Does Washington need a K-Street Project for China?

The K-Street Project was an effort by the Republican Party in 1990s to increase the number of Republicans hired by Washington, D.C. lobbying firms. The Republicans thought it should correct an imbalance caused by 40 years of Democratic Party control of the U.S. Congress that led the lobbying firms to hire mostly Democrats. The Democrats claimed it was crony capitalism. It soon fell out of favor with leading Republicans, though zealots in both parties keep tabs on how many of “their guys” are in the leading firms.

In the wake of the COVID-19 pandemic China’s ruling  Communist Party did  the impossible: It brought Republicans and Democrats together. According to a Harris poll, Americans increasingly agree that “the Chinese government bears responsibility for the spread of the pandemic, that it can’t be trusted on this or any other issue, and that the U.S. government should maintain a tough position on China on trade and overall, especially if Beijing again falters in its commitments.”

Chinese interests increased their spending on lobbyists in response to the effort by President Donald Trump to toughen trade terms with Beijing. In 2018, spending by Chinese non-government organizations was nearly $15 million. Over the years, some U.S. firms doing business with Chinese interests have hired an impressive slate of former U.S. government officials.

The question is: In light of China’s recent  behavior,  should these guys still get meetings?

China’s lobbyists claim they represent China’s private sector, but there is no private sector in China: You are the custodian of assets as long as it suits the Chinese state and, above the state, the Communist Party.

The Chinese system has been called “capitalism with Chinese characteristics,” which would be a thing if it weren’t really just a wealth generating machine erected by the Communist Party to finance its drive to dominate the world by 2049.

Was there an American role in this? Yes.

Many of America’s leaders made a big bet that China would act responsibly and that trade would assuage political differences, which doesn’t comport with the Communist Party’s zero-sum view of the world. The bet isn’t paying off, as the Communist Party shrugged off criticism over its slave labor camps filled with Muslim Uighurs and the suppression of pro-democracy protestors in Hong Kong.

Many incurious experts muddled the discussion by claiming that “many U.S. actions are contributing directly to the downward spiral in relations” when they should have promoted discussion on the means and motives of China’s Communist Party. The National Basketball Association retreated when a league official expressed support for Hong Kong’s democracy protestors. The whole enterprise was described by Jim Geraghty at National Review: “We’re Not Exporting Our Values to China — We’re Importing Theirs.”

As the 20^th anniversary of the US-China Relations Act approaches, it may be time to admit that it was “a monumental mistake,” the moment the U.S. gave up the game.

It’s been proposed that the U.S. decouple its economy from China or seek some kind of payback via the tort system for the damage caused by the Wuhan Coronavirus. The payback would be satisfying in the short term only, and decoupling would mean unwinding complex supply chains dependent on China which will take time.

American  firms do have legitimate business interests in China, but the U.S. should consider reshoring manufacturing for critical resources. As a first step, the U.S. needs to determine how reliant it is on China for the active pharmaceutical ingredients in the medicines it buys, as even the Food and Drug Administration can’t tell the president and Congress how vulnerable America is. When seeking reliable second sources for critical products like APIs which may currently be supplied largely from abroad, the first question should be: Can we make it in North America with our Canadian and Mexican partners?

The 1990s K-Street Project was about jobs for the boys; the 2020s K-Street Project should flip it and take a granular look at what the boys did, to tell the American public what — and who — are China’s influence tools.

Congress can hold productive hearings about lobbying by public and private Chinese entities, Beijing’s funding of Confucius Institutes at colleges and gifts to think tanks and universities the government sometimes refers to for expert advice. It can also examine Chinese involvement in U.S. entertainment and media companies and the technology sector and predatory investment in distressed U.S. companies suffering from the pandemic-induced slowdown. There’s also the long-standing U.S. reliance on China for rare earth elements and what can be done to encourage production in North America.

The way forward may be strict reciprocity in some dealings with China, but it may be more effective to publicly examine China’s influence campaign in the U.S. and hear from the Americans who were part of it. Public opinion is running against China, so the hearings will generate good C-SPAN and some B-roll for campaign ads.

Naming and, in some cases, shaming a few of the more gullible and complicit Americans would be an effective warning to others — and may be the country’s best defense.

James Durso (@james_durso) is the Managing Director of Corsair LLC, a supply chain consultancy. He was a professional staff member at the 2005 Defense Base Closure and Realignment Commission and the Commission on Wartime Contracting in Iraq and Afghanistan. Mr. Durso served as a U.S. Navy officer for 20 years and specialized in logistics and security assistance. His overseas military postings were in Kuwait and Saudi Arabia, and he served in Iraq as a civilian transport advisor with the Coalition Provisional Authority.  He served afloat as Supply Officer of the submarine USS SKATE (SSN 578).