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Transmittal letter:

On behalf of the U.S.-China Economic and Security Review Commission, we are pleased to transmit the Commission’s 2022 Annual Report to Congress. This Report responds to our mandate “to monitor, investigate, and report to Congress on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China.” The Commission reached a broad and bipartisan consensus on the contents of this Report, with all 12 members voting unanimously to approve and submit it to Congress.

In accordance with our mandate, this Report, which is current as of October 7, includes the results and recommendations of our hearings, research, and review of the areas identified by Congress in our mandate, as defined in Public Law No. 106–398 (October 30, 2000) and amended by Public Laws No. 107–67 (November 12, 2001), No. 108–7 (February 20, 2003), 109–108 (November 22, 2005), No. 110–161 (December 26, 2007), and No. 113–291 (December 19, 2014). The Commission’s charter, which includes the 11 directed research areas of our mandate, is included as Appendix I of the Report.  

The Commission conducted seven public hearings, taking testimony from 74 expert witnesses from government, the private sector, academia, think tanks, research institutions, and other backgrounds. For each of these hearings, the Commission produced a transcript (posted on our website at www.USCC.gov). This year’s hearings included:

• CCP Decision-Making and the 20th Party Congress;
• China’s Cyber Capabilities: Warfare, Espionage, and Implications for the United States;
• China’s Energy Plans and Practices;
• Challenging China’s Trade Practices: Promoting Interests of U.S. Workers, Farmers, Producers, and Innovators;
• China’s Activities and Influence in South and Central Asia;
• U.S.-China Competition in Global Supply Chains; and
• Challenges from Chinese Policy in 2022: Zero-COVID, Ukraine, and Pacific Diplomacy.  

The Commission received a number of briefings by executive branch agencies and the intelligence community, including both unclassified and classified briefings on implications of China’s Zero-COVID policy, China’s relationship with Russia after the unprovoked invasion of Ukraine, China’s involvement in global logistics, China’s cyber capabilities, China’s space capabilities, China’s nuclear capabilities, and net assessments of U.S. and Chinese military capabilities. The Commission also received briefings by foreign government officials as well as U.S. and foreign nongovernmental experts. The Commission includes key insights gained through these briefings either in its unclassified Annual Report or, as appropriate, in a classified annex to that Report.

The Commission conducted official fact-finding travel this year to U.S. Strategic Command and U.S. Indo-Pacific Command. During these visits we heard from our military’s leadership on the threat presented by China in strategic, air, sea, and cyber domains. In addition to onsite meetings, this year we continued to conduct virtual discussions with interlocutors to ensure the continued diversity of perspectives heard by the Commission. The Commission also relied substantially on the work of our excellent professional staff and supported outside research (see Appendix IV) in accordance with our mandate (see Appendix I).

The Report includes 39 recommendations for congressional consideration. The Commissioners agreed that ten of these recommendations, which appear on page 10, are the most important for congressional action. The complete list of recommendations appears on page 32 at the conclusion of the Executive Summary.  

We offer this Report to Congress in the hope that it will be useful for assessing progress and challenges in U.S.-China relations. Thank you for the opportunity to serve. We look forward to continuing to work with Members of Congress in the upcoming year to address issues of concern in the U.S.-China relationship.

Key recommendations:
1. Congress direct the Administration to produce within 90 days an interagency report coordinated by the Office of the U.S. Trade Representative to assess China’s compliance with the terms and conditions of the 1999 Agreement on Market Access between the People’s Republic of China and the United States of America.
2. Congress direct the Administration to create an Economic and Security Preparedness and Resilience Office within the executive branch to oversee, coordinate, and set priorities for cross-agency efforts to ensure resilient U.S. supply chains and robust domestic capabilities, in the context of the ongoing geopolitical rivalry and possible conflict with China.  

3. Congress enact legislation creating a permanent interagency committee in the executive branch charged with developing options and creating plans for the imposition of sanctions or other economic measures in a range of possible scenarios, including (but not limited to) a Chinese attack, blockade, or other hostile action against Taiwan.
4. Congress direct the U.S. Food and Drug Administration in cooperation with other federal agencies, within one year and on an ongoing basis thereafter, to identify pharmaceutical products that utilize active pharmaceutical ingredients (APIs) and other ingredients and inputs that are sourced directly or indirectly from the People’s Republic of China and develop alternative sourcing arrangements through available tools and resources, including Defense Production Act authorities.  
5. Congress direct the Administration as part of the Indo-Pacific Economic Framework (IPEF) to negotiate a prohibition on the utilization of China’s National Transportation and Logistics Public Information Platform (LOGINK) or similar systems provided by Chinese stateaffiliated entities within IPEF member ports.

6. Congress direct the U.S. Department of the Treasury to require U.S. corporations and U.S.-registered subsidiaries of foreign corporations to publicly disclose, on an annual basis, all holdings in firms linked to China’s military, including those that maintain any production permit, qualification, or certification issued by the People’s Liberation Army or China’s State Administration for Science, Technology, and Industry for National Defense.
7. Congress create an authority under which the president can require specific U.S. entities or U.S. entities operating in specific sectors to divest in a timely manner from their operations, assets, and investments in China, to be invoked in any instance where China uses or threatens imminent military force against the United States or one of its allies and partners.  
8. Congress direct the U.S. Department of Defense to produce a classified report on current and future military posture, logistics, maintenance, and sustainment requirements to bolster the United States’ “capacity to resist force” in the event of a Chinese attack and attempted invasion of Taiwan.  

9. Congress should make available significant additional multiyear defense funds in conjunction with: (i) a joint planning mechanism made up of Taiwan and U.S. defense officials identifying sets of interoperable and complementary capabilities required for the defense of Taiwan; and (ii) Taiwan legislatively committing significant additional funds to procure its share of those capabilities for its military.
10. Congress, pursuant to the Hong Kong Human Rights and Democracy Act, amend the International Organization Immunities Act to remove Hong Kong Economic and Trade Offices as a covered organization, thereby eliminating diplomatic privileges enjoyed by such offices and their employees in the United States.  

Executive Summary [40 pages]: https://www.uscc.gov/sites/default/files/2022-11/2022_Executive_Summary.pdf
Annual Report [785 pages]: https://www.uscc.gov/sites/default/files/2022-11/2022_Annual_Report_to_Congress.pdf
Recommendations: https://www.uscc.gov/sites/default/files/2022-11/2022_Comprehensive_List_of_Recommendations.pdf

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