On Thursday, April 15, Yu Maochun, a senior fellow at the Hudson Institute and former China policy advisor to the White House, participated in a Senate hearing on issues related to the Communist Party’s economic ambitions, revealing its distinctive economic performance and offering two suggestions for Western democracies to deal with the Communist threat.
Yu Maochun said that the Chinese Communist Party is practicing communist dictatorship in China, monopolizing all power and launching a serious challenge to the free world. Having gained the benefits of the international free market system, the CCP has enjoyed open access to international trade, capital markets and advanced technology, which has enriched and empowered the CCP and poses a deadly threat to the United States and the international free market economic system. Yu Maochun quoted Pompeo as saying, “After the policies of the free state resurrected the declining Chinese economy, Beijing began to bite.”
In response to the different manifestations of the Chinese Communist Party’s economy, Yu Maochun noted that in addition to controlling the Chinese economy and using large amounts of cheap and skilled labor, as well as forced labor in labor camps to build sweatshops, the Communist Party also tightly controls financial resources, controls the exchange rate and restricts currency flows.
This move, he claims, forces non-state enterprises to rely on state-owned financial and banking institutions; foreign investors are unable to move their profits out of China and can only inject more capital here; and Chinese citizens are restricted in their ability to send money abroad. This has created instability in the global monetary system.
In addition, Yu Maochun said, the CCP controls the free flow of information and sets arbitrary economic growth targets based on its political motives rather than reliable economic figures. This has made the information and financial records of many Chinese state-owned enterprises listed on Western capital markets murky and opaque, directly endangering U.S. investors.
He also noted that the Chinese Communist Party is exploring measures to digitize its currency in order to curb the dollar’s dominant global role, undermining the global trade settlement and transaction monitoring system based on surveillance of the population on a daily basis. In addition, the CCP, fearing that Chinese people are too wealthy to be a threat to its rule, has suppressed and arrested many billionaires for bizarre and absurd reasons when private property is not protected by the Constitution.
On the question of how to deal with the Chinese Communist threat, Yu Maochun points out two suggestions: First, the United States should correct the mistakes of half a century of foreign policy and wake up. Second, this awakening must be institutionalized through congressional action.
He said that due to political and ideological differences, it is impossible for the market economy of the Chinese Communist Party to coexist peacefully with the free international trade market system. Previously the U.S. had hoped to change the CCP, but now not only has it failed to do so, it is being changed by the CCP, which is trying to reshape the global order in its own image.
Yu Maochun pointed out that the first step of institutionalization is to respond item by item to the comprehensive list of permissible or impermissible foreign investors published annually by the CCP’s Development and Reform Commission, known as the Special Administrative Measures for Foreign Investment Access. The United States could prohibit such things as Chinese investment in high-quality agricultural seeds, social research, humanities and social science research institutions, significant mineral extraction, news organizations, radio and television production, film studios, movie theaters and theaters, and cultural performance troupes.
The second step is to take sovereign reciprocal actions against the Chinese (Communist) countries. Because too many American companies are effectively held hostage by the CCP, perpetuating the plight of American businesses in the communist state, Congress could create a mechanism for them to register complaints about discrimination in China. For example, the Communist Party’s banning of Facebook and Twitter, among others, should not just be an issue for these two social media outlets, but an issue involving private American companies.
The third step is to recognize the importance of leadership. If the United States does not change its behavior, the CCP will change the free world. Therefore in a world of U.S.-China competition, the U.S. must win and dominate the global order.
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