A U.S. government commission known for its generally hardline stance on U.S.-China relations appears to have softened its calls for action in its annual report but is still recommending a number of measures that could have an effect on two-way trade.

In its 2022 report the U.S.-China Economic and Security Review Commission called for a raft of new actions that would have had a significant impact on bilateral trade, arguing that years of efforts to persuade China to change had been unsuccessful. This year’s report does continue to assert that China’s ruling regime “gives no sign of altering its policies” despite U.S. engagement and that “the new normal” in the U.S.-China relationship “is one of continuing, long-term strategic and systemic competition.”

However, the report also highlights that China “may now be on the verge of its most serious economic crisis in 40 years” at the same time that it is facing “an increasingly inhospitable international environment as the United States and other advanced industrial countries attempt to shift supply chains out of China and ‘de-risk’ their economic relations with it.” The commission asserts that Beijing has done little of substance to respond to these and other challenges, possibly suggesting (despite its traditional bellicosity) that this inaction will be sufficient to constrain China’s ambitions and that the U.S. thus does not need to be overly aggressive in its own efforts.

Nevertheless, the commission makes some notable recommendations for U.S. government action, including the following.

- evaluate the potential for establishing a single U.S. export licensing system integrating the Commerce Control List, the dual-use technology licensing system managed by the Bureau of Industry and Security, and the U.S. Munitions List (an idea pursued but ultimately abandoned by previous administrations)

- amend the procedures for investigating claims of trade remedy law evasion to include goods subject to existing Section 301 tariffs on imports from China

- evaluate the national security threat posed by electronic products imported from China and consider the use of all trade tools, including tariffs, to eliminate or mitigate any such risks

- establish a secure electric vehicle and new energy vehicle supply chain by considering legislation fostering cooperation with the European and the United Kingdom on (1) raising or maintaining tariffs on Chinese EV, NEV, and related inputs and technology and (2) promoting supply chain diversification and resilience in the EV and NEV markets

- request an evaluation of the effectiveness of recently-imposed semiconductor export control regulations on preventing China from either acquiring or developing the capacity to manufacture certain advanced semiconductors

- authorize the Committee on Foreign Investment in the U.S. to review (1) investments in U.S. companies that could support foreign acquisition of capabilities to attain technological self-sufficiency or otherwise impair U.S. economic competitiveness and (2) investments made by Chinese entities in the U.S. education system in the form of contracts

- require domestic associations, such as industry or trade associations, that 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

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