"To Beat China, Must Also Break Free Market Principles"… US Congressional Advisory Panel's Bipartisan Recommendations (Comprehensive)

Submission of the 2020 Annual Report of the US-China Economic and Security Review Commission (USCC) to Congress
Emphasis on the Role of the US Government in Industrial Policies such as Technology Standards
Recognize Taiwan as a De Facto Separate Country and Express Willingness to Support in Case of Chinese Invasion

[Asia Economy reporters Naju-seok and Lee Hyun-woo] A U.S. congressional advisory body has called for the government to take a leading role in industrial policy, moving away from free market principles, in order to win the competition against China. It also suggested that since China might push for Taiwan's unification, Taiwan should be treated as a de facto separate country and the U.S. should express its willingness to support Taiwan in case of emergency. Since the advisory body provides policy recommendations to the executive branch, its views are expected to influence the China policy of the upcoming Biden administration.

On the 1st (local time), the U.S.-China Economic and Security Review Commission (USCC), a bipartisan advisory body to the U.S. Congress, submitted a 587-page "2020 Annual Report" containing these points to Congress.

In this report, the USCC urged the U.S. government to take an active role in countering competition with China. It called for a major overhaul of industrial policy. The report recommended that Congress consider establishing government committees that can discuss with companies and U.S. allies regarding issues such as setting technology standards. It suggested that the Departments of Commerce, State, Defense, Energy, and other science and technology-related agencies participate in reviewing U.S. policies related to technology standardization.

This approach contrasts with the previous practice where companies voluntarily developed technology standards. However, the USCC pointed out that China’s government directly coordinates to create its own standards, warning that "under the current approach, the U.S. and Western allies will lose control over technology development." The report diagnosed that "when facing countries that have coordinated industrial policies related to technology and provide massive subsidies for corporate research and development (R&D), the U.S. influence on technological advancement may diminish."

The Washington Post (WP) interpreted the USCC’s recommendation as a strong urging for the U.S. government to abandon the traditional principles of a free market economy and actively confront China. Since the Reagan administration, American conservatives have insisted that the government’s role should be limited and avoid industrial policies, but China’s rise has forced a reconsideration of these conservative principles.

[Image source=AP Yonhap News]

The Chinese government provides large-scale support in the form of massive subsidies for advanced technologies such as aircraft, electric vehicles, semiconductors, and robotics. These efforts have contributed to Chinese technology becoming established as technology standards, but until now, this issue has not faced external checks. As a result, Chinese technology standards have been accepted worldwide, making Chinese product exports advantageous and leading to increased market share.

The USCC also advised that the U.S. government should actively intervene in the Taiwan issue. It recommended strengthening support for the Taiwanese government in case of emergency, preparing for the possibility of China invading Taiwan to forcibly unify it. The report specifically mentioned the enactment of the Hong Kong National Security Law, stating that "the Chinese leadership pursues political objectives without regard for previous commitments," and pointed out that "China’s unification of Taiwan has emerged as a pressing issue affecting U.S. security interests." It emphasized that "China is violating Taiwan’s territorial waters with large-scale military exercises and intends to invade Taiwan." Furthermore, it recommended that "the head of the American Institute in Taiwan (AIT), which currently functions as the U.S. embassy in Taiwan, should be appointed by the President directly like an ambassador and confirmed by the Senate through legal reforms."

This content was produced with the assistance of AI translation services.