Wisconsin Republican Rep. Mike Gallagher has convened both defense and finance experts to game out a hypothetical war between the U.S. and China should Beijing ever decide to invade Taiwan. Now, he says it would be “useful” to run a similar experiment with tech companies as well.
“I do find these tabletop exercises have a useful way of kind of pushing people outside their intellectual comfort zone and forcing them to go beyond just the standard conversation or the standard back and forth,” said Gallagher, who chairs the House Select Committee on China.
These war games have exposed that both U.S. industry and the government are ill-equipped to respond to a future crisis over Taiwan, Gallagher said. And they have also affirmed his view that imposing tougher restrictions on American investments and tech exports today would make a difference should such a conflict ever become reality.
“I just want us to do everything possible to prevent a war with China, because if nothing else, our war game teased out how destructive such a conflict would be, both in terms of the economic cost as well as the human costs,” Gallagher said in an interview on POLITICO Tech.
Most recently, Gallagher has urged the Commerce Department to expand its existing trade controls on China by cutting off tech exports to Huawei and Semiconductor Manufacturing International Corp. after the two Chinese companies unveiled a new smartphone featuring a high-end chip that Gallagher contends must have been developed using American technology.
And he rejected arguments from some American chipmakers, most notably Intel, that curtailing sales of microchips to China will cut into their revenue and force them to reconsider plans to build manufacturing facilities in the U.S. — investments that the Biden administration has frequently touted as proof of his economic agenda.
“These are the same companies that are begging for government subsidies under the CHIPS Act,” Gallagher said, referring to legislation passed last year that funneled $52 billion into domestic microchip research and manufacturing. He voted against it.
“If you’re going to ask the American taxpayer to give you money, I think it’s reasonable for the American taxpayer to say, ‘OK, you know, you’re going to have to accept a set of restrictions on your ability to do business in China,'” he continued.
Congress should also put more constraints on U.S. investors profiting from Chinese tech companies, Gallagher said. In particular, he has called on lawmakers to expand an executive order President Joe Biden signed last month limiting some overseas investments to cover a broader group of both U.S. investors and Chinese tech firms.
Similar proposals have previously garnered intense pushback from corporations and financial institutions. But Gallagher said “as long as Congress legislates a solution, and has an appropriate transition period or glide path, I think they can live with it.”
Beyond tightening regulation on business with China, Gallagher said including tech firms in future war games is “something I think needs to happen,” because it could help the government identify loopholes that allow China to circumvent bans on U.S. technology. It could also surface strategies for preventing American dollars from funding Chinese companies that develop artificial intelligence and synthetic biology, he said.
Gallagher’s latest war game took place earlier this week in New York, where members of the House Select Committee on China huddled with Wall Street executives to assess what economic and financial measures the U.S. might take to deter an imaginary conflict set in 2028. It laid bare the “complexity” of the economic relationship between the two countries, including the U.S.’s dependence on China for critical goods like minerals and pharmaceuticals.
“The moral of the story is that none of the options were great,” Gallagher said.
Annie Rees contributed to this report.
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