Source: United States Senator for Ohio Rob Portman
June 12, 2019 | Press Releases
WASHINGTON, DC – At a Senate Finance Trade Subcommittee hearing today, Senator Rob Portman (R-OH) questioned four China experts on the impacts of China’s Belt and Road Initiative (BRI). Made up of the sea lanes and overland routes made famous by the Silk Road, the BRI represents China’s global investment strategy to expand Chinese economic power and national security might.
Excerpts of his questioning can be found below and a video can be found here:
Portman: “Thank you for this really important hearing and all our witnesses today, you all have been very informative. Yesterday I was meeting with U.S. Ambassador to Italy and I thought we would be talking more about EU matters but in fact the topic shifted to China. He told me that China is very involved in Italy and that Italy has recently chosen to sign over 20 separate BRI deals with China totaling over $2.8 billion. I’m also hearing that Switzerland – again, I met with a Swiss representative from the business community this week to talk about doing a trade agreement with Switzerland, and I’m told that Switzerland is also working with China on projects in third countries. A comment was made earlier that our strategic partners aren’t really part of Belt and Road and our military partners aren’t – Italy is certainly a strategic partner and a military partner. I say this only to add to the litany of concerns that we should have about some of our even strongest allies engaging in this.
“The Global Engagement Center, which is from legislation that we wrote in the Senate Foreign Relations Committee, has given us some new information lately which is that China has been supplying videos and surveillance equipment to Belarus and has been doing it since 2011. In Europe alone 17 countries have had Chinese telecommunication investments, 14 have had Chinese energy project investments, 20 for Chinese transportation and logistics investments. So, I appreciate the comments that were made today about how we push back on that and how we reassert American investment and trying to help set standards, in particular, the Development Finance Corporation (DFC) I support strongly. That was created by the BUILD Act, and I was one of the original six cosponsors of that bill. I believe it’s an important counterpoint to what’s going on around the world. And yet, the BUILD Act is limited to lower and lower middle-income countries as you know. That excludes some of those middle-income countries in Southern and Eastern Europe that we’ve been talking about today that are a part of Belt and Road. So my question for you is – and maybe Ms. Bartholomew and Dr. Kliman might respond – given that Southern and Eastern Europe have emerged as a strategic battleground between the United States and China, and I would also say vis-à-vis Russia where there’s significant influence of course, do you believe that the BUILD Act should be expanded to include some of those countries and some of those regions as well?”
Ms. Carolyn Bartholomew, Chairman U.S. – China Economic and Security Review Commission: “On that, I would have to say I’m giving my personal opinion right now rather than anything to do with what the commission has done. I think it would be a great idea to expand it. I hope that any expansion is not done at the expense of the low- and middle income countries too so that it is an expansion not a substitution. A couple of other things you mentioned if I may. One, Russia-China of course. We actually held a hearing a month ago, two months ago, on Russia-China issues and watching the growth of the Russia-China alliance is something that is a real concern. You mentioned surveillance in Belarus. Of course there is surveillance equipment being sold all over the place. We even had Chinese surveillance equipment cameras – they’re gone now – outside some of our military bases and at the U.S. embassy in Kabul. So there are supply chain issues that go along with that but I think Russia, you know there was this recent incident where a Russian navy ship came dangerously close to a U.S. navy ship. Watching that Russia-China expanding relationship is going to be very important that the people focus on.”
Portman: “A key non-tariff barrier, of course, for our exporters is standards. And we talked about that some today and Dr. Scissors talked a little about the importance of standards. They make it easier for our businesses to do business overseas, particularly in unfamiliar export markets otherwise, regulations and so on make it very difficult for us to sell in to some of those markets. The World Trade Organization’s Technical Barriers to Trade Agreement in part encourages governments to adopt international standards for that reason – so there’s international standards setting bodies and we support that. What I’m troubled by is seeing China take such a keen interest in this standard-setting process. Next generation telecom technology like 5G is an instructive place to look. In 2018, China had eight of the 39 available leadership positions in those standard-setting bodies, the most of any country at the International Telecommunications Union’s 5G-related bodies. So that’s the ITU’s 5G-related bodies, eight of the 39. The United States by the way had a single representative.
“At the International Standards Organization last year, China was in third place of the representatives there. The United States was tied for 16th place with Finland for the most participants. China also leads in Standards Essential Patents or SEPs for 5G. These SEPs are patents that are for technologies that are essential for compliance with any given standard and can provide the owner global market share licensing revenues and advantage in tech development. Unfortunately, Chinese companies now own 36 percent of all 5G SEPs with Huawei alone leading with over 1500 of these patents. So the question, for any one of you, given that the private sector technologies are so important and that the private sector manages U.S. membership in these standard-setting bodies, what should we be doing differently? Should the U.S. government get involved in this? We allowed the private sector to take the lead and yet, we aren’t represented.”
Dr. Daniel Kliman, Senior Fellow And Director, Asia-Pacific Security Program: “I’m happy to jump in on that as well as the other question. So, I think the U.S. government has to play a much more muscular and centralizing role that the private sector, I think, is looking for certainly more resources on the U.S. government side to plug into these convenings where the Chinese are flooding the zone. It’s very hard for the U.S. government, without the resources and kind of the top-down direction, to compete on equal footing. Very quickly on your Europe questions, I do think you could consider again having kind of a strategic mandate for the DFC where in select cases they could plug in to maybe middle-income countries in Southern and Eastern Europe. I think one area that would really move the needle in these countries is U.S. support for NGOs that are focused on Chinese influence. This could really expose a lot of Chinese activities and can bring, especially in countries that are democratic, increase scrutiny. Lastly, in general for Southern and Eastern Europe and more generally I think Congress could play a role in encouraging a new definition of diplomacy so the State Department focusing much more on commercial diplomacy rather than more of a reporting function.”
Portman: “Well, thank you, my time is expired. I appreciate the hearing and I’m one of those who believes that we need a constructive relationship with China. It can be done, it should be done, but that’s not the direction we’re headed right now.”