[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
COUNTERING MALIGN PRC INFLUENCE IN EUROPE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
September 11, 2024
__________
Serial No. 118-130
__________
Printed for the use of the Committee on Foreign Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,
or http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
56-820 PDF WASHINGTON : 2026
COMMITTEE ON FOREIGN AFFAIRS
MICHAEL T. McCAUL, Texas, Chairman
CHRISTOPHER H. SMITH, New Jersey GREGORY MEEKS, New York, Ranking
JOE WILSON, South Carolina Member
SCOTT PERRY, Pennsylvania BRAD SHERMAN, California
DARRELL ISSA, California GERALD E. CONNOLLY, Virginia
ANN WAGNER, Missouri WILLIAM KEATING, Massachusetts
BRIAN MAST, Florida AMI BERA, California
TIM BURCHETT, Tennessee JOAQUIN CASTRO, Texas
MARK E. GREEN, Tennessee DINA TITUS, Nevada
ANDY BARR, Kentucky TED LIEU, California
RONNY JACKSON, Texas SUSAN WILD, Pennsylvania
YOUNG KIM, California DEAN PHILLIPS, Minnesota
MARIA ELVIRA SALAZAR, Florida COLIN ALLRED, Texas
BILL HUIZENGA, Michigan ANDY KIM, New Jersey
AUMUA AMATA COLEMAN RADEWAGEN, SARA JACOBS, California
American Samoa KATHY MANNING, North Carolina
FRENCH HILL, Arkansas SHEILA CHERFILUS-McCORMICK,
WARREN DAVIDSON, Ohio Florida
JIM BAIRD, Indiana GREG STANTON, Arizona
MICHAEL WALTZ, Florida MADELEINE DEAN, Pennsylvania
THOMAS KEAN, JR., New Jersey JARED MOSKOWITZ, Florida
MICHAEL LAWLER, New York JONATHAN JACKSON, Illinois
CORY MILLS, Florida SYDNEY KAMLAGER-DOVE, California
RICH McCORMICK, Georgia JIM COSTA, California
NATHANIEL MORAN, Texas JASON CROW, Colorado
JOHN JAMES, Michigan KWEISI MFUME, Maryland
KEITH SELF, Texas BRAD SCHNEIDER, Illinois
RYAN K. ZINKE, Montana
JAMES C. MOYLAN, Guam
Brendan Shields, Majority Staff Director
Sophia Lafargue, Minority Staff Director
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SUBCOMMITTEE ON EUROPE
THOMAS KEAN, New Jersey, Chairman
JOE WILSON, South Carolina WILLIAM KEATING, Massachusetts,
DARRELL ISSA, California Ranking Member
ANN WAGNER, Missouri DINA TITUS, Nevada
BILL HUIZENGA, Michigan MADELEINE DEAN, Pennsylvania
MICHAEL LAWLER, New York JIM COSTA, California
NATHANIEL MORAN, Texas SUSAN WILD, Pennsylvania
KEITH SELF, Texas GABRIEL AMO, Rhode Island
C O N T E N T S
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REPRESENTATIVES
Page
Opening Statement of Subcommittee Chairman Thomas Kean, Jr....... 1
Opening Statement of Subcommittee Ranking Member William Keating. 2
WITNESSES
Statement of Dalibor Rohac, Senior Fellow, The American
Enterprise Institute........................................... 4
Prepared Statement............................................. 7
Statement of Peter Rough, Senior Fellow and Director of The
Center on Europe and Eurasia, Hudson Institute................. 20
Prepared Statement............................................. 22
Statement of Ivana Karaskova, China Team Lead, Association for
International Affairs.......................................... 30
Prepared Statement............................................. 32
APPENDIX
Hearing Notice................................................... 52
Hearing Minutes.................................................. 53
Hearing Attendance............................................... 54
Questions For The Record
Questions submitted to Ivana Karaskova from Rep. Self............ 55
Questions submitted to Ivana Karaskova from Rep. Wagner.......... 59
Questions submitted to Dalibor Rohac from Rep. Kean.............. 61
Questions submitted to Dalibor Rohac from Rep. Self.............. 64
Questions submitted to Dalibor Rohac from Rep. Wagner............ 67
Questions submitted to Peter Rough from Rep. Kean................ 69
Questions submitted to Peter Rough from Rep. Wagner.............. 72
COUNTERING MALIGN PRC INFLUENCE IN EUROPE
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Wednesday, September 11, 2024
House of Representatives,
Subcommittee on Europe,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:03 p.m., in
room 2172, Rayburn House Office Building, Hon. Thomas Kean, Jr.
(chairman of the subcommittee) presiding.
Mr. Kean [presiding]. The Subcommittee on Europe of the
House Foreign Affairs Committee will come to order.
Before we begin, I must note that, sadly, we will not be
joined today by our colleague from South Carolina, Mr. Wilson.
Joe took ill last night at an event and is currently in the
hospital. By all accounts, he is recovering and conscious.
Please join me in praying for a full and speedy recovery for
Mr. Wilson.
[Prayer.]
Thank you.
The purpose of this hearing is to examine the PRC's malign
activities in Europe, as well as discuss what U.S. and European
policymakers can and are doing to counter this influence.
I now recognize myself for an opening statement.
OPENING STATEMENT OF CHAIRMAN THOMAS KEAN JR.
For decades, the Transatlantic Alliance has been the
cornerstone of American national security and a force
multiplier for preserving the Western rules-based order. From
the global threat of Soviet imperialism to the evil that struck
this Nation on 9/11, 23 years ago today, our alliances faced
countless threats together and remain strong.
However, the threats are multiplied now. Once challenged
only by the military and political ambitions of the Soviet
Union, our alliance now faces the malign activities of both the
Russian Federation as well as the People's Republic of China.
Confronting China's aggression and coercion will be perhaps
the defining challenge for the Western world in the 21st
century. The United States cannot confront this challenge
alone. As before, we need our European allies with us.
Since 2019, the European Union has considered China to be a
systemic rival. However, it also considers China to be a
partner for cooperation and economic competitor. There is an
obvious tension here. How can China be both a partner for
cooperation, but also a systemic rival?
Thankfully, it appears that some in Europe are willing to
treat China like the rival that it is. China's significant
support of Russia's full-scale invasion of Ukraine has led some
in Europe to rightfully reevaluate their relationship with the
PRC.
The PRC is providing Russia with enormous quantities of
dual-use goods, including semiconductors that support Russian
military activities in Ukraine. It has also proved to be a
willing accomplice in aiding Russia's attempt to circumvent
Western sanctions. In the words of numerous officials in the
Biden-Harris administration, this assistance from China has
enabled Russia to quote, ``reconstitute its military.''
Chinese troops may not be on the ground fighting alongside
Russians, but China's aid to Russia's defense industrial base
is undoubtedly enabling Putin's genocidal war of aggression to
continue. This war is the greatest threat to the continent's
security since the fall of the Berlin Wall, and many in Europe
are deeply concerned that China has been aiding and abetting
for over 2 years.
Despite this, Hungary continues to be a key strategic
partner for China. It is an active participant in China's Belt
and Road Initiative, serving as a crucial link in the
logistics-transport corridor between China and Europe. Hungary
has even allowed Chinese police to operate inside Budapest,
allegedly to help Hungary deal with increasing volumes of
tourists from China.
In Serbia, the government recently signed 28 cooperation
agreements with the PRC ranging from trade to media
cooperation. Serbia is also perhaps a large buyer of PRC
military equipment on the European continent.
Xi's motives are clear. He wants to create more economic
and political dependencies among our allies in Europe that
would strain their ability to respond to future PRC aggression.
He wants to join Putin in casting doubt on the reliability of
the United States as an ally, driving a wedge between us and
Europe and undermining the Transatlantic Alliance as a whole.
Just as many in Europe have begun standing up to Putin
since his full-scale invasion of Ukraine, I call on our allies
in Europe to take the same approach with President Xi. His no-
limits partnership with Putin is a clear threat to the Western
world and we must stand together to confront it.
The chair now recognizes the ranking member, the gentleman
from Massachusetts, Mr. Keating, for any statement that he may
have.
OPENING STATEMENT OF RANKING MEMBER WILLIAM KEATING
Mr. Keating. Thank you, Mr. Chairman, for holding this
important hearing today.
And I just want to extend my concern and hope for a swift
recovery to Representative Joe Wilson. I have found him to be
among the most trusted bipartisan partners in this committee,
and particularly, on issues that affect Ukraine, defending
Ukraine, and Russia's illegal and immoral war of aggression. We
all hope for a very swift recovery.
The endured global threat of Chinese malign influence
represents a grave challenge to U.S. and transatlantic economic
and national security. This challenge, one more broadly posed
by authoritarian governments to transatlantic democratic
states, is not new.
For decades, the Soviet Union and now Russia, Iran, North
Korean, and China have sought to undermine European solidarity
and transatlantic security. Despite China's geographical
distance, which many European leaders use as an excuse to turn
a blind eye to Beijing's actions, the People's Republic of
China with its economic might and its malign coercion, often
couched as goodwill investment, poses a direct and pressing
threat to European security.
Today, Ukraine is at the forefront of Chinese influence in
Europe. As Ukraine defends its freedom from Russian aggression,
the Chinese government has become a, quote-unquote, ``decisive
enabler'' of Russia's illegal war. Just yesterday, it was
announced that, in exchange for tangible military assistance to
Russia, the Kremlin is providing Beijing with technologies
related to submarines and missile capabilities.
I commend the Biden-Harris administration not only for
rallying the world to support Ukraine, but also for imposing
sanctions on Chinese firms and other entities that back
Russia's war effort. These firms and the Chinese government
must know their actions will not go unpunished.
While China's support for Russia often makes headlines, its
broader economic coercion and political influence campaigns
across Europe pose serious threats. Nowhere is it more evident
than in Hungary, where Prime Minister Victor Orban has not only
welcomed Chinese malign investment into his country, but
curried favor with Xi Jinping and his dark authoritarian vision
of a less free and a more hostile global order.
The Biden-Harris administration and our determined
Ambassador in Hungary, David Pressman, have made it very clear
Prime Minister Orban's friendly relations with Xi Jinping pose
significant dangers. Unfortunately, not everyone shares this
view of Hungary and Orban's relationship with Xi. As we've
seen, Donald Trump has called Orban smart and one of the most
respected of men.
This is a dangerous and reckless description of a person
who's not only shuttered the rule of law and civil liberties,
but also embraced his relationship with China, who so many here
today in this room know is a threat to us here at home.
Beyond Hungary, China has been aiming to influence its
influence in the Western Balkans, particularly in Serbia.
There, President Vucic has touted Serbia's ironclad friendship
with China and has acquired Chinese drone and missile systems.
China's strategic partnerships with various European
national governments attempt to undermine the European Union's
derisking policies that seek to reduce dependency on critical
supply chains and impose more scrutiny on inbound and outbound
investments.
While Hungary and Serbia deepen their ties with the Chinese
government, countries like Lithuania and the Czech Republic
have been clear-eyed about the national security risks
associated with increased Chinese investment. Other countries
like Ireland have taken important steps to bolster the inbound
investment screening mechanisms, a crucial measure to identify
and address malign investments.
At the same time, many European leaders recognize Beijing's
support for the Kremlin's war in Ukraine for what it is, two
authoritarian governments aiming to undermine Ukraine's
democratic sovereignty. We must be clear about the risk of
failing to confront Beijing's malign influence in Europe. China
is constantly observing how Europe responds to Russia's
invasion of Ukraine. Europe must remain aware of the risks and
the potential threats to the continent's stability, should the
Chinese military escalate its aggressive stance in the South
China Sea as well.
The conflict in Ukraine and the potential contingency in
Taiwan are inextricably linked, and I have no doubt that the
United States and Europe must stand united against any malign
aggression and investment from China wherever it may occur.
With that, I look forward to the testimony of our three
distinguished witnesses on how the United States can further
educate and work with our European partners about the risks
associated with Chinese financing and the critical importance
of continuing to support Ukraine in its fight against Russian
aggression.
Thank you and I yield back.
Mr. Kean. Thank you, Congressman Keating.
Other members of the subcommittee are reminded that opening
statements may be submitted for the record.
Mr. Kean. We are pleased to have a panel of distinguished
witnesses before us today on this important topic.
Dr. Dalibor Rohac is a senior fellow at the American
Enterprise Institute.
Dr. Peter Rough is a senior fellow and Director of the
Center on Europe and Eurasia at the Hudson Institute.
And finally, Dr. Ivana Karaskova is the China team lead at
the Association for International Affairs.
Thank you for being here today.
Your full statement will be made part of the record, and I
will ask you to keep your verbal remarks to 5 minutes in order
to allow time for member questions.
I now recognize Dr. Rohac for his opening statement.
STATEMENT OF DALIBOR ROHAC
Mr. Rohac. Chairman Kean, Ranking Member Keating, members
of the subcommittee, thank you for this opportunity to address
you on this important subject today.
My work at AEI focuses on the political economy of Central
and Eastern Europe and on the transatlantic partnership on
which China has been casting an increasingly larger shadow in
recent years, especially in the wake of Russia's full-scale
invasion of Ukraine.
My remarks provide a brief summary of my written statement
which I submitted for the record, which focuses on China's
influence in Central and Eastern Europe proper.
The regional picture in Central and Eastern Europe is as
complicated and as contradictory at times as the wider European
one, where the EU has been simultaneously seeing China as a
negotiating partner, as a competitor, and as a systemic rival.
Some countries of the region, most notably, Lithuania and
the Czech Republic, have aligned themselves fully with the
United States and our Indo-Pacific allies on the subject.
Speakers of both chambers of the Czech Parliament have visited
Taiwan on high-profile visits, angering the CCP. Lithuania has
suffered an import ban from China following an upgrade of its
old relations with Taiwan.
On the opposite side of the spectrum, Hungary and Serbia
have been deepening their ties with China. Viktor Orban sees
Hungary as a pillar of the Belt and Road Initiative. He
famously rebuked the Trump administration's 5G initiative back
in 2019.
Just last year, China was the largest foreign investor in
Hungary, accounting for as much as 44 percent of all Chinese
FDI in Europe. CATL, a major Chinese battery manufacturer, is
planning to open a new battery plant in the southern-eastern
city of Debrecen, worth up to $8 million, which would be the
largest facility of its kind in Europe. And Hungary borrowed a
billion euros from Chinese banks, again, the largest loan of
its kind in the country. The two countries also concluded a
very opaque security cooperation agreement.
In addition to Hungary and France, you may remember that
Serbia was the third stop on Xi Jinping's European tour this
year. And Serbia's President Vucic noted that the reverence and
love that Xi ``encounters in our Serbia will not be found
anywhere else.''
Over the years, China has invested into steel mills,
mining, and the automotive sector in Serbia, in addition to
large-scale infrastructure projects. Overall, Chinese loans
have added around 3.7 billion euros to Serbia's public debt.
Serbia, in addition to security cooperation arrangements with
China, has purchased Chinese medium-range anti-aircraft missile
systems and Chinese drones. And in 2022, China was the largest
supplier to the Serbian military.
Now, these cases on the opposite side of the spectrum are
not exactly representative of the region which, as I said, is
very diverse and complicated. So, in the Western Balkans, you
have countries that might have an anti-Western or anti-American
agenda which, nonetheless, see Chinese loans and investment
into infrastructure as desirable and tempting.
China, as a result, now holds 40 percent of Montenegro's
external public debt; 20 percent of North Macedonia's external
public debt. In the case of NATO allies, this is a significant
liability and potential source of Chinese blackmail.
Further east, Georgia has now become a key battleground
State, so to speak, which could be lost, perhaps permanently,
to Chinese and Russian influence after the election this
October. The ruling Georgian Dream Party has been reneging on
its many Western commitments and its location on the so-called
Middle Corridor makes it an interesting country for China to
focus on. Anaklia, a deep-sea port that was supposed to be
developed by a U.S. consortium, was awarded recently to a
Chinese state-controlled entity instead.
Now, before I conclude, just to turn to a very different
example, Poland is a country that has been an exemplary ally to
the United States, one that has not been a major destination
for Chinese FDI. Yet, Polish officials will tell you that they
want to have a constructive relationship with China, and Poland
was, indeed, among the first countries to join the Asian
Infrastructure Investment Bank. It is a country that joined the
BRI initiative.
And the rationale in Warsaw is that our Polish friends are
trying to prevent a full Russian-Chinese alignment. This is
something that really worries them very much. And this is
something that I think policymakers in Washington have to
reflect on as well; namely, how to reassure our allies and how
to sort of show them that China is not the path forward.
I will be very happy to answer any questions, particularly
about U.S. policy responses to this challenge going forward.
But my message is simple: Europe and the Indo-Pacific are
linked, and the China challenge cannot be addressed adequately
without engagement with our European friends and allies.
Thank you.
[The prepared statement of Mr. Rohac follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Kean. Thank you, Dr. Rohac.
I now recognize Mr. Rough for his opening statement.
STATEMENT OF PETER ROUGH
Mr. Rough. Chairman Kean, Ranking Member Keating, and
members of the subcommittee, thank you for the opportunity to
testify before you today on this important topic.
With your permission, I would like to submit my written
testimony into the record.
As mentioned, my name is Peter Rough. I'm a senior fellow
at Hudson Institute, where I serve as Director of the Center
for Europe and Eurasia. The views expressed in my testimony are
my own and should not be construed as representing those of
Hudson.
Today, there are three--and really only three--major
economic centers in the world: East Asia, Europe, and North
America. The Sino-American competition we find ourselves in
will be determined, in part, by the orientation of Europe. For
the PRC to succeed, it needs to neutralize Europe on matters
essential to its interests. It is for this reason that it seeks
to break the Transatlantic Alliance, which has served as a
major source of American power for decades.
The PRC's primary military lever for attacking the European
order is Russia, with which it has formed an alliance that is
on display just this week through joint exercises in the Sea of
Japan.
To overcome Western sanctions, Russia depends on the PRC
for dual-use items that are essential for its war effort--from
machine tools to microelectronics. Russia has also looked to
the PRC for macroeconomic relieve. In 2023, two-way trade
between the PRC and the Russian Federation reached a new high
of 240 billion U.S. dollars.
It does not appear possible for the Transatlantic Alliance
to wedge or split Russia from the PRC in the foreseeable
future. Absent that possibility, the United States should at
least vector Sino-Russian strategic proximity to our advantage
with our allies.
The United States should urge European leaders to put the
war in Ukraine at the center of their relations with Beijing.
Europeans have raised the war during their trips to Beijing,
but often as one issue among many and with trade delegations in
tow.
The PRC is seeding the ground for the next great war in
Europe. Europeans should make clear to Beijing that continued
support for Russia, including in the supply of strategic dual-
use items, will negatively impact all aspects of Sino-European
relations.
The PRC's primary economic lever for undermining European
prosperity is its export-driven manufacturing model. The
Chinese Communist Party has utilized State subsidies,
intellectual property theft, market restrictions, technology
transfers, regulatory interventions, and currency manipulation
to gain control over global manufacturing chokepoints and
supply chains in recent years. Since 2022, it has also profited
from heavily discounted Russian oil.
Chinese overcapacity poses a major threat to European
industry--with all the attendant downsides to social cohesion.
Europe's experience with solar technology, which it helped
pioneer, but is now dominated by the PRC, may only be a
harbinger for the chemicals and auto industries. Today, U.S.
policymakers should worry as much about European economic
decline as they should about Europe's trading surplus.
While forging a fully fledged alternative trading system of
rule-abiding states that excludes the PRC does not yet have
sufficient support in the West, but the United States can make
common cause with Europe against PRC dumping. Wherever
possible, we should work collaboratively to diversify
transatlantic supply chains--for example, in critical
minerals--and counter Chinese dumping, as with electric
vehicles. Such steps would protect the West against political
extortion and prepare it for the PRC's ongoing decoupling from
Western economies.
The PRC has also worked to insinuate its products,
instruments, and institutions into Europe's critical
infrastructure. It has done this through elite capture, cyber
espionage, key acquisitions, and the use of its diaspora. In
those areas where it still relies on Western technology, like
advanced lithography machines, it has also threatened reprisals
over European export controls.
It has become common practice for Washington to express
shock and surprise at the scale of the China challenge--from
the PRC's construction of vast numbers of missile silos to its
establishment of extraterritorial police stations on U.S. and
European soil.
It is very likely that public reporting on Chinese
subversive activities in Europe constitutes only the tip of the
iceberg. From the United Front's Confucius Institutes to
Chinese-operated critical infrastructure, the PRC is working
hard to subvert the continent.
There are tools available to you as policymakers to address
this, if only we feel the urgency. For example, to counter
Chinese infrastructure investment in Europe, like at the Port
of Piraeus, the United States should embrace initiatives like
the 13-country Three Seas Initiative, which Greece recently
joined. However, to date, the Biden administration has declined
to make an equity investment into TSI, and the $300 million
loan it had set aside for infrastructure sits idle,
inexplicably.
Europe is our forward-operating base on the European land
mass and the source of a great deal of American prosperity. The
Transatlantic Alliance is one of the keys to winning the Sino-
American competition this century, and I thank the committee
for shedding light in this topic today.
I will look forward to answering your questions.
[The prepared statement of Mr. Rough follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Kean. Thank you, Mr. Rough.
I now recognize Dr. Karaskova for her opening statement.
STATEMENT OF IVANA KARASKOVA
Ms. Karaskova. Chair Kean, Ranking Member Keating,
distinguished members of the Subcommittee on Europe, it is my
great pleasure and honor to address you today. With your
permission, I would like to summarize my written testimony.
My name is Ivana Karaskova. I work as a China team lead at
the Association for International Affairs, a Prague-based,
foreign policy think tank and an NGO. And until March this
year, I also served as a special advisor to the Vice President
of the European Commission as a Commissioner for values and
transparency.
I consulted on the draft of the Defense of Democracy
package, which should increase the transparency of financial
flows into Europe and increase the resilience of the European
societies against malign foreign influence.
In my today's short address, I would like to focus on three
key issues: the State of play of Chinese interference in
Europe; second, Europeans' response, and last, to pursue a way
forward, including recommendations for the United States.
China's initially viewed Europe as a potential ally against
the United States and global governance. It focused on trade,
technology exchange, and a win-win cooperation. The perception,
however, changed with the ascent of Xi Jinping into power and
he gradually initiated ideological reforms which emphasized
nationalism. This domestic policy led to human rights
violations, most notably, but not exclusively, in Xinjiang;
deterioration of freedom in Hong Kong, and mismanagement in
dealing with the COVID-19 pandemic.
Internationally, China became more aggressive in the South
China Sea, East China Sea, and across trade relations. And
since approximately 2018-2019, Europe became aware of these
changes and it started to focus on economic profitability,
also, with raising security concerns.
So, from the position of seeing China as a potential
partner, it started to look at China as an economic competitor
and, also, a strategic rival. The final wake-up call came with
the war in Ukraine. Especially in Central and Eastern Europe,
this support led to increasing willingness to treat Russia and
China as similar actors.
So, there is a positive development in Europe, I have to
say, with Ursula von der Leyen last year unveiling her strategy
of derisking from China, the Critical Raw Materials Act, or the
Defense of Democracy package, which I already mentioned. Yet,
these are coming in a relatively slow pace and they are often a
result of political compromise.
In general, Europe's response to Chinese influence is
halted by four different factors:
A lack of capacity due to prioritization of war in Ukraine
and Russia. The war in Ukraine has, understandably, made Russia
the top priority, as it represents a clear and present danger
to European security. China, in contrast, is seen as a longer-
term strategic challenge, particularly in the economic domain.
The second problem stems from a lack of political will to
deal with China. Despite the derisking strategy being announced
last year, Europe remains interdependent to China. The lack of
political will to take a more assertive stance toward China has
created divisions within Europe's response to Beijing.
While some European countries, like Lithuania and the Czech
Republic, have adopted more confrontational stances, others,
such as Germany and France, are more hesitant due to
significant economic ties and reliance on trade with China.
There are also outliers, as was mentioned here--Serbia,
Hungary, but also Slovakia. The risk is that such outlier
countries may influence others, especially in Central and
Eastern Europe, where the temptation to secure future economic
deals with China remains very strong. As a result, Europe's
collective response to China is fragmented.
The third problem lies in limited expertise on China within
European countries, their ministries, and also,
counterintelligence services.
And finally, the European public perceives China as a
distant threat, shown by all public surveys we have in our
depository. So, there is a rather limited popular demand for
tougher actions.
Moving forward, strengthening Europe's resilience to
Chinese influence will require a more coordinated European-led
effort with an emphasis on internal capacity-building and
strategic independence.
The United States, as well as other like-minded partners,
such Japan, Australia, or South Korea, can help in ensuring
best practices, showing understanding for European economic
interests, and coordinating cyber defense efforts.
The United States can play a significant role in addressing
the challenges posed by outlier governments in Europe, such as
those in Hungary, Serbia, and increasingly, Slovakia. The
United States should reassure these governments that they can
expect continent investments and economic opportunities from
Europe and the United States.
On the other hand, it must communicate the red lines and
that certain behaviors will not be tolerated.
The United States should recognize that China positions
within the European governments could change quickly as a
result of elections in the Czech Republic, in Germany, but also
in France, and cultivate cross-partner dialog on China.
Thank you for the opportunity to present these insights
today. I look forward to engaging with the members of the
subcommittee during the discussion.
[The prepared statement of Ms. Karaskova follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Kean. Thank you, Dr. Karaskova.
And I now recognize myself for 5 minutes of questions.
The PRC is providing a lifeline for Russia's war effort in
Ukraine, exporting an enormous amount of dual-use goods to
boost Russia's defense industrial base. In April, Deputy
Secretary of State Kurt Campbell revealed that Russia's
military has been, quote, ``reconstituted,'' thanks to this
assistance from China.
Mr. Rough, in your own words, how has China's support for
Russia's defense industrial base enabled Putin's ongoing war
against Ukraine and how would Putin's war effort in Ukraine be
going if it didn't have this support from the PRC?
Mr. Rough. Well, thank you, Mr. Chairman, for that
question.
Today, it is widely acknowledged that the PRC provides
Russia with 70 to 90 percent of its computer numerical control
machine tools, which are crucial for the automated production
of precision-guided munitions and aircraft parts, and 90
percent of the microelectronics, which are critical for the
production of missiles, tanks, and aircraft.
I believe, last April, General Cavoli, the Supreme Allied
Commander Europe and the Commander of the European Command,
testified before the House Armed Services Committee that
Russian military reconstitution is taking place at a much more
rapid clip, owing to PRC's support.
And I can tell you that, in conversations with Biden
administration officials, they see the Chinese support for the
Russian war effort as absolutely essential to Russia's ability
to take the number of casualties and reconstitute its armor and
forces in Ukraine that it has over the past year.
So, it is the dramatic issue in----
Mr. Kean. How would you rate the efficacy of the Biden-
Harris administration's efforts to severe its malign PRC
support for Russia, and what more can and needs to be done?
Mr. Rough. I think rather than taking individual sanctions
decisions against individual actors, the Biden administration
might want to consider sectoral moves, including the potential
threat of secondary sanctions against actors, for example, in
Hong Kong, which is considered a major throughput for malign
activity.
So, I would say that individual decisions and sanctioning
decisions by the Biden administration have yet really to take
on the totality of the PRC threat and more probably should be
done.
Mr. Kean. Thank you.
European countries often speak about derisking from the
Chinese economy as opposed to decoupling from it. Dr. Rohac and
Dr. Karaskova, what do you take ``derisking'' to mean in the
European context and how would you grade Europe's progress on
derisking from China?
Dr. Rohac, first, and then, Dr. Karaskova, please.
Mr. Rohac. Thank you for this question. It is an important
one.
There is a great deal of ambiguity in the term
``derisking.'' And the matter is made more complicated by the
fact that you have 27 member states involved in this
conversation, where the perception of risk is very different.
So, as of now, there is very little in terms of a coherent
European approach toward this question.
Even within individual countries, such as Germany, where
Chinese electric vehicles do represent a threat because of the
subsidies and because of the explicit Chinese policies to dump
excess capacity on the European market, it is a threat to the
Germany industrial base. At the same time, you have important
players in the German industry who are also benefiting from the
economic ties to China.
So, these tensions do exist at the national level as well.
We are nowhere near where we need to be in the United States in
terms of decoupling from China, in terms of dual-use technology
and critical supplies of, say, minerals, and so on and so
forth.
I think the conversation in Europe is, if anything, lagging
further behind the United States, and I think this is one of
those opportunities where U.S. leadership would be really,
really helping in steering the conversation forward.
Mr. Kean. Thank you.
Dr. Karaskova, the same question.
Ms. Karaskova. The recently released Customs data from 2018
to 2023 actually indicate that the European countries
maintained, or even increased, their dependency on China. But I
would like to stress that the derisking strategy started only
last year. So, we will probably see that, hopefully, in the
data coming from 2024 and onwards.
But talking with the German businesses, which have a great
deal and great interest in the Chinese market, it seems that
derisking strategy offers, also, some loopholes for those who
do not wish to comply. And German companies often interpret
derisking as just relocating their production more to China and
taking on more Chinese partners saying, ``We are actually
derisking from the European push for us to be less present on
the Chinese market. We actually become European-Chinese
companies.'' And that's their interpretation of ``derisking.''
So, I'm a little bit skeptical here.
Mr. Kean. Thank you.
I now recognize Ranking Member Keating for any questions
that he may have.
Mr. Keating. Thank you very much.
Dr. Karaskova, just if you could followup? Do you think
that the recently elected European Commission, whether there
will be any change in this derisking policy as a result of that
newly elected Commission?
Ms. Karaskova. I don't think so. I think that within the
European Commission, especially with the President, there is
still a great push toward derisking strategy and making this
happen. So, there is a lot of announcement coming up from the
new Commission, or at least the plan for derisking is
continuing. It very much depends on how the economies would
react to that.
So, we have experienced a record high in inflation in a
number of European countries. We have also experienced energy
shocks. And we do have governments which are now composed of
far-right parties, which have very different positioning on
China and, also, on Russia.
And we have more elections coming, as I said, the Czech
Republic, but also Germany next month and France as well. And
that could actually hamper the European Commission position on
derisking. So, I do see tensions between where the European
Commission is heading, and would like to head, and where the
European governments may actually want the European Commission
to go when it comes to China and Russia.
Mr. Keating. How much effect is the actions of Hungary,
Serbia, and Slovenia, how much does that create that tension,
too, not just the election of more people from the far-right
parties?
Ms. Karaskova. There's a problem because there is a big
pull of gravity when it comes to Serbia. Serbia is the biggest
country and the most influential country in the Western
Balkans. And there is a number of countries surrounding that
which have seen that Vucic can get away with his position on
both Russia and China and it actually pays dividends. So, they
can think that this could be a valuable model for them.
And the same happens with Hungary. And we do see this with
the new Slovak government, led by Prime Minister Fico, that he
is also taking a lot of inspiration from Hungary. So, we may
see a slow domino effect if this is not stopped.
But you are absolutely right, Hungary, Serbia, and most
increasingly Slovakia as well, could be outliers, which may try
to tilt that balance.
Mr. Keating. And then, accompanying this, of course, is
disinformation campaigns as well. So, could you tell us about
the effect of this Chinese disinformation campaign, as they use
that in conjunction with some of the elections that are there
to the more far-right people? And how can it affect China and
how they are using it to their advantage?
Ms. Karaskova. Uh-hum. Initially, China was messaging to
European countries the so-called--and I mentioned it already--
positive energy, talking about Chinese culture, Chinese
traditions, Chinese language, and so on. This changed in 2018-
2019, when China suddenly started to play by the Russian
playbook. So, suddenly, started to sow distress toward the
governments, toward military, toward international
organizations, such as the NATO or the EU.
So, we do see Russia and China confluencing actually on
this topic, and that started even before the war in Ukraine,
some of it. So, we do see this convergence actually happening.
China also started to be very blunt when it started to
approach far-right and far-left movements. Originally, it
started with the far-left, then it moved across the board, and
now, it is actually talking with all the parties in Europe.
And these are not limited only to amplifying the
narratives, the messages, by the far-right and far-left, but
also by financial support to those French political parties and
movements.
There was a case in Germany the last couple of months back,
when an assistant of Maximilian Krah, one of the MEPs for
Alternative for Deutschland, was actually caught red-handed
giving information to his Chinese handlers on secret
information from the European Parliament. And this is just the
tip of an iceberg.
But, as I said, the counterintelligence services, to my
belief, are not paying enough attention to that because
everybody is occupied with Russia.
Mr. Keating. Yes, and then, I mentioned in my opening
remarks about the technology exchange in submarines and
missiles with Russia and China, as a result of Beijing's
support for Russia. Time is running out. But has that caught
the attention of European officials as well?
Ms. Karaskova. It did. Frankly speaking, there was already
a recognition that the Chinese support lended to Russia is not
only rhetorical or diplomatic or economy. That goes, also,
toward the military area. And there was a suspicion already
that it goes beyond the dual-use materials. So, I don't think
that it comes as a big shock.
Mr. Keating. Thank you all for coming.
And I yield back.
Mr. Kean. Thank you, Ranking Member Keating.
I now recognize Representative Self from Texas for 5
minutes.
Mr. Self. Thank you, Mr. Chairman.
There's no doubt that China is on the move, at least for
now, and we have an administration that will not hold them
accountable. Certainly, fossil fuels, we could have Russia and
Iran destitute today, should we have chosen to do that.
We talk a lot about soft power. This is a soft power
discussion. But if you will look at that chart that I gave you,
China controls some of the hard assets, critical minerals. Now,
you may remember the pandemic challenges for supply chains. You
may remember the fossil fuel Nord Stream 2 example. When you
control resources, you control economies.
Now, by their own admission, in the EU--let's look at the
chart first. On the left side--and all the members have it as
well--on the left side, you see some diversity on who mines
these critical minerals, some diversity. On the right side, you
see the refined supply--China, China, China right on down the
line.
Now, by their own admission, EU, 98 percent of their rare
earths are controlled by China; 93 of their magnesium is
controlled by China; 97 percent of their lithium is controlled
by China.
So, as we talk about soft power--and we have seen recently,
as I say, he who controls resources has a lot of control over
your economy. I think one of you used the word ``blackmail.''
Because I think this is a dangerous--now, semiconductors we
won't talk about--but this is a dangerous--and frankly, if we
had not had a light winter in Europe after the Nord Stream was
cutoff, Germany would have been in real trouble; Europe would
have been in real trouble. But we had a light winter, so they
made it through.
So, I just want to ask you, how in the world--and I'm
following up on a conversation I had with Ambassador John Bass
this morning--how in the world are we going to wean Europe and
the United States--and, oh, as an aside, Alaska alone has 49 of
the 50 critical minerals and we refuse to mine them in the
United States to any great degree. So, how in the world are we
going to derisk and decouple, whatever term you want to use, if
97, 93, 98 percent of critical minerals are controlled by
China?
Because the rest of this seems to be, yes, we in America
have the same problem. We look at them as the ``big warehouse
in the sky,'' and yet, we consider them a strategic adversary.
We have got the same problem Europe does. But how in the world
are we ever going to wean off Europe--and we are discussing
Europe--if these numbers apply, critical minerals? Because this
looks to me like blackmail material.
Who wants to take it?
Mr. Rough. Sure, I will just supplement your point,
Congressman, that I think the Russian war strategy for the
winter is to bomb Ukrainian critical infrastructure, so that
you, essentially, freeze the civilian population.
To your point, the Europeans have, at least belatedly,
pushed a Critical Raw Materials Act, which is supposed to
within the next 6 years, by 2030, alleviate some of their
dependencies in extraction, processing, and recycling, but they
are overwhelmingly dependent on the PRC for rare earths. I
suppose streamlining, planning laws, and chemical regulations
across countries and developing joint financing would make
sense. But, in the end, what is critical here is political will
on both sides of the Atlantic.
And perhaps the Chinese sort of nascent blackmail in this
area by withholding germanium and gallium, which are used for
semiconductor applications and military communications
equipment, causing the skyrocketing, almost a doubling of
pricing in the past year.
Mr. Self. And why did they put that in place?
Mr. Rough. This was a, this was----
Mr. Self. It was the results of a visit--it was direct
blackmail--the visit by maybe Speaker McCarthy; I have
forgotten the exact visit, but a visit of a U.S. official.
They, then, turned it into blackmail by withholding germanium
and gallium.
Mr. Rough. And it is now bound up in the European Union's
attempt to defend itself against Chinese dumping electric
vehicles. We also have heard that in the coming weeks there
might be export controls on antimony, an obscure metal used in
armor-piercing ammunition.
So, as the Chinese drip out these policy decisions,
hopefully, it will rattle Europe sufficiently to where we can
forge a joint transatlantic response.
Mr. Self. Okay. Before we go, China is in trouble in many
ways. Demographically, they haven't moved away from their
construction model to grow. They are looking perhaps at
deflation.
Real quickly, do you think that that is going to be
problem? Because they will take the whole world down with them
if they start a deflationary cycle.
[No response.]
Silence.
Mr. Rohac. I mean, Chinese, the weakness of the Chinese
economic model I think is becoming more and more apparent, and
it is simultaneously good news for the countries of the West
and bad news. It is good news because the Chinese are not quite
as prosperous as we might have expected them to be, and
demographically, the outlook is bad. The unsustainability of
the state-led, capital-intensive, capital-heavy development I
think is becoming apparent. It's the rate of return on
investment is falling down. And I don't think China has the
sources of domestic productivity growth that we enjoy in the
United States, being a free and open economy that is attracting
talent and capital from around the world. So, that is good news
simultaneously.
The interlinkages that do exist are something policymakers
have to be aware of and the way to deal with that is to----
Mr. Kean. Thank you.
Mr. Self. Thank you, Doctor.
Mr. Kean. Thank you.
Mr. Self. Chairman, I yield back. Thank you.
Mr. Kean. Thank you, Representative Self.
The chair now recognizes Representative Titus for 5 minutes
of questioning.
Ms. Titus. Thank you, Mr. Chairman.
Well, we have heard a lot about the relationship between
China and Hungary. Both have strong men leaders, both
democratic backsliding--certainly, in Europe with Hungary. The
human rights violations. Forty-four percent of Chinese
investments in Europe go to Hungary. So, that relationship is
pretty established.
But, Dr. Karaskova, when Xi went to Budapest in May and
they met, he met with Orban, and they established what they
called an ``all weather partnership,'' and as part of this,
they signed several agreements that ranged from economic to
cultural cooperation. Could you give us some more detail about
those agreements and how they have had an impact, and maybe how
that notion of this ``all weather partnership'' might be
spreading beyond Hungary?
Ms. Karaskova. Yes, Hungary seems to be--Hungary and Serbia
seem to be the only countries which are actually benefiting
from China currently when it comes to investments from Central
and Eastern European countries. The other so-called 16 plus
one, now 14 plus one countries, do not either eye the
investment or they actually do not benefit that much.
And there is a direct correlation between political stances
of these two governments--I mean Hungarian and Serbian--and all
those investments, opportunities given by China.
These two governments also--and forgive me for being so
blunt--have a very transactional and opportunistic nature. So,
they do not, they do not care that much about anti-corruption
measures, and so on. So, I would still see those two as
outliers and as a direct correlation between what their public
stance is and political stances are on this.
If I may also go to the previous question, but I'm not sure
how this works. So, maybe if there is time, I would like to do
that.
Ms. Titus. And I will come back to that.
I also want to ask you, why do you think it is important
for U.S. leaders to call out Orban's relationship with the PRC?
Now, especially in light of last night's debate, does Trump's
Presidential relationships and his praise for Orban kind of
undermine our transatlantic democratic values and cooperation?
So, could you comment on that?
Ms. Karaskova. That's a very tough question. I may perhaps
revise it and say that Mr. Orban is not very well regarded by a
majority of the European governments. That's by also saying
that I would like to say that he is admired by opposition
leaders, usually those on the far-right spectrum, which may
actually make their avenues into the next governments. So, this
is a very, very shaky ground, very moving sense.
But, in general, the comments about Mr. Orban being very
wise and smart, and so on, I don't think they resonated in
Europe, in general.
Ms. Titus. How about opposition to him in Hungary?
Ms. Karaskova. Opposition, unfortunately, lost in the last
elections. There is still a significant, I would say, push,
especially by the Mayor of Budapest, but the population,
unfortunately perhaps, is very happy with Mr. Orban and with
his policies. So, I don't see any foreseeable change in the
government.
Ms. Titus. All right. Well, I will yield the time and let
you answer the question on the critical minerals, since it
seems to keep coming up in every hearing.
Ms. Karaskova. Thank you very much. That is very kind of
you.
I just wanted to perhaps say that rare earth or rare
materials are actually not rare. They are quite, quite
prevalent. What is problematic here is that, when you extract
them, it is very pollutant and Europeans do not like to pollute
their grounds.
We, as Europeans, I think we drop the ball when it comes to
relationship with African countries, due to historical
grievances and also different priorities. So, there is an
increased attention paid to African countries, Sub-Saharan
countries in particular, but there is a lack of division of
labor of the Europeans. So, we do see that we have to do
everything, and in the end, nobody is actually doing anything.
So, there is a problem in, I think, U.S.-EU cooperation on
actually dividing the countries, dividing the tasks, and
pushing Europeans to be much more active when it comes to
cooperation with our African partners. And we have seen the
recent visit of leaders in Beijing and the cooperation between
Africa and China that Europeans are actually losing in this
game with China.
Ms. Titus. Now, I will take my time back. Thank you.
Mr. Kean. Thank you.
I now recognize Rep. Costa for 5 minutes of questions.
Mr. Costa. Thank you very much, Mr. Chairman.
And I think it is appropriate at this point in time that we
look at the Chinese influence in Europe, but, more importantly,
use this as an opportunity to talk about greater cooperation
between our European allies and ourselves.
Because, for China, we share a similar challenge. China is
an adversary; they are a competitor, and they are a vast
market. And that makes it complicated.
And I don't think in that matrix we have really, ourselves
or the Europeans, have determined how we deal going forward
with China's adversarial relationship with us--the attacks they
have on us thousands of times a day in very subtle ways, both
in our companies, their espionage, as well as attacks on our
institutions, public institutions. And they do the same in
Europe.
And so, what we haven't hit upon is a strategy. Do you
think Russia and China are coordinating their malign
influences, and European nations are with us? And are these
common goals or are these personal agendas?
Who would like to take that on? Please, Dr. Rohac.
Mr. Rohac. I'm happy to. Thank you.
I think there's certainly a degree of coordination, as
exemplified by the no-limits partnership reached between Putin
and Xi. However, I think the coordination and cooperation
between those two actors falls short of the degree of
institutionalized alliance-like structure that we saw during
the cold war between the Soviet Union and----
Mr. Costa. And that is sort of lacking. I mean, I think the
Europeans think that their Trade and Technology Council, the
TTC, is one of the ways to address the differences, and I think
they would also like to work with us in implementing tools to
limit China's influence. What do you think of the possibilities
of that?
Mr. Rohac. I think the TTC has not lived up to the
expectations due to the modeling. I think----
Mr. Costa. Well, but for reasons, why--first of all, it is
a work-in-progress, I believe. And second, our collaboration on
it I think has not been significant.
Mr. Rohac. Well, I think the method just deserves a much
greater sort of degree of ambition and urgency from
policymakers on both sides of the Atlantic, if you are to build
truly integrated supply chains.
Mr. Costa. But isn't that where we are really missing out?
I mean, when you look at our economy and the Europeans' economy
and the opportunity to leverage that, is the lack of
collaboration----
Mr. Rohac. Well, I'm old enough to remember the
negotiations over TTIP before 2016.
Mr. Costa. Yes, well, I'm old enough to remember the TTIP
effort as well.
Mr. Rohac. And I would like----
Mr. Costa. And sadly, it was discarded along with the
Trans-Pacific Partnership. Because I think working with allies
that share values is a far better way than the notion of
tariffs, which are a tax on American consumers. And everybody
can play that game and we have seen it.
So, let me ask another question here. You know, I work
closely with our European allies, and they see Hungary and
Viktor Orban, that great defender of democratic values and
institutions--Viktor, Viktor, where are you?--because they know
what his game is all about. And so, he is a problem child for
Europe and they are having to deal with it, even in this point
in time where they have the chairmanship.
But where are the opportunities to deal with the malign
influences of Russia and China? We know what China's goals are.
We know what Russia's goals are with their invasion of Ukraine.
And clearly, you know, I mean, Putin is a war criminal. Russia
is a syndicate masquerading as a country with a mob boss called
Putin. And their view is, you know, if they can succeed in
Ukraine, then possibly Poland is next--or Romania, or the
Baltic States. So, where do we find the opportunities to
collaborate with our allies here? I mean, is this not a seminal
moment in world history?
Mr. Rohac. I do think we need both carrots, deeper
cooperation, but also sticks. When you look at Hungary and the
EV investments in places like Hungary or Slovakia, there has
been evidence that is being investigated by the Select
Committee on the CCP that links some of these Chinese
conglomerates to the events in Xinjiang and the genocide
against the Uyghurs. We should not be afraid to actually float
the possibility of sanctioning these companies.
Mr. Costa. No, I agree.
Mr. Rohac. And taking a much sort of tougher, more coercive
stance.
Mr. Costa. Let's draw the line with TikTok, begin there----
Mr. Rohac. Forcing allies to have to pick a side.
Mr. Costa [continuing]. The wholly owned subsidiary of the
Chinese Communist Party of China.
Thank you. My time has expired. But I will take another
shot at it.
Mr. Kean. Thank you.
I now recognize Congress Isa for 5 minutes.
Mr. Issa. Thank you, Chairman.
I'm going to ask, if any of you disagree, to be the first
to speak up.
Do you disagree that China is a current threat to the
stability of Sub-Saharan Africa because of their activities,
including destabilizing governments and taking over whole
industries of raw materials?
[No response.]
Okay. Do you agree that they have begun a serious attack on
European institutions, including YPO?
[No response.]
Last, are any of you not aware that they stole the entire
plan from CERN for the next generation of nuclear research and
supercollider?
[No response.]
You're all aware of it.
So, then, the question is, if all of that is true, that
they are willing to compromise a whole continent; that they are
willing to attack institutions, global institutions, and they
are willing to steal the entire intellectual property designs
for the next generation of research, the pride of Europe--you
just have to type ``CERN'' and you can look, and it is nothing
but what Europe is so proud of, all that has come out of that
joint innovation that the United States has participated in
since the 1950's.
If that is the case, then where is there a carrot left? The
carrot is already that they steal everything with impunity. So
now, the question is, do we have the will with our European
partners to begin using the stick of making it at least
economically disadvantageous to them to do so?
Anyone care to comment on that?
Yes, ma'am?
Ms. Karaskova. Unfortunately not. So, as Director Rohac
already said, Europe is fragmented, and I completely agree with
that; that there are governments who are willing to go the
extra mile, but, first of all, those governments may perish
quite easily in the next elections.
And second, they go the extra mile because of the
partnership with the United States--not necessarily because
they actually understand China's threat of know all that the
Chinese government stands for.
So, it is very fragile, very fragmented. And I absolutely
agree that we are out of carrots. Maybe the carrots could be in
climate change, but, honestly speaking, who cares about climate
change sincerely?
Mr. Issa. I will leave that one where it started.
My followup question really, though, is, if China is as
fragile economically as they appear to be--today, they refuse
to honor their, literally, it was announced today, their HSBC,
Hong Kong and Shanghai Bank Corporation. They had promised tens
of billions of dollars of backstop on their bad real eState
loans. And the Hong Kong Bank--or it goes by the letters now--
had to announce that, you know, the Bank of China has decided
they are not going to honor that.
If that is the case, am I wrong, or should the United
States and this body look at this as our softest--or no--our
hardest tool, but with the least kinetic damage, is, in fact,
an all-out economic attack, if you will, on the underpinnings
of China, which is their situation in which they have been
allowed to print money even more freely than the United States.
They have done so. And the reality is they are not loaning
money to anybody; they are actually taking your money and
giving it back to you in the form of a loan.
Am I missing anything? Or do we, essentially, have what
appeared to be a tiger that is, in fact, when you look at their
current financial condition, they are a paper tiger--especially
if we cutoff the flow of clandestine oil and natural gas to
them?
Mr. Rohac. One possible caveat to this would be concerns
over the health of our own financial industries, both in Europe
and the United States. And we have seen financial contagions
unfold in the past. I think the exact mechanisms and downside
risks are not well understood even among economists. So, I
would have some sympathy for those who would urge caution in
exercising this----
Mr. Issa. And I agree with you. And I will just close by
saying I agree with you. And I used that extreme for a reason.
There is no soft landing if, in fact, the see-through buildings
are what they appear to be throughout China. The question is,
how can we do what we need to do to China, which is recognize
their false construction and their false wealth, and at the
same time protect institutions in Europe and the United States?
If we do nothing, we will eventually hit a cliff.
So, the question for the record--I know, Chairman, we have
to go--is, in fact, ideas that would allow us to begin moving
in that direction at a pace that isn't catastrophic.
Mr. Rough. Well, I think there is some very easy low-
hanging fruit where we can begin. One is China's version of
Europe's critical infrastructure, which is important, also, for
our military posture.
The Chinese have state-owned enterprises with major
shareholders in four of the five Europe's major ports--in
Rotterdam, Antwerp, Hamburg, Valencia, Spain. LOGINK, a Chinese
Ministry of Transportation unified logistics platform, is
embedded in at least nine European ports--also, Rotterdam,
Antwerp, and Hamburg.
So, there is, I think, an opportunity to work with the
Europeans at least extricating our own vulnerabilities from the
Chinese on critical infrastructure, and then, move to the next
stage of derisking and decoupling--ultimately, made more
complex by the fact that, unlike the cold war, the United
States and the PRC have interwoven economies, and I think we
have to be delicate and deft and intelligent in the way that we
derisk, delink, and ultimately, decouple our economies from
China without damaging our own wealth and prosperity.
Mr. Issa. Thank you.
Thank you, Mr. Chairman.
Mr. Kean. Thank you, Representative Issa.
With no further questions from members, I want to thank our
witnesses for their valuable testimony and the members for
their questions.
Members of the subcommittee may have some additional
written questions for the witnesses. And we want to ask you to
respond to these promptly and in writing.
[The information referred to appears in the appendix:]
Mr. Kean. Pursuant to committee rules, all members may have
5 days to submit statements, questions, and extraneous
materials for the record, subject to length limitations.
[The information referred to appears in the appendix:]
Mr. Kean. Without objection, the committee stands
adjourned.
[Whereupon, at 3:05 p.m., the subcommittee was adjourned.]
APPENDIX
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