▶ 0:00:20The select committee will come to order and uh we are going to be having members joining us at different points uh in this morning's hearing. But I want to welcome our witnesses, uh, former prime minister of Australia, the Honorable Scott Morrison, uh, and former US Ambassador to Japan, the Honorable Rahm Emanuel. It's great to have you both with us.
▶ 0:00:42and uh and uh Ambassador Emanuel, I want to thank you for your hospitality when we came and visited Japan and uh you served in that role as ambassador and uh we appreciate all you did to help the committee understand the issues uh relative to Japan. Um it's also very rare for a former head of government to appear before Congress not as a ceremonial guest but as a witness. And Mr. Mr.
▶ 0:01:10Morrison, your presence underscores both the seriousness of this issue and the strength of the US Australia alliance. We're here today to address one of the most urgent threats democracies face in the 21st century. The People's Republic of China, economic coercion of other countries.
▶ 0:01:29China uses market access as leverage, employing tariffs, regulatory blockades, and diplomatic intimidation to target democratic nations that speak up for human rights or national sovereignty. These are not isolated acts. They are part of a coherent strategy. And for too long, we treated China's rise as an economic opportunity detached from the party's geopolitical ambitions.
▶ 0:01:55But today it's clear as trade between the CCP and the free world has grown, so has its appetite for economic leverage and control. And Mr. and Mr. Morrison's government called for an independent inquiry into CO origins. Beijing didn't argue. It retaliated with tariffs on wine and barley, with bans on lobster and coal, with a list of 14 political demands that made clear what the CCP wanted. submission.
▶ 0:02:25Lithuania opened a Taiwan office. China launched an embargo. South Korea deployed a US missile defense system. Beijing shut down factories and blocked exports. Norway awarded a dissident the Nobel Peace Prize. China responded with salmon bans and frozen diplomacy. These weren't policy disputes. They were sovereignty violations. In each case, the message from Beijing was clear.
▶ 0:02:56We will control your behavior through your Xi Jinping has said himself, "China must tighten international production chains dependence on China to form a powerful countermeasure and deterrent That's not economic development. That's a blueprint for coercion. But democracies have a choice. We can allow fear of retaliation to define our foreign policy. Or we can build the tools and coalitions to fight back.
▶ 0:03:27That begins with moral clarity. Our values, free speech, rule of law, national sovereignty are not bargaining chips. They are non-negotiable. It also requires a whole of society response. We must leverage state crafts such as trade tools, export controls, and investment guarantees to support allies under pressure.
▶ 0:03:50We need to reindustrialize our own defense manufacturing base, reshore or Frenchshore production of critical inputs, and build international coalitions that reduce dependency because the next round of coercion won't wait until we're ready. It will come when we're weakest. We also need to remember that China's coercion is not just about trade. It reaches into our own societies and attacks our core values.
▶ 0:04:18Target targeting diaspora communities, leveraging propaganda, and exploiting our open systems to create doubt so division and instill fear. That's not a problem for law enforcement alone. It's a challenge to democratic cohesion. And finally, we must double down on the efforts that Beijing fears the most, including AUS, the Quad, and deeper Indo-Pacific coordination with our friends.
▶ 0:04:48The CCP wants to isolate the United States from our allies. Our answer must be unity and collective economic resilience to Beijing's Economic coercion is not a phase of Chinese foreign policy. It's the logical and inevitable conclusion of the Chinese Communist Party's world view and ominously it is a warning of what is to come if we fail to meet the CCP's challenge. It's time for the free world to stand together.
▶ 0:05:18Thank you. And uh with that I'd like to recognize our ranking member Raja Krishna Morphy for his opening statement. Thank you Mr. Chair. Turn this on. Got it. Thank you. Thank you.
▶ 0:05:49Thank you, Mr. Chair. I'd like to address three things. One, how the CCP has attempted to coers the US and our global partners. two, some of our current vulnerabilities to CCP coercion, and three, how we can combat such coercion. Today, we confront a truth that is hiding in plain sight. The CCP is not just building an economy, it's building leverage. It has turned globalization into a trap and and has weaponized interdependence.
▶ 0:06:19The CCP has a track record of using its state controlled levers to target the US, our allies, and anyone who dares to defy political will of the CCP. The CCP does not view its economic tools as democracies do.
▶ 0:06:36Instead of using these tools to uphold freedom, democracy, and human rights, the CCP wields its powers to punish free speech, bend democratic nations to the CCP's will, and gain even more leverage. First, let's take a look at how the CCP has used the coercion playbook across the globe. The chairman mentioned Australia. He mentioned Lithuania.
▶ 0:07:01But uh in Norway they were targeted after the Nobel Peace Prize was awarded to a Chinese dissident. Japan blocked from rare earth exports after a territorial dispute in the East China Sea. And the list goes on and on. This brings me to my second point. America's own vulnerabilities to coercion from China. From our medicines to ships to drones, we are dangerously reliant on China.
▶ 0:07:29But today, I want to focus on rare earth elements. America relies on China for over 80% 80% of its rare earth processing. The PRC developed this control over decades of careful planning and execution. In 1992, then Chinese leader Deng Xiaoping famously said, "The Middle East has oil. China has rare earths." Let's look at why rare earths are so important.
▶ 0:08:00They are in something we take for granted every day, namely rare earth magnets. And I have one in my hand. China produces 90% of the world's rare earth magnets. And how does that work? Well, I have something here. This is a simple motor that spins because of rare earth magnets. But it's not just in this gadget.
▶ 0:08:25It's in everyday items, including this toothbrush and even this drill. It's basically in everything you can possibly think of. These rare earth magnets power almost all items that involve motors uh in our daily lives.
▶ 0:08:46the fact of the matter is when China decides to cut off these rare earth the motors stop and our economy comes screeching to a halt. And that's what just happened recently. After Trump, President Trump announced a slew of tariffs. The PRC retaliated and blocked a raft of rare earth element exports, including the ones that go into these particular important magnets.
▶ 0:09:12The sudden export control set off alarm bells for American businesses, workers, and consumers who would be the ones to eventually pay the price for shortages. Ford even announced that the rare earth shortage forced it to shut a factory in our hometown ambassador of Chicago. China can so much as flip a switch and cause major damage to the American economy. That is why this morning I'm sending this letter, Mr.
▶ 0:09:41Chair, to the Commerce Department asking what they're doing to ensure that China holds up their end of the recent deal on rare earth exports. I'm also sending another letter, Mr. chair to the State Department urging them to work with our allies and partners to diversify our worldwide critical mineral supply chains. This brings me to my final point. We must answer CCP coercion with resolve, unity, and resilience.
▶ 0:10:12That means building a collective defense among de democratic nations against coercion. It means investing at home and diversifying our supply chains. And it means imposing costs, not just unilateral tariffs or sanctions, but coordinated responses that make clear if you attempt to coersse one of us, you will face all of us. Thank you, and I yield back. Thank you, ranking member.
▶ 0:10:40And as usual, your uh visual aids and uh material that you bring to these hearings is uh exquisite. So uh thank you very much. If you need a toothbrush, just let me I'm getting a hint here. Um, if any other member wishes to submit a statement for the record without objection, those statements will be added to the record. Our witnesses today, I want to first start by Mr. Scott Morrison.
▶ 0:11:08Served as Prime Minister of Australia from 2018 to He has contributed mightily to the defense of the west and our shared values from the Quad to AUS and we are incredibly privileged to have him here today. Welcome. And uh we're also grateful to be joined by Ambassador Rahm Emanuel who has served our nation as the ambassador to Japan as mayor of Chicago in Congress and as the White House chief of staff.
▶ 0:11:37Quite a record of service. Um, as a good Chicago, he is known for his mild manner and circumspect tone. We're looking forward to what uh will no doubt be colorful testimony from him today. Uh, with that, I want to welcome the witnesses and thank them for being here this morning. Uh, Mr. Morrison, uh, you're now recognized for any opening remarks you might like to make. Thank you very much, uh, Mr.
▶ 0:12:06chairman and to uh congressman Krishna Muthy also. Thank you. Uh and can I start by um also recognizing the members of the committee as well and and thank you for your invitation to be with you here today. It is an honor to join you and uh and can I thank you also for the important bipartisan work you do on this committee. I'm very familiar with it was at the time I served in office and not just for the United States but for all US allies and partners around the world.
▶ 0:12:35Australia and the United States are the closest of allies and the best of friends. For over a century, we have stood together in every conflict, making Australia unique amongst US allies around the world. As long-standing, resilient, and modern democracies with market-based economies, we believe in a world order that favors freedom based on fundamental values of universal human rights that respect human dignity, the rule of law, open and fair trade, freedom of religion, speech, association and thought,
▶ 0:13:06and transparent representative governance. While sincerely holding such beliefs, we're also conscious of our imperfections and capable of self-correction through our own democratic processes and the safeguards of transparent and accountable institutions. While our histories differ, Australia and the United States see the world through a similar lens.
▶ 0:13:25It is through that lens that we have both been able to identify the rising threat from authoritarian states who not content with absolute control over their own populations to preserve their own regimes also seek hegemonic control over their own regions and to recast the world order to accommodate their illiberal objectives. Most significantly, this involves the subordination of a rule of law based on universal human rights to unarbitilarly define by the state and to draw an equivalence between their regimes and freedom based societies.
▶ 0:13:56The Chinese Communist Party, the CCP government of the People's Republic of China is such a regime. This will not change, nor can it be negotiated away. Rather than opening up their society during postcold war globalization, the CCP used China's newly granted access to global trade, capital markets, and legitimacy and international forums to build the economic, diplomatic, technological, and military capacity to one day challenge the global order in an attempt to make it more favorable to their regime security.
▶ 0:14:27That day is now. I appear here today in a private capacity having previously served as the 30th prime minister of Australia from August 2018 to May 2022. And during that time and my earlier cabinet roles commencing in 2013, I witnessed and experienced firsthand the dramatic escalation of the CCP's regime's assertive and aggressive behavior towards the countries in the Indo-Pacific region to achieve their goals.
▶ 0:14:54In Australia, this included targeted illegal trade bans and diplomatic estrangement. In November 2020, the PRC embassy in CRA helpfully released to media a list of 14 points of grievance with Australia that set out the grounds for the CCP's coercive and bullying actions. And I table a copy of those points for the committee's information.
▶ 0:15:16The grievances included Australia exercising our sovereignty over foreign investment on national security grounds, making and enforcing laws to curb foreign influence and espionage, allowing freedom of speech in relation to criticisms of China and our national parliament and media, and making and supporting national statements in international fora critical of Chinese aggressive behavior in the South China Sea and towards Taiwan and against their own population in Hong Kong and Jing Jang, as well as calling for an independent an inquiry into the
▶ 0:15:46origins of CO 19. I have no doubt that the primary objective of the PRC's targeting of Australia during this time was to make an example of Australia as a key US ally in the region to punish Australia as a warning to others. I am pleased that our government provided the example of resistance and resilience by standing firm rather than acquiescence and appeasement. Throughout this period, we moved to work with our allies and partners in the region to deepen our ties and strengthen our cooperation.
▶ 0:16:15This included the initiation of Orcus and together with India, Japan, and the United States, the establishment of the Quad Leaders dialogue. Both of these measures began under the first Trump administration and were realized by the Biden administration. They also became further points of grievance with the CCP. After the failure of the CCP's coercive efforts to break our resolve, the PRC took advantage of the change in government following the 2022 federal election to affect a reset and adopt a different set of tactics.
▶ 0:16:45This included abandoning their economic and diplomatic bullying and coercion for more inductive engagement laced with charm and flattery. That said, the PRC still continues to engage in intimidatory behavior by their military against Australia when it suits them without remorse.
▶ 0:17:02While the CCP's tactics may have substantially changed, their objectives remain the same, namely to neutralize public support for Australian government actions to counter the potential security threat posed by the CCP, such as increased defense spending or restricting investment in critical technologies or sensitive supply chains.
▶ 0:17:21to normalize and establish an equivalence between the CCP's authoritarian regime with free societies to provide license for their activities to weaken the network of US alliances and partners within the Indoacific that provides an effective deterrent to CCP behavior injurous to a free and open Indo-Pacific including peaceful absorption of Taiwan and to isolate US influence in the region. In conclusion, there are many lessons from our experience.
▶ 0:17:48Above all, I would highlight the need to never become casual about the potential threat and to remain vigilant. And in the same way that the CCP seeks to target our alliances and partnerships, these same relationships must form the core of our shared response. Strengthening and deepening the networks of US alliances and partners is critical to resilience and deterrence. This is as true in the economic sphere as it is in the security sphere.
▶ 0:18:13In this new era of strategic rivalry, it is critical that these tracks of national policy are aligned and integrated. It is also true that the US allies and partners must understand that it is in this new environment that more will be required of them in these relationships both individually and collectively including by Australia in the years ahead. I look forward to your questions and uh discussing these issues with you further.
▶ 0:18:41I'm also pleased to be appearing here with Ambassador Well, thank you very much. Uh, Ambassador Emanuel, you may proceed. Thank you, Mr. Chairman, to the ranking member, the members of the committee. Uh, it's an honor to appear before you today. I obviously don't have the eloquence of the Aussie accent or the show and tell of the ranking member, my good friend.
▶ 0:19:05For more than 60 years, the partnership between the United States and Japan has been the cornerstone of both peace and prosperity in a free and open Indoacific. As ambassador, I sought to deepen our ties and confront our common challenges, none greater than China's most pernicious and persistent tool, economic coercion. China has made its currency of economic statecraftraft and retaliation a replacement for negotiation.
▶ 0:19:34And where it cannot conquer through division, it chips away through corruption and control. In 2010, China cut off exports of critical rare earth minerals, as noted earlier, to Japan, hitting Japanese industry and consumers over a dispute involving the Skaku Islands.
▶ 0:19:51After 2012 confrontation between Manila and Beijing in the South China Sea, China quarantined fruit exports from the Philippines and sent vessels to protect Chinese fishermen and blocking Philippine fishing boats.
▶ 0:20:062016 after soul South Korea decided to deploy the US THAAD missile system to protect itself from North Korea launches Beijing orchestrated boycots by Chinese consumers and tourists punishing South Korea for acting in its own When Lithuania in 2021 allowed a Taiw Taiwanese office to open, China banned all bilateral trade.
▶ 0:20:31China slapped import restrictions on a range of Australian goods, coal, barley, beef, copper, and wheat over Australia's calls for an independent inquiry into the origins of CO 19 in 2020. Sometimes China's coercion is overt and obvious. Other times, it's covert and conniving.
▶ 0:20:53It ex also exerts softer pressure as it did with the National Basketball Association, which succumbed to Chinese pressure over one team's general manager tweeting support in 2019 for pro-democracy protests in Hong Kong. More recently, Beijing has refused to export a type of magnet, as noted by the ranking members uh comments, essential for industrial manufacturers here in the United States.
▶ 0:21:21Most dramatically, Ford halted production of certain advanced vehicles, including their facility in the city of Chicago, the oldest plant in the United States. Our country, with the largest economy in the world, sits at top many rare earth minerals, vital to our future prosperity. But China has a near monopoly, 90%, on the ability to process China's coercion and message is not limited in this instance to the American audience alone.
▶ 0:21:51It's playing out across the global theater as other nations Regardless of the method, the message from China is the same. Submit or suffer. Beijing exerts economic pressure to achieve its political goals and bend nations to its political will. Their goal is clear. Isolate one to intimidate Ours must be to isolate the isolator through an alliance to counter China's coercion.
▶ 0:22:21As a 31st US ambassador to Japan, I saw up close and cleareyed how China pursues its geopolitical goals, not through innovation and inspiration, but through intimidation and infiltration. During my time in Tokyo, the embassy issued an unprecedented report on Chinese coercion to neutralize this tool that Beijing perfected over the last 15 years.
▶ 0:22:44The takeaway to secure our standing in the 21st century, America and its allies need an anti-coercion coalition to China to counter China's cor aggression. Beijing's bullying is not a foreign policy, but an example of a failure of one. Nevertheless, the world's response has to be has been scattered, slow, and too often silent.
▶ 0:23:08Continuing on the current course is a recipe for continued The United States cannot afford to be alone, passive or partisan in this strategic competition. Cutting off our allies, cutting off our research and development, and treating investments in key industries like semiconductors is Our unilateral disarmament of our strongest advantages as a country.
▶ 0:23:31We must lead a resilient anti-coercion coalition to resist economic intimidation and respond with strength when deterrence fails. It should be based on mutual commitments that are public and reciprocal. First, as I called in a piece about a year ago in the Wall Street Journal, such a coalition would need the economic equivalent of the North Atlantic Treaty Organization's Article 5. An attack on one is attack on all at its core.
▶ 0:23:58Look no further farther rather than what the EU adopted in 2023 after Lithuania was coerced by China. An e anti-coercion instrument that focuses on deterrence and allows for retalatory policies by the EU. Countries should support allies under economic assault with a unified response. Resilience requires a willingness to retaliate and recognizing China's weaknesses and prepared to go after them.
▶ 0:24:26N I know that you find it surprising that I would advocate that nations would in insulate themselves from China's pressure through collective resilience that requires leveraging When I arrived in Japan, I worked to expand trilateral ties. Today, Tokyo, Washington, and Seoul, as well as Tokyo, Washington, and Manila are not just We're aligned. We strengthened our economic ties, enhanced our military readiness readiness, and deepened our intelligence sharing.
▶ 0:24:57Second, America cannot self- emulate. The Chinese undoubtedly understand how important intellectual property and advanced research are to their own ambitions. It's a false choice to suggest the US must pick between free markets and government intervention. To maintain our economic sovereignty, we must have both and invest in our advantages. talent from around the world that comes to America, research and development, science, our universities.
▶ 0:25:24Surrendering our strengths is Finally, nations must have our own have our own tools of economic cooperation which can be used to shore up supply chain resilience. Reshoring without French shoring will not succeed. In other words, we must offer victims real relief in real time from China's coercion, coercive trade actions, including export credit lines and expedited licensing.
▶ 0:25:51Australia's response to China's coercion is the best example of how to replicate going forward. And if I could, and I know I'm past my time, conclude with one single During my tenure in Tokyo, China banned Japanese seafood from its market, citing false concerns about contamination from Fukushima area.
▶ 0:26:16As ambassador and working with the uh Indopaccom in Honolulu, our military, we exposed the hypocrisy and coercion with photos of Chinese fishing boats operating in Japanese water fishing, having banned the Japanese fish to show the safety of the seafood. I know you find it shocking, but I went swimming and surfing in Fukushima with members of the parliament and publicly ate loca lo local local seafood and vegetables.
▶ 0:26:47I also led efforts to have our US military bases purchase Japanese seafood and served it proudly at both the residents of the ambassador and at the embassy and took a number of you also when you visited shopping at the local Fuku Fukushima area in Tokyo. At a very public campaign, China recently abandoned its boycott of Japanese seafood.
▶ 0:27:11Now, if I could, if one skinny ambassador with a big mouth could do that, imagine what countries could achieve together. Cracking the code of coercion isn't It takes unity and sustained resolve and respect for our allies.
▶ 0:27:30We are in a strategic competition between free nations that innovate and a surveillance state that imitates between democratic resilience and authoritarian reliance. United coordinated and committed an anti-coercion coalition is the best offense and the best defense against China's campaign of intimidation. Again, thank you very much for this honor to testify today. Thank you, Ambassador.
▶ 0:27:57Uh we'll now move to uh five minutes of questioning from our committee members. Uh I'll begin. Uh Mr. Morrison, uh during your time as prime minister, China issued a now infamous list of 14 grievances targeting Australia's domestic laws and sovereign decisions.
▶ 0:28:17What should that list tell us about the nature of PRC coercion and the kinds of values it seeks to undermine in Well, thank you, Mr. Chairman. I think fundamentally it it it demonstrates that the CCP fundamentally has a problem with representative democracies and there are some irreconcilable differences uh between an authoritarian regime uh in in China
▶ 0:28:47as as much as an authoritarian regime in Russia or Iran for that matter um and the activities of of free and and open states. Prime Minister, late Prime Minister Abbe, who ambassador know well and I knew well also spoke of a free and open Indo-acific. That is a threat and a challenge to regime security in China.
▶ 0:29:09And I think we have to be cleareyed about this and not pretend that there is somehow that this is going to be resolved through discussion. Discussion is fine. Engagement is good. It's it's better than the alternative. But if we think that that is going to produce a a a change in the mindset in Beijing about what their objectives are, then we're frankly kidding ourselves.
▶ 0:29:33So you you you worked to coexist to avoid conflict that requires deterrence and a wideeyed appreciation of what the the Chinese state is all about. At every point, even the most moderate of their leaders like Jangzamin were very clear about the fact that even when they entered uh most favored nation status, they still said amongst to their officials that uh the West and particularly the United States is is still looking to see us destroy our socialist system.
▶ 0:30:04Um they won't change. So we have to deal with that advice give to leaders of other countries who are facing something like I think the first one is to know what you believe in and why your country believes that and and know what your red lines are. I mean those 14 points that uh of grievances that they tabled. I remember I I tabled them at a G7 meeting in Carvis Bay to all the G7 leaders.
▶ 0:30:32It was a G7 plus meeting and I asked the simple question, which of you would relent on any of the these points? The answer was none. These are just the simple behaviors of of transparent representative democracies with market-based economies. Um, and so know know that you believe the those things, keep investing in those things and understand what the red lines are that are produced um by holding those beliefs.
▶ 0:30:59The other thing I would say is make sure that you're building your internal resilience um to coercion and that you mentioned in your opening remarks, Mr. Chairman, that a whole of society approach is necessary. I completely 100% agree and our response uh dealt with everything from interference in our political system um through ensuring that we kept an open mic for for free speech in our parliaments and media and so on.
▶ 0:31:25um you need to build the internal resilience and that means an appreciation of the potential threat and that is somewhat in jeopardy in Australia. Most recently low institute completed a survey which for the first time in quite a number of years um there is a a greater value on the economic partnership with China than concerns about the security threat and I'll table that for the committee.
▶ 0:31:49um that that is an objective of the CCP that western democracies will go to sleep on the threat and that's why I think the work that your committee is doing here the work and I'd stress the bipartisan work that is done by this committee and um the ambassador and I perhaps might disagree on some elements of of of policy not sure we'll have to have a beer and find out but um I know one thing By our statements
▶ 0:32:19here today, I think we've sung from the same song sheet as indeed you and the ranking member have. Thank you very much, Ambassador. I'd like to follow up on your um testimony where you talk about basically an article 5 um economic sort of a collective defense mechanism. Could you talk a little bit more about that idea? Sure. Uh two kind of predicate moments.
▶ 0:32:44One is how the EU came to Lithuania's defense and China realized Europe was bigger than Lithuania and it was too The second piece is when uh the uh G7 was held in uh in Japan when I was ambassador there was an adoption or the first time actually in the communicate a reference to coercion by China in some effort.
▶ 0:33:09So you have the two predicates and then I suppose the third point is I do mean this when you look at Korea, you look at Japan, you look at the Australia is the best kind of blueprint of what you want to replicate worldwide. They did it on their own. The prime minister is much greater at this and more knowledgeable, but basically used their existing trade relationships, their existing alliances and put them on steroids and really operate.
▶ 0:33:35And China realized they couldn't isolate Australia, which is why I call you want to isolate the isolator. Article five is the equip because it basically goes to the exact vulnerability of China strategy. Their strategy is to take it to Australia or take a Japan and make an example out of them and everybody should stand by and not only not want to go where Japan is, but let it happen. And then it's not just Japan, but it's audience is much larger.
▶ 0:34:04If everybody got together and had a collective self-defense, which is what article to five would uh uh basically indicate, the ent the basic premise of China's coercion unfolds and it reverberates in every case.
▶ 0:34:20And I don't want to overplay the role that I play, but in the ban on Chinese seafood, the ban on uh Korean uh products uh or tourism, the ban on multiple products out of Australia, in the end of the day, China threw in the towel when everybody could work either their economic relationships or or political strategic relationships so they were not isolated. So the article 5 builds off of that basic premise and I think that is what we need right now.
▶ 0:34:49uh because we have to eliminate what is I said in the opening statement is the most persistent and pernicious tool in their economic state. Correct. Thank you very much. Uh ranking member Krishna Mory. Hey, thank you Mr. Chair. Um and it's such an honor to have such distinguished witnesses today. So, thank you so much for coming in. I don't normally do this, but I brought in a nice bottle of Australian wine.
▶ 0:35:16Ever since China banned it in 2020 for Australia calling for a COVID investigation, this wine has been called freedom wine. And Prime Minister Morrison, you helped Australia sell a lot of freedom wine, right?
▶ 0:35:32I remember Secretary Pompeo uh sent me a picture with as a very similar bottle at the time and uh yeah look at some point China was going to tire of drinking Wuhan Pino I think and was going to go back to the um go back to the better product. Well, let me it what's really fascinating about this is that Taiwan actually coined the term freedom wine.
▶ 0:35:58And what's fascinating is that when you and I visited Taiwan last year, they serve freedom wine at the lunch. And that goes to what the ambassador was talking about, which is what when friends and partners ban together, they can fight bans by China. And so, um, what's very al what's also interesting is that, um, I also brought something Freedom pineapple cakes made by what in Taiwan are called freedom pineapples.
▶ 0:36:29This is because after CCP banned Australian wine, you guessed it, they banned Taiwan's pineapples. And Ambassador Emanuel, after this ban in Japan, sales of Taiwan's pineapples went bananas. Right. I am waiting for you to hold up some Chicago 312 beer. It's coming. Unfortunately, Ambassador, Japan was the next target.
▶ 0:36:56And you alluded to this because after Japan attended a 2023 summit with the US and South Korea here at Camp David, which you attended, China banned all Japanese seafood, citing food safety concerns. But Mr. Ambassador, here are some pictures of you. Judging by these echoes our friendship on two of these out of three photos.
▶ 0:37:20Judging by these photos, Ambassador, I think you believe that those allegations of safety concerns were completely fabricated, right? It was a it was complete fabrication because they were just simply trying to hurt they were trying to hurt the Japanese for doing the right thing. In my opening remarks, I alluded to this man, Leo Shiao, one of China's champions of democracy, who won the Nobel Peace Prize while in prison in China.
▶ 0:37:49And in response, the CCP cut ties with Norway, where the Nobel Committee is based and banned Norway's salmon. There seems to be a seems to be a trend here. Norway's response to the CCP was Norway said, "Norway attaches high importance to China's core interests and will not support actions that undermine them and will do its best to avoid any future damage to bilateral relations." Now, Ambassador, to
▶ 0:38:19me, that's not an apology. That's graveling. Wouldn't you Yes, Mr. I think that Prime Minister Morrison, this is what Beijing wanted you to do uh after you called for an investigation into CO. I I want to turn to my next topic. In my opening, I mentioned that China dominates rare earths. In contrast, we only have one rare earth mine in the entire US.
▶ 0:38:46It's owned by MP Materials, which just recently received nearly half a billion dollars of investments from DoD. This deal will one allow MP to make more magnets, these things which I talked about earlier, and two create a 10-year guarantee that DoD will buy MP's rare earths at a floor price, ensuring that MP and hopefully others can compete. Now, Mr.
▶ 0:39:12Ambassador, it it feels like the administration and the private sector need to do more of this with regard to going allin and creating our own resilient supply chain domestically. What do you think? Uh m Mr. Ranking member what I would say to thinking. Yeah. The short answer is I have advocated this before and I think we as a country and the national security council does this. They issue at the beginning of every term a strategic review of the challenges.
▶ 0:39:41I think the National Economic Council inside the White House should do the same on economic both opportunities and vulnerabilities and then be able to then lay out a blueprint how to ailarate or reduce your uh vulnerabilities and how to accentuate your strengths. And I would note if I could in almost every instance Japan in the case of the both the Philippines Australia one of China's great vulnerabilities is food. They target other countries food.
▶ 0:40:11That is a strategic opportunity given their psychological and economic vulnerability as it relates to sourcing food product for 1.5 billion people. If I might ask one final question, um this image from the American Revolution is the join or die image. This was used to rally the 13 colonies to fight back together against British tyranny.
▶ 0:40:36We've updated it into this new graphic which I think builds upon what Ambassador Emanuel was talking about which is join or die. Today America and our friends Australia, Taiwan, Japan and others are like the divided parts of the snake and if we operate together we can fight Chinese coercion.
▶ 0:40:58And I think you know, Ambassador Emanuel, this is what you were referring to in your article 5 comments uh about fighting together against Japanese coercion rather than fighting alone, right? Thank you. Thank you. And I yield back. Thank you, Representative Himenez. Thank you, Mr. Chairman. And and really, I didn't know neither one of you were coming. I just came here to watch Raj do his thing.
▶ 0:41:27Um it's pleasure to see both uh both of you, especially you um ambassadors. Pleasure to see you again. And by the way, I want to commend you on the on the great job you did as as ambassador um in Japan. The I'm known here as pretty pretty hawkish on on China and I consider China and their products.
▶ 0:41:50uh China's China to be basically a drug dealer and the world is is addicted to Chinese and when China wants to punish anybody just withhold the drugs right and so there's only one way you you cure yourself is is you have to uh you have to rehabilitate yourself we must decouple from China because if you don't no matter what no matter what you do I I guess
▶ 0:42:20they they acquiesced to you um uh Mr. Prime Minister and and said okay now we we will allow your products to be sold in China and um we won't uh we won't impose uh you know economic sanctions etc. But I think that was a way of trying to keep both everybody from actually decoupling from them so that anytime in the future they can do it again.
▶ 0:42:51Do you have a comment on I do um I think that is that is correct. Um the the actions to re to lift the bans on Australian products um was undertaken sometime after Australia um uh withdrew the actions we brought against uh the PRC at the WTO.
▶ 0:43:14So it first required a withdrawing of the allegation of illegal trade bans before they even frankly contemplated removing those. I think what the PRC learned during their experience of seeking to bully us is that that was ineffective and it wasn't working because we stood our ground. And I want to stress one point in uh in relation to what the ranking member said.
▶ 0:43:36Um yes, the the political statements that were made around freedom wine or the indeed the the act the the campaign that the ambassador led in Japan, they are strong political statements. But the pain of what was done particularly to our wine industry was real and our our viters and others experienced that and yes there was some freedom once sold but not enough to make up um for that impact.
▶ 0:44:04And my point about that is you stand up it hurts and you have to be prepared to take that. And one of the most encouraging things I used to receive when I was prime minister was letters from farmers who said this hurts but what you're doing is right and we'll stand with you. And I've never been more proud of Australians than at moments like that. And so if you're going to stand up here, you've got to be prepared to take a few hits in the process. But it's much it's much you're much more able to do that if you can take hits with your mates.
▶ 0:44:34Um and your mates have got to show up as well. And they're the sort of things that I think you're referring to, ranking member, and and chairman and others in in the political support in that demonstration, which was very important. I received it here in many other places. Um so yeah. They realized they got it wrong. The wolf warrior diplomacy, all of that was a massive tactical error and they took advantage of the change of government to try and reset that and uh and take a different approach.
▶ 0:45:03Um because you're right um a decoupling uh of of of the two economies ultimately apart from single source supplies like rare earth materials and so on in the United States um China has a lot more to lose on that front because of the size of the US market. Um you already see US capital has been draining out of particularly private capital out of China now for some time. The same is true in Korea and Japan. They've wised up as well.
▶ 0:45:30So that movement of capital and and US markets and access to it I think is an incredibly important card and can be deployed both in US own interests and the interests of allies and partners. Mr. Prime Minister, the problem that I have is that um I want to decouple faster. Okay. And I know it's going to take pain, but what what uh what I'm seeing is uh they will they will acquies because they're in it for the long haul. And uh and they want to keep us hooked uh as long as they can.
▶ 0:45:59And frankly, we are feeding we're feeding the monster that eventually will eat us up. And uh and the food that they have is our capital. It's our it's our money. And so we're actually uh for every dollar that goes to China, it's going to be used against us. it's going to be used against the the free world. And so the faster that we decouple and look, we just did a deal with um to get continue to get rare earth from China.
▶ 0:46:24I was I don't think I'm all that crazy about it to be honest with you because then we don't have we don't have this critical need to make our own. We can still rely on some of their uh rare earths and eventually one day they will cut us off. And so you know my time uh my time is up and I yield back. But uh again, thank you for for your courage and again uh Mr. Ambassador, thank you for the great job you did. I really Mr. Chairman, can I make a response?
▶ 0:46:50In in in support of that last point in particular, we are kidding ourselves if we think at some point if the PRC can find an alternative source of supply for uh for their for what they need in in our case resources and various things like that. If they can find it from a a more compliant source, they will no matter how much dialogue you're having, if it appears from somewhere else, they will take that decision at the appropriate time for them.
▶ 0:47:19But equally, uh, where you have vulnerabilities on single source supplies like critical minerals and rare earths, before you jump off one lily pad, you got to have another one to jump onto. And that does require a concerted effort. And I remember this was an issue that we raised when we were here back in 2019 with with the president in his first term of the need to build these supply chains around critical minerals and rare earths which had exactly the features of what you've just mentioned in terms of of MP materials here in the United States.
▶ 0:47:48If you can have a resistance to the price manipulation which China applies to rare earth and critical minerals through their strangle hold on processing um every single time an Australian rare earth's mind might try and get going. What do they do? They manipulate the price. Uh the market tanks. They go out of business. They control the market with with ruthlessness.
▶ 0:48:09And so that requires end users which are in Japan, Korea, and the United States to be able to give clear and certain price signals into the supply chain so alternative supply chains can be built. When you can do that and when you can have greater um v variety in the markets of which you're selling into, we were able to find other markets for our barley. The coal kept going out of Australia at the same rate it was before out of Newcastle port. It was still making its way to China.
▶ 0:48:38I think Singapore became one of the biggest coal miners in the world during that time. And you know, it still got there. Um but you had to have your options. When you have your options, well, you have resilience. Thank you, Representative Torres. Thank you, Mr. Chair. I see America's critical mineral dependency on China as our single greatest strategic vulnerability.
▶ 0:49:01In 2010 and 2011, China engaged in economic coercion against Japan, imposing export controls on rare earth elements, the first known instance of Beijing weaponizing its choke hold on critical minerals and rare earths against a foreign country. Since 2010, we have known that Western countries like the United States are dangerously dependent on China for critical minerals and rare earths.
▶ 0:49:25We have known that China is able and willing to weaponize its choke hold on critical minerals against adversaries like the United States. Despite knowing these dangers, the US is no closer to achieving critical mineral independence than we were 15 years ago. In fact, China controls more of the world's rare earth refining today than it did back in 2010 and 2011 during its economic coercion of Japan.
▶ 0:49:51I guess my question is why has the United States been so dangerously complacent when it comes to breaking out of critical mineral dependency? America made itself energy independent from the Middle East. Yet we seem to lack the same sense of urgency around making ourselves mineral independent from China. Why the discrepancy? Is that for either one of us? Yeah, either one of us. You want to go first, Mr. No, you I'll follow you.
▶ 0:50:22Congressman, if I could take one step we repeated for basically a decade that China was a economic competitor. or a strategic competitor. And when President Xi comes to power, he makes a decision that China is a strategic adversary, not a competitor.
▶ 0:50:43It's a very different psychological Second, to your point, and why I advocate this in conjunction with an article five like uh instrument tool, is to take an assessment of your vulnerabilities.
▶ 0:51:01I don't if I could as you went through basically two years of war in the Middle East including with Iran as you noticed energy prices did not spike and I know we all know this it's been written so I'm not violating any prior assignments there were models where god forbid there was conflration in the Middle East you were going to see energy go to 140 bucks a barrel that didn't happen and why because of the United States full stop And we
▶ 0:51:31worked at it over decades did not abandon the effort of resilience as related. So you need exactly that type of resilience and study where your vulnerabilities are what you need to shore up those vulnerabilities not both yourself independently but with allies and friends alike. So both reshoring and friend shoring in complacent magnets would be an area.
▶ 0:51:54Now, I know you find it hard to believe, but as a middle child, I don't mean to destroy the comety of the group right now, but I say this because, as I noted earlier, Europe's plank post Lithuania. The only time they've thought of in of employing that unity was now with the United States because of how we're negotiating with the EU. They haven't deployed it, but they threatened to.
▶ 0:52:23So, it was designed with China in mind, but it's actually looked at and ma made to be deployed with us. One of the problems for China right now is given the war in Ukraine by Russia, they have lost access to the European market. Leveraging, as the congressman noted, our own market that is a powerful force against China plus our allies in the Indo-acific, Japan, Korea, Australia, New Zealand, India, Philippines and other countries.
▶ 0:52:54So understanding how we organize as a group and put the together that economic coalition with real tools to confront both their coercion and will foyer in an in service of a larger interest is key to our long-term economic independence, our economic resilience and our competition with China. I want to squeeze in one more question.
▶ 0:53:21Um there are reports that China has agreed to resume exports of rare earths to the United States in exchange for the United States resuming exports of H20 AI GPUs to China. And there are competing views, right? The argument from the administration is that it wants to make the world including China dependent on an American AI tech stack that includes Nvidia chips. But then the opponents argue that the H20s are just too computationally powerful. How should we view the deal?
▶ 0:53:48Should we see it as building an American AI tech stack or as American capitulation to China's economic coercion? Well, I think this goes to knowing where your red lines are and um in the point I made in response to an earlier question and the these are either sensitive technologies which which are aiding a strategic rival or they're not and that plays into the US's
▶ 0:54:19security interests or it doesn't. But somewhere that that call needs to be made and uh greater minds than mine will have to apply themselves to that in in making that decision in evaluating that deal. Um and you know some will argue that uh that that Chinese tech will catch up and they'll have their own versions of it and they won't need it.
▶ 0:54:42And look in my experience everyone can make whatever argument they want around these issues but it all just comes back to that fundamental question. what is the what is the security interest uh and what is the red line that you can and cannot Mr. Congressman, what I would say is like in any review, you want to find where China's vulnerabilities are and make sure they're dependent on the United States or the free world in those areas.
▶ 0:55:08They have a tremendous amount of vulnerability to three sources: food dependence, energy dependence, and fear of their own people. and where those vulnerabilities are. We want to go at them and make them actually rather than totally disengage, make them more by making them more dependent. Could I also touch then and follow up to your earlier question which is why has it been going on for so long?
▶ 0:55:38because end users want cheaper prices and China will give them the cheaper prices and until there is a resolved to break that that hold which is a a vulnerability at this end of the chain and in other end user parts of the chain be that in Japan or or elsewhere you made the point about um what occurred with Japan and rare earths earlier that is true and the answer to that was a company an Australian company called Linus set up a rare earth processing facility in Malaysia uh with support from the Japanese government
▶ 0:56:08through jogme and that enabled such a process to provide a a secure supply chain to Japan. Now I applaud the Japanese government for the initiative they took but took strong leadership. It put clear guard rails in place and Linus is now building a plant in Texas um and which will do heavy rare earth uh processing. Now the rare earth business is a pretty marginal business and uh it doesn't take much to to rattle it. um when you have price manipulations.
▶ 0:56:39And so the measure that's been taken with MP I I think is an an excellent one, but it's one that should really be extended to allies and partners um whether they be in the United States or or friend short Thank you, Representative Le Hood. Well, thank you, Mr. Chairman. I want to thank both of you for being here today and your your service. Uh Ambassador Emanuel, welcome. Um, you had many accomplishments as ambassador to Japan.
▶ 0:57:06Uh, I want to highlight one of those was was the Chicago Cubs opening their season in Japan this year with a three-game series. So, I think you had something to do with that. So, thank you for that. Uh, and bringing the Cubs to Japan. Um, Ambassador Emanuel, I think what many of us appreciated in your service in Japan was your bluntness, your honesty, and your straightforwardness. And um I want to read from an article from September 20th of 2023 from NBC News.
▶ 0:57:36The title, White House told US ambassador Emanuel, US ambassador to Japan to stop taunting Chinese the Chinese on social media. Rahm Emanuel has mocked Chinese President Xi Jinping speculating about the recent disappearance of a top official. Uh then you went on on social media with the hashtag mystery in Beijing building. Um and my question is that was strategic and that was tactical and I think many of us appreciated you taking them on.
▶ 0:58:05What what was achieved by that? Um and and what were the Uh I think since we know each other pretty well. One there was never an effort to really silence me but even if there was it didn't succeed.
▶ 0:58:22uh as you know um and the effort was to show as like in the situation when I bring up the situation in Fukushima and I want to the Aqualino who was head of the Indopaccom at that time because he had resources and we caught pictures of the Chinese fishing boats in Japanese waters. That picture told a thousand words. It was part of a campaign over a period of time that paid dividends because China threw in the towel at the end.
▶ 0:58:53So part of this was also to show the hypocrisy of what China was doing. And there was a minister of defense. There was a foreign minister and there was basically three or four cabinet ministers went missing and never heard from again in three or four terms. I think I recited Agatha Christie and then there were none was actually the social media at that point. So it was to show the hypocrisy of China, also to show the the fact that what they were doing and basically re uh lift the curtain on that kind of actions in that area.
▶ 0:59:22It didn't stop because as you could see pretty recently um there's I've lost count I think four to five members of the uh people's liberation army their armed forces the commanders and leaders of that forces have all now been fired etc in that effort so it was to expose the hypocrisy of their political acts and what they said they always and I think the prime minister knows this they always say it's win-win uh but all uh roads lead to one destiny,
▶ 0:59:52Beijing's advantage. Yeah, thank you for that. Um, in your uh response to Mr. Torres's question, you talked a little bit about partnering with our like-minded allies. I I we haven't I came a little late, but we haven't heard TPP. Now, that's in the past, but when we think about TPP and what we wanted to do there in terms of writing the rules of the road when it comes to trade in the Indoacific region, partnering with our like-minded allies.
▶ 1:00:16Now that ship is probably passed, but that that seemed to me what you were referring to in terms of how do we work with in the e on the economic front? How do we partner with our allies there to do that is that still a strategy you think has legs? I don't think you should if I couldn't Mr. Congressman don't isolate it by region. One of the success of the past strategy in my view was that Europe was realized that it was not North Atlantic over here and the Indo Pacific over here.
▶ 1:00:46there was one strategic sphere. You want Europe engaged economically, politically in the peace and prosperity of the Indo-Pacific. That gives us greater leverage. You don't want this just on Australia, Japan, and South Korea. You want all our friends involved and pulling in the same direction.
▶ 1:01:05Now I think as the NATO as rather the G7 communicate indicated as EU's action after Lithuania was isolated you want countries of like-minded like-minded interests to come together form an economic union where anti-coercion is at the core of confrontation. It flips the script where China is trying to isolate in Australia or China isolated a Japan. They become the isolated party.
▶ 1:01:32You want the economic coercion to quiver to be taken out so they don't rely on it. And remember, if you take all the countries we talked about in the Indoacific, you take the United States, Canada, Mexico, the EU, they cannot export their capabilities just to the developing world. It's just not that big of a market today. The other thing I would say to you, it also then goes to a vulnerability.
▶ 1:02:00Half the cases at the World Trade Organizations are brought by other countries against Chinese companies doing exactly what the prime minister said. Crushing price to destroy competition. You saw it in the steel plant in Chile. 20,000 people laid off. South Africa an ally of China brought a case. Brazil an ally brought a case all in the steel lumin area. So you by pulling these markets back and uniting them as allies and friends.
▶ 1:02:28We'll have our disagreements, but we're united in our confrontation on China. You make China's attempt to crush other c another count's manufacturing industrial capacity a vulnerability of theirs because right now China can be the target of public air and anger rather than in the situation the United States flip the script. Thank you for that. Can I Mr. Morrison, you want to comment on that? Yeah, I I do.
▶ 1:02:56I want to agree with what ambassador said, but I think that's enough, but I would um I would also want to highlight the issue that you've raised in your question in particularly in Southeast Asia and with the Indoacific more broadly. Many of our aligned friends um the idea that we would ask them to make a choice in this strategic rivalry is unwise.
▶ 1:03:21There are there are nations in the Indoacific of which that's entirely appropriate and Australia is one of those as a a core ally of the United States. But other countries in the region want choice. Um and so where where China is active in a particular country. Well that that will happen. The response to that is not for US or other allied interests to not be there. The the the response is to double down and be there even more strongly and to provide them with that choice.
▶ 1:03:49And I I observed this with many countries in Southeast Asia. They would not only want to see us, but they would want to see our pension funds. They would want to see our companies. And they particularly want to see those coming out of the United States. Companies like Mitsubishi are very active in Indonesia and so on. This is a good and positive thing because in many of these Southeast Asian economic security is security. It is their primary issue.
▶ 1:04:14And so while we can speak as allies of our shared values around the issues that are most important to us, um they will not always completely overlap and we must prioritize the economic relationship with these countries to give them assurance and confidence um so they can become like-minded partners on particular things.
▶ 1:04:36Uh and so and and by the way for the T TPP the doors always open always welcome and we should never allow the PRC into it certainly if the if uh if if the US is not into into it and uh the first one that should be coming in should be Taiwan. Thank you Representative Brown. Thank you Mr. Chairman.
▶ 1:04:56Um, I have the honor of representing Ohio's 11th Congressional District, a district that has been defined by the grit of working families, the contributions of small businesses, and the promise of American manufacturing. I want to focus today's hearing on how Chinese Communist Party's economic tactics have very real impact on everyday Americans. For too long, China has taken advantage of our open markets while putting up walls around their own using tools like export restrictions, retaliatory tariffs, and targeted boycots.
▶ 1:05:27That might sound abstract in policy terms, but it hits closer to home than people realize. When China imposes rare earth mineral restrictions, it doesn't just pressure Fortune 500 companies. It ripples through US supply chains, raising costs for factories in the Midwest and threatening jobs in places like Cleveland and throughout Northeast Ohio. When China blocks key components used in American American auto manufacturing, it's not just trade policy.
▶ 1:05:55It's a family on the east side who can't afford to fix their car. It's a union worker furled without notice. It's a parent watching groceries and gas get more expensive while global tensions rise. Ambassador Emanuel, your testimony underscores how China is leveraging its dominance and rare earth processing to apply economic pressure globally.
▶ 1:06:16From your experience in Japan and your work building alliances, how can the United States and its allies act quickly to shield workers and consumers from price shocks and supply chain disruption stemming from China's coercion? Well, as I first of all, I want to thank Congresswoman from noting uh the type of work that goes on in your district and across and I say this also as sen the congress the ranking member made note of the Ford plant as I did
▶ 1:06:47uh shutting down in Chicago and as mayor I convinced Ford to bring a third shift there about 1,200 not workers not only and then an additional couple thousand on supply side so to see them shutter the plan. It's not just shuttering a plant. That's right. It means workers going without, as you noted, without paychecks. Fat little leagues and the community that's built around that plant and supporting all the other activities that go on, they all come to a, you know, screeching halt.
▶ 1:07:19Not only did we talked extensively earlier about alliances working on an um uh kind of coalition, but I also think knowing how to invest in our own strengths. I do happen to think the alliances and allies we've built up since World War II is a strength. We'll have our disagreements like every family does, but in the end of the day, we share more in common than the disagreements and the highlights of those.
▶ 1:07:46I think the United States has an incredible capacity both in our research, our innovation, our technology, and our ability to take That is a strength. Abandoning any one of those is unilateral disarmament. The universities in Ohio, while they're competitors to University of Illinois or University of Michigan or any other UN statewide universities, is the envy of the world.
▶ 1:08:17the technology that comes from Ann Arbor, the technology that comes out of Columbus, Ohio, the technology that comes out of Champagne, Illinois, like the internet, the envy of the world. You know, one of the opportunities I had by living overseas is you get to see America in a different light. I used to say lip service, you know, the innovation, the ecosystem, but guess what? It's not lip service. It's a shining example.
▶ 1:08:44So not just protecting ourselves but our strength. China replicates, copies, cheats, economic espionage, econ and intellectual property theft. We out innovate everybody to cut research and development dollars to our universities to attack the ability for them to attract talent. I know this may be heresy right now. that is literally taking our strengths and making it a weakness and it's wrong.
▶ 1:09:15And so that to me every when you look at your universities in your state, the amount of not only innovation but amount of startups that come from there, the next future in the sense of technology that comes from there and companies that come from there, that's where America plays a home game. That's an away game for China. You want to play on our turf. Mhm. Nothing to take away from the universities in Australia. Don't get upset.
▶ 1:09:40Uh but we have something that every other country in the world is envious of. What goes on at our universities, what goes on at our companies, the people that we come that come from around the world to be part of that. Why would we cut off our nose despite our face? That's a home game for us. play on our turf. So that's how you Thank you.
▶ 1:10:08So this is for either either of you. Many industries in my district, steel, chemicals, and uh manufacturing have been undercut for years by China's unfair trade practices, including dumping products below market value and subsidizing statebacked firms.
▶ 1:10:25How should Congress strengthen our enforcement of counterveailing duties and anti-dumping measures in a way that not only holds China accountable but also ensures timely relief for American workers and producers?
▶ 1:10:43Interestingly, one of the things that led to China imposing the PRC government imposing their trade bans on Australia was that we had taken some anti-dumping decisions on uh steel on rail for for railways, rail lines and so on. One of the conditions the new government agreed to in order to have all those trade bans dumped was to drop those anti-dumping um uh decisions as well.
▶ 1:11:08And so anti-dumping I think is is a real threat to China and not just uh here in the United States or in Australia but increasingly in developing economies all around the world. The number of anti-dumping inquiries and actions being taken by developing countries uh because the PRC economic model is is based on overp production.
▶ 1:11:31their consumers, their consumer economy is weak and they make up for it by driving over production at what is effectively at at non-performing prices for their for their for their stateowned enterprises. They wear the losses. They dump the products and this is starting to burn relationships between the PRC and and and what they would call their clients under the Barri program.
▶ 1:11:54So this is a weakness for the PRC and so to highlight this overp production dumping of products be here in the in the United States or elsewhere and working together with allies and partners to back each other up on those measures I think is really important and having some harmony about how these things are investigated and rooted out.
▶ 1:12:13Not only will that be beneficial here, but I think it'll be welcomed in developing countries, which uh the PRC often uses and and lists to try and achieve their own objectives, particularly in international institutions. Um and that's another area I'd highlight. Um the the PRC's influence in international institutions. We talked about critical minerals and rare earths.
▶ 1:12:35One of the increasing sources of that in the future will be from seabed um and the involvement of China seeking to gain seabed license mining in the Southwest Pacific and others and to crowd out um allies and partners in that field is is a troubling issue and one that the US can play an important role in. And I know Mr. Chairman we're on short time There's an example right now on the Magnus. There's a company in Australia MP here in the United States.
▶ 1:13:04I think there's really important to underscore both your question what the prime minister answered which is China's attempt will be right now given what we're doing will be to crush the price of magnets worldwide through subsidies so that neither the Australian company or the American company get their sea legs and be a standalone capable company supporting both the price and the ability to withstand price competition and that's not market driven but state driven is going to be essential
▶ 1:13:35to our future, not short term, over the long term, decades, economic independence and Noticed, I think it was two to three weeks ago, China banned all scientists who work at the magnet industry in China from traveling overseas.
▶ 1:13:54I don't think it was because they've recommended that their holidays be sent only in China because they knew that intellectual capability and they're going around the world at the very time that Australia and the United States are starting to build up a magnet industry that is basically dormant to a standalone is a thing that they don't want to see happen. So they can't go to conferences, they can't go to international gatherings.
▶ 1:14:17So sustaining those companies, reshoring, French shoring will make us economically independent of China's coercion. Thank you, Mr. Chairman. Thank you, Representative Moran. Thank you, Mr. Chairman, and thank you to both our witnesses, Prime Minister, and Ambassador. I want to thank you in particular for being strong, steady, and effective voices as it relates to the threats that the Chinese Communist Party poses.
▶ 1:14:43In particular, as we're talking today about economic coercion, which no doubt is a threat to uh America's way of life, no question they seek to change behavior through fear and intimidation and anti-American coercion across the world. And this committee, I think, must take steps to address the CCP's coercion and craft legislation that will be a tangible document for Xiin Ping and his economic adviserss uh to understand where we stand on this issue.
▶ 1:15:12I I don't think the American people understand how bad the situation is about the intimidation. When I look back in preparation for this hearing, I was astounded just a couple of examples that I I'll bring out. Uh during the 2023 field hearing that this committee held back when uh Mike Gallagher was the chair uh in New York City, there was uh there was a threat put out to those that would would be witnesses and those witnesses didn't want to reveal their identities because they understood the reprisals that might come from the CCP.
▶ 1:15:42In 2021, Reuters reported that the PRC embassy in Washington DC had sent letters to US firms pressing executives to urge members of Congress to amend or withdraw bills that sought to enhance US competitiveness on the international stage. Those are the kind of actions that the PRC is going to take.
▶ 1:16:00And we certainly remember what happened to South Korea uh when uh China imposed economic penalties against South Korean companies costing them billions of dollars after Soul agreed in 2016 to a US request to deploy THAAD missile defense systems in South Korea seems really to be no limit on the actions the PRC will take to engage in economic coercion.
▶ 1:16:22Uh I want to start with you prime minister and talk about the the use of arbitrary laws by China or their arbitrary application of laws their own laws in this regard. In 2020, China implemented the export control law which as you know gives the CCP the ability to halt exports of critical minerals or technologies based on a national security criteria with frankly no basis in fact on their side.
▶ 1:16:47Uh they've used laws like this to stop the export of key goods when countries don't hold their same political uh view as you know. They also implemented the unreliable entity list in 2020. That's their term which allows Beijing to blacklist foreign firms from undefined acts that they see as harmful to their national sovereignty. In the US we have similar laws but frankly we uh provide evidence and we fairly and equally apply those laws. That's not the case for China. I want to go back to when you were uh when you were dealing with this in Australia.
▶ 1:17:18Prime Minister, what steps did you take to lead Australia in the face of direct economic coercion by China and how did you see China use these arbitrary laws to pressure Australian companies? Oh, thank you, Congressman. Uh it's interesting that be yes there are a number of uh decisions that Australian took on Huawei and so on and we were the first to do that globally but we're engaged in some abbittoire issues with China and I was raising those uh with the premier
▶ 1:17:48at the time and we were just making zero progress on this issue. the the use of non-tariff barriers to basically be denying the ability for us to uh to be pursuing our our media exports into China and we there was just an absolute brick wall. Now this is before I called for a an inquiry into co 19 um much is put on that issue and I don't resolve for it for a second.
▶ 1:18:15uh this led to the deaths of millions of people around the world and their accountability on this issue uh has never been has never been um brought to anything um and it must one day but I I digress those very types of non-tariff barriers that the the internal rules the processes um they are used to frustrate exhibit frustrate I should say inhibit um what were the normal trade relationships between us and China under a free trade
▶ 1:18:45agreement. So even where you have an agreement, they'll they will say they obey the rule of law so long as that rule of law suits their purpose at the time or they can change the rule of law when it suits them. And that is the great threat of authoritarian regimes. The rule of law is the rule of law in in in the countries we reside in. But for China, it's the rule of law as they call that law any given day. And uh if it doesn't suit, then they will find another way to to to prevent um the actions of others who they seek to frustrate.
▶ 1:19:13And before I I lose my time today, I want to come to you, ambassador, because you mentioned some things earlier about how do we effectively um introduce counter measures. And I I thought one of the things you said was really insightful. You said make China more vulnerable and dependent in three areas, food, energy, and then use their fear of their own people against them effectively. So I want to ask you specifically, how do we go about that here in in Congress?
▶ 1:19:39What kind of legislative action should we take to increase the vulnerability in these areas to China and to make them more dependent on the rest of the world? Thank you, Congressman. Um, so your colleague mentioned about disengaging that China's a bit like a drug. No, one is I don't like the cold war metaphor. As you go back to the Cold War, we didn't really have trade with the Soviet Union. the trade between the United States and China is nipping up against a trillion dollars.
▶ 1:20:09So it's not a real metaphor. And the second is China believes there is a cold war. It's in the science and technology area. They want to dominate in biotech, AI, quantum computing. go down the list making sure and this requires a deft hand meaning you can't just use a blunt in instrument we're they are vulnerable on food I think it's a mistake to have Brazilian soybeans replace American soybeans
▶ 1:20:40I think that gives us leverage I think it's a mistake that they can access energy either through Russia or Iran I think making them more more dependent on not just oil and gas, our technology as it relates to a series of things on battery research as it relates to battery storage or other types of technology. But you go down the list, this is what I think the NAC would do. I think I uh NAC being the National Economic Council in the White House.
▶ 1:21:08I do want to stress though, you're doing this in conjunction with your allies. The mindset that the United States will do this solo plays to China's game. were on their turf isolated just monoto mono us standing with the European friends and allies with our allies in the strengthens we are a numbers game when that force brings you flip China's script now
▶ 1:21:38I respect the institution of congress having served here but in the end of the day the the lead here is out of the executive branch to set the president having served also uh at the behest of two presidents. So, Congress can play a supporting role, both challenging and reinforcing when an administration is taking the course. Thank you to both of you and I agree with you, ambassador. We need strong partnerships and allies across the world to isolate China and instead of allowing that to happen in the reverse.
▶ 1:22:06One thing I would note that was two if I could do two things, Mr. Chairman. One is what's not fully appreciated and I did not until I got there. How much not just our friends and allies but people and other countries in the region do not want an untethered unhinged China. They see the United States as the best insurance policy to anchor in that area.
▶ 1:22:35China strategy, they are the rising power. America's declining power. get in line or you're going to get Australia's treatment. Our strategy, we're a permanent Pacific power and presence and you can bet long on the United States. We have to double down on that. Not just Australia, not just Japan, not just Korea. Other countries in the region want America, not just the men and women that serve on the Abraham Lincoln or the Ronald Reagan. They want all of America. They want our sports.
▶ 1:23:06They want the instruments of our soft power. They want the instruments of our economic So, if we're going to do this and stay a permanent Pacific power and presence, don't put this on the young men and women that signed up to serve on a Navy ship 6 months away from their family Put it on the communities that can outproduce, out innovate, and out compete with China. And do it with our allies in tow pulling with us.
▶ 1:23:34That's our responsibility as a world leader. our responsibility to our values and our responsibility to the men and women who are asked as one piece of our instrument of power. I fully agree, Mr. Chairman. I yield Thank you, Representative Stevens. So, I come from uh Michigan, the industrial Midwest, the heartbeat arguably of our manufacturing sector.
▶ 1:24:02And we have been dealing with the China consideration and the coercion consideration since before the Great Recession really woke a lot of people up. the illegal dumping, the currency manipulation, the challenges to our automotive industry. And I came into this hearing with, you know, questions about minerals because after a year and a half, I've written this bill called Unear America's Future Act.
▶ 1:24:32It's the CHIPS Act for minerals. Uh Mr. Prime Minister, we I've talked extensively to Mr. Rudd about this legislation. Um, Ambassador Emanuel, I'd also love to talk to you about this. It is entirely comprehensive and it is a framework for how we can compete in the 21st century, the mid 21st century, Mark.
▶ 1:24:54I mean, we can and love to go back into history and look at this, but yes, we need to look the present in the face um and the future that we're heading towards. What does this world look like in 2050? and who is leading the industrial rules-based order.
▶ 1:25:11My presumption on this and my charge as a federal lawmaker is to bolster the US alongside our allies to achieve that goal for technology dominance, for industrial dominance and any sort of trappings in terms of how uh governance structures can continue to bolster capital markets.
▶ 1:25:35But this kind of came out with Brown in her question and uh Rahm you got to this and I want to dig on it a little bit further. How how do we reverse the the trajectory here?
▶ 1:25:49How do we and we're hearing a lot about the the allies and you know that we we need to work with others in the Indoacific and uh ranking member I appreciated your your graphic but how do we push back effectively and and strategically and can we continue to do things like AUS that you know is a great framework for us here in the United States of America and with our allies for technology technology de
▶ 1:26:19development. Is there a vision or a path for us to do things like AUS? And when you were ambassador, I thought, well, maybe we can do Jous. Maybe we can tie in and work more aggressively with our allies out outside some of the constraints of of trade relationships. So, it's nice to talk about onshoring and reshoring. I'm I've I know how to do it, and I think we got a plan to do it.
▶ 1:26:44My my bill is loan guarantees, tax credits, and and an R&D center of excellence again, CHIPS act for minerals because we can't do 85 to 95% processed over there. But can we just dig a little bit further while we're all still in the room and and hearing all your fascinating responses about how we achieve this goal about 2050? And Mr. Prime Minister, if you'd like to start, that'd be great, too. Well, thank you and thanks for the question.
▶ 1:27:12I'd start by saying a strong America is critical for that. I mean, allies and partners, yes, absolutely. And we I think we've been saying that all morning and as as the question is as well. U but for the allies and partners network to work, there has to be a strong core and that requires a strong America and an America with a strong industrial base in particular. One of the the greatest successes the United States has had through allies and partners has been their sort of global security initiatives, whether it be the Indo-acific, NATO or elsewhere.
▶ 1:27:41And applying that same discipline of of those networks into the economic sphere is is critical to achieve that. But it doesn't work unless the United States itself maintains its leadership and and and keeps striking distance on these core things that uh are necessary. So, I would agree with you. What's what's frustrating from the Michigan perspective, sir, is, you know, we have a current administration, 55 tariff announcements in 100 days.
▶ 1:28:09I mean, I I appreciate how bipartisan and thoughtful we are here. But we've got billions of dollars of losses now coming out of our our big three. We have the second fastest growing unemployment in the nation in Michigan. You know, thank you erratic tariff policies and all the the hiring freezes. And this is not to get overly partisan. Cut the deal for Michigan. Cut the deal for Michigan. I'm not yelling at you about that, but that's what we need right here.
▶ 1:28:36I I don't I don't need Yes, I get what's going on with China and they hoard and we give them everything with the minerals that go into materials and that's rising costs on us. Cut the deal for us. Right. Rahm, did you want to chime in? Congresswoman, I would say look, the pass is a bit of a prologue here. There are three periods of great economic growth in America.
▶ 1:29:02One is after civil war, one is at the beginning of the 20th century and uh one is after at the end of World War II. What do all three have in common? Investing in America and Americans. Take education land grant colleges under Abraham Lincoln universal high school education at the beginning of the 20th century and the GI bill where education plank educated and trained a generation of Americans. You invest in Americans, there's nothing China's doing that's going to scare me.
▶ 1:29:33You invest in America, our research universities, our roads, our bridges, our technology. You dominate the rules of AI, quantum computing, biotech. There's a story just the other day We're now, our major pharmaceutical companies are now becoming more and more dependent on China's biotech sector. That used to be our play. If we don't invest in it, we're going to lose it. The one thing we know, you don't invest in it, lose it.
▶ 1:30:00And so to me, Michigan's fate is kind of a canary in the coal mine to the rest of us in the same way that happened on the Ford plant in the south south side of the city of Chicago. Actually, that plant, I don't mean to do this, exports to more markets around the world than any other plant in the Ford family here in the United States. Okay? You invest in it, Beijing, we're coming after you.
▶ 1:30:25There's nothing America can't do if you invest in both the American people and the American economy. The fundamentals of the public sector are in the rule of law, our research at universities and our R&D capacity and our ability to take risk and the capabilities of both the brains and the bronze that make up this country. And I want to emphasize what the uh prime minister said.
▶ 1:30:51You can have all the coalition and I'm for it, but there's only one quarterback. We proved that in Europe. We're proving that in Indo Pacific and we can call the play and I don't mean I know that Australia is a very important friend and ally but I think he would emphasize that without the United States it's a lot of independent countries with the United States you got a team I yield back Mr.
▶ 1:31:16Chair thank you so much thank you representative Tuda thank you Mr. Mr. Chair and I just want to build upon the comments of my colleagues. I too greatly value our defense partnership with Australia and I've been working in my role on the Armed Services Committee to expedite the construction of infrastructure in the Indo-Pacific. I represent Hawaii that both of our nations will be relying on and our partnership along with the United Kingdom and AUS is important for all three nations and the broader security of the Indo-Pacific.
▶ 1:31:45Last week, I included an amendment in the National Defense Authorization Act directing the Defense Department to explore ways to expand the AUS partnership that addressed our critical mineral supply challenges, including as it relates to rare earth minerals. Prime Minister, given Australia's historic strengths at mining and mineral processing, what are your thoughts to potentially expanding AUS to also include approaches to uh reducing our reliance on China and other countries when it comes to critical minerals, especially for defense purposes?
▶ 1:32:15And ambassador, you spoke about um making sure that we are countries of like-minded union. In particular, I'm thinking about the Quad. Last uh week this committee convened a round table to talk about our vulnerabilities in pharmaceuticals API KSM reagents and solvents and such and as we know China has quite the market in this particular area.
▶ 1:32:37Thoughts about making sure that when we look at the quad and the work that it's doing there it also looks at particular areas where we do need to decouple and make ourselves less vulnerable um in particular with the pharmaceutical industries. I'm also wondering for both of these areas, rare minerals as well as pharmaceuticals and other areas of dependency, is the current tariff policies that we are seeing from the Trump administration quite frankly playing into China's hands? We need to be very smart and deliberate about all actions and how it all connects together.
▶ 1:33:07So, I would love to hear that and if we have some time, um, Ambassador, you mentioned the fact that we need to know the baseline. China took 15 years to get to this point where they had us by the batteries and the meds. What else do we need to be forward looking at in terms of where they are building up a potential vulnerability and dependency for us and our allies going forward into the future? I might just deal with the the Orcus question first. Um it's very important Orcus retains its focus.
▶ 1:33:35Um it is a a defense partnership agreement um both to ensure that Australia um can have a capability of nuclearpowered submarines which can play an important role in the network of of alliances in the Indoacific and be part of that deterrent effect and that is for Australia an enormous undertaking um to do this and it requires our full focus on those tasks.
▶ 1:33:59Uh pillar two of Orcus um focuses on ensuring we have advanced defense technologies which enables us to also strike that deterrent against in particular the PRC but other potential adversaries globally.
▶ 1:34:13Um again keeping the focus on that a key part of when we did ARUS was ensuring that we had an integrated defense industrial base across those three jurisdictions uh pairing back the regulations be it on export controls or ITARS or things like that and I think there's been enormous progress made on that more to do but I am deeply thankful to the US Congress um for the work they've done in in pairing that back we've made more progress than we have in the last 50 years on those issues and that's a positive thing.
▶ 1:34:41The reason I highlight that is that what you're raising is an important input into that defense industrial base. The rare the processed rare earths that go into whether they be nuclearpowered submarines or F-35s or whatever it happens to be that is essential for those things to be done and everything else is that is going to be done that we haven't even dreamt of yet. What I would um humbly suggest is I think the best forum for those industrial uh type processes is probably more through the quad.
▶ 1:35:08I think it certainly supports AUS and I think is entirely consistent with what AUS is doing. Um I think what's important is that it gets done and uh and I think the quad in particular provides a good vehicle because it includes Japan. Um mo more recently uh there's a company in Australia Pilra Minerals Minerals who who have struck a a joint venture with POSCO in Korea um which is a processing rare sorry lithium raw material um arrangement.
▶ 1:35:39We need to see more and more of those types of deals uh and providing those supply chains amongst friends. Um, it is in Australia's interests for the US industrial base to be strong. And I think this is a point that's sometimes lost about allies and partners. We think it's a good a good thing for the US to rebuild its industrial base. We have a stake in that. Um, and and we want to ensure that happens.
▶ 1:36:03That's why under Orcus already, we've paid half a billion in supporting nuclear submarine production here on Virginia class. I don't know of any other ally the United States has that is actually paying the United States to help build your defense industrial base on submarines. That's what a serious partner does that is keen on doing heavy lifting in a partnership.
▶ 1:36:23And so I would say a similar amount of effort and focus is required to get those supply chains on rares and critical metals right because you cannot pursue the capabilities that you want under Orcus unless you have those secure supply chains. So the issue you're focusing on is dead right. Thank you, Congresswoman. I would uh two things I would say and take a note or three rather. One, take a page out of the export controls. When I was ambassador, we worked on that.
▶ 1:36:51The United States position visa v uh semiconductors with China was strengthened because Japan, South Korea, Taiwan, and the Dutch stood shoulder-to-shoulder with us. That's why China squealled like a stuck pig. And that's a lot for a Jewish kid to say stuck pig. Okay. And so you got to that was a joke. You guys got to relax around here. Uh so you have to appreciate that is an example.
▶ 1:37:19China sued for peace because the effectiveness of our coalition worked to isolate the isolator. The quad is a place of economic cooperation. You got to look at the strategic landscape. I said this earlier to a colleague's question. They are competing with us on AI dominance around the world, not just with our AI.
▶ 1:37:43Will the rules of AI be written around a China model or US-based Quantum computing, same deal. Biotech, same deal.
▶ 1:37:57So you look down five, six promising technologies tomorrow that are going to be the most dominant technologies and you begin to double down both on the research dollars that go to those technologies, the security of the companies and the innovation that comes out of those research dollars and the protection of them in the early stages to be comp worldwide competitors. Now I do want to say because I don't this probably is the last answer so I might as well kind of go with it.
▶ 1:38:27Look, I think tariffs are a blunt instrument that are being applied They should be used strategically, not across the board. Not all problems. It's a hammer in search of a nail. That's my view. I think that if we thought about this strategically, looked at the tomorrow, where do we want to be? How do we invest in the technology? How do we invest in invest in the brain power?
▶ 1:38:53How do we invest in the muscle power to build up a competitive economic ecosystem around areas? And the problem when you lose your industrial base is that there's a whole series of ecosystems that's part of that because that industrial base is part of the innovation piece. It's not universities over here and production over here.
▶ 1:39:15That's why you can't concede the ground of industrialization or manufacturing to China because if you take a look at the EV auto industry the they we were first like solar but take the EV we were first with a national brand called Tesla their companies though figured out how to recharge them in five minutes we haven't they have an ecosystem that is operating you need that manufacturing as a part and parcel and the heart and soul of your innovation.
▶ 1:39:46Mr. Chairman, can I close on one thing? Uh I do want to thank uh both the chairman, the ranking member, and the full members of the committee for having a hearing on something essential to the economic prosperity and the future of our not only our country, our allies, but most importantly, the communities and people we represent. And for a rare moment, uh as somebody who also participated in this sport, this is a rare committee of bipartisanship.
▶ 1:40:12We'll have our differences on a number of other issues, but you came together on looking to the future and how to make play a constructive role in shaping it. And I want to thank both of you and the members for a real thorough discussion about what tomorrow can bring and how to make sure it's to America's advantage and our allies advantage. Well, thank you very much, uh, Ambassador Emanuel, Prime Minister Morrison, uh, really appreciate your participation today.
▶ 1:40:38Um questions for the record are due one week from today and without objection the committee hearing is adjourned.