to permit active-duty U.S. military officers to wear their uniforms during visits to Taiwan.

(From Chapter 5: Taiwan)

Congress raise the threshold of congressional notification on sales of defense articles and services to Taiwan to the highest tier set for U.S. allies and partners. Congress also terminate any requirement to provide prior notification of maintenance and sustainment of military equipment and capabilities previously sold to Taiwan. (From Chapter 5: Taiwan)

Congress enact legislation directing the U.S. Department of Commerce’s Bureau of Industry and Security to extend export control measures currently in place for mainland China to subsidiaries of Chinese companies established or operating in Hong Kong. (From Chapter 6: Hong Kong)

Congress hold hearings examining technologies subject to ex- port controls for mainland China, but not controlled for Hong Kong. These hearings should request that the U.S. Department of Commerce’s Bureau of Industry and Security and the U.S. Consulate General in Hong Kong assess the effectiveness of current export controls in preventing unauthorized transshipment to the Mainland or other destinations. (From Chapter 6: Hong Kong)

Members of Congress participate in congressional delegations to Hong Kong and meet with Hong Kong officials, legislators, civil society, and business representatives in the territory and when they visit the United States. They should also continue to express support for freedom of expression and rule of law in Hong Kong. (From Chapter 6: Hong Kong)

EXPAND/COLLAPSE ALL RECOMMENDATIONS

Key Recommendations
The Commission recommends:

Congress require the Office of Management and Budget’s Federal Chief Information Security Officer Council to prepare an annual report to Congress to ensure supply chain vulnerabilities from China are adequately addressed. This report should collect and assess:

Each agency’s plans for supply chain risk management and assessments;
Existing departmental procurement and security policies and guidance on cybersecurity, operations security, physical security, information security and data security that may affect information and communications technology, 5G networks, and Internet of Things devices; and
Areas where new policies and guidance may be needed—including for specific information and communications technology, 5G networks, and Internet of Things devices, applications, or procedures—and where existing security policies and guidance can be updated to address supply chain, cyber, operations, physical, information, and data security vulnerabilities.

(From Chapter 4: China’s High-Tech Development, Section 1: Next Generation Connectivity)

Congress examine whether the Office of the U.S. Trade Representative should bring, in coordination with U.S. allies and partners, a “non-violation nullification or impairment” case—alongside violations of specific commitments—against China at the World Trade Organization under Article 23(b) of the General Agreement on Tariffs and Trade. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Tools to Address U.S.-China Economic Challenges)

Congress direct the U.S. Department of Justice to:

Examine the application of current U.S. laws, including the “Conspiracy against Rights” law, to prosecuting Chinese Communist Party affiliates who threaten, coerce, or otherwise intimidate U.S. residents.
Clarify that labels required by the Foreign Agents Registration Act on informational materials disseminated on behalf of foreign principals, such as China Daily, must appear prominently at the top of the first page of such materials.

(From Chapter 3: China and the World, Section 2: China’s Relations with U.S. Allies and Partners)

Congress require the Director of National Intelligence to produce a National Intelligence Estimate (NIE), with a classified annex, that details the impact of existing and potential Chinese access and basing facilities along the Belt and Road on freedom of navigation and sea control, both in peacetime and during a conflict. The NIE should cover the impact on U.S., allied, and regional political and security interests. (Chapter 3: China and the World, Section 1: Belt and Road Initiative)

Congress direct the National Counterintelligence and Security Center to produce an unclassified annual report, with a classified annex, on the Chinese Communist Party’s influence and propaganda activities in the United States. (From Chapter 3: China and the World, Section 2: China’s Relations with U.S. Allies and Partners)

Congress direct the U.S. Department of Defense and U.S. Department of Homeland Security to provide to the relevant committees of jurisdiction a report, with a classified annex, assessing how the change in the China Coast Guard’s command structure affects its status as a law enforcement entity now that it reports to the Central Military Commission. The report should discuss the implications of this new structure for China’s use of the coast guard as a coercive tool in “gray zone” activity in the East and South China seas. This report should also determine how this change may affect U.S. Navy and U.S. Coast Guard interactions with the China Coast Guard, and whether the latter should be designated as a military force. (From Chapter 2: U.S.-China Security Relations, Section 2: China’s Military Reorganization and Modernization: Implications for the United States)

Congress direct the National Telecommunications and Information Administration and Federal Communications Commission to identify (1) steps to ensure the rapid and secure deployment of a 5G network, with a particular focus on the threat posed by equipment and services designed or manufactured in China; and (2) whether any new statutory authorities are required to ensure the security of domestic 5G networks. (From Chapter 4: China’s High-Tech Development, Section 1: Next Generation Connectivity)

Congress direct the Government Accountability Office to conduct an assessment of U.S.-China collaborative initiatives in technical cooperation. This assessment should describe the nature of collaboration, including funding, participation, and reporting on the outcomes; detail the licensing and regulatory regime under which the initiatives occur; consider whether the intellectual property rights of U.S. researchers and companies are being adequately protected; examine whether Chinese state-owned enterprises or the military are benefitting from U.S. taxpayer-funded research; investigate if any Chinese researchers participating in the collaboration have ties to the Chinese government or military; investigate if any U.S. companies, universities, or labs participating in U.S. government-led collaboration with China have been subject to cyber penetration originating in China; and evaluate the benefits of this collaboration for the United States. Further, this assessment should examine redundancies, if any, among various U.S.-China government-led collaborative programs, and make suggestions for improving collaboration. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Tools to Address U.S.-China Economic Challenges)

Congress direct the U.S. Department of the Treasury to provide a report within 180 days on the current state of Chinese enforcement of sanctions on North Korea. A classified annex should provide a list of Chinese financial institutions, businesses, and officials involved in trading with North Korea that could be subject to future sanctions, and should explain the potential broader impacts of sanctioning those entities. (From Chapter 3: China and the World, Section 5: China’s Evolving North Korea Strategy)

Congress direct the Office of the U.S. Trade Representative to identify the trade-distorting practices of Chinese state-owned enterprises and develop policies to counteract their anticompetitive impact. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Tools to Address U.S.-China Economic Challenges)

Additional Recommendations
The Commission recommends:

Congress direct the U.S. Department of Agriculture to identify the extent to which China’s asynchronous biotech review and approval system for agricultural products adversely impacts U.S. industry. As part of its review, the U.S. Department of Agriculture should work with the Office of the U.S. Trade Representative to seek bilateral or multilateral measures, as appropriate, to address these impacts. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Agricultural Policies: Trade, Investment, Safety, and Innovation)

Congress direct the U.S. Department of Agriculture, in collaboration with the U.S. Food and Drug Administration, to prepare an annual report on its technical engagement with China on food safety, inspection, mechanisms for addressing sanitary and phytosanitary problems, and any technical assistance provided to China to improve its food safety inspection regime. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Agricultural Policies: Trade, Investment, Safety, and Innovation)

Congress consider imposing sanctions on key Chinese state owned enterprises and individuals involved in China’s ongoing militarization of the South China Sea. (From Chapter 2: U.S.-China Security Relations, Section 2: China’s Military Reorganization and Modernization: Implications for the United States)

Congress create a fund to provide additional bilateral assistance for countries that are a target of or vulnerable to Chinese economic or diplomatic pressure, especially in the Indo-Pacific region. The fund should be used to promote digital connectivity, infrastructure, and energy access. The fund could also be used to promote sustainable development, combat corruption, promote transparency, improve rule of law, respond to humanitarian crises, and build the capacity of civil society and the media. (Chapter 3: China and the World, Section 1: Belt and Road Initiative)

Congress require the U.S. Department of State to prepare a report to Congress on the actions it is taking to provide an alternative, fact-based narrative to counter Chinese messaging on the Belt and Road Initiative (BRI). Such a report should also examine where BRI projects fail to meet international standards and highlight the links between BRI and China’s attempts to suppress information about and misrepresent reporting of its human rights abuses of Uyghurs in Xinjiang. (Chapter 3: China and the World, Section 1: Belt and Road Initiative)

Congress direct the Administration to strengthen cooperation between the United States and its allies and partners in Europe and the Indo-Pacific on shared economic and security interests and policies pertaining to China, including through the following measures:

Urge the Administration to engage in regular information sharing and joint monitoring of Chinese investment activities and to share best practices regarding screening of foreign investments with national security implications, including development of common standards for screening mechanisms.
Enhance consultations on mitigating the export of dual-use technology to China and identifying other foundational technologies essential for national security.

(From Chapter 3: China and the World, Section 2: China’s Relations with U.S. Allies and Partners)

Congress direct the Administration to discuss in its engagements with the EU and NATO the implications of China’s increasingly close military ties with Russia and growing importance to transatlantic security interests. Such discussions would include how Europe and NATO can promote the exchange of information on common defense and other challenges posed by China and Russia, including both countries’ influence operations. (From Chapter 3: China and the World, Section 2: China’s Relations with U.S. Allies and Partners)

Congress direct the Office of the U.S. Trade Representative to resume meetings under the U.S.-Taiwan Trade and Investment Framework Agreement in 2019 and to identify enhanced negotiating procedures to resolve outstanding issues. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress direct the Administration to produce an interagency report on a whole-of-government strategy for supporting Taiwan’s engagement with the international community, including consideration of, but not limited to, the following actions:

Explore opportunities for providing proactive development and security assistance to Taiwan’s diplomatic partners in an effort to encourage them to maintain ties with Taipei.
Identify adjustments the United States could take in its relations with Taiwan in response to Beijing altering the cross Strait status quo and taking coercive action to pressure Taipei.
Discuss cross-Strait relations and U.S. policy regarding Taiwan in meetings with U.S. allied and partner governments and support an expansion of commercial, cultural, and other exchanges between Taiwan and those countries.
Establish a high-level bilateral U.S.-Taiwan development dialogue to encourage Taiwan’s role in promoting sustainable global development.
Identify key international organizations that would benefit from Taiwan’s expertise and participation, and focus high-level U.S. advocacy efforts to secure Taiwan’s membership or participation in these organizations.

(From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress consider amending antiboycott laws under the Export Administration Act or pass new legislation to prohibit U.S. companies from complying with China’s efforts to apply pressure on Taiwan. Such legislation could include measures authorizing reciprocal sanctions on Chinese entities in the event of Chinese government retaliation against U.S. companies. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress direct the U.S. Department of Defense to support the implementation of Taiwan’s new Overall Defense Concept and take actions that support Taiwan’s ability to maintain a sufficient self-defense capability by including Taiwan military personnel as participants or observers in U.S. and U.S.-led multilateral military exercises; conducting regular high-level exchanges of military planning and other advisory personnel pursuant to the Taiwan Travel Act; and considering the potential for assisting Taiwan with the creative acquisition of critical defense articles, including through coproduction of defense technology between U.S. and Taiwan companies. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress consider raising the threshold of congressional notification on sales of defense articles and services to Taiwan to those set for major U.S. allies, and terminating any requirement to provide notification of maintenance and sustainment of Taiwan’s existing capabilities. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress express support for the Tsai Administration’s approach to maintaining the status quo in the Taiwan Strait. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress direct the U.S. Department of Commerce and other relevant government agencies to prepare an unclassified public report, with a classified annex, examining and assessing the adequacy of U.S. export control policy for dual-use technology as it relates to U.S. treatment of Hong Kong and China as separate customs areas. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

Congressional interparliamentary groups engage parliamentarians from the United Kingdom, EU, and Taiwan in a biennial review of China’s adherence to the Basic Law, with specific attention to rule of law, freedom of speech and assembly, and press freedom, and issue a report based on its findings after each review. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

Members of Congress participate in congressional delegations to Hong Kong and meet with Hong Kong officials, prodemocracy legislators, civil society, and business representatives in the territory and when they visit the United States. In meetings with Hong Kong and Chinese officials, they should raise concerns about Beijing’s adherence to the “one country, two systems” policy and China’s promise to allow Hong Kong a “high degree of autonomy.” They should also continue to express support for freedom of expression and rule of law in Hong Kong. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

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Key Recommendations
The Commission recommends:

Congress consider legislation updating the Committee on Foreign Investment in the United States (CFIUS) statute to address current and evolving security risks. Among the issues Congress should consider are:

Prohibiting the acquisition of U.S. assets by Chinese state-owned or state-controlled entities, including sovereign wealth funds.
Requiring a mandatory review of any transaction involving the acquisition of a controlling interest in U.S. assets by Chinese entities not falling under the above class of acquiring entities.
Requiring reviews of investments in U.S.-based greenfield assets by Chinese-controlled entities to assess any potential harm to U.S. national and economic security.
Expanding the definition of “control” to include joint ventures, venture capital funds, licensing agreements, and other arrangements or agreements that enable Chinese entities to access and/or determine the disposition of any asset.
Prohibiting any acquisition or investment that would confer “control” with regard to critical technologies or infrastructure. The U.S. Departments of Homeland Security, Commerce, and Defense shall prepare and regularly update a list of critical technologies or infrastructure that would not be eligible for acquisition or investment by any Chinese entities to ensure U.S. economic and national security interests are protected.
Including a net economic benefit test to assess the impact of acquisitions by Chinese entities in the United States to ensure they advance U.S. national economic interests.
Requiring that any proposed acquisition of a media property by a Chinese entity be assessed in terms of the acquiring entity’s history of adhering to Chinese Communist Party propaganda objectives and its potential to influence public opinion in the United States.
Authorizing an independent review panel, appointed by Congress, to review the actions and activities of CFIUS on a continuing basis.
Allowing any CFIUS member agency to bring a transaction up for review and investigation.

(From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Chinese Investments in the United States)

Congress amend the Foreign Sovereign Immunities Act (FSIA) of 1976 to:

Allow U.S. courts to hear cases against a foreign state’s corporate affiliates under the commercial activity exception.
Require Chinese firms to waive any potential claim of sovereign immunity if they do business in the United States.

(From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Chinese Investments in the United States)

Congress strengthen the Foreign Agents Registration Act to require the registration of all staff of Chinese state-run media entities, given that Chinese intelligence gathering and information warfare efforts are known to involve staff of Chinese state-run media organizations and in light of the present uneven enforcement of the Act. (From Chapter 3: China and the World, Section 5: China’s Domestic Information Controls, Global Media Influence, and Cyber Diplomacy)

Congress urge the Administration to invite Taiwan to participate, at least as an observer, in U.S.-led bilateral and multilateral military and security-related exercises, including the Rim of the Pacific (RIMPAC) maritime exercise, Red Flag air-to-air combat training exercises, and Cyber Storm cybersecurity exercise, in order to support Taiwan’s efforts to enhance its defense capabilities, expand opportunities for Taiwan to contribute to regional and international security, and counter China’s efforts to limit Taiwan’s international space. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress consider legislation to ban and delist companies seeking to list on U.S. stock exchanges that are based in countries that have not signed a reciprocity agreement with the Public Company Accounting Oversight Board (PCAOB). (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Chinese Investment in the United States)

Congress authorize U.S. defense spending at levels sufficient to address the growing challenge to U.S. interests posed by China’s ongoing military modernization program and to ensure the United States will have the capacity to maintain readiness and presence in the Asia Pacific. (From Chapter 2: U.S.-China Security Relations, Section 2: China’s Military Modernization in 2017)

Congress direct the National Science and Technology Council, in coordination with the National Economic Council and relevant agencies, to identify gaps in U.S. technological development vis-à-vis China, including funding, science, technology, engineering, and mathematics workforce development, interagency coordination, and utilization of existing innovation and manufacturing institutes, and, following this assessment, develop and update biennially a comprehensive strategic plan to enhance U.S. competitiveness in advanced science and technology. (From Chapter 4: China’s High Tech Development, Section 1: China’s Pursuit of Dominance in Computing, Robotics, and Biotechnology)

Congress reauthorize annual reporting requirements of the United States-Hong Kong Policy Act of 1992, in an effort to ensure policymakers have the most up-to-date and authoritative information about developments in Hong Kong. The report should include an assessment of whether Hong Kong has maintained a “sufficient degree of autonomy” under the “one country, two systems” policy, among other developments of interest to the United States. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

Congress direct the Office of the U.S. Trade Representative to develop criteria for the Notorious Markets List to ensure listed companies can be held accountable for engaging in or facilitating copyright piracy and trademark counterfeiting. (From Chapter 1, U.S.-China Economic and Trade Relations, Section 3: U.S. Access to China’s Consumer Market)

Congress consider legislation conditioning the provision of market access to Chinese investors in the United States on a reciprocal, sector-by-sector basis to provide a level playing field for U.S. investors in China. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Chinese Investment in the United States)

Additional Recommendations
The Commission recommends:

Congress require the Office of the U.S. Trade Representative to expand the National Trade Estimate’s coverage of China’s digital trade barriers to include an assessment of their impact on U.S. industries and whether they comply with China’s World Trade Organization commitments. (From Chapter 1, U.S.-China Economic and Trade Relations, Section 3: U.S. Access to China’s Consumer Market)

Congress require the executive branch to develop a whole-of-government strategy for countering Chinese coercion activities in the Indo-Pacific coordinated through the National Security Council that utilizes diplomatic, informational, military, economic, financial, intelligence, and legal instruments of national power. (From Chapter 2: U.S.-China Security Relations, Section 3: Hotspots along China’s Maritime Periphery)

Congress increase economic and development assistance and public diplomacy resources to Southeast Asia commensurate with its importance to U.S. strategic, economic, and political interests. A significant portion of additional funding should be directed to democracy, civil society, and governance capacity programs. (From Chapter 3: China and the World, Section 1: China and Continental Southeast Asia)

Congress direct the U.S. Department of State and the U.S. Agency for International Development to allocate sufficient funding for the Lower Mekong Initiative and maintain funding at a level consistent with its role as a platform for water policy coordination and as a provider of U.S. expertise for environmentally safe dam construction. (From Chapter 3: China and the World, Section 1: China and Continental Southeast Asia)

Congress direct the administration to increase cooperation on infrastructure projects supported by U.S. partners and allies, such as Asian Development Bank programs and bilateral projects administered by the Japan International Cooperation Agency. U.S. cooperation should leverage U.S. technical expertise regarding engineering, management, and social and environmental safeguards. (From Chapter 3: China and the World, Section 1: China and Continental Southeast Asia)

Congress support initiatives that enable cooperation between the U.S. Coast Guard and maritime Asian coast guards (possibly to include joint patrols, shiprider agreements, and the expansion of the Code for Unplanned Encounters at Sea [CUES] to include coast guard and other maritime law enforcement agencies), given the prominent role of the China Coast Guard in aggressively advancing China’s territorial ambitions in the East and South China seas. (From Chapter 3: China and the World, Section 2: China and Northeast Asia)

Congress examine the state of the U.S.-Japan alliance in light of China’s military modernization, paying particular attention to efforts to achieve a joint command structure for planning and executing complex combined operations. (From Chapter 3: China and the World, Section 2: China and Northeast Asia)

Congress highlight the accomplishments and otherwise elevate the visibility of the Global Cooperation and Training Framework, which facilitates U.S.-Taiwan cooperation in areas such as public health and disaster relief. Such efforts possibly could include examining whether the program would benefit from additional staffing and funding. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress urge the executive branch to reexamine its practice regarding reciprocal visits by senior U.S. and Taiwan military officers and civilian officials with the aim of increasing high-level exchanges, including Cabinet-level officials and senior National Security Council officials, as part of an effort to enhance U.S.-Taiwan relations. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congress ensure relevant U.S. military personnel are sufficiently familiar with Taiwan’s defense situation by allocating funds for U.S. military personnel to take courses at Taiwan’s defense educational institutions (such as Taiwan’s war college, service command and staff schools, and airborne school) and other courses in Taiwan in an unofficial capacity through the American Institute in Taiwan, in order to ensure the U.S. military is prepared to act in support of Taiwan’s defense if called on to do so. (From Chapter 3: China and the World, Section 3: China and Taiwan)

Congressional committees of jurisdiction examine and analyze potential U.S. policy options toward Hong Kong, including those to impose costs on Beijing for not abiding by its commitments to the territory, given mainland China’s increased intrusions into Hong Kong’s autonomy. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

Members of Congress participate in congressional delegations to Hong Kong and meet with Hong Kong officials, legislators, and business representatives in the territory and while they visit the United States. In these meetings, they should raise concerns about Beijing’s adherence to the “one country, two systems” policy and the recent crackdown on prodemocracy activists, including the imprisonment of Joshua Wong and others. They should also continue to express support for freedom of expression and rule of law in Hong Kong. (From Chapter 3: China and the World, Section 4: China and Hong Kong)

Congress require the U.S. Department of Commerce to collect information from U.S. companies that do business in China concerning requests from the Chinese government regarding censorship, surveillance, and data transfers, and report its findings to Congress. (From Chapter 3: China and the World, Section 5: China’s Domestic Information Controls, Global Media Influence, and Cyber Diplomacy)

Congress modify U.S. Federal Communications Commission regulations to require greater transparency regarding Chinese government ownership of media outlets and the clear labeling of media content sponsored by the Chinese government. (From Chapter 3: China and the World, Section 5: China’s Domestic Information Controls, Global Media Influence, and Cyber Diplomacy)

Congress urge the Office of the U.S. Trade Representative, when renegotiating the existing Bilateral Film Agreement between the United States and China, to increase the number of films that have access to Chinese theaters and increase the revenue sharing arrangement to a level reflecting the median arrangement existing around the globe. In addition, the arrangement should reserve a minimum of 50 percent of the quota for films from studios and independent distributors that are not owned or controlled by Chinese interests. (From Chapter 3: China and the World, Section 5: China’s Domestic Information Controls, Global Media Influence, and Cyber Diplomacy)

Congress direct the Federal Bureau of Investigation in concert with the U.S. Department of Commerce’s International Trade Administration to expand outreach to and develop educational materials and tools for U.S. academics, businesses, venture capitalists, and startups in dual-use sectors on potential risks associated with Chinese investors and partners, the Chinese government’s role in acquiring technology through programs such as the Thousand Talents Program and Project 111, and steps to prevent industrial and cyber espionage. (From Chapter 4: China’s High Tech Development, Section 1: China’s Pursuit of Dominance in Computing, Robotics, and Biotechnology)

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Key Recommendations
The Commission recommends:

Congress direct the U.S. Government Accountability Office to prepare a report examining the extent to which large-scale outsourcing of manufacturing activities to China is leading to the hollowing out of the U.S. defense industrial base. This report should also detail the national security implications of a diminished domestic industrial base (including assessing any impact on U.S. military readiness), compromised U.S. military supply chains, and reduced capability to manufacture state-of-the-art military systems and equipment. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: State-Owned Enterprises, Overcapacity, and China’s Market Economy Status)

Congress amend the statute authorizing the Committee on Foreign Investment in the United States to bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of U.S. companies. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: State-Owned Enterprises, Overcapacity, and China’s Market Economy Status)

Congress direct the U.S. Department of Defense to include a permanent section in its Annual Report on Military and Security Developments Involving the People’s Republic of China on the role and activities of China’s maritime militia and the implications for U.S. naval operations. (From Chapter 4: China and the U.S. Rebalance to Asia)

Congress enact legislation requiring its approval before China—either the country as a whole or individual sectors or entities—is granted status as a market economy by the United States. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: State-Owned Enterprises, Overcapacity, and China’s Market Economy Status)

Congress require that under antidumping and countervailing duty laws, Chinese state-owned and state-controlled enterprises are presumed to be operating on behalf of the state and, as a result, do not have standing under U.S. laws against unfair trade to block a case from proceeding. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: State-Owned Enterprises, Overcapacity, and China’s Market Economy Status)

Congress direct the Federal Bureau of Investigation to provide a classified report to Congress on what risks and concerns have been identified as associated with information systems acquired by the U.S. government, and how those risks are being mitigated. This report should identify information systems or components that were produced, manufactured, or assembled by Chinese-owned or -controlled entities. (From Chapter 2: U.S.-China Security Relations, Section 3: China’s Intelligence Services and Espionage Threats to the United States)

Congressional committees of jurisdiction hold hearings to:

Analyze the impact of China’s state-directed plans such as the Made in China 2025 and Internet Plus on U.S. economic competitiveness and national security, and examine the steps Congress can take to strengthen U.S. high-tech and high-value-added industries such as artificial intelligence, autonomous vehicles and systems, and semiconductors.
Ensure that U.S. government agencies such as the U.S. Department of the Treasury, U.S. Department of Commerce, and the Office of the U.S. Trade Representative have sufficient personnel, funding, and Chinese-language capabilities to examine China’s economic and trade policies and China’s compliance with its bilateral and multilateral commitments, including the World Trade Organization.
Examine U.S. access to China’s domestic market, particularly for services and high-tech sectors. This hearing should assess how U.S. government agencies such as the U.S. Department of Commerce and the Office of the U.S. Trade Representative are seeking to increase market access for U.S. firms and explore what additional policy options could be pursued.

(From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s 13th Five-Year Plan)

Congress require the U.S. Department of Defense to conduct a study identifying the risks and gains associated with the United States pursuing a burden sharing strategy that utilizes emerging People’s Liberation Army expeditionary capabilities to help stabilize the Asia Pacific region during a crisis or to counter a shared threat such as the spread of terrorism in Southeast Asia. (Chapter 2: U.S.-China Security Relations, Section 2: China’s Force Projection and Expeditionary Capabilities)

Congress express support for more frequent U.S. freedom of navigation operations in the South China Sea in conjunction with U.S. allies and partners. (From Chapter 4: China and the U.S. Rebalance to Asia)

Congress direct the U.S. Department of State to develop educational materials to alert U.S. citizens living and traveling abroad about recruitment efforts by Chinese intelligence agents, and to make these materials available to U.S. universities and other institutions sending U.S. students to China. Congress should also direct the U.S. Department of Defense to develop and implement a program to prepare U.S. students studying in China through Department of Defense National Security Education Programs to recognize and protect themselves against recruitment efforts by Chinese intelligence agents. (From Chapter 2: U.S.-China Security Relations, Section 3: China’s Intelligence Services and Espionage Threats to the United States)

Additional Recommendations
The Commission recommends:

Congress create an office within the International Trade Administration whose sole purpose is to identify and initiate antidumping and countervailing duty cases to ensure a more effective and timely response to China’s unfair trade practices. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: State-Owned Enterprises, Overcapacity, and China’s Market Economy Status)

Congress direct the U.S. Department of the Treasury to prepare a report analyzing U.S. exposure to China’s financial sector and the impact of China’s financial sector reforms on the U.S. and global financial systems. This report should also identify the policies the U.S. government is or should be adopting to protect U.S. interests in response to this changing environment. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s 13th Five-Year Plan)

Members of Congress and Congressional staff seek opportunities to advance U.S.-Taiwan economic, political, and security relations, support Taiwan’s participation in international organizations, and draw attention to Taiwan’s democratic achievements and contributions to the international community. (From Chapter 3: China and the World, Section 2: China and Taiwan)

Congress urge the executive branch to make available to Taiwan, consistent with the Taiwan Relations Act, defense articles and services required to address the continuing shift in the cross-Strait military balance toward China. (From Chapter 3: China in the World, Section 2: China and Taiwan)

Congress direct the U.S. Department of State to reexamine its policy guidelines on reciprocal visits by senior U.S. and Taiwan military officers and civilian officials with the aim of increasing high-level exchanges. (From Chapter 3: China and the World, Section 2: China and Taiwan)

Congress request briefings by the Office of the U.S. Trade Representative (USTR) on the status of the Trade and Investment Framework Agreement negotiations with Taiwan and direct the USTR to identify enhanced negotiating procedures to resolve outstanding issues and ensure an accelerated path to conclude such talks. (From Chapter 3: China and the World, Section 2: China and Taiwan)

Congress express that China’s apparent abduction and detention of five Hong Kong and foreign national booksellers based in Hong Kong for selling banned books to customers in mainland China violates its commitments to maintaining a ‘‘high degree of autonomy’’ in Hong Kong under the ‘‘one country, two systems’’ framework. In addition, members of Congress in their meetings in China should continue to express support for human rights and rule of law in Hong Kong. (From Chapter 3: China and the World, Section 3: Hong Kong)

Congress continue to renew annual reporting requirements of the U.S.-Hong Kong Policy Act of 1992, in an effort to ensure policymakers have the most up-to-date and authoritative information about developments in Hong Kong. (From Chapter 3: China and the World, Section 3: Hong Kong)

Congress direct the U.S. Department of State to prepare a report that assesses whether Hong Kong has maintained a ‘‘sufficient degree of autonomy’’ under the “one country, two systems” policy, due to the deterioration of freedom of expression in Hong Kong and Beijing’s increasing encroachment. (From Chapter 3: China and the World, Section 3: Hong Kong)

Congress require the U.S. Department of State to produce an unclassified report assessing China’s compliance with UN resolutions on North Korea. (From Chapter 3: China and the World, Section 4: China and North Korea)

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Key Recommendations
The Commission recommends:

Congress assess the coverage of U.S. law to determine whether U.S.-based companies that have been hacked should be allowed to engage in counterintrusions for the purpose of recovering, erasing, or altering stolen data in offending computer networks. In addition, Congress should study the feasibility of a foreign influence cyber court to hear evidence from U.S. victims of cyber attacks and decide whether the U.S. government might undertake counterintrusions on a victim’s behalf. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: Commercial Cyber Espionage and Barriers to Digital Trade in China)

Congress require the Administration to provide a comprehensive, publicly-available assessment of Chinese foreign direct investments in the United States prior to completion of negotiations on a Bilateral Investment Treaty. This assessment should include an identification of the nature of investments, whether investments received in support of any kind from the Chinese government and at which level (national, provincial, or municipal), and the sector in which the investment was made. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China)

Congress consider legislation conditioning the provision of market access to Chinese investors in the United States on a reciprocal, sector-by-sector basis to provide a level playing field for U.S. investors in China. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China)

Congress direct the U.S. Department of Defense, U.S. Air Force, and relevant agencies within the U.S. Intelligence Community to jointly prepare a classified report that performs a net assessment of U.S. and Chinese counterspace capabilities. The report should include a strategic plan for deterring, with active and passive systems, strikes against U.S. assets in light of other countries’ rapid advancements in kinetic and non-kinetic counterspace technology. (From Chapter 2: Security and Foreign Policy Issues Involving China, Section 2: China’s Space and Counterspace Programs)

Congress assess the ability of, and if necessary amend, existing U.S. trade laws to address China’s industrial policies, abusive legal or administrative processes, and discriminatory treatment of foreign investors, and to determine the consistency of these practices with China’s World Trade Organization commitments. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China)

Congress continue to support initiatives to harden U.S. bases in the Asia Pacific, including the Pacific Airpower Resiliency Initiative, in order to increase the costliness and uncertainty of conventional ballistic and cruise missile strikes against these facilities, and thereby dis-incentivize a first strike and increase regional stability. (From Chapter 2: Security and Foreign Policy Issues Involving China, Section 3: China’s Offensive Missile Forces)

Congress continue to support the U.S. Department of Defense’s efforts to reduce the vulnerability of U.S. space assets through cost-effective solutions, such as the development of smaller and more distributed satellites, hardened satellite communications, and non-space intelligence, surveillance, and reconnaissance assets such as unmanned aerial vehicles. (From Chapter 2: Security and Foreign Policy Issues Involving China, Section 2: China’s Space and Counterspace Programs)

Congress require the Administration to prepare an annual classified report on foreign government-sponsored cyber attacks against all Federal Government agencies, including but not limited to an assessment of the damage and the affected agencies’ plans to secure their networks against future attacks. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: Commercial Cyber Espionage and Barriers to Digital Trade in China)

Congress direct the U.S. Government Accountability Office to prepare a report assessing the U.S. New Silk Road policy. This report should evaluate the New Silk Road’s strengths and weaknesses and its current status and future prospects for meeting U.S. policy objectives in Central Asia. This report should investigate how U.S. policy toward Central Asia intersects and interacts with U.S. policy toward China more broadly, and how the U.S. and Chinese Silk Road initiatives interact in Central Asia. (From Chapter 3: China and the World, Section 1: China and Central Asia)

Congress pass legislation to require the Securities and Exchange Commission (SEC) to make clear to publicly traded companies and their investors the circumstances under which the theft of intellectual property through a computer network intrusion may be a material fact that might affect a company’s revenues and should therefore be required to be disclosed to the SEC. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: Commercial Cyber Espionage and Barriers to Digital Trade in China)

Additional Recommendations
The Commission recommends:

Congress consider legislation requiring the President to submit a request to Congress for approval before any change occurs, either for the country as a whole or for individual sectors or entities, in China’s status as a non-market economy. Under such legislation, any change to the designation of China could not proceed without consent of both Houses of Congress. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China.

Congress direct U.S. antitrust enforcement agencies to conduct an analysis and legal assessment of alleged anticompetitive behavior by Chinese antitrust enforcers, and report in full on enforcement activities. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China.

Congress expand the guidelines for consultation and transparency relating to trade negotiations covered by Trade Promotion Authority to include negotiations on a Bilateral Investment Treaty between the United States and China. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China.

Congress urge the U.S. Trade Representative to initiate consultations with China’s Ministry of Commerce to identify the extent to which China’s policy regarding subsidies and other incentives for purchases of domestically-produced new energy vehicles may violate its World Trade Organization commitments and what steps should be taken to address any inconsistencies with those commitments. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: Foreign Investment Climate in China.

Congress direct the U.S. Government Accountability Office to prepare a report that analyzes U.S. exposure to China’s financial sector, the progress of China’s financial sector reforms, and the effect of China’s financial sector reforms on the U.S. and global financial systems, and identifies the policies the U.S. government is adopting to protect U.S. interests in light of this changing environment. From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s State-Led Market Reform and Competitiveness Agenda

Congress urge the U.S. Department of Commerce to undertake a comprehensive review and prepare a report on China’s Made in China 2025 and Internet Plus initiatives, including their forced localization of manufacturing and research and development requirements, to determine their potential impact on domestic U.S. production and market access for U.S. firms. From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s State-Led Market Reform and Competitiveness Agenda

Congress direct the U.S. Environmental Protection Agency, U.S. Department of Energy, and U.S. Department of Commerce to jointly prepare a report that outlines China’s stated targets to address pollution and climate change, and evaluates whether the Chinese government has allocated sufficient resources (including expenditures) to meet those commitments. From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s State-Led Market Reform and Competitiveness Agenda

Congress consider legislation amending the Federal Information Security Modernization Act of 2014 to require an annual review by the U.S. Department of Homeland Security of the steps taken by all federal agencies to ensure that adequate systems are in place to protect cyber assets. From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: Commercial Cyber Espionage and Barrier to Digital Trade in China

Congress evaluate existing consumer right-to-know laws to determine whether a cloud-based computing company has an affirmative duty to identify the physical location of its cloud-based assets. From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: Commercial Cyber Espionage and Barrier to Digital Trade in China

Congress direct appropriate jurisdictional entities to undertake a review of (1) the classification of satellites and related articles on the U.S. Munitions List under the International Trafficking in Arms Regulations and (2) the prohibitions on exports of Commerce Control List satellites and related technologies to China under the Export Administration Regulations, in order to determine which systems and technologies China is likely to be able to obtain on the open market regardless of U.S. restrictions and which are critical technologies that merit continued U.S. protection. From Chapter 2: Security and Foreign Policy Issues Involving China, Section 2: China’s Space and Counterspace Programs

Congress allocate additional funds to the Director of National Intelligence Open Source Center for the translation and analysis of Chinese-language technical and military writings, in order to deepen U.S. understanding of China’s defense strategy, particularly related to space. From Chapter 2: Security and Foreign Policy Issues Involving China, Section 2: China’s Space and Counterspace Programs

Congress direct the U.S. Department of Defense to provide an unclassified estimate of the People’s Liberation Army Second Artillery Force’s inventory of missiles and launchers, by type, in future iterations of its Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China, as included previously but suspended following the 2010 edition. From Chapter 3: Security and Foreign Policy Issues Involving china, Section 3: China’s Offensive Missile Forces

Congress direct the U.S. Department of Defense to prepare a report on the potential benefits and costs of incorporating ground-launched short-, medium-, and intermediate-range conventional cruise and ballistic missile systems into the United States’ defensive force structure in the Asia Pacific, in order to explore how such systems might help the U.S. military sustain a cost-effective deterrence posture. From Chapter 3: Security and Foreign Policy Issues Involving china, Section 3: China’s Offensive Missile Forces

Congress continue to support “next-generation” missile defense initiatives such as directed energy and rail gun technologies, and require the U.S. Department of Defense to report to committees of jurisdiction on the status of current component sourcing plans for the development and production of directed energy weapons. From Chapter 3: Security and Foreign Policy Issues Involving china, Section 3: China’s Offensive Missile Forces

Congress request classified briefings from the U.S. Intelligence Community on the nature of U.S.-China cooperation on counterterrorism to ensure the U.S. government is not inadvertently supporting Chinese counterterror policies and tactics that undermine human rights. From Chapter 3: China and the World, Section 1: China and Central Asia

Members of Congress and their staffs consider traveling to Central Asia, and, when doing so, engage with U.S. business community and nongovernmental organizations to discuss ways of improving human rights, rule of law, environmental protection, and business environment. From Chapter 3: China and the World, Section 1: China and Central Asia

Congress direct the U.S. Government Accountability Office to prepare a report assessing the effectiveness of recent U.S. efforts to enhance the maritime security capabilities of allies and partners in Southeast Asia and identifying the remaining challenges and opportunities. From Chapter 3: China and the World, Section 2: China and Southeast Asia

Congress urge the Administration to enhance its support for regional information sharing institutions focused on maritime security in Southeast Asia. From Chapter 3: China and the World, Section 2: China and Southeast Asia

Congress direct the U.S. Government Accountability Office to expand its August 2015 report Southeast Asia: Trends in U.S. and Chinese Economic Engagement to evaluate whether Chinese government funded investment and assistance projects in Southeast Asia negatively affect U.S.-funded projects in Southeast Asia. From Chapter 3: China and the World, Section 2: China and Southeast Asia

Congress urge the Administration to make available to Taiwan, consistent with the Taiwan Relations Act, defense articles and services required to address the continuing shift in the cross Strait military balance toward China. From Chapter 3, China and the World, Section 3: Taiwan

Congress direct the Administration to invite Taiwan to participate at least as an observer at U.S.-led bilateral and multilateral military and security exercises, including future Rim of the Pacific (RIMPAC) and Cyber Storm exercises. From Chapter 3: China and the World, Section 3: Taiwan

Congress encourage the Administration to increase its public support of Taiwan’s participation in international organizations,* which would help Taiwan expand its status and legitimacy in the international community. From Chapter 3: China and the World, Section 3: Taiwan

*These organizations may include: the United Nations Framework Convention on Climate Change, International Atomic Energy Agency, International Civil Aviation Organization, International Maritime Organization, and International Criminal Police Organization (Interpol).

Congress require the U.S. Department of State, the U.S. Department of Defense, and the U.S. Department of Commerce to jointly prepare a classified report on Taiwan’s role in the U.S. strategy in Asia. The report should include an overview of Taiwan’s current role in the strategy; U.S.-Taiwan defense cooperation and a description of all joint programs; and opportunities for Taiwan’s inclusion in U.S. Asia strategy. From Chapter 3: China and the World, Section 3: Taiwan

Members of Congress, when visiting mainland China, also visit Hong Kong, and that Congress encourage senior Administration officials, including the secretaries of State, Defense, and Commerce, to make visits to Hong Kong part of their travel. From Chapter 3: China and the World, Section 4: Hong Kong

Congress sustain the language in the Department of State, Foreign Operations, and Related Programs Appropriations Act of 2016 reauthorizing the report requirement under the U.S.- Hong Kong Policy Act of 1992 supporting human rights and democracy in accordance with the Sino-British Joint Declaration. From Chapter 3: China and the World, Section 4: Hong Kong

Congress urge the U.S. Department of State to increase its public diplomacy efforts in Hong Kong in support of press freedom, media independence, and academic freedom. From Chapter 3: China and the World, Section 4: Hong Kong

Congress engage parliamentarians from the United Kingdom in an interparliamentary review of China’s adherence to the Basic Law since the handover of Hong Kong to China in 1997, with specific attention to rule of law, progress in achieving universal suffrage, and press freedom. From Chapter 3: China and the World, Section 4: Hong Kong

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Key Recommendations
The Commission recommends:

Congress consider legislation that would make available a remedy to domestic firms that have been injured from the anticompetitive actions (such as access to low-cost or no-cost capital) of foreign state-owned companies for the injury that has been inflicted and allow for the potential award of treble damages. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges)

Congress fund the U.S. Navy’s shipbuilding and operational efforts to increase its presence in the Asia Pacific to at least 67 ships and rebalance homeports to 60 percent in the region by 2020 so that the United States will have the capacity to maintain readiness and presence in the Asia Pacific, offset China’s growing military capabilities, and surge naval assets in the event of a contingency. (From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization)

Congress appoint an outside panel of experts to do a net assessment of the Sino-American military balance and make recommendations to Congress regarding the adequacy of the current U.S. military plans and budgets to meet the security requirements of the United States in the Pacific. (From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization)

Congress require the Department of the Treasury to include in its semiannual report to Congress specific information in the beneficial economic impact of China moving to a freely floating currency in terms of U.S. exports, economic growth, and job creation. In addition, Congress should urge the Administration to begin immediate consultations of the G-7 to identify a multilateral approach to addressing China’s currency manipulation. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges)

Congress direct the Government Accountability Office to update its report on the effectiveness of the U.S.-China Joint Commission on Commerce and Trade (JCCT) and the Strategic and Economic Dialogue (S&ED). The updated report should include an assessment of the objectives sought by the United States in these talks and whether China has honored its commitments to date. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges)

Congress consider amending existing trade enforcement rules to ensure that foreign investment in the United States cannot be used to impede the ability of domestic producers to bring petitions for trade enforcement actions. Congress could direct the Department of Commerce to update its regulations and procedures for antidumping and countervailing duty cases to create a rebuttable presumption that firms that are state-owned, state-controlled, or state-invested with facilities in the United States are operating at the direction of the state. Those state-directed companies would then be excluded from calculations of industry support or opposition unless they can prove that there is no such involvement or direction. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges)

Congress request that the Office of the United States Trade Representative, Department of Commerce, and International Trade Commission report to Congress on the extent to which existing authorities would allow for sanctions to be imposed against entities that benefit from trade secrets or other information obtained through cyber intrusions or other illegal means and were provided by a national government, foreign intelligence service, or other entity utilizing such means. If authorities do not exist, they should provide a proposal to address such problems. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges)

Congress pursue measures to improve the government’s information about drug ingredient and dietary supplement producers, especially for imports. To this end, Congress should urge the Food and Drug Administration (FDA) to work with its Chinese counterparts to establish a more comprehensive regulatory regime for registering China-based active pharmaceutical ingredient producers, and make this producer information available on demand for U.S. agencies. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services)

Congress adopt a resolution urging China to keep its commitments to allow broadly representative nomination and election of Hong Kong’s chief executive by universal suffrage in accordance with democratic procedures as articulated in the 1984 Sino-British Joint Declaration on the Question of Hong Kong, the Basic Law of the Hong Kong Special Administrative Region, and the International Covenant on Civil and Political Rights. (From Chapter 3: China and the World, Section 3: Hong Kong)

Congress urge the FDA to insist on expedited approvals from the Chinese government for work visas for the FDA staff, and on expanded authority to conduct unannounced visits at drug manufacturing facilities in China. (From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services)

Additional Recommendations
The Commission recommends:

Congress direct the Interagency Trade Enforcement Center (ITEC) to provide briefings to the House Ways and Means and Senate Finance Committees and the House and Senate Appropriations Committees on its activities, since its creation, to coordinate and improve upon the enforcement of U.S. laws against unfair trade. Congress should examine whether providing statutory authority for ITEC would enhance enforcement activities and ensure that adequate resources are available and that other Departments and Agencies are responsive to its requests. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress consider whether state and local governments should be treated as interested parties under laws against unfair trade and thereby have standing to bring or participate in trade cases. Further, Congress should consider creating a private right of action allowing U.S. companies to take legal action against competitors directly in antidumping and countervailing duty cases, rather than having to rely on U.S. government assistance. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress seek clarification from the executive branch as to its interpretation of Article 15 of China’s World Trade Organization Accession Protocol concerning China’s achievement of “market economy” status. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress direct the Council of Economic Advisers (CEA) to brief the Joint Economic Committee on existing data collection efforts within the Administration regarding investments by Chinese entities in the United States. CEA shall describe the differing data sets available from public and private sources and the extent to which existing data provides adequate information to U.S. policy makers to assess changing trends and the potential economic implications from these investments. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress require the Department of Commerce to prepare a comprehensive analysis of excess productive capacity in China across a range of sectors, including, but not limited to, steel, glass, paper, cement and solar products, and provide a report to the President and to Congress on what actions should be taken to address this problem. This report shall be prepared annually for a period of five years, at a minimum. In addition, the Administration should consult with major trade allies with similar concerns about Chinese overcapacity in these sectors to determine what multilateral engagement would effectively deal with this problem. As part of this approach, the Administration shall evaluate the effectiveness of other efforts to address global and China’s overcapacity in certain sectors, such as the Organization for Economic Cooperation and Development Steel Committee, the U.S.-China Steel Dialogue, and JCCT and S&ED talks. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress require the Office of the United States Trade Representative to brief the House Ways and Means and Senate Finance Committees, within 60 days, on trade enforcement issues involving China which have been initiated or announced since 2009, but have not yet been resolved, and identify what steps will be taken to ensure a more rapid resolution of such issues. The briefing shall include an estimate of the economic value to the U.S. in terms of production and job creation, if the identified market barrier or impediment were eliminated. From Chapter 1: U.S.-China Economic and Trade Relations, Section 2: U.S.-China Bilateral Trade and Economic Challenges.

Congress urge the Institutes of Medicine of the National Academies to convene a task force to assess purchasing decisions by U.S. wholesalers, retailers, and healthcare providers with regard to China-origin drugs and drug ingredients, and to recommend ways in which to improve information sharing and coordination with the Food and Drug Administration (FDA). From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services

Congress monitor the efficacy of the FDA’s regulatory activities in China, consider ways to optimize the use of appropriated funding, and identify what other steps are necessary to protect the health and safety of the U.S. population. From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services

Congress adopt measures that make greater use of “track and trace” technology. To this end, Congress should: (1) urge the U.S. government negotiators to demand that China harmonize with internationally recognized standards its unique device identifiers for medical devices and its serialized verification of APIs, so as to allow for equivalency with U.S. systems and standards; (2) make the use of serial numbers for product verification at U.S. pharmacies mandatory at all times, not only in cases where a product is suspect (as currently spelled out in the Drug Quality and Security Act). From Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services

Congress direct the Trade Policy Review Group of the Office of the U.S. Trade Representative to review the interests of U.S. healthcare goods and services providers in the Chinese market, Chinese market barriers, and opportunities to promote human health in China in ways that support U.S. consumer and business interests. Chapter 1: U.S.-China Economic and Trade Relations, Section 3: China’s Health Care Industry, Drug Safety, and Market Access for U.S. Medical Goods and Services

Congress direct the Government Accountability Office to conduct an assessment of government-led U.S.-China collaborative initiatives on clean energy. This assessment should describe the nature of collaboration, including funding, participation, and reporting on the outcomes; consider whether the intellectual property rights of U.S. researchers and companies are being protected; examine whether Chinese state-owned enterprises are benefitting from U.S. taxpayer-funded research; investigate if any U.S. companies, universities and labs participating in government-led collaboration with China have been subject to cyber penetrations originating in China; and evaluate the benefits of this collaboration for the United States. Further, this assessment should examine redundancies, if any, among various U.S.-China government-led collaborative programs, and make suggestions for improving collaboration. From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Clean Energy Competition

Congress require that the Department of Energy, in consultation with the Department of Commerce, identify barriers to market access in China for clean and renewable energy products and services and their impact on U.S. production and job creation, and report to the committees of jurisdiction, within 120 days, on specific action plans to address these barriers. As part of this report, the Departments shall identify sourcing patterns that have changed over the last 10 years in these sectors and also the extent to which U.S. companies are producing in the Chinese market to serve that market and whether they were previously able to manufacture these products in the United States for export to China. From Chapter 1: U.S.-China Economic and Trade Relations, Section 4: U.S.-China Clean Energy Competition

Congress ensure the adequacy of open source collection, production, and dissemination capabilities vis-a`-vis security issues involving China. From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization

Congress direct U.S. Pacific Command to brief Congress on the People’s Liberation Army Navy’s participation in the Rim of the Pacific-2014 exercise. From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization

Congress direct the Department of Defense to provide to Congress its purpose and rationale for its military-to-military engagement planning with the People’s Liberation Army, including proposed programs already discussed with the People’s Liberation Army. From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization

Given the importance of understanding China’s nuclear and conventional ballistic missile programs, Congress direct the Government Accountability Office to provide an unclassified report, with a classified annex that examines China’s nuclear and conventional ballistic missile capabilities, intentions, and force structure. From Chapter 2: Military and Security Issues Involving China, Section 2: China’s Military Modernization

Members of Congress reaffirm their support for human rights, freedom of expression, and rule of law in China and raise citizens’ rights to freedom of speech, expression, and religion in their meetings with Chinese government officials. From Chapter 2: Military and Security Issues Involving China, Section 3: China’s Domestic Stability

Congress support the efforts of the U.S. Agency for International Development, U.S. Department of State, and the National Endowment for Democracy to strengthen governance and improve the well-being of Chinese citizens through capacity-building training programs and exchanges. From Chapter 2: Military and Security Issues Involving China, Section 3: China’s Domestic Stability

Congress closely monitor U.S.-China counterterrorism cooperation to ensure the United States is not endorsing or providing any support for China’s suppression of Chinese citizens, including Uyghurs, Tibetans, and other ethnic minorities. From Chapter 2: Military and Security Issues Involving China, Section 3: China’s Domestic Stability

Congress continue to support and fund media outlets that promote the free flow of information and Internet freedom within China. From Chapter 2: Military and Security Issues Involving China, Section 3: China’s Domestic Stability

Congress require the Administration to submit a one-time interagency report clarifying the progress of the Asia rebalance policy. From Chapter 3: China and the World, Section 1: China and Asia’s Evolving Security Architecture

Congress emphasize the value of the U.S.-Australia alliance in its interactions with Australian legislators. From Chapter 3: China and the World, Section 1: China and Asia’s Evolving Security Architecture

Congress express support for Japan’s efforts to exercise ‘‘collective self-defense’’ in its interactions with Japanese legislators. From Chapter 3: China and the World, Section 1: China and Asia’s Evolving Security Architecture

Congress examine the Administration’s progress on greater intelligence, surveillance, and reconnaissance (ISR) integration and sharing between the United States and its allies and associates in East Asia and Oceania. In addition, Congress should support efforts by the Department of Defense to improve ISR capabilities of allies and security associates in East Asia and develop a ‘‘common operating picture’’ for the East and South China Seas. From Chapter 3: China and the World, Section 1: China and Asia’s Evolving Security Architecture

Congress urge the Administration to encourage allies to develop their missile defense capabilities. From Chapter 3: China and the World, Section 1: China and Asia’s Evolving Security Architecture

Appropriate Congressional committees require the Departments of Defense and State to jointly produce a classified report on U.S. efforts to engage with China, South Korea, and Japan on issues related to North Korean stability. The report should include a discussion of prospects for political crisis or regime collapse in North Korea; a discussion of each country’s outlook and approach to contingency planning for North Korea collapse scenarios; a detailed explanation of the current state of engagement among these countries on contingency planning for North Korea collapse scenarios; and an overview of existing track two dialogues aimed at enhancing understanding and cooperation among these countries on issues related to North Korean stability, to include an assessment of the effectiveness of these track two dialogues. From Chapter 3: China and the World, Section 2: Recent Developments in China’s Relationship with North Korea

Congress require future classified and unclassified Department of Defense reports on ‘Military and Security Developments Involving the Democratic People’s Republic of Korea’ to include a full discussion of China’s activities impacting the military and security situation in North Korea. From Chapter 3: China and the World, Section 2: Recent Developments in China’s Relationship with North Korea

Congress support nongovernmental organizations that encourage democracy and promote human rights and economic liberalization in North Korea. From Chapter 3: China and the World, Section 2: Recent Developments in China’s Relationship with North Korea

Congress support nongovernmental organizations that facilitate exchanges and dialogues among the United States, Japan, South Korea, and China on issues related to security and weapons proliferation on the Korean Peninsula. From Chapter 3: China and the World, Section 2: Recent Developments in China’s Relationship with North Korea

Members of Congress and Congressional staff in their interactions with official delegations from China exchange views on North Korea. From Chapter 3: China and the World, Section 2: Recent Developments in China’s Relationship with North Korea

Congress direct the Administration to permit and encourage official travel to Taiwan for uniformed military personnel above the level of O6 and urge Cabinet-level officials to make more frequent visits to Taiwan to promote commercial, technological, people-to-people, and military exchanges. From Chapter 3: China and the World, Section 3: Taiwan

Congress urge the Administration to make available to Taiwan the arms and equipment it needs for its self-defense, consistent with the Taiwan Relations Act, due to the shifting cross-Strait military balance. From Chapter 3: China and the World, Section 3: Taiwan

Congress encourage the Administration to increase its public support of Taiwan’s participation in international organizations such as the United Nations Framework Convention on Climate Change. From Chapter 3: China and the World, Section 3: Taiwan

Congress encourage the Administration to strengthen economic cooperation between the United States and Taiwan to further their economic growth and prosperity. From Chapter 3: China and the World, Section 3: Taiwan

Members of Congress, when visiting mainland China, also visit Hong Kong to engage with high-level administrators on such issues as democratic election. From Chapter 3: China and the World, Section 4: Hong Kong

Members of Congress, jointly with members of British Parliament, promote Hong Kong’s high degree of autonomy in accordance with the Sino-British Joint Declaration and the Basic Law. From Chapter 3: China and the World, Section 4: Hong Kong

Congress renew the biennial reporting requirements of the U.S.-Hong Kong Policy Act of 1992. From Chapter 3: China and the World, Section 4: Hong Kong

Congress reconvene a congressional caucus on Hong Kong to ensure continuous attention to the region’s democracy and civil rights issues. From Chapter 3: China and the World, Section 4: Hong Kong

U.S.-China Economic AND Security Review Commission

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