Warner: U.S. needs a better plan to confront supply chain threat from China

The Democratic senator called for foreign investment reform and decried recent comments by the president that Huawei could be used as a bargaining chip in a trade war with China.

US China strategy (rawf8/Shutterstock.com)

Sen. Mark Warner (D-Va.) warned in a speech June 17 that while U.S. policymakers have slowly come to recognize the long-term threat that China poses to a range of technology and cybersecurity issues, they currently lack a cohesive strategy to effectively confront Beijing over the next few years.

"Here I think we need a lot of work, and frankly I've seen very little articulate development from the administration on that short-term strategy," said Warner. "I will acknowledge that Trump administration has done the right thing vis-a-vis China in saying the status quo was not working, but if the status quo is not working, [the president's] got to offer an alternative."

National security officials like FBI Director Christopher Wray have accused China's government of using all elements of national power to "steal its way up the economic ladder" at the expense of other countries, implementing policies like forced technology transfer and foreign investment while also incentivizing state-aligned companies and hackers to pilfer intellectual property and trade secrets from competitors.

Warner accused the administration of effectively squandering its best opportunity to rally an international coalition of Western countries to confront China through a series of public statements and trade-related actions, both against Beijing and allies like Canada. He also criticized multiple public statements by President Donald Trump suggesting that recent actions -- like placing Huawei on the Department of Commerce entity list -- could be undone if a broader trade agreement with China is reached.

Trump personally intervened last year to reverse a similar Commerce action against Chinese telecom firm ZTE after discussing the matter with Chinese President Xi Jingping.

"We need to make sure -- particularly as the administration moves forward -- that we don't confuse trade issues with national security issues," said Warner. "What particularly concerns me are recent comments where [Trump] indicated that the administration's appropriate actions … around Huawei might be a trading chip in our trade dispute with China. That would be a disaster."

In comments to the press and public, U.S. officials outside the White House frequently stress that the restrictions against Huawei and ZTE as well as a number of supply chain initiatives are strictly related to national security and shouldn't be bargained away in economic negotiations. Officials are particularly concerned about Huawei's global reach building out 5G networks, with a recent Congressional Research Service report claiming the company has contracts in place for 5G infrastructure with nearly 30 countries, including U.S. allies like Iceland and Turkey. Other allies, like Britain and Germany, have indicated they will allow Huawei to do work outside the core of their 5G networks.

Last year Congress passed the Foreign Investment Risk Review Modernization Act, which implemented a number of reforms to the Committee on Foreign Investment in the United States that make it easier for U.S. officials to block investment from Chinese capital in American companies that traffic in "critical" emerging technologies. Warner said he was in favor of further restrictions to prevent venture capital investment from China in non-controlled industry sectors that also cross over into technological development.

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