[Senate Hearing 118-81]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 118-81

                         ALIGNING TRANSATLANTIC 
                          APPROACHES ON CHINA

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON EUROPE AND
                     REGIONAL SECURITY COOPERATION

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                              JUNE 7, 2023

                               __________

       Printed for the use of the Committee on Foreign Relations
       
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                  Available via http://www.govinfo.gov

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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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-----------------------------------------------------------------------------------     

                 COMMITTEE ON FOREIGN RELATIONS        

             ROBERT MENENDEZ, New Jersey, Chairman        
BENJAMIN L. CARDIN, Maryland           JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire          MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware         MITT ROMNEY, Utah
CHRISTOPHER MURPHY, Connecticut        PETE RICKETTS, Nebraska
TIM KAINE, Virginia                    RAND PAUL, Kentucky
JEFF MERKLEY, Oregon                   TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey             JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii                   TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland             BILL HAGERTY, Tennessee
TAMMY DUCKWORTH, Illinois              TIM SCOTT, South Carolina
                Damian Murphy, Staff Director          
       Christopher M. Socha, Republican Staff Director          
                   John Dutton, Chief Clerk          


                   SUBCOMMITTEE ON EUROPE AND        
                 REGIONAL SECURITY COOPERATION        

            JEANNE SHAHEEN, New Hampshire, Chairman        
CHRISTOPHER MURPHY, Connecticut      PETE RICKETTS, Nebraska
CHRIS VAN HOLLEN, Maryland           RAND PAUL, Kentucky
TAMMY DUCKWORTH, Illinois            JOHN BARRASSO, Wyoming
BENJAMIN L. CARDIN, Maryland         MARCO RUBIO, Florida

                              (ii)        

  
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire............     1

Ricketts, Hon. Pete, U.S. Senator From Nebraska..................     3

Barkin, Noah, Senior Advisor, Rhodium Group, Senior Visiting 
  Fellow, 
  Indo-Pacific Program, German Marshall Fund of the United 
  States, Berlin, 
  Germany........................................................     5
    Prepared Statement...........................................     7

Oertel, Dr. Janka, Asia Program Director, Senior Policy Fellow, 
  European Council on Foreign Relations, Berlin, Germany.........     9
    Prepared Statement...........................................    10

Small, Andrew, Senior Transatlantic Fellow, Indo-Pacific Program, 
  German Marshall Fund of the United States, Berlin, Germany.....    13
    Prepared Statement...........................................    15

                                 (iii)

 
                        ALIGNING TRANSATLANTIC 
                          APPROACHES ON CHINA

                              ----------                              


                        WEDNESDAY, JUNE 7, 2023

                           U.S. Senate,    
        Subcommittee on Europe and Regional
                              Security Cooperation,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:45 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Jeanne 
Shaheen presiding.
    Present: Senators Shaheen [presiding], Murphy, Van Hollen, 
Duckworth, and Ricketts.

           OPENING STATEMENT OF HON. JEANNE SHAHEEN, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Shaheen. Good afternoon. This meeting of the Senate 
Foreign Relations Europe Subcommittee will come to order.
    I am pleased to be joined by Ranking Member Ricketts and we 
expect other members of not only this subcommittee, but the 
Asia Subcommittee to join periodically, given today's topic.
    In early 2021, the European Union was on the cusp of 
signing the EU-China Comprehensive Agreement on Investment 
stemming from a 7-year negotiation process that would have 
revolutionized trade between the two trading blocs.
    Two years later the European Union has made a significant 
policy shift on China crystallized in a speech in March by 
European Commission President Ursula von der Leyen, who called 
for diplomatic and economic ``de-risking''--her word--and for 
Europe to be bolder on China, which has become, and I quote, 
``more repressive at home and more assertive abroad.''
    This policy shift, which closer aligns EU and U.S. policy 
toward China, is a welcome development. Like the European 
Union, the United States wants a relationship with the PRC that 
upholds the international rules-based order that has 
successfully advanced the global economy and human rights 
around the world.
    However, a series of events over the past few years, 
including the PRC's repression of its Uighur population in 
Xinjiang, have made it clear that we cannot compartmentalize 
our relations with China. We must unite with our allies to 
protect our economies and our shared values.
    The urgency to align our approach toward China was made 
crystal clear when Russia launched an unprovoked and illegal 
invasion of Ukraine.
    Xi Jinping's decision to stand shoulder-to-shoulder with 
Vladimir Putin and declare that theirs is a partnership with no 
limits should be of concern to every democracy around the 
world.
    Russia's invasion highlighted the urgent need to align our 
policies closely with our allies, including the EU. China's 
concerning and aggressive behavior is not new, but Russia's 
brutal invasion created an opening, I believe, to work with 
nations in the Indo-Pacific and beyond who recognize that 
Taiwan is top of mind for China as it takes notice of our 
international response to Ukraine.
    This malign behavior, along with the wakeup call resulting 
from COVID-19 related supply chain disruptions, has spurred a 
growing consensus across the Atlantic, the Pacific, and beyond 
that we must decrease our dependence on China and hold the PRC 
accountable for its behavior.
    Throughout Europe there are numerous examples of efforts 
China undertakes to coerce European partners or make strategic 
investments that undermine European security.
    China has made aggressive economic overtures to secure 5G 
contracts for Huawei, threatening to undermine the security 
infrastructures of EU and NATO allies and aspirant members.
    In Montenegro you can visit a road that was supposed to 
connect the north and south of the country, but still has not 
been completed almost 10 years since the project was signed. 
That is because of China's debt trap diplomacy that has 
entrapped Montenegro in its ability to fully fund and complete 
the project.
    Perhaps one of the most notable examples is from 2021 when 
China implemented the equivalent of a trade embargo in response 
to Lithuania opening a Taiwan representative office in Vilnius.
    I want to emphasize that to fully understand the threats 
the United States and the world face from the PRC's increasing 
aggression, we need qualified and capable ambassadors on the 
ground around the world competing with Chinese interests, 
engaging with our allies and partners, and standing up for 
America's national security.
    The EU and our European partners are critical for our own 
nation's ability to address many elements of China's economic 
and security agenda.
    That is why diplomatic coordinating mechanisms such as 
restarting the U.S.-EU dialogue on China and establishing the 
U.S.-EU Trade and Technology Council have been instrumental.
    In addition to these efforts, the transatlantic alliance is 
prepared to address China's acute security, political, and 
economic threats.
    In 2022, for the first time NATO's Strategic Concept 
recognized China as a threat to regional security. This unity 
of purpose in countering China is critical to protecting 
Europe's key infrastructure including its ports, critical 
minerals, and telecommunications.
    I welcome the EU and NATO's efforts to broaden its 
definition of national security to include critical 
infrastructure.
    Now, today we have convened this hearing to foster a deeper 
understanding of how our European allies and partners view the 
China challenge, to assess PRC engagement with and intentions 
with respect to Europe and individual EU member states, to 
consider vulnerabilities that continue to threaten our 
collective security, and to explore additional tools and 
opportunities to harmonize the U.S.-EU policy with respect to 
the PRC.
    I look forward to our discussion today and exploring how 
this Congress can best support these continued efforts.
    With that, let me turn to the ranking member, Senator 
Ricketts.

               STATEMENT OF HON. PETE RICKETTS, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Ricketts. Thank you very much, Madam Chairman, and 
thank you to all of our witnesses for being here today to talk 
about this incredibly important topic.
    The past 18 months have been some of the most consequential 
for Europe in the decades since World War II. When Vladimir 
Putin launched his illegal war, he started the largest conflict 
on a continent we have seen since World War II.
    Europe was, largely, caught off guard and is handicapped by 
its dependence on Russian energy. As a result, Europe has been 
forced to reckon with and recalibrate its approach toward its 
own security.
    Through our strategic and coordinated efforts on military 
and humanitarian support as well as sanctions, the West has 
helped Ukraine resist this brutal aggression and repression by 
a despot.
    This is demonstrating the power of the transatlantic 
cooperation. The war in Ukraine has unsurprisingly resulted in 
a deterioration of Russia and European relations.
    However, it has also served as an inflection point in 
Europe's relationship with the People's Republic of China. 
Throughout Moscow's campaign of aggression, Beijing has opted 
to consistently provide Putin with economic and diplomatic 
cover while turning a blind eye to Russia's atrocities on the 
Ukrainian people.
    While tensions between Europe and the People's Republic of 
China had already been on the rise, this no limits partnership 
between Xi Jinping and Putin has finally raised alarms in 
Europe on the PRC's malign ambitions after years of focusing 
purely on the economic benefits of Chinese engagement.
    Encouragingly, leaders like EU Commission President von der 
Leyen have shown that some in Europe are waking up to the 
threat that the CCP poses.
    In March, von der Leyen proposed an ambitious course 
correction for Europe's economic approach towards the PRC 
focusing on strengthening the EU's inbound investment screening 
and export control regulations and a push for a new outbound 
investment regime.
    Additionally, the EU-China Comprehensive Agreement on 
Investment has rightfully been put on ice and that should 
remain the case, and the EU, along with the United States, is 
far more focused on economic coercion after the People's 
Republic of China's restriction of Lithuanian goods as 
punishment for allowing Taiwan to open a de facto embassy 
there.
    Individual countries have also taken matters into their own 
hands, from Netherlands restricting its semiconductor 
technology to Ireland shutting down a Chinese overseas police 
station. These have all been welcome efforts.
    However, given the divide in Europe on how to address the 
PRC remains to be seen whether it can develop a coherent long-
term strategy that delivers bold policy actions at both the EU 
and member state levels.
    Over the last 8 months, I have been disappointed to see 
European leaders make visits to Beijing with large business 
delegations to kiss the ring of Xi Jinping all in the name of 
expanding business ties and access to the massive Chinese 
market.
    Some, and this includes President Biden as well, believe 
that rewarding Xi with a more diplomatic engagement and 
strengthened economic ties is the necessary policy prescription 
to get him to act responsibly as well as play a positive role 
in ending the conflict in Ukraine.
    This is a grave miscalculation that only serves to 
strengthen Xi's hand while showcasing a divide within Europe 
and a lack of confidence across the Atlantic.
    It is critical that Europe and the U.S. are aligned both on 
the risks that the CCP poses to our mutual security and what we 
can do together to address it. Forums like the U.S.-EU Trade 
and Technology Council, or TTC, can be important for that 
alignment, but only to the extent that they produce tangible 
results.
    I was also glad to see that last year's NATO Strategic 
Concept covered the threats that the PRC poses to the alliance. 
Now we need to ask whether the words we put into action.
    Xi knows that it is our system of alliances and 
partnerships that provides us with a distinct advantage over 
autocratic and authoritarian regimes and this is fundamental.
    The single biggest advantage that we have is our system of 
alliances with countries in Europe and around the world. That 
is not something that the PRC can replicate. As a result, Xi 
will stop at nothing to expand the PRC's malign influence in 
the continent and leverage economic vulnerabilities to drive a 
wedge between the U.S. and Europe in pursuit of his strategic 
goals. We must not allow the PRC to be successful in this 
endeavor.
    Let us be clear. There can be nuances in our approaches, 
but there cannot be an urgency gap between us. Given the PRC's 
rapidly expanding military, its ambitions to be the world's 
dominating power by the year 2049, and its increasingly hostile 
rhetoric and actions towards Taiwan, the time to take serious 
action to deter the PRC is now, not in 5-10 years.
    The PRC's challenge is too big for either side of the 
Atlantic to respond alone. Neither the United States nor Europe 
want an international order dictated by the People's Republic 
of China, but whether we live in that order is up to us. It 
will ultimately come down to the extent of our resolve and our 
ability to coordinate to meet this challenge head on together.
    I look forward to hearing from our panel of witnesses today 
on how we can strengthen the transatlantic cooperation and work 
together to combat the CCP's malign influence and aggression.
    Thank you, Madam Chairman.
    Senator Shaheen. Thank you very much, Senator Ricketts.
    Let me welcome all of our witnesses and thank you for 
traveling today to get here. We appreciate it. I am going to 
introduce you and ask that we hear your testimony in the order 
of introduction.
    I will begin with you, Mr. Barkin. Our first witness today 
is Noah Barkin, who is a senior adviser with Rhodium Group's 
China Practice. He is also a visiting Senior Fellow in the 
Indo-Pacific program at the German Marshall Fund of the United 
States.
    His current work focuses on Europe's relations with China, 
emerging technologies, and the implications of China's rise for 
the transatlantic relationship. On these topics, Mr. Barkin has 
written for The Atlantic, The New York Times, Foreign Policy, 
and Politico, and he is the creator of a popular newsletter 
called Watching China in Europe.
    Dr. Janka Oertel is the director of the Asia program at the 
European Council on Foreign Relations. She previously worked as 
a Senior Fellow in the Asia program at the German Marshall Fund 
of the United States Berlin office where she focused on 
transatlantic China policy including on emerging technologies, 
Chinese foreign policy, and security in East Asia.
    She has published widely on topics related to EU-China 
relations, U.S.-China relations, security in the Asia Pacific 
region, Chinese foreign policy, 5G and emerging technologies, 
as well as climate cooperation. Thank you.
    Andrew Small is a Senior Transatlantic Fellow with the Asia 
program at the German Marshall Fund of the United States. His 
research focuses on U.S.-China relations, Europe-China 
relations, and broader developments in Chinese foreign and 
economic policy.
    He has testified before the U.S.-China Economic and 
Security Review Commission in both the Foreign Affairs 
Committee and European Parliament. Andrew is the author of ``No 
Limits: The Inside Story of China's War with the West'' and the 
``China-Pakistan Axis: Asia's New Geopolitics.''
    Thank you all for being here. I will ask you to begin, Mr. 
Barkin.

STATEMENT OF NOAH BARKIN, SENIOR ADVISOR, RHODIUM GROUP, SENIOR 
VISITING FELLOW, INDO-PACIFIC PROGRAM, GERMAN MARSHALL FUND OF 
               THE UNITED STATES, BERLIN, GERMANY

    Mr. Barkin. Chair Shaheen, Ranking Member Ricketts, 
distinguished members of the committee, thank you for the 
opportunity to talk to you today about transatlantic 
cooperation on China.
    Europe's relationship with China has been worsening for 
more than half a decade, mirroring the decline in relations 
between Washington and Beijing. In past years, European 
concerns centered around issues of economic competitiveness and 
market access, but they have since broadened to encompass 
worries tied to human rights, economic coercion, strategic 
dependencies, disinformation, and security.
    Europe entered a new phase in its relationship with China 
following Russia's invasion of Ukraine in February 2022. The no 
limits partnership sealed between Xi Jinping and Vladimir Putin 
in the weeks before the war began and China's subsequent 
refusal to condemn Russia's aggression are cementing the view 
of China as a competitor and systemic rival in Europe.
    Importantly, the war has also increased awareness both in 
European governments and corporate boardrooms about the risks 
of a conflict over Taiwan.
    Today, there is an intense debate underway in major 
European capitals about reducing economic dependencies on 
China. European Commission President Ursula von der Leyen 
delivered an important speech on March 30 in which she argued 
for a de-risking of Europe's relationship with China. Over the 
coming months, Europe will begin the process of defining what 
de-risking means in practice.
    The hardening of Europe's line can obscure differences that 
exist between 27 EU member states and in some cases within 
individual European governments.
    On the hawkish end of the spectrum are a group of Eastern 
European countries led by Lithuania which promote a values-
based foreign policy. At the dovish extreme is a country like 
Hungary. The largest EU states, including Germany and France, 
fall somewhere in between.
    As we saw on President Emmanuel Macron's recent visit to 
China, France stands out for its support for European strategic 
autonomy, which is code for an independent Europe that is not 
overly reliant on China or the United States.
    Germany stands out for having what is by far the closest 
economic relationship with China of any European country. 
According to new figures from Rhodium Group, German firms 
accounted for 84 percent of total EU FDI into China last year.
    Germany is also the country in Europe where the debate over 
relations with China is the most intense. Chancellor Olaf 
Scholz's coalition is divided over how far and fast to go in 
recalibrating ties with China.
    Still, it is fair to say that the win-win economic 
narrative that has fueled close ties between Berlin and Beijing 
in recent decades is increasingly being eroded by conditions on 
the ground in China and competition from Chinese firms in core 
German industries like autos.
    I would like to conclude with a few observations about 
transatlantic cooperation on China.
    First, I believe we have seen a great deal of convergence 
between the U.S. and Europe over the past 2 years on the 
language that is being used to define the challenges posed by 
China.
    In recent months, we have seen senior officials on both 
sides of the Atlantic embrace the term ``de-risking'' and we 
have seen officials distance themselves from the idea of a 
full-blown economic decoupling from China.
    Second, this alignment is more than just rhetorical. There 
is a growing transatlantic consensus on the need to reduce 
dependencies on China, diversify to other markets, and improve 
the resilience of supply chains.
    Third, the U.S. and EU have created a series of structured 
dialogues on China in recent years. The U.S.-EU Trade and 
Technology Council held its fourth ministerial meeting in 
Sweden last week. China also features in discussions at NATO 
and the G-7.
    Fourth, the war in Ukraine has pushed the U.S. and Europe 
closer together and focused minds in Europe on the risks of a 
conflict in Taiwan.
    That said, it is wrong to expect perfect alignment between 
the U.S. and Europe on China. The U.S. is an incumbent 
superpower. It plays a vital security role in the Indo-Pacific 
and it is not a collection of countries with different 
interests like the EU is.
    As a result, it sees China through a different prism than 
Europe does and its response reflects this. There is no 
appetite in European capitals for containing or isolating China 
and there are concerns in some capitals about what is perceived 
as an overly confrontational approach from some corners of 
Washington, particularly on the issue of Taiwan.
    There is a consensus in Europe that despite the growing 
strains, but also because of these strains, one must continue 
to engage robustly with Beijing. As a result, we have seen a 
flurry of visits by European leaders.
    I am convinced that building transatlantic convergence on 
China and limiting the risks of divergence depends on robust 
engagement between the U.S. and EU on trade technology and 
security policies that are at the heart of the challenges 
presented by Beijing's policies.
    This will include building a positive transatlantic 
narrative, including on trade and investment, that is not only 
about China. It will require that the U.S. look beyond the 
daily noise on China policy that is coming from 27 EU member 
states and remembering Europe is not a monolith, and it will 
require that the Administration and members of Congress are 
active, persistent, patient, and when necessary forceful in 
making their policy arguments to European counterparts behind 
closed doors.
    I believe we are on a similar trajectory on China between 
Europe and the U.S. that has been driven by the policy choices 
in Beijing. If Europe has a strong partner in Washington, I am 
convinced that Washington will have a strong partner in Europe.
    Thank you very much.
    [The prepared statement of Mr. Barkin follows:]

                 Prepared Statement of Mr. Noah Barkin

    Chair Shaheen, Ranking Member Ricketts, distinguished members of 
the Committee. Thank you for the opportunity to talk to you today about 
transatlantic cooperation on China.
    Europe's relationship with China has been worsening for more than 
half a decade, mirroring the decline in relations between Washington 
and Beijing.
    In past years, European concerns centered around issues of economic 
competitiveness and market access. But they have since broadened to 
encompass worries tied to human rights, economic coercion, strategic 
dependencies, disinformation, and security.
    Europe entered a new phase in its relationship with China following 
Russia's invasion of Ukraine in February 2022. The ``no limits'' 
partnership sealed between Xi Jinping and Vladimir Putin in the weeks 
before the war began and China's subsequent refusal to condemn Russia's 
aggression, are cementing the view of China as a competitor and 
systemic rival. Importantly, the war has also increased awareness, both 
in European governments and corporate boardrooms, about the risks of a 
conflict over Taiwan.
    Today, there is an intense debate underway in major European 
capitals about reducing economic dependencies on China. European 
Commission President Ursula von der Leyen delivered an important speech 
on March 30 in which she argued for a ``de-risking'' of the Europe's 
relationship with China. Over the coming months, Europe will begin the 
process of defining what de-risking means in practice.
    The hardening of Europe's line can obscure differences that exist 
between the 27 EU member states, and in some cases, within individual 
European governments. On the hawkish end of the spectrum are a group of 
eastern European countries led by Lithuania, which promote a values-
based foreign policy. At the dovish extreme is a country like Hungary. 
The largest EU states, including Germany and France, fall somewhere in 
between.
    As we saw on President Emmanuel Macron's recent trip to China, 
France stands out for its support of European strategic autonomy--code 
for an independent Europe that is not overly reliant on China or the 
United States. Germany stands out for having what is by far the closest 
economic relationship with China of any European country. According to 
new figures from Rhodium Group, German firms accounted for 84 percent 
of total EU foreign direct investment in China last year.
    Germany is also the country in Europe where the debate over 
relations with China is the most intense. Chancellor Olaf Scholz's 
coalition is divided over how far and fast to go in recalibrating ties 
with China. Still, it is fair to say that the ``win-win'' economic 
narrative that fueled close ties between Berlin and Beijing in recent 
decades is increasingly being eroded by conditions on the ground in 
China and competition from Chinese firms in core German industries.
    I'd like to conclude with a few observations about transatlantic 
cooperation on China.
    First, I believe we have seen a great deal of convergence between 
the U.S. and Europe over the past 2 years on the language that is being 
used to define the challenges posed by China. In recent months, we've 
seen senior officials on both sides of the Atlantic embrace the term 
de-risking. And we've seen officials distance themselves from the idea 
of a full-blown economic decoupling from China.
    Second, this alignment is more than just rhetorical. There is a 
growing transatlantic consensus on the need to reduce dependencies on 
China, diversify to other markets, and improve the resilience of supply 
chains.
    Third, the U.S. and EU have created a series of structured 
dialogues on China-related challenges in recent years. The U.S.-EU 
Trade and Technology Council held its fourth ministerial meeting in 
Sweden last week. China also features increasingly in discussions 
within NATO and the G7.
    Fourth, as I mentioned earlier, the war in Ukraine has pushed the 
U.S. and Europe closer together and focused minds in Europe on the 
risks of a conflict in the Taiwan Strait.
    That said, it is wrong to expect perfect alignment between the U.S. 
and Europe on China. The U.S. is an incumbent superpower. It plays a 
vital security role in the Indo-Pacific. And it is not a collection of 
countries with different interests like the EU. As a result, it sees 
China through a different prism than Europe does. And its response 
reflects this.
    There is no appetite in European capitals for containing or 
isolating China, and there are concerns in some capitals about what is 
perceived as an overly confrontational approach from some politicians 
in Washington, particularly on the issue of Taiwan.
    There is a consensus in Europe that despite the growing strains--
but also because of these strains--one must continue to engage robustly 
with Beijing. As a result, we have seen a flurry of visits by European 
leaders since China ended its strict zero-COVID policies at the end of 
last year.
    While there is a nascent push in Europe to reduce dependencies on 
China, the appetite for paying an economic price in the name of 
national security is not as developed as it is in the U.S. or in a 
country like Japan. The threat perception is evolving in Europe, but 
more gradually. As we've seen on Ukraine, however, Europe is capable of 
major shifts in policy in times of crisis.
    I am convinced that building transatlantic convergence on China, 
and limiting the risks of divergence, depends on robust engagement 
between the U.S. and EU on the trade, technology and security issues 
that are at the heart of the challenges presented by Beijing's 
policies.
    This will include building a positive transatlantic narrative, 
including on trade and investment, that is not only about China. It 
will require that the U.S. look beyond the daily noise on China policy 
that is coming from 27 EU member states, remembering that Europe is not 
a monolith. And it will require that the Administration and members of 
Congress are active, persistent, patient and when necessary forceful in 
making their policy arguments to European counterparts behind closed 
doors.
    We are on a similar trajectory on China that has been driven by 
policy choices in Beijing. If Europe has a strong partner in 
Washington, I am convinced that Washington will have a strong partner 
in Europe.

    Senator Shaheen. Thank you, Mr. Barkin.
    Dr. Oertel.

 STATEMENT OF DR. JANKA OERTEL, ASIA PROGRAM DIRECTOR, SENIOR 
 POLICY FELLOW, EUROPEAN COUNCIL ON FOREIGN RELATIONS, BERLIN, 
                            GERMANY

    Dr. Oertel. Thank you.
    Chair Shaheen, Ranking Member Ricketts, thank you for the 
opportunity to be appear here before you today. It is an honor 
and a privilege.
    I would like to make four brief points: First, Europeans do 
not speak with one voice when it comes to China, but that does 
not necessarily translate into disunity in action. The overall 
level of attention regarding China as a challenge to European 
interest has grown remarkably over the last 5 years.
    China policy matters more. Therefore, it makes sense that 
it is more fiercely debated. Discussions seem to be all over 
the place when looking at the day-to-day reporting, but 
stepping back from that kind of daily madness, it is actually 
not true when looking at what is happening at the policy level. 
Among EU policymakers, positions on key matters are broadly 
united and on a linear trajectory of significant hardening and 
growing skepticism about the future relationship with Beijing.
    The recent visit by French President Macron to China has 
not changed this overall trend. The packages and policies 
agreed upon at the EU level with a clear eye towards China are 
real, impactful, and they are here to stay, and they have 
enhanced the EU's ability to respond to the changing 
geopolitical environment.
    From investment screening to the 5G toolbox or the carbon 
border adjustment mechanism they are all rooted in hard changes 
in the economic reality. Trade relations between Europe and 
China are changing in China's favor. Particularly for small and 
medium-sized European enterprises, the Chinese market is thus 
moving from being the place to be to being risky business.
    The second point would be China's support for the Russian 
invasion in Ukraine constitutes an absolute turning point in 
Europe-China relations. The war in Ukraine has not put the 
question of how to relate to China on the diplomatic and 
strategic backburner, which one could have expected.
    On the contrary, because of Beijing's support for Moscow it 
has brought the idea of China as a challenge to European 
strategic interests closer to home. Particularly in Central and 
Eastern Europe, the observable shift among many leaders is 
significant and will be lasting.
    The war has underscored the problem of over dependence on 
China as well as overall supply chain risks, but this does not 
translate into a desire for full-scale decoupling in Europe. 
The costs, the heartbreak, and the relations with Russia has 
incurred on European economies are a huge warning sign to many 
policymakers.
    At the same time, the war has highlighted the potential 
implications of other global security risks and has ignited the 
discussion about the security situation in Taiwan. Possible 
scenarios and assessment of the potential fallout are now hotly 
debated in Europe's strategic community and, if I may add, I 
have been doing this for 15 years. I have never seen these 
debates before.
    Thirdly, the Chinese leadership sees Europe as a 
battleground for competition with the United States, but the 
European public does not quite perceive it that way yet. The 
Chinese leadership continues to see an advantage in trying to 
undercut alignment, distract EU countries from China's 
engagement with Moscow, and obstruct transatlantic unity.
    Therefore, China currently appears to be on a repair 
mission in the relations with Europe. Special Envoy Li Hui's 
visit and a flurry of additional diplomatic activity including 
government consultations with the German cabinet this June or 
Chinese Premier Li Qiang's presence at Macron's new Global 
Financial Pact Summit in Paris 2 days later are signs of that.
    Among European leaders this has not fundamentally swayed 
positions, but it seems that they have so far failed to convey 
the urgency of their changing approach to China and the direct 
implications for European security and prosperity convincingly 
at home.
    Today, my colleagues at the European Council on Foreign 
Relations have published polling data from 11 EU member states. 
With regard to a Taiwan contingency, the majority of 
respondents, 62 on average--62 percent would be in favor of a 
neutral stance.
    European policymakers know that this is not an option and 
need to communicate this much clearer to their domestic 
audiences because once a direct connection to Europe's own 
security is more palpable, numbers do change.
    A staggering 41 percent of respondents on average across 
member states would thus be in favor of sanctions against China 
if it were to deliver ammunition or weapons to Russia, even if 
this meant, and I quote, ``serious economic harm to Western 
economies.''
    This brings me to my fourth and final point. Among 
policymakers, transatlantic convergence on the analysis of the 
challenges posed by China is real, but de-risk and diversify 
needs to move beyond the slogan.
    The discussions at the G-7 level have reached a new 
consensus since the Hiroshima Summit, with a joint commitment 
to economic resilience and economic security. The negotiations 
and the framework of the TTC are enhancing trust and making 
real progress possible from green technologies, particularly 
also to standard setting, and the various bilateral exchanges 
on the issue, including ahead of meetings with Chinese 
counterparts, have generated a much higher degree of 
coordination.
    To guarantee that this trend is sustainable beyond this 
U.S. Administration and to bring the European and American 
public along what is needed is concrete, joint, or parallel 
action that benefits both sides of the Atlantic and shares 
risks and costs.
    Thank you very much.
    [The prepared statement of Dr. Oertel follows:]

                 Prepared Statement of Dr. Janka Oertel

    Dear Chairwoman Shaheen, Ranking Member Ricketts, and distinguished 
members of the subcommittee, thank you for the opportunity to appear 
before you today. It is an honor and privilege to address you.
    I would like to make four points:

  1.  Europeans do not speak with one voice when it comes to China 
        policy, but that does not necessarily translate into disunity 
        in action.

  2.  China's support for the Russian invasion in Ukraine constitutes a 
        turning point in Europe-China relations.

  3.  The Chinese leadership sees Europe as a battleground for 
        competition with the Unites States, but the European public 
        does not perceive it that way--yet.

  4.  The EU's China policy objectives are converging with those of the 
        United States, while full alignment in policy and rhetoric 
        remains unlikely. De-risking is a useful framework for a 
        transatlantic approach, but it needs to move beyond the slogan.

    Let me elaborate on each of them briefly.
                      attention is up, unity holds
    The overall level of attention regarding China as a challenge to 
European interests has grown remarkably over the last 5 years. 
Precisely because of the heightened importance that the relationship 
with China now plays for EU governments the messaging is more complex, 
with a stronger focus on the domestic audience.
    While the daily ups and downs of the media reporting on European 
positions can leave observers confused, when stepping back European 
positions are actually relatively united and on a linear trajectory of 
significant hardening and growing skepticism about the future of the 
relationship. The recent visit by French president Macron and the 
subsequent comments in the media have not changed this broader trend.
    The packages and policies agreed upon with a clear eye towards 
China (although formally ``country-agnostic'') are quite impressive: 
the inbound investment screening mechanism, the anti-coercion tool, the 
foreign subsidies regulation, the 5G toolbox, new due diligence 
directives, the Critical Raw Materials Act, outbound investment 
screening plans, as well as the Carbon Border Adjustment Mechanism, 
which has generated significant concern in Beijing--all of this is 
real, impactful and here to stay and has enhanced the EU's ability to 
respond to the changing geopolitical and geo-economic environment the 
Union and the member states are facing.
    The changes are driven by hard economic and political realities, 
not by ideology or moral considerations. The EU's trade deficit with 
China is growing. From 2020 to 2022 alone it has more than doubled.\1\ 
Germany holds the largest share of trade with China among EU countries 
and the same trajectory applies: foreign direct investment into China 
from Germany is up, imports from China have increased, while sales of 
German companies in the Chinese market in key industries, particularly 
the automotive sector, are slowing. German exports to China are down in 
relative terms and have only grown marginally in absolute terms over 
the last year. In 2022, China was only Germany's fourth largest export 
market, significantly behind the United States, France, and the 
Netherlands.
---------------------------------------------------------------------------
    \1\ In 2020 the trade deficit of the EU vis-a-vis China amounted to 
182.3 billion Euro compared to 396 billion billion Euro in 2022, see: 
https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-
region/countries-and-regions/china_en.
---------------------------------------------------------------------------
    This is changing the narrative. Particularly for small and medium 
size European enterprises, the Chinese market is moving from being the 
place to be to being risky business.
           ukraine is a pivotal moment--also for china policy
    For policy makers in Europe, the issue of highest strategic 
salience remains the Russian invasion of Ukraine, but the war has not 
put the question of how to relate to China on the diplomatic and 
strategic backburner. Quite the opposite: because of Beijing's support 
for Moscow, it has brought the idea of China as a challenge to European 
strategic interests closer to home.
    It has ignited a debate about the security situation in the Taiwan 
Strait. Media reporting regarding Taiwan--particularly in Germany has 
increased significantly and the number of conversations in the 
strategic, policy, and business community about possible scenarios and 
assessments of the potential fallout has increased markedly across 
Europe and particularly in Brussels.
    Additionally, there is a specific regional impact of China's `no 
limits' bond with Moscow: In Central and Eastern Europe China's failure 
to condemn the Russian invasion has led to another re-evaluation of the 
relationship with China. While the cooling of the relations over the 
past few years in what once was the 17+1 format (and is now down to 
14+1, slowly drifting into irrelevance) was mainly due to China's 
assertive policies at home, the pandemic response, and disappointed 
business interests, the shift that is observable among many of the 
political leaders in the region now is likely to be more significant 
and lasting. It cuts to the heart of their own strategic priorities in 
terms of safeguarding sovereignty and territorial integrity and is 
fueled by a deep-rooted fear of Russian intentions.
    While Chinese support to Moscow has highlighted the problem of 
single points of failure regarding overdependence on individual goods 
and products from China as well as overall supply chain risks, this 
does not translate into a desire for full-scale decoupling in Europe.
    On the contrary, the costs that the hard break in the relations 
with Russia has incurred on European economies are a huge warning sign 
to many. The longer the war continues and the deeper the overall 
challenges to the global economy become, the harder it will be to 
maintain European unity as those EU countries that are more dependent 
on China, such as Germany, may be inclined to slow the de-risking 
process in favor of short-term economic relief.
              beijing's charm offensive falls flat--so far
    The Chinese leadership continues to see an advantage in trying to 
undercut alignment, distract EU countries from China's engagement with 
Moscow, and obstruct transatlantic unity and has thus currently put a 
particular emphasis on its outreach to EU countries.
    So far, however, Beijing's attempt to improve ties has not swayed 
most European leaders who see no new offers by the Chinese leadership 
on the table and are unimpressed by Special Envoy of the Chinese 
Government for Eurasian Affairs Li Hui's latest visit, the cold and 
low-level reception by the Polish Foreign Ministry being a case in 
point. \2\
---------------------------------------------------------------------------
    \2\ For the readout of the Polish Foreign Ministry, please see: 
https://www.gov.pl/web/diplomacy/deputy-minister-wojciech-gerwel-met-
the-special-envoy-of-the-chinese-government-for-eurasian-affairs.
---------------------------------------------------------------------------
    The visits in Kiev, Warsaw, Berlin, Paris, and Brussels of the 
special envoy and a flurry of additional diplomatic activity including 
the upcoming government consultations with the German cabinet on 20 
June 2023 and Chinese Premier Li Qiang's planned presence at Macron's 
flagship ``Summit for a New Global Financial Pact'' are an indicator 
that Beijing is focusing on select member states it regards as 
particularly relevant.
    There is reason to be concerned that some of these tactics can be 
successful as European public perceptions of the relationship with 
China in many member states are not as clear as the existing unity in 
broadly rallying behind the toughening of the EU line may indicate.
    With regard to a potential Taiwan contingency, for example, the 
latest poll that my colleagues at the European Council on Foreign 
Relations have conducted in 11 EU member states \3\ concludes that a 
majority of European respondents (62 percent on average) polled would 
be in favor of a neutral stance rather than supporting the United 
States, which only 23 percent would on average be advocating for.
---------------------------------------------------------------------------
    \3\ The representative poll is part of ECFR's ``Unlock Europe's 
Majority'' project. Polling was conducted in April 2023 in Austria, 
Bulgaria, Denmark, France, Germany, Hungary, Italy, the Netherlands, 
Poland, Spain, and Sweden. See: https://ecfr.eu/publication/keeping-
america-close-russia-down-and-china-far-away-how-europeans-navigate-a-
competitive-world/.
---------------------------------------------------------------------------
    It is on European and U.S. policymakers to jointly convey the 
impossibility of neutrality in such a scenario and devise a clear 
strategy for advocating deterrence and de-escalation to avoid a 
military confrontation that takes public perceptions into account by 
clearly conveying that neutral by-standing will not be an option for 
Europe.
    Because once the direct connection to the reality of European 
citizens becomes clearer the numbers change: a staggering 41 percent of 
respondents (on average across member states) would thus be in favor of 
sanctions against China if it were to deliver ammunition or weapons to 
Russia, even if this meant ``serious economic harm to Western 
economies.''
    The picture is more nuanced when looking at the individual country 
polling. In Sweden 56 percent of respondents were in favor, 51 percent 
in the Netherlands, whereas only 37 percent of the respondents in 
Germany would be inclined to do so, with 38 percent arguing that it 
would be more important to protect the Western economies than to 
sanction China.
    All countries polled show an exceptionally high number of undecided 
respondents (20 percent to almost 40 percent) to this question, which 
indicates that there is a lot of unease among the European public and 
the need for clear communication of political objectives and risk 
calculations of European leaders becomes even more important.
    Risk is currently priced against the imaginary costlessness of 
upholding the status quo. Weighing the costs of inaction against the 
cost of more decisive European action to defend European interests vis-
a-vis China is a key task for policy makers in Europe and beyond.
          transatlantic convergence is real, but de-risk and 
               diversify needs to move beyond the slogan
    This brings me to my fourth and final point. Transatlantic 
convergence on the analysis of the challenges posed by China is real 
among policy makers, the discussions in the G7, the EU-U.S. Trade and 
Technology Council and the various bilateral exchanges on the issue, 
the close coordination ahead of meetings with Chinese counterparts and 
regarding measures to be taken is a clear indicator of that.
    ``De-risk and diversify'' seems to be terminology around which 
transatlantic partners can rally.
    But discomfort in European capitals regarding full alignment with 
the United States remains high, and public opinion and domestic 
politics is important on both sides of the Atlantic.
    Therefore, the exact contours of a ``de-risk and diversify'' agenda 
need to become real very quickly in Europe with a clear roadmap for 
bringing the public on board for this overhaul of the way the global 
economy and the multilateral framework has been functioning. It also 
needs to move beyond the rhetoric of tools and instruments, insinuating 
that mere little tweaks to the existing order will suffice to safeguard 
European security and prosperity in an age of system competition.
    A de-risk and diversify slogan with no concrete policies attached 
could otherwise quickly become a banner to hide behind for continued 
complacency, reactiveness, and inaction in tackling the challenges 
head-on.

    Senator Shaheen. Thank you, Dr. Oertel.
    Mr. Small.

 STATEMENT OF ANDREW SMALL, SENIOR TRANSATLANTIC FELLOW, INDO-
  PACIFIC PROGRAM, GERMAN MARSHALL FUND OF THE UNITED STATES, 
                        BERLIN, GERMANY

    Mr. Small. Chair Shaheen, Ranking Member Ricketts, it is an 
honor to have the opportunity to speak before you today on this 
important topic.
    As both of you and as my fellow witnesses have laid out, 
Russia's invasion of Ukraine has been a watershed moment for 
European-China policy and for the transatlantic agenda on 
China.
    The United States and Europe already agreed on the 
challenges that the PRC posed. We agreed also that they were 
systemic, that security, human rights, economic factors, 
technology could not exist in separate lanes anymore, that they 
were intertwined, and we agreed on many of the measures that we 
needed to take in response, but there was, as Ranking Member 
Ricketts noted, an urgency gap between the two sides. There is 
no question that we have gone through a transformation in how 
China is being dealt with in the transatlantic relationship, 
from a time when Europe was still apprehensive about open 
cooperation with the U.S. on China to a situation where that 
coordination is now embedded at every level of the relationship 
from NATO to the TTC.
    It has been clear at the same time that the U.S. was moving 
further and faster in overhauling its China policies and that 
the European side was often in reactive and sometimes slightly 
reluctant mode, recognizing the issues at stake, heading in the 
right direction, but often lacking the momentum to make some of 
the more difficult choices required.
    Following the Russian invasion, that urgency gap has been 
closing. First, the political common sense in Europe when it 
comes to economic risk with China has now changed. The combined 
shock of the pandemic and the invasion on top of all the 
existing concerns about the PRC's trajectory under Xi Jinping 
have made it much harder to argue that the status quo is the 
low-risk, cost-free option.
    There is certainly a spectrum of views in Europe on how to 
define economic security and de-risking as the business 
delegations that you noted show, but this is a mindset shift in 
Europe, and in each practical area from export controls to 
outbound investment screening it is making coordination across 
the Atlantic easier.
    Second, broader perceptions of China have shifted as a 
result of the support that Beijing has extended to Moscow. The 
PRC is now seen by many Europeans as an enabler of Russia's 
war, a direct contributor to security threats in Europe in a 
way that is far more tangible than cyber intrusions or 
influence operations ever were.
    European policymakers certainly still want to keep areas of 
cooperation alive, but there is a consensus that rivalry and 
competition now define the relationship, and European leaders 
have delivered a consistent message to Beijing in recent 
months. The provision of military support to Russia would 
amount to an even graver rupture in the Sino-European 
relationship.
    Third has been to make more tangible the possibility of a 
major security crisis in East Asia, particularly over Taiwan, 
and the risks of complacency about the intentions of 
revisionist authoritarian powers.
    There is deeper understanding now among European 
policymakers of how interconnected security issues in the 
Atlantic and Indo-Pacific theatres are of the seismic shock 
that a cross-strait crisis would have for Europe and that 
Europe is a player when it comes to deterring China.
    Eighteen months ago when China looked at Europe as a 
sanctions actor, they thought Crimea--in other words, modest 
measures that they could live with, that they could swallow.
    Now when they look at Europe they see SWIFT cutoffs, 
central bank asset freezes, and sweeping export controls. Even 
if Europe and the U.S. cannot agree on preemptive signaling to 
China, the PRC now still has to take the possibility of a 
European economic squeeze into account before taking any 
fateful decisions.
    Beijing sees all of these developments with concern and is 
trying to undercut or at least slow them down. The PRC wants to 
make cooperation with the U.S. for Europe as costly as possible 
and incentivize European acts of distancing.
    It wants to ensure that there is no red lines crossed when 
it comes to European cooperation with Taiwan, and right now 
China is exceptionally focused on trying to maintain European 
openness for Chinese access to advanced technologies where 
Europe has become even more important to the PRC since the U.S. 
semiconductor export controls from last October, and, of 
course, what Beijing thinks is coming next.
    Ultimately, though, the PRC has decided to accept some 
level of collateral damage to its relationships in Europe as 
the price for deepening ties with Moscow. In the wider struggle 
that the PRC understands itself to be engaged in with the 
United States, Xi sees the partnership with Russia, even a 
weakened Russia, offering greater strategic benefits than any 
other relationship and China is realistic about where it sees 
the Europeans landing in this geopolitical landscape.
    The Chinese Communist Party's internal documents have long 
referenced Western hegemony, Western values, and Western 
hostile forces as the focus of its animosity, but Xi spoke 
openly in March about Western countries that have implemented 
all around containment, encirclement, and suppression.
    The PRC will do what it can to limit the damage to its 
position in Europe as Beijing's caution about the Russian 
request for lethal aid indicate, but it is simultaneously 
steeling itself for a contest with the West, not the United 
States alone.
    The coalition that the United States needs to build to 
address the shared challenges posed by China span multiple 
domains and geographies. We still have a long way to go on the 
transatlantic agenda.
    We have reached a far deeper level of coordination on China 
than looked plausible a few years ago and I think that will 
continue to be the trajectory in the years ahead.
    Thank you for your time.
    [The prepared statement of Mr. Small follows:]

                 Prepared Statement of Mr. Andrew Small

    Chairperson Shaheen, Ranking Member Ricketts, and distinguished 
members of the subcommittee, it is an honor to have the opportunity to 
testify before you today.
    Over the last few years, Europe and the United States have engaged 
in the most significant overhaul of their policies towards the People's 
Republic of China (PRC) since the opening of diplomatic relations. 
While the United States has moved further and faster in this process 
than Europe, the nature of the two sides' economic, political and 
strategic concerns about the PRC, and the analysis of how best to 
respond, has been highly convergent.
    This is reflected in the quality of transatlantic exchanges on 
China. Where it was once contentious even to address China-related 
concerns openly between Europe and the United States, collective 
efforts to do so are now embedded across all dimensions of the 
transatlantic relationship, from summits to working-level coordination, 
NATO to the EU-U.S. Trade and Technology Council (TTC). The urgency gap 
that existed between the two sides is starting to close. The Russian 
invasion of Ukraine, and the PRC's decision to extend significant 
political and economic backing to Moscow, has had a catalytic effect on 
European thinking. While Beijing has so far held back from providing 
lethal aid, the forms of support it already provides have positioned 
China as one of the chief enablers of the war. European leaders are now 
far clearer that while areas of cooperation with the PRC still exist, 
and effective political channels with Beijing need to be preserved, 
competition and rivalry are now the defining features of the 
relationship.
    The Russian invasion also acted as an acute warning of the risks of 
excessive dependencies on powerful authoritarian states, and has forced 
European leaders to start taking the prospects of a conflict in Asia--
particularly a cross-Strait contingency--more seriously. Coming on top 
of the supply chain vulnerabilities exposed during the COVID-19 
pandemic, and the worsening climate for European business in China, it 
has transformed the notion of ``de-risking'' the economic relationship 
from a radical position in the European debate to a matter of political 
common sense.
    While there are still differences over how expansively to define 
the concept, some of the basic principles are generally agreed: 
strengthened technology controls in fields with potential military 
applications; diversification away from areas of near-exclusive 
reliance on China; more robust means to address outright economic 
coercion; and tight coordination with like-minded partners to put these 
measures into effect. European capitals are now converging on a new set 
of policy objectives with China for the first time since 2019, when the 
EU's framework of treating China as a ``partner, competitor and 
systemic rival'' was first laid out. European Commission President Von 
der Leyen's March 2023 speech on how Europe should deal with a China 
that is ``more repressive at home and more assertive abroad'' was an 
indication of the direction of flow. EU member states have again given 
the Commission space to be bolder and clearer than some of them are 
willing to be themselves.
                            china's pushback
    The PRC views these developments with concern. Beijing aims to 
restrict and complicate European involvement in a common front with the 
United States; maintain a high degree of European openness for Chinese 
commercial and technological access; and limit any European moves on 
issues of high sensitivity, especially human rights, Xinjiang, Hong 
Kong, and Taiwan. The PRC has long understood Europe's importance in a 
geo-strategic landscape where competition cuts across the economic, 
technological, information, and ideological domains rather than hard 
military power alone. Yet Europe's salience to Chinese interests is now 
even greater in a context where U.S. restrictions on its means of 
acquiring technologies, tools, and know-how are tightening. In addition 
to the barrage of criticism of the United States to which European 
officials and leaders are now routinely subjected by their Chinese 
counterparts, there is a forensic focus on ensuring that Europe does 
not close down interactions with China in areas that will affect the 
development of its advanced capabilities. As a result, Europe is the 
subject of more intense diplomatic outreach from China than it has 
experienced in many years.
    At the same time, Beijing has essentially decided to accept some 
level of collateral damage to its standing in Europe as the price for 
deepening and elevating its ties with Moscow at a time of war. In a 
previous phase of Chinese foreign policy, Xi would neither have agreed 
to the ``no limits'' joint statement with Putin in the crucial weeks 
before the Russian invasion nor embarked on a full-scale state visit to 
Moscow at such a contentious juncture a year later. But in the wider 
struggle that the PRC understands itself to be engaged in with the 
United States, Xi sees the partnership with Russia--even a weakened 
Russia--offering greater strategic benefits than any other 
relationship.
    By contrast, Beijing is realistic about where it sees Europe 
landing. The Chinese Communist Party's internal documents have long 
referenced ``western hegemony,'' ``western values,'' and ``western 
hostile forces'' as the focus of its ideological animus. Chinese 
assessments have also long seen European strategic decision-making as 
necessarily conditioned by its alliance with the United States, and 
view Russia's invasion of Ukraine as a factor considerably tightening 
that alliance, a dynamic that will outlast the war. Xi's public remarks 
at the March 2023 ''Two Sessions'' notably spoke of ``western 
countries--led by the U.S.,'' that have ``implemented all-round 
containment, encirclement and suppression against us.'' The PRC is 
steeling itself more openly for a broader contest with the West, not 
the United States alone.
    Nonetheless, the PRC certainly wants to limit the extent of the 
damage to its relationships in Europe. This is one of the principal 
reasons giving Beijing pause in responding to Moscow's requests for 
lethal aid, and its willingness at least to go through the diplomatic 
motions of a peace initiative for Ukraine. Europe's leaders have 
delivered a consistent message to Beijing in recent months that the 
provision of systemic military support to Russia would amount to a real 
rupture in the Sino-European relationship. The Chinese Government has 
taken those warnings seriously.
                                ukraine
    European messaging has been less consistent when it comes to 
China's diplomatic role on Ukraine. Some European policymakers see 
reason to try to incentivize a more constructive Chinese approach; some 
see value in pushing Beijing on specific aspects of its 12-point 
position paper; some have attributed excessive significance to boiler-
plate Chinese statements on nuclear weapons; and others have been 
wholly skeptical about Beijing playing an even marginally helpful role.
    Xi's Moscow trip and the recent European visit from China's special 
representative for Eurasian affairs, Li Hui, certainly poured cold 
water on some of the more delusional hopes. The center of gravity at 
present is for Europeans to simulate belief in China's simulated 
efforts and at least give themselves the opportunity to call Beijing's 
bluff if nothing results. Europe is also looking to exert pressure on 
Chinese sanctions-busting, and considering measures to go after a list 
of Chinese entities engaged in dual-use transfers. But there is 
undoubtedly a constituency in Europe that sees the risk of an even 
darker trajectory for Xi's handling of the war--which could see 
significant military supplies to Russia--as good reason to tread 
carefully in dealings with the PRC.
                                 taiwan
    Where the Sino-Russian relationship and the de-risking question are 
at the top of Europe's China debates, the Taiwan question occupies a 
more delicate and complicated role. There is now clearer awareness of 
the risks and the stakes for Europe, with the economic shock alone of 
any cross-Strait conflict dwarfing that of Russia's invasion. The 
breadth of the sanctions imposed on Moscow has also turned Europe into 
a part-player in Taiwan-related deterrence efforts that it was not 18 
months ago. China is well aware that the sanctions-coalition is one 
that could be replicated for Taiwan contingencies, and saw Europe going 
far further with Russia than it had anticipated, with Chinese officials 
scrambling--for instance--to figure out the implications of the central 
banking asset freeze.
    Yet while there is now European willingness to warn China about the 
need for stability; to make clear that Europe also has a stake in 
cross-Strait security; and to find creative ways to expand relations 
with Taiwan--consistent with a One China policy--there is still caution 
about detailed transatlantic contingency planning for any sanctions 
measures. This is not just out of neuralgic anxiety about antagonizing 
Beijing: there is also a concern among European policymakers that any 
preemptively agreed lowest-common-denominator measures may do more to 
underwhelm than deter. For now, the PRC has to take into account 
Europe's demonstrated capacity to surprise on the upside with 
sanctions. And Beijing is well aware that while Europeans may be 
cautious about advance signaling, and may not be willing to act 
decisively for the sake of Taiwan alone, the U.S. frontline position in 
any conflict scenario will ensure that Europe feels obliged to do so 
regardless.
        the transatlantic action agenda--progress and prospects
    As the recent G7 summit in Hiroshima highlighted, United States and 
Europe, and their wider network of partners and allies in the Indo-
Pacific, are now more closely aligned in substance. Where prior summits 
still saw differentiating language on China from European leaders, 
reflecting their concerns about ``bloc politics'' and 
``confrontation,'' this looked closest to a real consensus rather than 
a paper one. The issues at stake have high stakes for the future 
international security order and major economic interests at home, and 
will be subjected to fierce intra-European and transatlantic debate. 
But depicting this as ``division'' obviates the fact that agreements on 
consequential areas of policy continue to be reached nonetheless. It is 
not an analytical mistake that Beijing tends to make.
    For now, the fastest-moving areas of cooperation have been on the 
defensive side. Europe's progress on agreeing an economic security 
strategy offers the prospect that it will move out of reactive mode on 
issues ranging from export controls to outbound investment screening. 
But even if the United States remains the pace-setter, there is now a 
suite of different areas in which the two sides are in synch, and can 
be expected to line up their approaches in the coming years. Despite 
this, it will remain important for the United States to be vigilant 
across areas of security where gaps and deficiencies are already 
appearing, such as the lagging of certain European countries on rollout 
of secure 5G networks, and the expansive openings for Chinese actors in 
other areas of Europe's digital infrastructure.
    There is also much further to go on building mutual capacities 
among the allies. There are areas where the TTC has unquestionably made 
helpful progress, from global standard setting to information sharing 
on subsidies. But on some of the most important parts of the respective 
domestic economic agendas, such as green industrial policy or data 
flows, we are still mostly dealing with transatlantic deconfliction 
rather than trying to build collective scale, and typically working to 
make advances on individual silos rather than ambitious joint packages 
to bolster allied competitiveness.
    The offer to the rest of the world needs strengthening too. There 
is no effective diversification strategy from China that fails to lay 
out a compelling picture to partners across the developing world. While 
there have been areas of tentative progress under the auspices of the 
Partnership for Global Infrastructure and Investment, and initiatives 
with potential--such as the Critical Raw Materials Club--there is still 
a sense that the political momentum behind them has lagged behind the 
scale of the required task. With the Belt and Road Initiative facing 
the most difficult phase since its inception, as China fails to make 
adequate progress on addressing the major need for debt restructuring 
among distressed lenders, the opportunity for Europe and the United 
States is clear. But there are still fears across much of the 
developing world that the West is in ``pulling up the ladder'' mode 
rather than seeing the diversification drive translating into new 
opportunities for them in a less China-centric model of globalization.
                               conclusion
    The United States and Europe have reached a far deeper level of 
coordination on China than looked plausible a few years earlier. 
Russia's invasion of Ukraine might have been expected to consume the 
two sides' political focus; it has instead led to an even greater 
awareness of how closely the Atlantic and Indo-Pacific theaters are now 
interconnected. The coalition that the United States needs to build to 
address the shared challenges posed by China spans multiple domains and 
geographies. Europe will remain a vital part of it in the years to 
come.

    Senator Shaheen. Thank you all very much.
    We will begin a round of questions, 5 minutes for each of 
us, and we will go in order of anyone else who comes in after 
Senator Ricketts and I begin.
    [Map is shown.]
    Senator Shaheen. I want to start with this map of 
Montenegro because all of your testimony spoke to movement in 
Europe, and I think one of the reasons for some of that 
movement is not just the war in Ukraine and a recognition of 
what is going on in China, but it is also a reflection of 
China's behavior in some of our European allies and this map 
shows one of those examples that I talked about in my opening 
statement.
    It is a road in Montenegro that was supported through 
China's Belt and Road Initiative with funding from the Export-
Import Bank of China. It was supposed to connect the north and 
south of the country, begun back in 2014, and Montenegro signed 
a nearly $1 billion deal to do that.
    Now, in red you can see where the project is completed, but 
the blue parts show the still incomplete sections of the 
project, and it not only highlights the challenges that 
Montenegro has had because of their need for capital and 
infrastructure investment, but it also shows the challenges 
that China has had in trying to do what it promises to 
countries like Montenegro who have signed up for the Belt and 
Road Initiative.
    I have to say it is a little baffling to me that in March, 
Montenegro signed up for yet another infrastructure project 
deal with China for a road, but, again, I think it reveals some 
of the vulnerabilities that China has.
    We also have a map on the other side that shows the 
European countries that have signed on to China's Belt and Road 
Initiative and, again, the darkest ones signed up earliest and 
we are still seeing the gray sections where we are not sure 
where they are at this point.
    Certainly, the movement that we are seeing in Europe is 
going to affect those countries as they think about their 
futures.
    I would ask you all, within Montenegro and the EU, what are 
some of the lessons that have been learned by the EU from this 
kind of a project so that they avoid becoming targets of 
Chinese disinformation, of debt trap diplomacy? I do not know 
who would like to begin.
    Dr. Oertel. Maybe let me start a little bit broader because 
you want to talk about the lessons of this and I think the 
Western Balkans is one of the reasons why we have a sincere 
discussion about China's role also with regard to the future 
rebuilding of Ukraine, for example, which I think is closely 
connected to that and where our conversation should start 
transatlantically immediately and how to set kind of guardrails 
for that in the future just as a footnote because I think it is 
really important.
    I do think that a lot of the lessons have been learned at 
the EU level, but these are member state decisions, member 
state decisions that are often very much driven by national 
domestic interests where there is always changes in government 
where new decisions can be taken and where a kind of linear and 
linearity of--or the lessons learned will not necessarily be 
taken forward, but because these are based on domestic 
political appeal.
    For the--kind of the future, it is more important that 
within the EU there are decisions on critical infrastructure 
taken, as you have laid out initially, because I think, 
honestly, it is more surprising to me that in 2023 a decision 
can be taken by the German train, Deutsche Bahn, to have their 
entire IT infrastructure built by Huawei than it is surprising 
to me that a debt-ridden country is willing to take on a loan 
from China to build an important infrastructure project.
    This is where I would like to kind of put the emphasis on 
in the conversation because I think we focus too much on 
projects in the Western Balkans or in other regions where they 
are kind of limited financial scope that need to be dealt with 
and that can be dealt with at the EU level. We actually need to 
look closer into the heart of the EU.
    Senator Shaheen. Well, so before we go on to address that, 
so answer that question about Germany and why Germany is 
willing to make that kind of----
    Dr. Oertel. Because there is still no understanding of the 
fact that there is a real risk attached and moving the heads of 
people into the zone that there are real strategic concerns.
    This deal did not have to even be flagged to any 
authorities because it was not considered critical 
infrastructure. I think there is a mindset shift at a top level 
that we have seen, but it has not trickled down across the 
entirety of the system and we still are in a situation where 
there is a lot of worry, particularly in Germany, about making 
China mad, making them uncomfortable. There is a lot of 
interest in just connecting and having good business relations 
going.
    I think there is a bigger problem there sometimes than we 
see and it is easy to finger point at the 16+1, 14+1 that they 
are now. We like to do that in Berlin as well, but actually it 
needs to start closer to home.
    Senator Shaheen. Thank you.
    Mr. Small, you were going to add to that?
    Mr. Small. Yes, thank you. Just to add a couple of points 
to this.
    When one looks at that map that you laid out of the Belt 
and Road countries, one also thinks back to an era of the 
Eurozone crisis and the biggest phase of Chinese investment in 
European infrastructure, and I think that has been a lesson 
that has been taken on board very seriously, particularly 
through the pandemic, the number of policymakers who said we 
must not repeat the mistakes of Piraeus--we must not repeat the 
mistakes that we made of squeezing a number of these countries 
in terms of their fiscal space and putting them in a position 
where they either feel they have to take Chinese investment or 
they feel they want to play the China card with Brussels, with 
Berlin, with whoever else.
    I think that is something that we have seen much less of in 
the last period of time. One of those countries, of course, 
Italy, is currently considering withdrawing from its Belt and 
Road MOU, which I think is reflective as well of how the tide 
has turned for much of Europe.
    I think there is, of course, a very different question when 
we are talking about the Western Balkans, when we are talking 
about countries on Europe's periphery, where I think some of 
these issues have not yet been successfully resolved.
    Of course, there is all the funds on the EU side, which 
still dwarf any of the money that comes in from China. This is 
not a kind of competitiveness space in terms of the resources 
that are put on offer. It is just--and this is going to be an 
endemic problem--there are going to be countries want to do 
some of the problematic political deals that are involved.
    I think some of this when it comes to EU accession 
negotiations, for instance, means putting these issues up 
front. This is, as Janka mentioned, something that when it 
comes to Ukraine is going to be important potentially in the 
future.
    I think there is also an understanding, particularly now, 
which I think is the hardest moment that the Belt and Road has 
faced since it started--I think there is an understanding of 
the level of crisis that it can put countries in, the toxicity 
of the debt that makes it harder to negotiate with other 
creditors, and the Montenegro case, of course, has all of the 
secrecy clauses. We still do not even know all of the details 
yet of some of the contracts.
    I think there has been a big shift in understanding, 
particularly since going back to the point at which some of 
these early contracts were agreed, but we still have a lot 
further to go even in some of the core spaces in Europe and on 
digital infrastructure and on many of these other areas.
    Senator Shaheen. Well, thank you. I would like to explore 
that--some of those points some more, but I will turn it over 
to Senator Ricketts next.
    Senator Ricketts. Thank you, Madam Chairman.
    One of the things that we saw that I touched upon in my 
opening remarks was how Europe has had to react to the Russian 
invasion of Ukraine with regard to their energy.
    My understanding is in the years prior to this invasion 
that U.S. officials had been warning Europe about their over 
reliance on Russian energy and what that could mean if there 
was a crisis, and by and large were dismissed as--almost being 
laughed out of the room, but just saying that is not going to 
be a problem. It is never going to happen.
    Then, of course, we have seen that it has happened and, as 
I mentioned earlier, caught them off guard and they have had to 
scramble to be able to realign their energy mix and where it is 
coming from.
    This just kind of demonstrates kind of the foot dragging 
that has been going on in Europe also with regards to the 
People's Republic of China. Obviously, Ursula von der Leyen's 
speech was very good. It looked to start getting away from this 
methodology of calling the PRC partner, competitor, or rival 
and talked about de-risking, and at the TTC Summit, Swedish 
Prime Minister Kristersson said, ``I think the U.S. has been a 
few years ahead of Europe, but I think very many countries now 
realize this is not the time for naivety.''
    I think that there is movement there, but the question gets 
back to the matter of timing. The PRC has been increasingly 
hostile and aggressive in its rhetoric toward Taiwan. We just 
saw this past week where a PRC destroyer had a very close call 
with an American ship, obviously on purpose, being very 
aggressive in its maneuvers.
    My question is how fast is this moving? If this is a 5-, 
10-, 15-year thing with regard to the European Union and how we 
deter the PRC? My fear is that will be too late, that the PRC 
will move faster than that to get to Taiwan.
    Dr. Oertel, maybe I will start with you. How do European 
leaders see this? I mean, do you think this is something with 
regards specifically about deterring the PRC in Taiwan? Is this 
something that they are talking about?
    Actually, maybe I will ask you to comment a little bit 
because you said you had not seen these types of debates 
before. Was that specifically with regard to the PRC? Or just 
broadly that you had not seen this kind of debate before?
    How do European leaders see that? Is this something where 
they think, yes, we have got to take steps right now or are 
they still thinking this is a years down the road problem?
    Dr. Oertel. Taiwan has become an issue that has moved on 
the agenda and I was referring specifically to Taiwan as a 
topic--as a discussion that I have not seen in that like--in 
that way before in the last 15 years because it has moved so 
fast.
    The problem was so far away for European leaders for such a 
long time, but particularly the reliance on semiconductors, 
particularly the reliance on trade routes, particularly the 
integration of supply chains, has led European leaders to 
understand and I think Noah's colleagues at Rhodium Group have 
added to that with a fantastic report that has put some numbers 
to this. When you give European politicians the cost--the 
actual cost of a crisis it does change the logic a little bit.
    We are having now very substantive conversations at all 
levels in the member states, but there is a capacity gap in 
some member states because it is just really difficult to be on 
top of all of these different matters.
    There is an urgency gap in some member states, but there is 
certainly a conversation at the EU level that is very 
interesting at the moment and I think where a lot of the action 
will be happening in the future.
    Real action, it is very unlikely to see some, like 
something committed to see before something really happens. I 
think it is more interesting now to sound out the gray lines--
the gray zones, to sound out policy responses to kind of more 
limited incursions, questions of more--what would certain 
scenarios mean in terms of cost to the European economy and 
then to drive this message home, at home because I think the 
data that I have presented in terms of our public opinion 
reviews, I would say, if you have 62 percent that want to stay 
neutral in a scenario when neutrality is not an option as a 
politician, you have a job to do of explaining why neutrality 
is not an option and then explaining how you will manage the 
issue and what the expectation level of the regional countries 
will be.
    Senator Ricketts. Dr. Oertel, it sounds like what you are 
telling me about European leaders, generally speaking, is they 
are starting to move, but they are not to the point where they 
can even make the case then to their respective populations 
about trying to deter the PRC in Taiwan right now because they 
are still not quite there themselves. Is that fair?
    Dr. Oertel. I think they have started to make that case, 
but I think this is a long process because this is really not 
an immediate security threat that has been on the agenda of 
policymakers for a long time.
    I would say it is moving pretty fast for EU's speed, which 
is not always the fastest. I do not think it is a 5- or 10-year 
framework that we are looking at, but more like the next year 
is going to be a year of intense discussions around this issue.
    Senator Ricketts. Okay. Great. Let me just follow up with 
regard to the respective public opinion on this because you 
gave some stats on that.
    How quickly did that move after the invasion of Ukraine and 
what is it--what role can the United States play in helping 
bring those populations along to be able to understand the 
threat, for example, if there was a conflict in the Taiwan 
Straits?
    That is 30 percent of the world's trade. That is going to 
impact Europe. I am guessing a lot of Europeans do not 
necessarily know that. I am sure a lot of Americans do not know 
it.
    What--how fast did it move in Ukraine and what can we as 
the United States do to help with that?
    Dr. Oertel. It moved immediately after Ukraine and I think 
what we have also seen is that some things that take forever 
normally do not take very long then under circumstances like 
that. I remind you of the LNG terminals in Germany which 
everyone told us was going to take 8 years and it took 8 months 
to build them.
    Things can move very quickly in a situation of crisis and I 
think this is what the EU has demonstrated and European 
countries have demonstrated that they are able to swing around 
when the crisis is real.
    Now, I think what a lot of people in the expert circles are 
advocating for is that the cost of this swing is a lot lower 
when you start a little bit earlier. I think this is the zone 
that we are in right now to ask the question between how 
imminent is the problem and how likely is it to come, and I 
think this is where the debates are heading at the moment 
because, of course, if you regard a problem as very imminent 
then you will take different policy options as if you think it 
will not happen in the next 5 years, so we will do certain 
other things first if you are in a situation of crisis, which 
you always have to remind everyone of. Europe is in a crisis 
situation at the moment like it has not been, as you said, 
basically, since World War II.
    There are priority questions right now, prioritization 
questions at the moment going on and this is one of them, so I 
think movement is possible pretty fast and I think the United 
States can help by making the case and providing data on what 
the cost, for example, would be.
    I think this is really important to underscore and 
underline how important--how kind of we can come to good--yes, 
good trade data to good figures on what this would mean.
    Senator Ricketts. Yes. I think one of the things that 
European leaders would be wise to do is read what Xi Jinping is 
saying because they have made very clear that bringing Taiwan 
back into the PRC's fold is an existential threat to the 
Chinese Communist Party, which means they have said there is no 
room for compromise on this.
    The timing, obviously, it is still up in the air, but the 
imminency of it, the fact or the--rather, the certainty of it 
is something that the PRC has no doubt about, that they are 
going to do this at some point, whether it is peaceful or 
through armies, they believe they will do this.
    Dr. Oertel. Let us say there is a real reckoning going on 
about what authoritarian leaders say and what they actually 
mean and that we should take that very seriously, which I think 
is a lesson that was learned the hard way over the last 18 
months in Europe.
    Senator Ricketts. Thank you.
    Senator Shaheen. Thank you, Senator Ricketts.
    Senator Van Hollen.
    Senator Van Hollen. Thank you, Madam Chair, and thank you 
for holding the hearing on this topic. I thank all of you for 
being here today and let me just pick up where Senator Ricketts 
left off.
    In your answer, you indicated there is a major debate and 
dialogue going on within Europe as to the direction we need to 
take and I think here in the United States we see it sort of 
set forth in the dichotomy distinction between the remarks 
President von der Leyen made before she went to China and the 
remarks of President Macron.
    As we look at this, I think there is broad agreement 
between the Biden administration and our European partners that 
we do not want to decouple, but we do want to de-risk. I think 
we have kind of settled on that formulation.
    Of course, the devil is always in the details and, really, 
that is what I want to dig into a little more because people 
can perceive what de-risking means, obviously, in very 
different ways.
    If I could start with the issue of critical minerals and, 
Dr. Oertel, I think you mentioned in your testimony the EU 
Critical Raw Minerals Act. Of course, we passed here the 
Inflation Reduction Act with all the incentives for clean 
energy and, obviously, we have got a big back and forth going 
on between the United States and Europe to try to get to a 
place where we can coordinate so that we are not reliant on the 
PRC for critical minerals in a growing EV industry.
    Where do those talks stand, in your view, and how important 
is it to our collective success that we reach agreement?
    Dr. Oertel. Let me start with the last question first. It 
is essential for our success to work together on this issue. I 
think this is fairly widely understood among all European 
leaders.
    It is also clear that this is not--even the transatlantic 
alliance--that is enough for this. We will need to partner very 
closely with Indo-Pacific partners and allies because otherwise 
we will not stem this massive problem that we are facing in 
this regard and the massive reliance over a short time.
    This is one of the issue areas in which I would say the 
movement is already the fastest. This is a pretty tangible 
policy issue. It is a pretty tangible policy problem. I mean, 
again, the figures matter.
    When you can start saying things like reliance to 98 
percent, reliance to 85 percent, reliance to 99 percent, and 
then you can also address that to domestic industries and say 
your cars will not be produced any more because this will be 
missing, this is a choke point, well, that actually generates 
action relatively quickly.
    The Critical Raw Materials Act and the--kind of the 
policies that we are seeing, particularly also Berlin and the 
discussions that we are seeing happening at the European level, 
are quite substantial and are areas in which it is also kind of 
possible to move because you can then start exploring. You can 
start working together. You can start looking where are things 
possible, what is the red tape that needs to be cut, what are 
the deposits that we have in Europe from northern Sweden to 
Serbia, what are the deposits that can be exploited quicker, 
what are the more difficult areas.
    I think this is one of the areas in which I think we see 
the collaboration between the U.S. and Europe working, but also 
we see the Europeans actually kind of grasping the problem and 
actually moving and starting to put this into practice. This 
will not be easy, but I think this is one of the few areas in 
which also the discussion has been going on for a long time 
now.
    Senator Van Hollen. Yes. No, I appreciate that and as you 
indicated, we obviously have to have coordination between the 
United States and our EU partners, but also critical partners 
around the world, both Japan, South Korea, where we have 
already got agreement, but also much of the ASEAN countries 
where we have the JETP proposal. We have really got--and we 
have to work collectively to make this work.
    Let me just ask a follow-on question regarding advanced 
semiconductors, really, for all of you. It is another sort of 
aspect of this whole discussion, of course, and as you know we 
had cooperation between the United States, Japan, and the 
Netherlands when it came to restricting the export of advanced 
manufacturing equipment for the highest-end chips, which is a 
good model.
    It only works, though, if we can ultimately expand that 
cooperation to all the other countries that can supply this 
kind of advanced material. When it comes to export controls on 
advanced semiconductors, where do you think we are in terms of 
our ability to coordinate with our European partners and others 
around the world who could also supply that very advanced 
technology?
    I will just take each of you, if I can.
    Mr. Barkin. This is, Senator Van Hollen, a very important 
question.
    When I look at the issue of de-risking, I think you can 
break it down into several parts. There is supply chain 
resilience, there is protecting critical infrastructure, and 
then there is technology transfer to China.
    I think on the issue of export controls, it is going to be 
difficult with Europe because Europe is not a single entity. 
Export controls policy is in the hands of the member states--
the 27 member states. It was the Dutch that decided to go along 
with Japan and the United States in preventing one of its 
biggest companies from sending semiconductor manufacturing 
equipment to China.
    I know that officials in Berlin are thinking about this 
right now--what Europe really needs is more coordination 
between its member states, developing a common policy, being 
able to sit down with Washington and discuss these issues.
    Something that Janka mentioned earlier, I think, which is a 
real issue is a lack of investment in the people who are doing 
the research to find out the details of the technologies, et 
cetera.
    I think we have here in Washington a whole-of-government 
approach, everyone pulling behind this. I think the October 7 
export controls that were announced--I do not think anyone in 
Europe, whether it is a European member state or the European 
Commission, could have come up with a document like that.
    They need to invest in the resources. They need to 
coordinate better so they can sit down and talk at eye level 
with the United States on these issues.
    Senator Van Hollen. Thank you. I appreciate it.
    Senator Shaheen. Thank you, Senator Van Hollen.
    Senator Duckworth.
    Senator Van Hollen. I guess the time is up. I will follow 
up with you. Follow up.
    Senator Duckworth. Thank you, Madam Chair. I would like to 
thank all the witnesses for appearing here today.
    It was not long ago that many European countries viewed 
their engagement with Russia in primarily economic terms and it 
took this largest conference in Europe since World War II to 
convince them that security matters had to be given equal or 
greater weight in their policy deliberations.
    Similarly, there is, as you have all described today, 
continued division within Europe on how much to emphasize 
cooperation, particularly economic cooperation, by strategic 
competition in European relations with the PRC.
    At last week's U.S.-EU Trade and Technology Council, 
ministerial EU officials described the pending draft of an 
economic security strategy that includes an anti-coercion 
instrument as well as language on export controls and outbound 
investment screening, suggesting that the EU is starting to 
move in the right direction.
    Dr. Oertel, this question is initially for you although, 
gentlemen, I welcome your input as well. What do you think is 
the most effective way to push Europe to reckon with the 
security challenges posed by the PRC? For example, is it 
continued pressure from the United States?
    Is it internal reckoning driven by a collective within 
Europe? Or is it going to be more models like the AUKUS 
agreement--the Australia, U.K., U.S. agreement--that will draw 
individual European allies further into the Pacific?
    What more should we be doing to find the right balance here 
and lend our weight in the right direction between those 
different ways that we could get Europe to get more involved?
    Dr. Oertel. What we have seen, and maybe I will take a 
historical example here, which is already historical is the 5G 
debate where we have seen a lot of influence from the American 
side--from the U.S. side--a lot of push from the European 
side--from the American side. Then there was a real reaction in 
some parts of Europe, particularly in Eastern Europe, 
immediately to take on the security challenge and to 
immediately think about it and in other parts there was greater 
reluctance, and there was a big discussion about does U.S. 
pressure help more or hurt more in this regard.
    I would say at this stage we are at the moment, it would be 
good if there would be a continued upkeep of pressure in terms 
of securing critical infrastructure because I do think once the 
eyes are off the ball things do not necessarily move in the 
direction any further.
    They sometimes just stall because the political tension is 
moving away. I would say: a) that is really worthwhile to 
continue to do that and to continue to move in that direction.
    The second thing that I would say is invest in capacity 
building. I think there is still an overestimation in other 
parts of the world of what most European member states are 
capable of providing in terms of analysis of the problems that 
they are facing.
    I do think that providing data, providing information, 
working together on providing kind of good, substantive 
examples of what the actual challenges are is really important.
    I see a huge role for collaboration also between 
parliaments because I do think that parliamentarians across 
Europe have woken up to the challenge, but are not necessarily 
sure how to respond, and I do think that there is a lot of 
capacity building that can be done and that can actually help 
that internal process that you were talking about because, in 
the end, that is what it takes.
    This will not be inflicted upon Europeans. They will need 
to come to their own conclusions on this, but I do see the 
process moving and a little nudge from the U.S. side, at least 
on 5G, has certainly not hurt.
    Senator Duckworth. Is there a utility in bringing in 
individual European nations in sort of a partnership--regional 
partnerships like AUKUS did with Australia, U.K., and the 
United States?
    I am sort of thinking--we have already had a discussion on 
critical minerals and in reports of a pending EU bill on 
critical minerals suggests that they share our concern about 
the need to diversify supplies away from the PRC and among 
other potential partners.
    I was in Indonesia earlier this year. They stand out as a 
country with both significant deposits of key minerals, as well 
as a strong investment interest from the PRC and the launch of 
the Just Energy Transition Partnership at the Bali G-20 Summit 
in 2022 suggests that there is room for U.S.-EU collaboration 
in this space.
    Perhaps this is more, Mr. Small, your area here. I know you 
touched on the critical minerals issue already.
    Do you support opportunities for the U.S. and Europe or 
U.S.--individual European nations in a partnership set up to 
collaborate more in developing initiatives that strengthen 
Western engagement, especially in a place like Indonesia?
    Mr. Small. Thank you.
    I think Indonesia is supposed to be one of the early 
forerunner examples of what we should be able to do 
collectively in terms of the offer that we can put out the Just 
Energy Transition and to a certain extent with the Partnership 
for Global Infrastructure in general on this.
    I think it is the area where we have lagged in general. I 
know there is a considerable level of focus on this and, again, 
particularly when it comes to critical raw materials.
    I think when you look at a number of the developing 
countries right now who are assessing the landscape, what is 
going on on the U.S. and EU at the moment in all of these 
areas.
    Are we now going through a deglobalization phase? Is there 
a pulling up of the ladder or pulling up of the drawbridge or 
is this going to bring new opportunities for us?
    As we discussed earlier, at a moment where the Belt and 
Road is at a very, very difficult point, it is actually a 
juncture in which the opportunity to step out with improved 
packages for countries where I think Indonesia is an excellent 
example--South Africa is, of course, the other matching 
example, Chile.
    We are looking at a number of kind of priority early cases 
that tie in to the other elements of our agenda on critical raw 
materials and supply chains.
    I think the battle on opinion in the developing world on 
this is still very much to be won. I think we have lagged 
behind still somewhat when it comes to really mobilizing the 
resources for infrastructure finance, rethinking development 
aid, all of these efforts that we have kept talking about.
    If I talk to the developing world policymakers who are 
trying to look at, okay, where is the alternative coming from, 
I think there is still--the jury is still out there as to 
whether we have got there yet.
    I think we have made a lot of progress on the defensive 
agenda on the kind of restrictions on export controls and all 
of these things. I think that is heading in the right 
direction.
    I think the big question mark is whether we have our 
collective packages together between the U.S., EU, Japan, and 
some of the other big partners to be able to really offer a 
full package alternative to some of these countries.
    Senator Duckworth. Thank you, Madam Chair.
    Senator Shaheen. Thank you, Senator Duckworth. I think 
there is an interest in a second round of questions from some 
of us, so I will begin with that.
    China in recent weeks has tried to position itself as a 
potential mediator in the war in Ukraine. Can you speak to how 
that positioning is being viewed in Europe and whether there is 
any--I mean, and how Ukraine sees it and also whether there is 
any real belief that this is a possibility? I do not know. 
Maybe you would like to begin, Mr. Barkin.
    Mr. Barkin. Sure. Very good question.
    I think we have had a number of senior European officials, 
including French President Emmanuel Macron and the EU's top 
diplomat, Josep Borrell, talking about the fact that or 
advocating for the fact that China play a mediating role.
    The way I understand these comments is that there is a 
realization that China--if any country has influence over 
Russia, it is China. I think in Europe, leaders are going out 
of their way to go to Beijing, sit down with Xi Jinping, and 
encourage him to put pressure on Putin.
    The jury is still out on whether this will happen. I think 
there is a healthy dose of skepticism about whether it will.
    We just had a Chinese envoy coming through Europe. He 
passed through Kyiv, passed through a number of other European 
capitals, and my understanding is he was just reading out 
talking points. There was no real substantive discussion or 
effort to bring about or come up with new solutions for a peace 
deal.
    I think we will continue to see the Europeans go out of 
their way to pressure China, to encourage China, to play a role 
because they realize that China is the only country that really 
may have any influence over Russia, but I do not think that 
expectations are very high that it is going to happen.
    Senator Shaheen. Mr. Small.
    Mr. Small. I would just add to this, I think we went 
through a slight--almost like a delusion and desperation phase 
on this, people looking for any avenue possible and China is an 
avenue and maybe they can use their influence.
    I think we have had a dose of realism, particularly after 
Xi Jinping's visit to Moscow. Chinese diplomats were briefing 
that this was going to be a peace mission and things like that, 
and Xi Jinping did not even want to pretend that it was a peace 
mission. It was just a deepening of relationships trip again.
    I think we are rather moving into a slight--almost a call 
China's bluff exercise as well with this. They have laid out a 
peace plan. Do we reject it out of hand? Not a peace plan, a 
12-point proposal. It is not really a peace plan, but do we 
pick and mix a few of these? Prod China harder?
    That was what we saw in the document--the joint document 
during the Macron visit. I think also a concern as the other--I 
do not know if your question hinted at--not to be out of line 
with where Zelensky is on this where I think he at least wanted 
to play along with this exercise on China's part.
    I do not think anyone thinks it is going to lead anywhere, 
but I think also no one wants to at the moment give China the 
out of saying, we came up with proposals and they were all 
rejected.
    I think there is very little faith in this amounting to 
anything. There is a question of China being brought in at a 
later stage of the process, perhaps in the summer, whether the 
Russians may want to pull the Chinese in at this stage. That 
means that there is still some value in exchanges and talking 
to the Chinese about that. The French are doing that in 
particular at the moment.
    I do think most of the illusions about the role that China 
might play on this, we saw a little bit of distancing when Xi 
Jinping met Putin at the Samarkand Summit.
    I think statements on nuclear weapons use--every time China 
makes a statement on nuclear weapons being stationed abroad you 
then see what happens the next day in--with Belarus. I think 
people understand what this amounts to now, but I think they 
still think it is worth going through the process.
    Senator Shaheen. Do you agree with that, Dr. Oertel?
    Dr. Oertel. I think it is really important to understand 
that this is the one issue where the Europeans are also really 
concerned that China will go a step further and where the 
message consistency of the visit of Sanchez, Macron, Olaf 
Scholz, Annalena Baerbock, and von der Leyen. It was all the 
same message of saying it is a red line for Europeans if China 
were to deliver ammunitions or arms to Russia, and I think this 
is really important because I think that shows also in the 
polling data that we have seen once European leaders are 
consistent in their message, are clear on what they want from 
China, there is also public support for these positions among 
the European public.
    I think this is something where we can define that pretty 
clearly and that is the key point on Ukraine at the moment, 
avoid that from happening and signaling that very clearly that 
Europeans are willing to bear costs for that to--for deterring 
that to--from happening.
    Senator Shaheen. I think all of those points make a lot of 
sense and they are really important. What do you think the view 
is of China's engagement in a post-war Ukraine?
    Because, obviously, there are going to be significant costs 
to rebuilding Ukraine and how do you think the Europeans view 
China's role in that or do they see that China has a role?
    Dr. Oertel. I think there continues to be a mismatch here 
as well then in terms of expectations. I think there is the 
thought that China will be willing to engage in the 
reconstruction process and I think China will be willing to 
engage in a reconstruction process, but on Chinese terms and 
not necessarily on the terms that the Europeans would like to 
see.
    I do think that this is where I meant we need to be very 
clear early on, despite the fact that we are actually not 
talking about rebuilding Ukraine at this moment because at the 
moment it is still being destroyed as we are seeing today.
    It is still important to talk about what the guardrails 
would look like and what the Ukrainian positions on this would 
be because fundamentally this will also be up to the Ukrainian 
Government to decide.
    Senator Shaheen. Yes, Mr. Small.
    Mr. Small. I would just add briefly, of course we know that 
China does not really do serious development aid. If China was 
coming to the table with vast sums of money that were grants, I 
think there would be a different debate on this.
    We are going to be talking about other forms of financing 
on the Chinese side. That is one issue that is there even in 
some of the discussions. We have to go to all of the debt-
related problems that we have already talked about on this.
    The second thing is I do think there is going to be a 
question, a sort of clever, clever game that is played of, if 
China invests this will prevent Russia from taking future 
action.
    We have seen this from certain governments in the past that 
they think there will be a sort of play and I think this is a 
misplaced assessment.
    I think we have seen what has gone on with Chinese 
infrastructure and other investments. It will not be a matter 
of priority, but I think we are going to go into a debate phase 
on this. We are already in it. It is quite nascent at this 
point.
    I think it is going to be very important to shape it and I 
think the U.S. will have a very important role in shaping the 
understanding of that in Europe because I think it is easy to 
slide into some quite problematic positions on that area while 
these discussions are taking place, I think, quite intensely 
about what the future shape of Ukrainian reconstruction looks 
like.
    Senator Shaheen. Thank you.
    Senator Ricketts.
    Senator Ricketts. Great. Thank you, Madam Chairman.
    I wanted to talk a bit more about the TTC. This was 
something that was created by the European Commission and the 
Biden administration in 2021 to create a nonbinding forum that 
would put the European Commission in the driver's seat versus, 
say, member states or the European parliament and, obviously, 
it is just that.
    My question, and maybe, Mr. Barkin, I will direct this to 
you, is there any meaningful action that you think will come 
out of the TTC, and given the fact that it is a nonbinding 
organization, are there changes to it that we could do 
something to see nonbinding or is it just really going to be a 
place where the U.S. and the EU can get together and have 
conversations, but that is really going to be the end of it? 
What is kind of your thought on that?
    Mr. Barkin. I think the TTC is hugely important. I think we 
need to adjust our expectations. There is a ministerial meeting 
every 6 months. We cannot expect big deliverables at every 
meeting. I think we need to view this as a process.
    We also have to set priorities. I think we have 10 working 
groups at the moment. I think a lot of resources are being 
poured into this. We need to focus on those areas where we feel 
we can make real progress. This is green tech, avoiding a 
subsidy race in green technologies, thinking ahead to 6G 
standards, developing common standards.
    If the U.S. and Europe are not doing that together and then 
broadening that out, working with our other allies, then China 
is going to impose its own standards, especially in the Global 
South.
    I think the TTC serves a purpose. For the TTC to survive 
and persist in future administrations, I think it is very 
important for Congress to get involved, to support it and, 
otherwise, I think we need to think about other dialogue 
formats as well.
    We do have an EU-U.S. dialogue on China. That is also 
something which is valuable. They are talking about Taiwan 
there, but we need to keep these dialogues going and think 
about them long-term, not expect deliverables every few months.
    Senator Ricketts. More around--I would say what you are 
describing, it is going to be more kind of the background, 
maybe, foundational stuff to be able to prepare to de-risk as 
far as the PRC, but not something that is going to come out and 
say, hey, here is the things we are going to do specifically to 
deter the PRC. Is that fair?
    Mr. Barkin. Well, I think with the TTC, we have a bit of a 
divergence because the U.S. sees the TTC as mainly a discussion 
about China and I think Europe would like to keep China out of 
it for the most part and talk about trade and technology 
cooperation, positive cooperation without that focus on China.
    I think in the last TTC ministerial in Sweden, China did 
come up quite a bit. There is obviously a pushback against 
China's non-market policies. Coercion is also an issue in the 
TTC.
    I think the two sides need to not litigate past problems. 
They need to think about the future. What do we want to do with 
6G looking out 5-10 years ahead? I think it is something that 
the EU and U.S., they need to take a long-term view on. They 
cannot be thinking we are going to deliver something every few 
months.
    Senator Ricketts. All right. Great. Thanks.
    Mr. Small, I would like to talk a little bit about NATO. In 
June of 2022, NATO came out with their Strategic Concept 
document that listed the PRC as one of the strategic priorities 
in a systematic challenge to the Euro-Atlantic security for the 
first time.
    Obviously, the PRC took issue with that and made 
threatening statements and so forth. Tell me a little bit about 
what you see about how that can work out and especially with 
regard to some of the Asia Pacific countries like South Korea, 
Japan, Australia, and New Zealand that attended the NATO Summit 
and how do we--because we have mentioned about bringing in 
those Indo-Pacific partners in.
    How can NATO work with that to bring that together and how 
do you think that works with the--what kind of response will we 
see from the PRC?
    Mr. Small. Thanks very much. I think you have got these two 
almost distinct tracks--the AP4, even though the countries do 
not like being called the AP4 track, and how we can kind of 
deepen and integrate security between the Indo-Pacific and the 
Atlantic theatres and more.
    I think we will see some more progress at the Vilnius 
summit. I think there has been a lot of prep in the last period 
to try to think through what is the next phase of these 
partnerships.
    I mean, some of these were initially structured around 
almost arrangements that had been put in place around 
Afghanistan further back in time with some of these countries 
and I think it has only really been in the last couple of years 
that we have moved into this new phase of and we may yet see 
the office in Tokyo. I think there is a few other steps that 
are being envisaged there on the AP4.
    I think actually the more important piece of it has been 
integrating China thinking into NATO in general. I think it has 
been really lagging behind as an institution until this was 
pushed by the U.S. a few years back to suggest that the 
institution needs to take this up more seriously.
    A lot of the benefits of doing it are actually invisible. I 
think a lot of what is being achieved at the moment in terms of 
being able to have a series of sensitive discussions, sharing 
information, sharing intelligence on some significant strategic 
developments with China that really acculturate of the European 
defense ministries, defense officials, defense ministers, to a 
different mode of thinking and understanding about the nature 
of the challenge they face.
    We are getting very tentative discussions on Taiwan where 
NATO, in the end, has not, of course, talked through some of 
what these contingencies would mean in these scenarios in much 
more nascent stages on that.
    I think there are as well, for instance, the information 
sharing on China's overseas military bases. There are a number 
of these things that are taking place relatively discreetly at 
the moment and where a number of NATO members are still 
nervous. They are still nervous, your question related to 
China's reaction to this.
    We are, of course, at a juncture in which China has spoken 
much more openly about NATO, much more critically about NATO, 
and in the no limits joint statement with Russia explicitly 
supported the two Russian treaty proposals that would have 
called, essentially, for a roll back to the stationing of 
alliance troops that essentially predates the end of the Cold 
War.
    I think there is a nervousness about--from some countries 
about how visibly NATO is assuming this role. I think it was 
very impressive that we were able to get this language through, 
but to get the institution to think seriously as well about the 
conjoined threat of China and Russia, to integrate the thinking 
across the institution, to think through, for instance, on 
infrastructure issues, military infrastructure, and some of the 
challenges that we have had on the digital side there, I think 
it has been a really useful exercise, but a large portion of 
this agenda that is going to be taking place in a non-NATO 
context as well.
    I think there are still a number of NATO members that will 
still want to see pieces of the security agenda dealt with 
seriously vis-a-vis China, dealt with seriously in Asia, but 
not necessarily just through NATO auspices.
    I also think we need to kind of draw a ring around what we 
can expect to achieve through the NATO platform even though it 
has been extremely valuable.
    Senator Ricketts. Thank you. Madam Chairwoman.
    Senator Shaheen. Thank you.
    Senator Van Hollen.
    Senator Van Hollen. Thank you, Senator Shaheen, and this is 
a great topic for a hearing. We could spend a lot of time on 
this and I think a lot of us are very interested in how all 
this will play out, going forward, in terms of collaboration 
and coordination between the United States and Europe as well 
as others around the world.
    Mr. Small, I share your concerns with respect to the issue 
of the Partnership for Global Infrastructure in terms of over 
promising and under delivering and I do think collectively we 
have got to figure out a strategy there because we do not have 
the same instruments--policy instruments, financial 
instruments--that China lays down which also come to great 
costs for many of the countries where they do those deals.
    We have made a collective commitment--I think $800 billion 
over the next couple of years--and I think we have got to find 
a way to deliver on that or, as you say, other countries, 
Indonesia, others, are going to say great talking points, but 
no--where is the beef.
    I am going to throw out a couple questions and maybe you 
can divvy them up based on your particular expertise.
    One relates to the issue of laying down early markers in 
terms of what kind of economic sanctions China could expect to 
be imposed if, for example, he crossed the red line and 
provided lethal assistance to Russia or if it took very 
aggressive action against Taiwan.
    There is a major debate. A lot of us believe that sanctions 
are less useful to punish people after the fact and can play a 
more important role in terms of signaling in advance what the 
costs will be, but that, of course, requires putting sanctions 
out so that China, for example, in this case would see the real 
costs and there are, obviously, issues there.
    My one question is do you think that Europe and the United 
States could come to see eye-to-eye when it comes to laying out 
that kind of sanctions regime? As you know, Europe has been--
not liked some of our secondary sanction regimes we put in 
place.
    One question. Two quick things that came up at the G-7 with 
respect to a collective strategy to respond to economic 
coercion by China. We saw a number of years ago they punished 
South Korea when South Korea deployed some important anti-air 
defense systems. Australia has been the victim of coercion with 
Lithuania. Micron Technologies right now has been hit by China.
    If we are going to, collectively--in my view, we need a 
collective strategy for how we are going to respond because 
otherwise one country takes the burden of the punishment by 
itself.
    Finally, the G-7 also talked in very broad terms about an 
outbound CFIUS, which a lot of people have been talking about 
limiting investment, especially in those high-end technologies 
that China could use to advance its military.
    Again, if you could each sort of take a stab at that. I 
realize we have limited time so we will do the best we can.
    Mr. Barkin. I am happy to start. Maybe on the Taiwan issue.
    Rhodium Group and the Atlantic Council are coming out in a 
couple weeks with a study on this very issue looking at the 
potential for transatlantic cooperation on sanctions in a 
Taiwan scenario.
    It is absolutely important for the EU and the U.S. to talk 
about this. I think Janka mentioned earlier that the discussion 
in Europe is at a fairly early stage.
    I think individual member states have been thinking about 
scenarios. In Brussels, the European Commission has been 
thinking about this, but there is not a joined-up approach in 
Europe on Taiwan and possible sanctions and I think there is 
also a reluctance to talk about it openly.
    There is a great deal of sensitivity around that and there 
is a reluctance to, perhaps, provoke a crisis by talking about 
sanctions.
    The reason why the EU needs to get its head around this, 
why it needs to sit down with the United States and other 
allies to talk about it, is that we are not talking about 
necessarily a black and white scenario, an invasion or not an 
invasion.
    We are talking about an escalation ladder and it could be 
hybrid attacks on critical infrastructure in Taiwan. It could 
be the seizure of an island. It could be a blockade, and coming 
up with responses to this in real time is going to be extremely 
difficult.
    The EU is beginning to realize this. I think they are 
beginning to play through scenarios, but I think it is very 
important that the EU and the U.S. sit down and talk about this 
together.
    Dr. Oertel. Maybe I can add a little bit here in terms of 
the sanctions.
    I think what Andrew has laid out is the European Union has 
with its Russia sanctions regime--and we will see the 11 
sanctions package coming up--laid out the menu. This is what we 
can do. This is the toolbox.
    I think Beijing has taken note that this is now the menu 
that is available and that is a menu that is quite striking and 
very potentially damaging to the Chinese economy. I do not 
think that it is taken lightly in any kind of way.
    On the second question regarding the kind of collective 
strategy to respond to economic coercion, I think we have to be 
very careful about what we are going to see in the future 
because also from Beijing's side there is a smartening up about 
the approach to take and, obviously, the backlash that was 
created in the EU in the Lithuania case was not one that was 
particularly useful for China.
    We have to be on the lookout on new strategies and avenues 
that are being taken, particularly pressuring individual 
companies, because that has been coercion that will be very 
hard to see even for states because companies might swallow it 
up, might change their behavior without actually even informing 
governments about this.
    I would just like to caution against focusing on only one 
avenue of economic coercion. China's toolbox is very large in 
that regard and there a lot of opportunities that it will use 
to be below the radar there.
    The last point on outbound investment screening, I would 
say, it is a real conversation in Europe. In all of the 
capitals that I have spoken to, this is an ongoing 
conversation.
    I do not see an EU-level version happening anytime very 
soon, but we have seen on the investment--inbound investment 
screening that the EU has basically provided a framework and 
then we have individual member states' solutions that put this 
in their own legislative context in the way where it makes 
sense with their own national legislation because these are 
then trade tools or other tools that are being used that have 
to fit to the respective legislative background that each 
member state has.
    You could probably see, I would think, more along that 
direction than a kind of comprehensive EU system to be 
developing anytime very soon.
    Mr. Small. I would add on sanctions, I think the concern 
even for those who want to get the EU in the right place on 
Taiwan sanctions is the risk that we end up being precise and 
underwhelming, that the sanctions agreed in advance through a 
process like this are less convincing to the Chinese side than 
a gray zone of uncertainty that I actually think the sanctions 
that we have put in place on Russia have now created.
    When you saw Chinese central banking officials scrambling 
to figure out what the implications would be in the couple of 
months after the measures were put in place in Russia, I think 
we have had some of our effects on the collective transatlantic 
side with the measures that we have put in place.
    I think it would be a problem if we ended up agreeing 
something that looked like a lukewarm package that got pulled 
apart by certain of the reluctant states when in reality if we 
go into these scenarios we will go hard and comprehensive on 
sanctions.
    I think there is a challenge in how we calibrate that at 
the moment and I know it is an important sign of the 
discussions at the moment, but there are ways in which we could 
kind of calibrate that in the wrong way if we push too hard to 
get a minimalist package agreed in advance and signaled poorly 
in the end.
    On the--just briefly on the other points, on outbound 
investment screening and some of the anti-coercion work I think 
we sometimes have had a bit of a sort of stable door problem 
where we regulate and come up with solutions after the fact and 
the Chinese side moves into another channel and another 
direction.
    I think the helpful thing about the exercise that is being 
undertaken at the moment on the economic security planning is 
trying to look at this in the round on the European side, 
trying to look at how you close the gaps across the board, 
trying to look at the channels across the board. Outbound 
investment screening is certainly a part of that.
    Exactly on this issue on coercion, as you mentioned with 
Micron and some of the other cases, we are seeing China 
adapting its tactics already in anticipation of some of these 
things coming through.
    We are seeing the squeezes on companies that are being 
given both inducements and pressures privately, including the 
government lobby in Europe at the moment in ways that are 
putting more pressure on some of these firms than I think we 
have seen in the preceding years.
    We need to be extremely nimble to adapt to the fact that 
China is going to adjust around these measures and try and have 
instruments in place.
    I think the anti-coercion instrument itself is quite a good 
early example of that, but we are going to face this running 
tactical set of adjustments on the Chinese side on these areas 
and we need to be careful not to be drawn into a multiyear 
negotiation process on coming up with these instruments and 
then the Chinese at the flip of a coin have moved on and are 
getting the same effect through other means.
    Senator Van Hollen. Thank you so much, and thank you, Madam 
Chair, for your indulgence.
    Senator Shaheen. Thank you. I actually still have a few 
questions. If you all have another round, feel free to stay for 
that.
    We have talked about the economic means by which China 
influences countries in Europe--the Belt and Road Initiative, 
the diplomatic efforts, the coercion--but we have not really 
talked about the information space and one of the areas where I 
think we have seen China in certain places be able to influence 
outcomes is through disinformation and manipulation of 
information.
    How much is--are we seeing that in Europe and how much of a 
concern is that for EU and the European countries?
    Mr. Small. I mean, I think COVID was a bit of a wakeup call 
for the Europeans on disinformation activities and information 
activities across the board from the Chinese side.
    The structures that have been put in place to address this, 
particularly at an EU level, were primarily focused on Russia. 
China had a different set of tactics. It was more about wooing 
countries than hostile information activities of a certain 
sort.
    We saw that shift at that juncture in ways that reflected 
some tactics that were distinct and were more mirroring some of 
the Russian tactics that we had seen in the past.
    I think we saw that particularly in the early stages of the 
COVID-19 pandemic. We saw it with attempts to blame Italy, 
increase tensions between certain member states and the EU.
    These were the sorts of qualitative activities that were 
not just about China promotion activities, which we can kind of 
talk about in a separate category, and were more the kind of 
hostile activities of a different sort that we had seen.
    I think there has been an adjustment to deal with that. It 
is still of a different nature, I think, from the Russian 
activities. I think there are points in which the waking up to 
it in Europe, I think, has taken place. I think we are still 
concerned that the most successful information activities are 
taking place across the developing world.
    There are still a lot of things that we are teasing out 
with now the Defense of Democracy package that is kind of in 
motion on the EU side where we have seen program content that 
has been produced by CRI and it is not labeled that people are 
not seeing.
    I think there is an attempt to detect and get under this 
and try and put some measures in place, but this is also moving 
quite rapidly, particularly the question of things like joint 
activities between China and Russia.
    At the moment, we are getting a lot of mirroring and mutual 
promotion. We are not yet seeing kind of full joint activities 
and joint information operations being conducted.
    Obviously, the concern is, given the nature of how the 
relationship is involving, that that is another step that we 
will see, but I think others may have more to add on the 
information side.
    Dr. Oertel. I was hesitating for one moment because this is 
a very specific field at the moment because it requires very 
specific knowledge of the respective member states' individual 
policies and I know that other colleagues, for example, even 
Ivana Karaskova in the Czech Republic, has done fantastic work 
on this where they are really trying to map the influence, 
where they are trying to figure out where this is, and I think 
this is--what we are seeing very nascently in the states that I 
know more about is an influence on the far right, and I think 
that is a concerning development that we are seeing--the far 
right and the far left--where we are seeing potentially greater 
ability of China to influence individual politicians.
    This is particularly concerning at a time where the far 
right in many European member states is hitting record numbers 
because of the way the economy is going because of the war, et 
cetera.
    I am currently monitoring this more in, for example, 
Eastern Germany, looking at what does local influence look 
like, but this is incredibly complex because of the federal 
structures of our systems. It is incredibly complex to actually 
detect what is going on.
    I think it is not a good--I do not think I can give a good 
answer. It is a very wide sweeping one, but I think one needs 
to particularly look into the specifics here and provide, and I 
think this is an area where I would call on European 
governments to provide funding also for this specific research 
because this has been significantly under-developed and I think 
this is an area where Europe itself should spend some money on 
finding out what is going on.
    Senator Shaheen. How much concern is there in Europe that 
United States policy on China is going to change if there is a 
new Administration?
    Mr. Barkin.
    Mr. Barkin. I do not think it is so much concern about 
U.S.-China policy. I think there is a realization that--there 
is quite a bit of consistency, I would say, between the Trump 
administration and the Biden administration on certain tools 
that are being used.
    I think the outreach to allies has shifted and, of course, 
we have had a legislative push--the CHIPS and Science Act, the 
IRA here at home.
    I think there is more concern about--in Europe about future 
administrations, perhaps, deprioritizing Europe. There is 
certainly concern about that. If we are talking about the 
commitment to NATO there is a debate in Washington about is 
Ukraine a distraction, should the U.S. be focusing fully on the 
Indo-Pacific?
    These debates certainly concern people in Europe and I 
think it is important to--it is important for the 
Administration--well, for the U.S. and the EU to sort of 
administration-proof their relationship.
    It is important for Europe to get assurances from the U.S. 
that the U.S. will be there even as it presses Europe to take 
more responsibility for its own defense. We have not really 
talked about,--we have not mentioned the term ``strategic 
autonomy.''
    I think strategic autonomy is a term that arose during the 
Trump administration because Europe felt it was being pushed 
into policy decisions that were not in its interests.
    Now it has become the favorite term of Chinese officials 
because it implies distance to the U.S., but when it comes to 
Europe doing more for itself, I think that is in U.S. 
interests. It is in European interests.
    I think Ukraine has kind of opened a lot of eyes in that 
respect, and where we all live, in Berlin, we have had some 
major changes in terms of investment in the military, et 
cetera.
    This is a debate that is moving. It is moving slowly and I 
think the U.S. needs to certainly encourage Europe to do more 
and not worry about labels like strategic autonomy. This all 
needs to happen. Greater investment in Europe's own defense 
needs to happen in coordination with the U.S. and allies, of 
course.
    Senator Shaheen. Well, I certainly think there is a great 
deal of bipartisan interest in seeing all of the NATO countries 
meet their 2 percent of GDP and that that is reinforced on a 
regular basis by not just members of the Administration, but by 
members of Congress. I would agree with that.
    I just have a final question, and I do not know that we 
know the answer to this yet, but I would think that as 
Europeans are watching the war in Ukraine that the blowing up 
of the dam and the subsequent flooding, the environmental 
impact, the potential of that to affect the Zaporizhzhia power 
plant, the implications for a broader Europe have to give 
people pause and put more pressure on concern about the 
relationship between China and Russia.
    Is it too early to know what the impact of that is going to 
be or are we already hearing a reaction to that?
    Dr. Oertel. I think it is too early and I do think that the 
Chinese Government has managed relatively carefully in the last 
few months to kind of put enough distance or enough doubt or 
enough smoke bombs around the relationship to have not a very 
clear connection to any of these activities.
    The Chinese Government put out or the Chinese newspapers 
put out a statement about kind of the same old great concern 
about the environmental impact, about the impact of the dam 
breaking, clearly not pointing fingers at whose responsibility 
it was. We saw the Global Times with that this morning.
    I think there is a clever play as well at hand there. I 
just wanted to, coming back to the last question, just really 
briefly give you the figure that we have from today, which was 
that the question that we polled in the 11 countries whether 
Europe can rely on the future of the U.S. being there to defend 
and whether it needs its own defense capabilities in comparison 
to 2020 where 66 percent of respondents said that. We are now 
at 75 percent--74 percent of Europeans saying Europe needs its 
own defenses and needs to spend more.
    If that is not a public mandate also, I think, for 
governments to actually act then I do not know what kind of 
majority governments would want. I just wanted to add that 
because I do think it is important to see that this is not 
something that is--would be much against European public 
opinion in that regard.
    Senator Shaheen. Thank you.
    Senator Ricketts.
    Senator Ricketts. Great. Thank you, Madam Chairman.
    In April, Airbus agreed to build a second assembly line for 
the A-320 in the People's Republic of China and was given the 
green light by Beijing to move forward with a previously 
announced 160-plane order.
    This agreement was made by Airbus, the Airbus CEO, who was 
a part of the economic delegation that went with President 
Macron to Beijing, and soon after the visit, Airbus also agreed 
to sell 50 H-160 Airbus helicopters to the Chinese firm GDAT.
    Like airplanes, helicopters are inherently dual-use in 
their nature and there is already a history of French civilian 
helicopters and derivatives thereof ending up in the PLA's 
modern-day attack helicopter equipment.
    I guess my--and then I got another. According to a report 
from the Horizon Advisory, Airbus-China engagement entails 
significant ties to China's military and military-civil fusion 
apparatus including in the form of supply dependencies, 
technology sharing, and research and development cooperation 
and, of course, we know that in the People's Republic of China 
there is no secrets. They are taking every bit of intellectual 
property they have.
    Mr. Barkin, how do you square the circle on this, that we 
are talking about de-risking and yet Airbus goes forward with a 
deal like this? What are we supposed to think about this in the 
United States?
    Mr. Barkin. Yes. I mean, it is a good question. I have 
written about this. I think the decision to sell the 
helicopters raised some eyebrows, even in the French 
establishment.
    I think Europe is at the beginning of a debate about 
exports of dual-use goods, of military-civil fusion practices 
in China. This is going to be part of the de-risking debate and 
I think it is probably going to be the most difficult part 
because I think there will be some resistance in certain 
European capitals. This is about export controls. This is about 
outbound investment screening.
    I would say that--without commenting on that individual 
deal--I would say we still have some work to do in Europe in 
getting our heads around where to draw the line, where the red 
lines are in the technology relationship with China and I think 
that is explicitly what von der Leyen said in her speech. We 
need to develop our own approach to this. We need to be able to 
sit down with the U.S. and discuss common approaches.
    I think this is all going to play out in the coming months 
in the EU debate, but I would agree that there have been deals 
in the past that have raised some eyebrows.
    Senator Ricketts. Dr. Oertel, you were talking earlier 
about how when European leaders get together and say, hey, this 
is what we want, like, PRC, do not sell weapons to Russia, that 
it moves public opinion.
    Does this deal not do just the opposite? When you see a big 
European--this is a flagship European company and it is being 
endorsed by President Macron, does this not send in the 
opposite direction?
    I mean, does this not make it harder to move public opinion 
and help the public understand the risks associated with the 
PRC when we see big European companies make this deal?
    Dr. Oertel. Yes. Clearly, the Airbus case, from the German 
perspective at least, is not seen in the area of military 
enabling. It is seen as purely commercial deals. It is sold as 
such. It is communicated as such.
    I do not know if you followed the news reporting over the 
last few days, but I do think there is some digging going on on 
many areas around the relationships also in the German media.
    We had seven German air force pilots that were identified 
as after retirement training PLA officers in actually acquiring 
capabilities of also strategic capabilities of not only flying 
an aircraft, but also using it for its purposes.
    This has created quite some backlash in the debates here. I 
would also trust on European media to dig up these cases and 
understand more clearly that there is always a relationship, 
also to the military aspects of this and in a nascent state of 
growing security concerns, and we are in the nascent state of 
growing security concerns in Europe about the role that China 
plays.
    This can actually make a huge difference, but we are not in 
the zone yet where this is seen as clearly we cannot do that.
    Obviously, no commercial aircraft could be sold, and then 
the question would obviously also be and does Boeing not sell 
any aircraft to China anymore--where is the kind of--where is 
the competition aspect here, where does this leave us.
    This is a very--I think I would be very careful in making 
cases around that because this is not clearly not seen in that 
area yet on the European side.
    Senator Ricketts. I am sorry--so I guess by your answer I 
am not quite clear. Do you think it makes it easier to talk to 
European populations about the risks that PRC poses in deals or 
are you saying it does not make a difference right now because 
they do not see this as being military?
    Dr. Oertel. At the moment this does not make a difference 
because this is clearly seen as a commercial activity in 
enabling Chinese commercial aircraft and kind of this is seen 
in the--clearly, in the realm of nonproblematic engagement.
    Senator Ricketts. Thank you.
    Senator Shaheen. Well, thank you very much, Senator 
Ricketts.
    I want to, again, thank our panel for traveling all the way 
from Berlin to join us and for your excellent testimony.
    We are going to keep the record of this hearing open until 
close of business Friday, June 9. Again, thank you to Senator 
Ricketts.
    At this time the subcommittee hearing on Europe will come 
to a close.
    [Whereupon, at 4:25 a.m., the hearing was adjourned.]

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